Converting an enterprise into a company in the Kingdom of Saudi Arabia is one of the most important issues currently because the government inside the Kingdom aims and encourages the privatization of companies and institutions owned by the state as part of the economic reform plan, meaning that anyone can convert his own enterprise into a company in the Kingdom of Saudi Arabia, this conversion It plays an essential role in developing commercial activity and achieving an increase and prosperity in funds, and converting the institution into a company will enable it to benefit from tax exemptions and legal protection and increase the ease of compliance with local laws and regulations.
The government within the Kingdom of Saudi Arabia aims to increase the conversion of the establishment into a company within the efforts of economic reform within the country, but before mentioning the method and method of conversion, it is necessary to identify the difference between the establishment and the company.
Institutions in the Kingdom gradually work to help them in some specific issues that have various goals, including social, professional and educational, while companies are limited to selling products because they are a small institution whose goal is to carry out some business of a commercial nature in order to obtain money through the profits that it achieves.
An institution according to the Saudi system is a large facility built according to a strong and solid economic foundation. It was established with the aim of exchanging products, or it was built for legal purposes, or to support an educational, social or other cause.
The company, according to the Saudi system, is an economic entity based on an incorporation contract that takes place between two or more persons and is binding on both of them, according to which both of them contribute to a project to achieve profit. Profits and losses for the contractors.
The procedures for establishing the establishment differ from the procedures for establishing the company in the following, the difference between them:
In order for the establishment to be established, the applicant for the incorporation must submit all papers related to proof of identity attached to the application form for the establishment of the establishment, as well as he must specify the type of establishment he wishes to build and also provide the insurance of the commercial registration of the establishment, its location and its status, whether it is ownership or rent.
In order for a company to be established, the type of company, its objectives, and the nature of the work within it must be determined, and it must be named with a name that is not similar to other companies. It is also necessary to adhere to all laws specific to work according to the type of company and the type of work within it.
If there is a desire to convert the establishment into a company, there must be full knowledge of the necessary steps to carry out the conversion. The following are the steps necessary to convert an establishment into a company in the Kingdom of Saudi Arabia:
Obtaining a commercial register for the establishment.
Go to the Ministry of Commerce and Economy in order to obtain the company’s founding contract.
Ratification of the company’s memorandum of association through an accredited lawyer or through a notary.
An invoice will be issued and the additional fees mentioned in the invoice will be requested.
Finally, a commercial register for the new company is issued.
The demand for lawyers and legal advisors specialized in companies and the commercial field within the Kingdom of Saudi Arabia has increased with the increase in commercial activity, as well as with the increase in the number of institutions working to convert to a company, as the lawyer provides the information and support necessary to implement the conversion process correctly, successfully, easily and quickly at the same time. It is possible to seek the assistance of a group of lawyers in this field through the Rahn Law Firm.
Recently, the Kingdom of Saudi Arabia witnessed a great interest in the idea of converting institutions into companies. This interest appeared as a result of the government’s encouragement to privatize companies and part of the institutions that have ownership. When transferring from an institution to a company, there are conditions that must be met in order for the transfer to take place from an institution to a company. :
Go to the building of the Ministry of Commerce and Economy in the Kingdom of Saudi Arabia to bring the commercial register of the establishment, because this contract is the one that will be concluded through the establishment of the company contract.
The contract must be authenticated by a specialized lawyer who has been appointed in advance or by a notary.
All expenses must be paid in order for the transfer to a company to take place. Upon payment, an invoice will be obtained containing all the expenses that have been paid.
There is a big question, which is better, institutions or companies, and the answer to this question is if the main objective of the project is to achieve profits, then it is better to establish and create a company because of the additional profits that it achieves, while if the objective of the project is to implement educational or social goals besides the profits, then it is It is best to establish a foundation.
Form for converting the establishment into a company in Saudi Arabia
A set of forms submitted by the Saudi Ministry of Commerce can be obtained through its website.
The Ministry, which has responsibility for trade within the territory of the Kingdom of Saudi Arabia, has opened an opportunity for visitors to its website to see a set of forms. These forms help transfer institutions to different companies, regardless of the type of company, whether it is a partnership, partnership, joint stock or other company.
This is done within the framework of the authorities inside the Kingdom facilitating the process of converting institutions into companies within the plan of the great economic reform in the Kingdom, and the Ministry provides an opportunity for a person to cooperate and appoint a lawyer, provided that he is a specialist.
That is, it is possible to cooperate with a lawyer who has great experience in the procedures for issuing the companies’ incorporation contract, and he must have great knowledge of all the systems and conditions related to ownership, because of the great knowledge that he has, he will help his client in drafting the contract legally and correctly, and he is also entitled to represent his client In all the legal procedures related to this process and he can collect and prepare the documents required to complete the process of converting the establishment into a company.
Payment of fees is one of the basic requirements for the conversion process, so it is important to know the total cost of converting the establishment into a company inside the Kingdom. The required financial cost can be determined as follows:
The cost of renewing the commercial registry is one thousand two hundred Saudi riyals. The cost of amending the commercial registry is also added, which costs approximately one hundred Saudi riyals.
There are additional fees for electronic publishing, the value of which is approximately five hundred Saudi riyals, and the added tax fee is added to it.
There are fees related to the Chamber of Commerce, the value of which is calculated according to the period specified for the validity of the company that will be established.
If a lawyer is hired, the cost of legal advice that has been agreed upon will be added.
It is not possible to determine the cost of electronic services accurately and specifically, due to the presence of many factors that affect the amounts due and related to legal fees, and the most important of these factors is the duration and size of the case, and the experience and competence of the lawyer affects the cost as well, due to the increase in his fees as his experience increases And his efficiency, but his fees can be negotiated with the lawyer before carrying out the actual procedures.
