LLC vs SJSC vs JSC vs branch: choosing a Saudi vehicle
Once your MISA registration is in hand, the next decision shapes governance, capital and whether you can ever list. The 2023 Companies Law gives foreign investors five forms — here is the decision matrix, with the capital floors and the one question that usually settles it.
Royal Decree M/132 and a single corporate code
Saudi company law is governed by the Companies Law, Royal Decree No. M/132, dated 1/12/1443H (30 June 2022), in force since 19 January 2023 with Executive Regulations issued by the Ministry of Commerce (MoC). It replaced both the 2015 Companies Law and the 2019 Professional Companies Law, pulling commercial, non-profit, family and professional entities under one code. Existing companies had a two-year grace period to align.
Article 4 sets out five statutory forms: the general partnership, the limited partnership, the joint stock company (JSC), the simplified joint stock company (SJSC) — the headline innovation of the reform — and the limited liability company (LLC). For a foreign investor, the practical shortlist narrows to four vehicles: the LLC, the SJSC, a branch of the foreign parent, and — for a single government contract — a temporary investment licence. A JSC enters the picture for large ventures and listings.
The vehicle decision follows the MISA registration and precedes almost everything else, because it determines governance, how you raise capital, and whether a public listing is ever on the table. Getting it right at incorporation is far cheaper than restructuring later.
The four vehicles foreign investors actually weigh
| LLC | SJSC | Branch | Temporary licence | |
|---|---|---|---|---|
| Best for | Operating businesses, JVs, holdings | Startups, capital raising, IPO prep | Extending a foreign parent | Delivering one government contract |
| Shareholders | 1 or more (Art. 156–157) | 1 or more (Art. 139) | Parent (no shares) | Parent (no shares) |
| Minimum capital | No statutory floor* | No statutory floor (Art. 139) | None (parent-backed) | Not applicable |
| Share classes / listing | Single class; cannot list | Multiple classes; IPO-ready after conversion | — | — |
| Governance | Flexible, simple | Flexible; no mandatory board | The parent's | Scoped to the contract |
| Watch-out | Share transfers less fluid | Newer — define more in the bylaws | Limited to the parent's activities | Ends with the contract |
* The Companies Law sets no statutory minimum for an LLC or SJSC. But MISA applies activity-based expectations in practice — a foreign-owned LLC is commonly expected to show around SAR 500,000 — and regulated sectors and trading (SAR 30 million for 100% foreign ownership) impose their own thresholds. “No legal floor” is not “no capital.”
Flexible, cheap, and now single-shareholder
The limited liability company is where most foreign investors land. Under M/132 it carries no statutory minimum capital (the old SAR 500,000 floor for foreign-owned LLCs is gone), offers limited liability and flexible management, and is inexpensive to run. The reform removed two old frictions: single-shareholder LLCs are permitted (Articles 156–157), and a single-shareholder LLC may now own another single-shareholder LLC — useful for holding structures. The 50-shareholder cap of the old regime is lifted.
The LLC fits operating businesses, joint ventures and holding companies. Its limits are real but narrow: it cannot offer shares to the public or list, and share transfers are less fluid than in a joint-stock form, typically subject to pre-emption rights and partner consent. For a company that will stay privately held, none of that bites; for one planning funding rounds, it points toward the SJSC.
Article 139, and the vehicle the reform created
The Simplified Joint Stock Company (SJSC) is the reform's signature addition, designed for startups, venture capital and growth companies. Article 139 is explicit that the JSC minimum-capital requirement does not apply to it — so it has no statutory minimum capital. It can be formed by a single shareholder, needs no mandatory board of directors, external auditor or general assembly, and lets the articles of association govern quorum, voting and decision-making with wide flexibility.
Multiple share classes
Different classes of shares with varying rights — the mechanism VC and founders need for preferences and options.
No capital floor
Unlike the closed JSC (SAR 500,000) or professional/public JSC (SAR 10,000,000), the SJSC has no legislated minimum.
Light governance
One or more directors, no mandatory board or general assembly — faster and cheaper than a JSC.
A path to listing
It cannot offer shares to the public without first converting to a JSC — a natural upgrade path as it grows.
If you will raise outside capital — or a listing is even a distant possibility — the SJSC's share classes and governance flexibility make it the cleaner start. For a plain operating business with no funding plans, the LLC is simpler still.
Closed and public joint stock companies
The joint stock company is the vehicle for large ventures, institutional investment and public listings. The closed JSC (CJSC) carries, under Article 59, a minimum issued capital of SAR 500,000, with at least one quarter — SAR 125,000 — paid up at incorporation. The reform allows single-shareholder JSCs (previously a minimum of five founders was required) and reduced the old SAR 5 million floor. A JSC must have a board with suitable financial and administrative experience and heavier governance than an LLC or SJSC.
