Setting up a branch office in Saudi Arabia Permanent Branch in KSA

Permanent Branch Saudi Arabia

A Permanent Branch is a conventional branch which would be considered as an extension of the parent office. The minimum start-up capital to satisfy MISA ‘s initial requirements would commonly be approximately SAR 500,000.

The main advantages of a Permanent Branch are:

  • Depending on the circumstances, it may be the quickest to establish
  • The formation process is generally similar to that of a limited liability company
  • No new articles of association are needed
  • It can have the full range of activities
  • It can engage in projects in both the public and private sector (in accordance with approved objects)
  • It may promote and solicit approved business throughout KSA

The main disadvantages of a Permanent Branch are:

  • Requires a minimum share capital of SAR 500,000 which may increase depending on the business activities.
  • Saudi-owned entities, or entities involving substantial Saudi participation, are likely to be preferred for government contracts
  • Its activities are limited to the licensed objects approved by MISA
  • There is a general expectation that substantive income producing activities will be undertaken
  • It is not able to conduct promotion, marketing and trading activities (as a minimum 25% Saudi equity participation is required for these activities together with significantly greater capitalization)
  • It cannot be formed solely to engage in representation or promotional activities
  • The parent company cannot quarantine liability in KSA and may be exposed in its place of incorporation
  • No other shareholders share the financial burden of capital requirements and setting up costs.

Contact us!