Limited Liability Company (LLC) in Saudi Arabia

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Introduction

A Limited Liability Company (LLC) in Saudi Arabia is a legal entity formed by one or more shareholders and is a corporate structure that protects its owners from being personally pursued for repayment of the company’s debts or liabilities.

Ownership

An LLC can be owned by one or more individuals or entities. Shareholders’ liability is limited to their capital contribution, providing personal asset protection.

Management

An LLC is managed by one or more managers appointed by the shareholders. The managers can be shareholders or third parties.

Registration

To register an LLC in Saudi Arabia, the shareholders must prepare and submit the company’s articles of association, obtain a commercial registration certificate, and fulfil other legal requirements.

Taxation

An LLC is subject to corporate income tax on its profits. The standard corporate tax rate in Saudi Arabia is 20%.

Legal Entity

An LLC is a separate legal entity from its shareholders, which means that it can enter into contracts, own assets, and incur liabilities in its own name.

Liability

Shareholders are not personally liable for the debts and obligations of the LLC, except to the extent of their capital contribution.

Capital Requirements

There is no minimum capital requirement for setting up an LLC in Saudi Arabia. However, the capital must be sufficient to achieve the company’s objectives.

Profit Distribution

Profits of an LLC can be distributed to shareholders as dividends. Dividends distributed to non-resident shareholders may be subject to withholding tax.

Conversion and Dissolution

An LLC can be converted into another type of company structure, such as a joint stock company, and can be dissolved through a formal legal process.

Restrictions

Certain activities in Saudi Arabia, such as banking, insurance, and telecommunications, may require specific licenses and are not permitted for LLCs.
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