Google Startup Grind Jeddah interview Anas Akel of Hourani & Partners on the legal and practical considerations of forming a startup in Saudi Arabia.

1. STARTUP GRIND JEDDAH
An Overview of Legal and Practical Considerations Impacting
Entrepreneurs Operating in KSA

2. A Leading Law firm in Saudi Arabia
We have full service offices in Riyadh and Jeddah which allow us to cater
to our clients across the Kingdom of Saudi Arabia. Moreover, we are one
of the very few firms who can offer Saudi expertise from our Dubai office.
Our full suite of capabilities includes:
• Corporate transactions
• M&A
• Infrastructure & Transportation
• Construction & Engineering
• Litigation and Dispute Resolution
•IPO
• Real Estate
• Company set-ups
• Insolvency
2
• Bankruptcy & Restructuring
• TMT
• Banking and securities regulatory
• Aviation finance
• Labor & Employment
• Public procurement work of all types
• Project finance
• Syndicated finance

3. Ministry of Investment Saudi Arabia (MISA)
v MISA (formerly SAGIA) regulates all foreign investment in Saudi
Arabia under the Foreign Investment Law.
v One-Stop Shop: various ministries in one location
v Licenses are granted for a period of 5 years
v 100% foreign ownership
v Certain activities are on the “Negative List,” i.e., activities that
are excluded from foreign investment:
• Oil exploration (reserved for Saudi Aramco)
• Security services
• Real Estate in Makkah and Madina

4. Ministry of Investment (MISA)
Types of Licenses
v Services License
§ IT, health care, education, consulting, restaurants,
hospitality, travel, tourism, etc.
§ 100% foreign ownership
§ Capitalization
• No minimum capital
v Manufacturing / Industrial License
§ Steel, cement, food and beverage, pharmaceuticals,
etc.
§ 100% foreign ownership
§ Capitalization
• No minimum capital

5. Ministry of Investment (MISA)
Types of Licenses
v Trading License
§ Wholesale and retail distribution of products
§ High capitalization requirement to attract serious
and large foreign investors
§ 75% - 25% JV trading entity
• Must have a minimum of 25% Saudi shareholding
• Capitalization
• SAR 26,666,666 (USD 7.1 million) minimum
capital
• Foreign shareholder must invest a minimum SAR
20 million (USD 5.33 million), regardless of share
ownership

6. Ministry of Investment (MISA)
Types of Licenses
v Trading License Cont’d
§ Wholly-owned foreign trading entity
• Capitalization
• SAR 30 million (USD 8 million) minimum
• Option #1
• SAR 300 million investment over a period of five (5) years
• retained earnings accumulated during the 5-year period may
count towards the target share capital amount.
• Option #2
• 200 million (USD 53.3 million) investment over a five year
period, and:
• manufacture at least 30% of its locally distributed
products in Saudi Arabia;
• Allocate at least 5% of sales to establish one or more
research and development programs in Saudi Arabia; or
• establish a unified center to provide after-sale services
(i.e. logistics, distribution, maintenance).

7. Ministry of Investment (MISA)
Types of Licenses
v Entrepreneur License
§ Requirements
• Must be sponsored by a Saudi University or designated
incubator
• The project should be in the field of technology and based on
innovation.
• Based on a prepared feasibility study and financing plan.
§ Capitalization
• No minimum requirement
§ Restrictions
• Only services and manufacturing
• Trading activities permitted with higher capitalization.
§ Advantages
• Reduced fees
• Low barrier to entry due to minimum capitalization
• Fast track license issuance

8. Registration Process
vCompany Name Reservation
vMISA
§ If no foreign shareholding, proceed to MOCI.
§ Complete the online MISA application, providing details about the
shareholders and proposed activities.
§ Activities must be selected from ISIC list
§ Required documents:
• Commercial Registration from home country (not required for
individuals)
• One year of audited financial statements (waived for
entrepreneurs)
• Shareholder(s) resolution to establish the entity and appoint
the management (not required for individual shareholders)
• Power of attorney to a legal representative to setup the entity
vMinistry of Commerce (MOC)
§ Draft Articles of Association (AoA) and submit online to the MOC for
feedback / approval
§ Upon approval, shareholders must appear before the Notary Public to
sign the AoA.
§ After signing the AoA, the MOC will issue a commercial registration
certificate.

9. Thank you
Anas Akel – aakel@houranipartners.com
Jonathan Burns – jburns@houranipartners.com
Amgad Husein – ahusein@houranipartners.com

10. *Associated Practice
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E: info@houranipartners.com
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4th Floor, Office Tower
Olaya Street
P.O Box 9629
Riyadh 11423
Kingdom of Saudi Arabia
T: +966 11 288 5400
E: info@houranipartners.com
Jameel Square*
Tahlia Street
P.O. Box 54144
Jeddah 21514
Kingdom of Saudi Arabia
T: +966 12 645 5055
E: info@houranipartners.com
Azarieh Building
Downtown Beirut
Riad Al Solh Street
Building Entrance No. A2-2, 2nd Floor
Lebanon
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