How to start a business in Saudi Arabia

How to start a business in Saudi Arabia

There are three major considerations to be made by those thinking of starting a business in Saudi Arabia:

  1. You must have a good knowledge of the region. Be prepared to undertake extensive research into the business sector you aim to operate within. You must have a viable business plan, which includes a study of the market conditions, the competition and your forecast results. You must be prepared to find the necessary investment from your own resources or through your bank and preferably by other means than applying locally, particularly if you’re new to the region and without a track record. A credible plan might attract local support, possibly government support.
  2. The law requires that you have a local partner who holds the majority interest and can therefore control the business (as well as close it, if he feels like it…). The local partner, be it a company or an individual, doesn’t need to contribute to the start-up investment or participate financially at all. As with self-employment, there are various ways that a partner can be remunerated. The local partner requirement is currently under review in some states, however, in order to encourage foreign investment.
  3. When the business is registered, you must show the Ministry of Commerce that you have a substantial sum of money to invest. The required sum varies between the states (it’s between $10,000/£6,500 and $50,000/£33,500 in most cases) and is reagrded as a guarantee against liabilities, although you may withdraw the money shortly afterwards!

The process is complex and financially risky, meaning that local knowledge is crucial. You must also consult a good lawyer from the outset. An experienced lawyer will guide you through the registration complexities and his help will be vital in protecting your interests. This applies whether you’re opening a modest shop or a major enterprise. As is the case all over the world, there are unofficial businesses operating in the region, but if anything goes wrong or you’re ripped off, you have no legal recourse whatsoever.

Don’t let these warnings put you off. All isn’t doom and gloom, and many people have developed successful, highly profitable businesses in Saudi Arabia. New operations are encouraged by the authorities and your local partner might be enthusiastically supportive (or he might be a severe liability). Export and manufacturing industries are especially strongly supported by government, particularly as regards the acquisition of land on which to construct a factory. If you set up such a business in a free trade zone, of which there are several in the region, it’s granted exemptions from import and export duties, commercial taxes, building and property licence fees, land tax and restrictions on the transfer of capital invested in the zone.

An alternative to starting a new business is to buy a going concern, which is a more straightforward process, as it doesn’t involve lodging capital, obtaining sponsorship or registration; all you have to do is agree a price and transfer the ownership of the business.

Local Chambers of Commerce can advise about start-ups and are adept at cherry-picking potentially profitable newcomers to the region. Winning the confidence and support of a Chamber of Commerce will help your cause. Contact details are as follows:

  • Council of Saudi Chambers of Commerce and Industry, PO Box 16683, Riyadh 11474, Kingdom of Saudi Arabia (Tel. 966-1-405 3200);
  • Eastern Province Chamber of Commerce, PO Box 719, Dammam 31421, Kingdom of Saudi Arabia (Tel. 966-3-857 1111);
  • Federation of GCC Chambers, PO Box 2198, Dammam 3145, Kingdom of Saudi Arabia (Tel. 966-3-826 5943);
  • Jeddah Chamber of Commerce and Industry, PO Box 1264, Jeddah 21431, Kingdom of Saudi Arabia (Tel. 966-2-651 5111);
  • Riyadh Chamber of Commerce and Industry, PO Box 596, Riyadh 11421, Kingdom of Saudi Arabia (Tel. 966-1-404 0044);

When doing business with Arabs, you will probably meet with hard but polite bargaining and find them expert at it. You need to be completely confident about the contents of your contractual agreement. If there are gaps, Arabs are brilliant at finding and exploiting them. Nevertheless, in the vast majority of cases, Arab businessmen meet their obligations fully. The experience of doing business with them is likely to be pleasant and friendly, and the trust built up on both sides will be long-lasting.

Incidentally, Arabs rarely say a direct ‘no’ to a proposition, so you must listen and observe carefully. If the response is ‘Leave it with me’ or ‘I’ll think about it’, there’s a good chance that the project will go nowhere.

The potential gains of starting and running your own business are great, but it isn’t for the faint-hearted. You need to remember that you aren’t a citizen of the country and when the time comes to leave and sell your interests, your partner has time on his side, while you might not.

Company Registration & Legal Obligations

Corporate law in Saudi Arabia is similar to that in western countries, in that businesses can be run as limited liability operations, private companies or other types of concern. As discussed, setting up a business or buying a going concern can be complex and you must obtain local legal advice and guidance about registration formalities. As a foreigner, you’re likely to use a western/Arab joint venture law firm. When choosing, seek the advice of the Arab-British Chamber of Commerce, the DTI, Middle East Association and your Embassy’s commercial sections.

