Do you dream of starting your company in Saudi Arabia? Let us walk with you through your company’s journey from beginning to end. The journey starts with company formation and official registration, then moves to the stage of growth and investment, where your ideas are protected and partners are attracted. Finally, if you decide to close, the organized liquidation stage ensures that everyone’s rights are preserved.
At every step, you will find clear Saudi regulations that support you from simple incorporation to safe liquidation. We will explain the path clearly and easily. Let us begin the journey.
The shocking truth is that 67% of Saudi startups face difficulties in company liquidation because they neglected to plan for it from the very beginning.
Source: General Authority for Small and Medium Enterprises, 2023
First – Types of Startups in Saudi Arabia:
Limited Liability Company (LLC):
- Advantages: The preferred choice for most startups, offering limited liability for partners and ease of formation and management.
- Suitability: For small businesses.
2. Closed Joint-Stock Company:
- Advantages: Suitable for medium and large investments, allowing the raising of higher capital and easier entry of new investors.
- Suitability: For companies planning expansion or seeking large investments.
3. Sole Proprietorship
- Advantages: Simple incorporation procedures, full control by the owner, suitable for small, low-risk projects.
- Suitability: For small or craft-based businesses.
Second – Company Formation:
1. Basic company formation steps in Saudi Arabia:
Through the following stages:
Pre-incorporation stage:
- Choosing the business activity and legal form.
- Securing the basic requirements.
- Market study and licenses.
Official incorporation stage:
- Reserving the trade name
- Issuing the commercial registration
- Activity licenses
- Final certificates
Post-incorporation stage:
- Opening the company bank account
- Tax registration
- Registering employees in social insurance
- Issuing e-invoices
Growth stage:
- Renewing licenses as required by law
- Expansion and investment
Liquidation stage if needed:
- Liquidation decision and defining its reasons
- Settlement of liabilities
For a comprehensive overview of the legal procedures and requirements for establishing a business in the Kingdom, you can read our article onCompany Formation in Saudi Arabia .
2. The impact of foreign investment on company formation:
Foreign investment is allowed up to 100% ownership in most sectors under the unified foreign investment system. In the company formation cycle, the foreign investor obtains an investment license from the Investment Authority, then follows the same steps as local company formation with the addition of a foreign capital certificate. This makes foreign investment a vital part of the company formation cycle, especially under Vision 2030.
3. Main legal procedures after company formation and before foreign investment:
After company formation, the following obligations apply:
- Registration with the Chamber of Commerce
- Opening a bank account
- Issuing a tax registration
If foreign investment is involved, contracts must be notarized before a notary public and annual reports submitted to regulatory authorities. These procedures protect foreign investment and ensure transparency throughout the entire company formation cycle.
Third– Company Liquidation:
1. What exactly is company liquidation?
Company liquidation is the legal process of closing a company, settling its debts, distributing its assets, and canceling its commercial registration. Under the Saudi Companies Law (Article 244 and beyond), liquidation is defined as the final stage that protects partners and creditors, whether voluntary or compulsory.
2. Types of company liquidation:
- Voluntary liquidation: by decision of the partners
- Compulsory liquidation: by court order
- Simplified liquidation: for small and medium enterprises
3. Voluntary company liquidation:
In voluntary liquidation, the partners meet and vote by majority (usually 75% of capital), then sign a liquidation agreement notarized by a notary public. The liquidation is announced in official newspapers for 90 days to allow creditors to submit claims, ensuring fairness.
4.Practical steps for company liquidation :
- Appointing one or more liquidators, internal or external, to manage the liquidation
- Closing accounts, paying debts, selling assets
- Distributing the remaining assets to partners, then submitting a final report to the Ministry of Commerce to officially announce the liquidation
5. The difference between voluntary and compulsory liquidation:
Compulsory liquidation is issued by court order in cases of bankruptcy or violations, often at the request of regulatory bodies. Unlike voluntary liquidation, the court appoints the liquidator, and the process takes longer (up to 18 months).
6. Duration and cost of company liquidation:
Liquidation takes 6–12 months depending on complexity, with costs ranging between SAR 10,000 and 50,000 (advertising fees, lawyers, taxes). A lawyer is recommended to speed up the process.
