Doing Business In Saudi Arabia - Bna

Another service is the Gold Key Service, which is a personalized and targeted
matchmaking service that combines orientation briefing, a profile of each Saudi
prospect, interpreter services for meetings, a local Commercial Specialist to escort you
to your meetings, and assistance in developing follow-up strategies.
Saudi law is based on the Islamic Shari'a and differs considerably from U.S. practice.
Nonetheless, the Saudi Government has earmarked nearly $2 billion to overhaul its
judicial system and court facilities in an effort to streamline the legal process. A Royal
Decree M/78 dated October 1, 2007 was promulgated, approving the Charter of
Judiciary system, and the Grievances Board Charter, and implementing work
mechanisms. U.S. firms contemplating an agency or a distribution agreement are
advised to consult with a local attorney.
Establishing an Office Return to top
The procedures to follow in establishing an office in Saudi Arabia differ according to
the type of business undertaken. The most common and direct method of establishing
an office is simply to appoint an agent/distributor, who can set up the office under its
own commercial registry. The agent/distributor agreement should be registered with
the Ministry of Commerce & Industry as previously described. The Commercial
Agency regulations govern the agent/distributor agreement.
A second method might be to establish a technical and scientific service office, which
also requires a license from the Ministry of Commerce and Industry. This approach
preserves the independence and identity of the foreign company and provides for
more leeway in managing and marketing the company’s products or services. Foreign
companies may apply for permission to open a technical and scientific service office
with the Ministry of Commerce and Industry. Technical and scientific service offices
are not allowed to engage directly or indirectly in commercial activities, but they may
provide technical and advisory support to Saudi distributors as well as conduct market
surveys and product research.
A third method is to establish a branch office. Under the new Foreign Investment Act,
the requirements and procedures for establishing a foreign branch office have been
eased. Foreign companies may set up a wholly foreign-owned Saudi branch office to
engage in any government contract or private sector work depending on the office
license and scope of activities. Foreign companies that are contracted to do work for
the Saudi Government must obtain a temporary commercial registration from the
Ministry of Commerce and Industry, and then proceed to establish a branch office.
Under certain circumstances, a foreign company may apply for a permanent
registration if it wishes to engage in permanent business in Saudi Arabia.
A fourth method is to establish a representative (or liaison) office. This is normally
granted only for companies that have multiple contracts with the Government and
require a local office to oversee contract implementation. Representative offices are
not allowed to engage in direct or indirect commercial activity in the Kingdom.
Establishment requires a license from the Ministry of Commerce and Industry.
5/13/2008