Western expatriates are generally well qualified – they don’t find work if they aren’t – and these qualifications are carefully checked with the issuing bodies, irrespective of where they were obtained. Western expatriates therefore tend to occupy senior positions, with commensurate salaries and perks. Workers from south-east Asia and the Indian sub-continent (who are sometimes – politically incorrectly – referred to as ‘Third Country Nationals’ or ‘TCNs’) usually occupy menial, unskilled or semi-skilled jobs and are paid accordingly.

Even those with professional qualifications and experience as good as those of a westerner are unlikely to enjoy similar benefits, as the remuneration of foreign workers is related to what they would expect to earn in their home countries, which is invariably higher for westerners. However, this situation is beginning to change, especially in the field of technology.

A powerful sponsor or employer is a great weapon with officialdom, and observing his skilful negotiating can be an enlightening experience. The authorities, however, are usually helpful and don’t tend to be difficult unless they have good reason. You will find your working life in the region easier if you’re polite and patient.

Smile and seek ‘advice’: requesting advice confers respect on the person asked and you will generally find that Arabs are friendly and helpful. Note that the recruitment of foreign staff is an expensive exercise for employers, including recruitment consultant fees, legal expenses and travel costs. As a result, few employers put their investment at risk by treating employees badly, and the great majority of expatriates prosper in Saudi Arabia for many years.

How to register a company in Thailand

How to register a company in Thailand

The private limited company is the form of business entity that is most commonly used by foreign investors in Thailand. In this blog post we provide a brief step-by-step overview of the various stages in the business registration process.

Step 1: Registering the company name

The name you chose for your company must not be identical to/or resemble the name of any pre-existing registered partnership or company. Certain terms are also prohibited from use in company names. For example, you may not use the term “investment” in your company name but the term “capital” is allowed. The company name must end with the word “Limited”.

It is recommended that you reserve three names ranked by priority to maximise the chances of success. Your company name will be registered in Thai language, even if the name of your company is in English. Do not propose a name that is lengthy or difficult for non-English speakers. Remember that your clients will have to write it, so the more complicated the name then the more mistakes your clients will make when drafting checks, etc.

The name of your business can be different from your company name. You can also use the same name for several companies proved that you accompany that name with a different figurative word. For example ABC Trading Ltd, ABC Holdings Ltd, ABC Capital Ltd, etc. Once approved, the corporate name is only valid for thirty days and no extension is permitted. This means that Step Two of the company registration process must be completed within this period of time.

Step 2: Filing the Memorandum of Association

The Memorandum of Association is a special agreement made by the founders (promoters) of the company. The Memorandum of Association must contain:

  • The name of the proposed company
  • The province of the Kingdom where the registered office of the company will be situated
  • The objectives of the company
  • A declaration that the liability of the shareholders will be limited
  • The amount of share capital which the company proposes to be registered
  • The names, addresses, occupations and signatures of the promoters (at least three individuals – not corporate entities)
  • The number of shares subscribed to by each of the promoters

The original copy (copies) of the Memorandum must be signed by the promoters and certified by two witnesses.

Step 3: The statutory meeting

The Statutory Meeting can be convened as soon as you register the Memorandum of Association. Its purpose is to:

  • Adopt the regulations (i.e. Articles of Association) of the company
  • Ratify any contracts entered into by the promoters or any expenses incurred by the promoters in promoting the company
  • Fix the amount to be paid to the promoters
  • Fix the number of preference shares (if any) to be issued, and the nature and extent of the preferential rights accruing to them
  • Fix the number of ordinary shares or preference shares to be allotted as fully or partly paid up otherwise than in money, if any, and the amount up to which they shall be considered as paid up
  • To appoint the first directors and auditors and the fixing of their respective powers

Step 4: Registering the company

The application can be lodged at the Ministry of Commerce on the same day that the Memorandum of Association is registered, providing that the Statutory Meeting has already been convened. The application for registration must be lodged no later than three months from the date of the statutory meeting, or you will need to provide a satisfactory explanation for the delay.

The following details must be provided in the application:

  • The total number of shares subscribed or allotted (distinguishing ordinary shares from preference shares, if any)
  • The number of ordinary shares or preference shares allotted as fully or partly paid-up otherwise than in money, and in the latter case, the extent to which they are paid-up
  • The amount already paid in money on each share; the total amount of money received in respect of shares
  • The names, occupations and addresses of the directors and if the directors have, power to act separately, their respective powers and the number or names of the directors whose signature is binding on the company
  • The period for which the company is registered, if any has been fixed
  • The address of the principal office and of all branch offices and any other relevant particulars

It is at this stage of the registration process that Thai shareholders may be required to disclose the source of their investment (refer to separate blog post on this topic). If the company intends to purchase land then there may be additional scrutiny of Thai shareholders by staff of the Land Department.