7. When should I consider company liquidation?
Early warning signs:
- Consecutive losses for 18 months [Source: Saudi Accounting Standards]
- A market decline of 40% or more
- Full depletion of capital
- A voluntary decision by partners to cease operations
8. Legal steps for company liquidation:
- Issuing and registering the liquidation decision with the Ministry of Commerce
- Appointing a licensed liquidator
- Paying debts and obligations
- Distributing remaining assets
- Officially announcing the end of liquidation
Legal warning: Failure to liquidate properly exposes owners to personal liability [Source: Saudi Companies Law, Article 150]
Fourth – Foreign Investment:
1. What is foreign investment in Saudi Arabia today?
Foreign investment refers to any project carried out by a non-Saudi investor, whether an individual or a company, in commercial, industrial, or service activities. It is governed by the updated Investment Law (issued in 2025), which replaced licensing with electronic registration to facilitate foreign investment, while guaranteeing equal treatment with local investors.
2. Practical steps for foreign investment:
The first step is electronic registration with the Ministry of Investment (MISA) through its portal, submitting a passport, business plan, and minimum capital (usually SAR 500,000). Then a trade name is reserved and the company is incorporated like a local investor, making foreign investment possible within days.
3. Rights and protections in foreign investment:
The foreign investment system guarantees rights such as free transfer of profits and capital, protection against expropriation, and incentives such as tax exemptions. It also protects against discrimination.
4. New developments in foreign investment for 2025:
From February 2025, the Capital Market Authority opened the main market to all direct foreign investment without prior qualification, raising foreign investments to more than SAR 590 billion by the end of 2025, with further growth expected.
5. Cost of foreign investment:
The cost of starting foreign investment ranges between SAR 5,000 and 20,000 for registration and licenses and takes 1–7 days electronically. A legal consultant is recommended.
7. Conditions of “foreign investment” in Saudi Arabia:
- Registration in the foreign investors register
- Obtaining a foreign investment license
- Compliance with the Saudi Companies Law
- Determining the permitted foreign ownership percentage (up to 100% in most sectors)
8. Advantages of “foreign investment” in Saudi Arabia:
- Tax exemptions for up to 20 years in some economic cities
- Customs facilities for imports
- Support in localization and training
- Preferential access to financing
Real success: Saudi company “Tech Care” grew by 300% after a foreign partner entered through the foreign investment program [Source: Saudi Investment Authority Report, 2023].
Fifth– Integration of “Company Formation”, “Company Liquidation” and “Foreign Investment”:
Stage One: Company formation:
- We ensure clauses in the incorporation contract that facilitate future liquidation.
- We design a financial structure that attracts foreign investment.
Stage Two: Smart growth management and periodic legal review
- Advance readiness for all liquidation scenarios
- Preparation of documents ready for foreign investment
Stage Three: Safe exit or global expansion
- Elegant liquidation when needed
- Or attracting foreign investment for expansion
In Saudi Arabia’s fast-moving business landscape, it’s not enough to start your company correctly the real advantage is being prepared for every stage of its lifecycle: incorporation, growth, investment, and liquidation when needed. This is where Sada comes in, turning scattered legal steps into an integrated and transparent roadmap. From building a solid incorporation structure, to strengthening governance and investment readiness, to enabling a safe and compliant exit that preserves rights and reduces risk, Sada helps you make faster, sharper legal decisions and position your business for sustainable growth. With Sada, stability isn’t left to chance; it’s built through clear, compliant, and strategic legal foundations.
To build a legally sound and investment-ready company, explore our guide on Steps to Establish a Company .
Frequently Asked Questions:
1. What sectors are prohibited for “foreign investment”?
Military sectors and some government services, as listed by the Investment Authority.
2. How long does company liquidation take?
From 3 months to two years depending on complexity, but “Sdad” reduces it to an average of 60 days.
3. Does company liquidation require a lawyer?
Yes, for legal protection
4. What is the cheapest way to “form a company” in Saudi Arabia?
A sole proprietorship costing no more than SAR 2,000, while “Sdad” offers a full formation package for SAR 2,999 only.
5. Can a non-Saudi “form a company” in the Kingdom?
Yes, through “foreign investment” programs that allow full ownership in most sectors.
6. What happens if I delay “company liquidation”?
Financial penalties, freezing of bank accounts, and possible legal liability.
7. How is company liquidation linked to foreign investment?
In cases of foreign investment, liquidation requires notifying the Investment Authority and transferring foreign assets with approval. Taxes on foreign investment must be settled before liquidation, along with a final financial report, making liquidation safe even for large foreign investments.
8. What happens if I delay company liquidation?
Financial penalties, freezing of bank accounts, and possible legal liability.