The public JSC (PJSC) — one seeking a listing on the Tadawul exchange or conducting a public offering — requires a minimum capital of SAR 10,000,000 and falls additionally under Capital Market Authority (CMA) regulation. For most foreign entrants the JSC is a destination they grow into, usually by converting an SJSC or LLC, rather than a starting point.
Extending a parent, or executing one contract
Extend the parent
- An extension of the foreign parent, not a separate company
- Limited to the parent's activities; no separate share capital
- Parent-backed, with its documents attested and legalised
- Suits a foreign company operating under its own name for a defined scope
Deliver one contract
- For a specific Saudi government or quasi-government contract
- Execute that contract for its duration, without a permanent entity
- Useful for defined-scope projects
- Not a substitute for a base if you intend to stay
A full JSC (SAR 500,000, heavier governance) is the route for large ventures and Tadawul listings; the RHQ is a separate MISA licence for regional management functions, with its own 30-year tax deal and substance rules — covered in our RHQ guides. Professional firms (law, audit, engineering) now incorporate under M/132 too, the 2019 Professional Companies Law having been repealed, typically needing at least two qualified partners.
You are not locked in
The Companies Law expressly permits conversion between structures, which matters because the right vehicle at seed is rarely the right one at scale. Converting an LLC or SJSC to a closed JSC generally requires a shareholder resolution (typically a 75% majority, or as the articles provide), draft articles in JSC form, and — if the paid-up capital is below SAR 500,000 — a capital increase to meet the Article 59 floor. The natural pathway is LLC or SJSC first, then JSC when a listing or institutional round demands it. Planning the conversion trigger at incorporation avoids a scramble later.
Three questions settle it
Will you raise outside capital?
If yes — or a listing is even possible — the SJSC's share classes and governance flexibility make it the cleaner start. If not, the LLC is simpler.
Extend, or build standalone?
Extending an existing foreign company under its own name points to a branch. Building a standalone Saudi business points to an LLC or SJSC.
One contract, or a flag?
Delivering a single government contract can be done on a temporary licence. Planting a lasting presence needs a permanent entity.
Questions we get asked first
Which vehicle is most common for foreign investors?
The LLC. Under the 2023 Companies Law (M/132) it has no statutory minimum capital, allows single-shareholder ownership (Articles 156–157), gives limited liability and flexible management, and suits most operating businesses, joint ventures and holdings. 100% foreign ownership is available for eligible activities.
What is the minimum capital for a Saudi company?
There is no statutory floor for an LLC or SJSC (Article 139 exempts the SJSC from the JSC minimum). A closed JSC requires SAR 500,000 issued capital with SAR 125,000 paid up (Article 59); a public JSC requires SAR 10,000,000. MISA still applies activity-based expectations in practice — commonly around SAR 500,000 for a foreign-owned LLC — and trading carries a SAR 30 million bar.
What is an SJSC, and who is it for?
The Simplified Joint Stock Company, introduced by M/132. With no minimum capital (Article 139), flexible governance, no mandatory board, multiple share classes and single-shareholder formation, it suits startups, VC-backed companies and anyone planning funding rounds or a future listing. It must convert to a JSC before offering shares to the public.
Can a single person own a Saudi company?
Yes. The 2023 Companies Law permits single-shareholder LLCs (Articles 156–157), single-shareholder SJSCs and even single-shareholder JSCs, and a single-shareholder LLC may own another.
When would I use a branch or a temporary licence?
A branch extends an existing foreign parent under its own name, limited to the parent's activities, with the parent's documents attested. A temporary investment licence lets a foreign company deliver a specific Saudi government contract without a permanent entity.
Can I change my company form later?
Yes. The Companies Law permits conversion — typically a 75% shareholder resolution and, for a conversion to a closed JSC, a capital increase to the SAR 500,000 minimum. The common path is LLC or SJSC first, converting to a JSC when a listing or institutional round requires it.
What governs a professional firm like a law or engineering practice?
Since the 2019 Professional Companies Law was repealed, professional firms incorporate under the Companies Law (M/132), typically as a professional company with at least two qualified partners, plus the relevant professional-regulator licence on top of the CR.
Does the Investment Law decide my company form?
No. The Investment Law (M/19) governs entry — the MISA registration; the corporate form is governed by the Companies Law (M/132). The two work together: register with MISA, then incorporate the chosen vehicle.
Pick the vehicle around your plans, not the paperwork
The right form under M/132 follows three things: whether you will raise capital, whether you are extending a company or building a new one, and whether you are delivering one contract or staying. Answer those and the choice is usually obvious — the LLC for most operating businesses, the SJSC where outside capital is in view, a branch to extend a parent, a temporary licence for a single project, and a JSC as a destination to grow into. Get it right at incorporation, plan the conversion trigger, and you avoid the far costlier job of restructuring later.
Not sure which vehicle fits?
We match the structure to your capital plans and activity under the 2023 Companies Law — and to whether you are staying or delivering a single project.
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This article is general information, current as of 2026, and is not legal or tax advice for any specific situation. Confirm current rules and official Arabic texts with the relevant authority before acting.