The director of the company will also need to sign a statement attesting that each shareholder has paid his/her share subscription. Receipts must be signed by the director and mention, the name of the shareholder, the amount paid, the amount of shares purchased, the value per share and that the money is collected for payment of the capital. Shareholders appearing on the first shareholder list must also sign the receipt, whereas shareholders that subscribe at a later stage are only required to sign the share transfer documentation.

Step 5: Registering for corporate income tax and VAT

Once your company has been registered, and within 60 days of incorporation or the commencement of operations, you will need to apply for and obtain a company corporate tax ID card from the Revenue Department. This process can be completed online.

You must obtain the company Tax ID in order to open a corporate bank account. If a foreign director of a company lacks a work permit, then the bank will generally request that the application documents for the opening of the company corporate account be co-signed by a Thai director.

Any business having a turnover of more than 1,800,000 THB per annum, and that is not subject to the Special Business Tax, must register for VAT within 30 days of the date they reach 1,800,000 THB in sales. In addition, should you wish to obtain a work permit then you will need to immediately register your company for VAT (more information about VAT).

The fees imposed by the Thai government in relation to the registration of a private Thai limited company are currently as follows:

ITEMGOVERNMENT FEESSTAMP DUTY
Registering company nameNo charge10 THB
Filing Memorandum of Association50฿ per 100,000 THB of capital; minimum 500 THB, maximum 25,000 THB200 THB
Statutory MeetingNo charge
Company registration5,000 THB per million baht of capital up to 250,000 THB400 THB
Tax ID registrationNo charge10 THB
VAT registrationNo charge10 THB

Source: https://thailand.acclime.com/

How to begin a business in UAE Free Zone

How to begin a business in UAE Free Zone

Staring an own business in the free zone is very simple and hassle-free. It is because the authorities of free zone only require less duration, minimal paperwork, and fewer efforts.

If you want to set up your business in the free zone of UAE, you must come with a perfect vision. Each business requires a vision. To turn your vision into true is a dream of each person. When you decide to open your own business, you require creating an excellent business idea. Dubai is a UAE city where you can find out an array of free zones to do a trade. Along with this, it also includes free industrial zones which are ideal for the potential investors who like to make more profit out of the investments. In short, Dubai is very healthy with an extensive range of new and other sectors of companies. There are lots of firms globally want to set up their business or company in Dubai. Here are main steps to free zone company setup in Dubai as follow.

Steps to begin your company in free zone

This passage let you know the simple process of starting a company in the free zone. It is significant to know that the authorities of every free zone come with their own regulations and rules. Apart from that, they have their unique setup procedure. The following are common steps of business set up in Dubai:

  • Establish the legal entity type
  • Select your trade name
  • Apply for your business license
  • Select a business space
  • Acquire pre-approvals, get the license and register the business

Decide the type of entity

It is an initial step for setting up a company in the free zone. In the free zone, you can start any one of the following two different kinds of firms, including:

  • FZE (Free Zone Establishment)
  • FZ Co (Free Zone Company)

The shareholder numbers will vary from one type of company to another. FZE needs one shareholder and FZ Co requires more than one shareholder. All kinds of free zones do not register both the two types of business.

Select your trade name

Choosing a trade name is the second step for setting up your business in the free zone. In most of the instance, you can ensure that the selected name is already registered or not with free zone authority.

Select your business activity

In free zone, you can select from more than three thousand business activities that range from more than hundred sectors like shipping, diamonds, gold, commodities, aviation, and energy, professional services, financial services, personal services, community services, FMCG, constructions, technology, media, education and much more.

Acquire initial approval

The business form in every free zone is actually following the rules and regulations of the respective free zone. For acquiring the approvals, you require applying with the documents. The documents list differs from one kind of business activity and company type as well as needs of free zone authority.

Select the office space

It is always helpful to know the dubai freezone company setup cost before leasing or buying a business space in the free zone. You can select the office space based on the number of works and kind of business activity. If you have a limited budget, you can prefer cheapest freezone in dubai.

Acquire the license

The final step is to get the approval. After that, you require paying license fees and registration fees. If you already know the business setup in Dubai cost, you can avoid many unwanted hassles. These are simple steps for uae free zone company formation. By following the steps, you can set up your business in a free zone without facing any difficulties.

Source: thriveglobal,com