Saudi Arabia’s Vision 2030 economic reforms have significantly liberalized foreign ownership rules. The New Investment Law allows foreigners to own 100% of a company in most sectors. This historic change aims to attract more global investment and diversify the Kingdom’s economy (beyond oil).
Although more sectors have now been opened, you still need to navigate certain regulations as a foreign investor. This includes obtaining a MISA license, Saudization, and adhering to UBO (Ultimate Beneficial Ownership) rules, and more.
In this article, we will talk about foreign ownership rules and restrictions in Saudi Arabia. We will talk about sectors that are open for foreign ownership, what you need to legally operate a business in the Kingdom, as well as requirements for establishing a business as a foreigner.
Understanding Saudi Arabia’s Business Landscape for Foreigners
Historically, foreign ownership for companies in Saudi Arabia was capped at 25%, and required local partners to legally operate in the Kingdom. However, reforms led by Saudi Arabia’s Vision 2030 in 2016 have significantly shifted foreign ownership regulations.
Legal Framework for Foreign Ownership for Businesses
Effective from February 2025, the New Investment Law in Saudi Arabia fundamentally allows you to have 100% ownership of businesses across multiple sectors. Administered through the Ministry of Investment Saudi Arabia (MISA), it allows you to establish Limited Liability Companies (LLCs) and/or Joint Stock Companies in the Kingdom. Foreign investors can enjoy equal treatment in establishing a legal entity including protection of property rights, contract enforcement, and the ability to fully repatriate profits and capital without restrictions.
Benefits of 100% Foreign Ownership for Companies
Supporting Saudi Arabia’s Vision 2030, the New Investment Law helps shape an investor-friendly environment for foreign investors in the Kingdom. Besides 100% foreign ownership, here are benefits of foreign ownership for companies:
- Profit repatriation: you can freely repatriate profits and capital without restrictions, enhancing cash flow management and reducing financial risk.
- Equal legal treatment: The law guarantees foreign investors equal rights and protections as local companies, including property rights, contract enforcement, and dispute resolution.
- Access to incentives: qualify for Saudi market incentives such as tax exemptions, reduced corporate tax rates, and customs benefits.
- Expanded sector opportunities: enter crucial sectors such as technology, manufacturing, retail, and services, supporting diversification away from oil dependency.
- Streamlined licensing and registration: MISA provides clear, efficient licensing processes that makes obtaining licenses and permits more predictable.
- Real estate ownership rights: Under the complementary 2025 Real Estate Ownership Law, foreign companies can acquire real estate in designated zones for business operations and employee housing, boosting operational infrastructure access.
Sectors Open to Foreign Ownership in Saudi Arabia in 2025
Under the New Investment Law, several business sectors are now open to 100% foreign ownership to diversify the economy and attract global investment. Here are the key sectors where you can have 100% foreign ownership:
- Information Technology (IT) and Communications
- Healthcare Services
- Education and Training
- Manufacturing and Industrial Projects
- Entertainment and Media
- Hospitality and Tourism
- Logistics and Supply Chain Services
- Retail and Wholesale Trade (with specific capital and regulatory conditions)
- Real Estate Development (with geographic restrictions, excluding Makkah and Madinah)
Sectors that Remain Restricted or Prohibited from Foreign Investment
Despite the changes brought about by the New Investment Law and Vision 2030, there are still sectors that remain restricted or partially restricted under the “Negative List”. These include the following:
Prohibited Sectors (No Foreign Ownership Allowed)
- Oil exploration, drilling, and production (generally prohibited due to national security)
- Military and security-related services
- Real estate ownership in the holy cities of Makkah and Madinah (ownership restricted to Muslims only; foreigners cannot fully own property in these cities)
- Tourist services directly related to Hajj and Umrah pilgrimages
- Fisheries and marine resource hunting activities (to protect local marine ecology and resources)
Restricted or Partially Restricted Sectors
- Certain healthcare services including midwifery, nursing, and physical therapy are subject to special licensing and restrictions due to their sensitive nature
- Certain forms of real estate ownership outside holy cities require licensing and localization, especially related to investment purpose and zone (new reforms have liberalized ownership in designated zones but with regulatory approvals)
- Recruitment services and employment agencies have operational restrictions on foreign ownership to promote Saudization and local employment priorities
What are Requirements to Obtain 100% Foreign Ownership in Saudi Arabia?
Obtaining a MISA License
A MISA license or a MISA Investment License is the official authorization granted by the Ministry of Investment Saudi Arabia. Obtaining the MISA license is mandatory for foreign investors and is central to unlocking full business rights in Saudi Arabia.
Applications are submitted online through MISA’s e-portal, where the Ministry reviews the application. This vetting process may involve background checks and requests for additional information on top of the documents provided during application.
To further streamline the process, MISA has reduced approval times from 3-6 weeks to 5-10 business days in line with Vision 2030.
Saudization (Nitaqat) Regulations
Saudization, enforced through the Nitaqat program, is Saudi Arabia’s national employment policy designed to increase the participation of Saudi nationals in the private sector workforce. The program sets mandatory Saudization quotas that vary by sector, company size, and industry.
Under the Nitaqat system, companies are classified into categories (Platinum, High Green, Mid Green, Low Green, and Red) based on the percentage of Saudi employees they hire relative to total staff. Platinum companies have the highest Saudization levels, while Red companies are the lowest.
Compliance with Saudization is critical for maintaining licenses, enabling you to issue visas for expats, and qualify for government contracts. Non-compliance can result in penalties such as blocked access to Ministry of Labor services, fines, and restrictions on renewing work permits or commercial registrations.
UBO (Ultimate Beneficial Ownership) Rules
Effective from April 3, 2025, Saudi Arabia’s UBO rules require all companies operating in the Kingdom (except publicly listed, state-owned, or liquidating entities) to disclose and maintain accurate information about their ultimate beneficial owners.
UBO is defined by law as any natural person who directly or indirectly meets the following criteria:
- Owns at least 25% of the company’s capital
- Controls 25% or more of voting rights
- Has the power to appoint or remove a majority of the board of directors or managers;
- Or can otherwise influence decision-making in the company.
The objective of this regulation is to enhance corporate transparency, align with international standards such as those set by the Financial Action Task Force (FATF), and prevent illicit activities like money laundering and tax evasion. Companies must submit UBO details during licensing and registration with the Ministry of Commerce and maintain updated records, reporting any changes within 15 days. Failure to comply can result in penalties up to SAR 500,000.
If a beneficial owner cannot be identified, the company’s manager, board members, or chairman are considered the UBO. The Ministry of Commerce manages a centralized UBO registry, improving regulatory oversight and corporate governance.
What do you Need to Establish a Company as a Foreigner in Saudi Arabia?
To establish a foreign-owned company in Saudi Arabia, several key documents are required to complete the registration process. These documents ensure that you meet both legal and regulatory compliance, local employment policies, and commercial standards under the New Investment Law
- For Individual Shareholders:
- Valid passports with minimum six months validity
- Saudi residence permit (Iqama), if applicable
- KYC (Know Your Customer) forms with personal and financial details
- Proof of address such as recent bank statements or utility bills
- For Corporate Shareholders:
- Parent company Certificate of Incorporation
- Memorandum and Articles of Association of the parent company
- Board resolution approving the Saudi investment
- Notarized Power of Attorney authorizing representatives
- Audited financial statements for the past two years
- Business Documents:
- Memorandum and Articles of Association for the Saudi company
- Comprehensive business plan with financial projections
- Three proposed trade names ranked by preference
- Property Documents:
- Lease contract registered with Ejari (official tenancy system)
- The leased premises must have a commercial zoning and be compatible with licensed activities
To streamline the incorporation process, Emerhub provides end-to-end corporate services from the registration process, obtaining necessary licenses and post-incorporation requirements. With our expertise in local and administrative processes, we can minimize delays, mitigate compliance risks, and ensure a smooth entry into the Saudi market.
Expand your business in Saudi Arabia with Emerhub. Fill out the form below and talk to our local experts for a free consultation!
FAQs About Foreign Ownership Rules and Restrictions in Saudi Arabia
Both Saudi nationals and foreigners can fully own businesses under the New Investment Law, provided they obtain the appropriate license from the Ministry of Investment Saudi Arabia (MISA). Saudi nationals naturally have the right to 100% ownership, while foreign individuals and companies can now also fully own businesses in most sectors without requiring a local partner or sponsor.
As a foreign investors in Saudi Arabia, you can establish several corporate structures depending on their business goals and operational needs. The most common types of entities are:
- Technical and Scientific Services Office (TSSO): Designed for foreign companies providing specialized technical or scientific services that support their parent companies.
- Limited Liability Company (LLC): This is the most popular structure due to its flexibility and clear liability protection. LLCs can be 100% foreign-owned and offer limited liability to shareholders. They require a minimum capital based on the sector and activities.
- Joint Stock Company (JSC): Suitable for larger ventures, JSCs have shareholders with tradable shares and are subject to stricter regulatory and governance requirements. They can be public or private but allow foreign ownership within sector limits.
- Branch of a Foreign Company: This structure allows foreign companies to establish a presence in Saudi Arabia without creating a separate legal entity. It requires a foreign investment license and offers less operational autonomy than subsidiaries.
- Regional Headquarters (RHQ) and Representative Offices: These are suitable for foreign companies wanting a regional base mainly for managing subsidiaries or conducting marketing activities but cannot conduct commercial business directly.
Saudization affects foreign businesses by mandating a quota of Saudi nationals as part of the national labor localization policy, also known as the Nitaqat program. Meeting Saudization requirements is crucial for foreign businesses to maintain licenses, renew visas and work permits, and access government services and contracts. Saudization quotas vary by sector, company size, and the nature of the business, with certain professions requiring higher rates.
The commercial registration process for foreign-owned companies in Saudi Arabia begins after obtaining the Ministry of Investment Saudi Arabia (MISA) investment license, which authorizes full foreign ownership in permitted sectors. The key steps are:
- Trade Name Reservation: apply online via the Ministry of Commerce to reserve a unique company name compliant with Saudi guidelines.
- Preparation of Company Documentation: includes notarized Memorandum and Articles of Association outlining business objectives, shareholder details, and governance.
- Submission of Application: The complete company documents and required forms are submitted to the Ministry of Commerce for Commercial Registration (CR).
- Verification and Approval: The Ministry reviews the application for compliance with legal and sector-specific requirements. Additional approvals from other government bodies may be needed depending on the business activity.
- Issuance of Commercial Registration: Upon approval, the CR certificate is issued, legally allowing you to operate in Saudi Arabia.
- Post-Registration Obligations: you must register with the Saudi Chamber of Commerce, General Authority of Zakat and Tax (GAZT) for tax purposes, and obtain any additional licenses relevant to its business sector.
This process typically takes between 1 to 3 months depending on the complexity of your business and sector approvals.
