Branch vs. Subsidiary: Choosing the Right Model for Your Clinic in KSA

The healthcare sector has always been a top-most priority for the Saudi Government. As a dominant realm of Saudi Vision 2030 strategy, KSA has also started taking proactive steps, from implementing PPPs (Public Private Partnerships) to AI (Artificial Intelligence), the Saudi Government is all set to rigorously identify the key issues and transform the nation’s healthcare ecosystem in the impending years. Additionally, increasing investment and expanding the budget of the healthcare sector in KSA in the last decade is a witness to its enlarging scale. The scope for healthcare business setup in KSA has also widened by virtue of encouraging measures taken by the Saudi Government toward healthcare infrastructure and its development.

Today, one can obtain KSA healthcare licenses, including hospital licenses, general polyclinic licenses, radiology center establishment licenses, laboratory establishment licenses, clinic licenses, and many others, following certain government procedures.

In this article, we have brought a comprehensive guide on setting up a branch or subsidiary of a foreign clinic, what license one needs to acquire for clinic setup in KSA, what the prerequisites are, and much more.

What is a Branch Office Setup in Saudi Arabia?

A branch office is a prominent form of business setup that foreign companies can opt for to expand their current business endeavor in KSA. To open a branch office in KSA, you require a license approved by MISA, i.e., the Ministry of Investment.

The Kingdom of Saudi Arabia; however, with certain restrictions; allows a foreign company to set up a wholly owned branch office. It should be noted that KSA-based branch offices can operate only in commercial or administrative scope, but not for trading activities, whether public or private sector.

It’s more like a liaison office of a foreign company that requires the appointment of one legal representative in KSA. Forming a branch is easier than setting up other business forms in the Kingdom as it allows you to enjoy certain perks, such as no requisites for AOA (Article of Association), minimum reserve, etc., over other forms of the establishment.

The financial and other liabilities and business operations of a branch office in KSA are limited to foreign companies. Moreover, its incorporation process is congruent with the LLC (Limited Liability Company) set up in Saudi Arabia.

What is a Subsidiary in Saudi Arabia?

A subsidiary or child company is a type of business entity bought by another business/company, also known as a holding or parent company, that owns and controls the former one. Many foreign investors and entrepreneurs choose to set up a subsidiary in KSA for various business activities nowadays.

The share capital requirement for the subsidiary in the form of a private limited company varies and it’s best to check in with professional business setup consultants beforehand. Generally, it takes a minimum of 2 months including the time frame for the approval and issuance of the required license to establish a subsidiary company.

It should be noted that the subsidiary and its parent company are separate legal entities; however, the parent company’s management takes decisions on behalf of the subsidiary. Moreover, the subsidiary company is also required to report to the parent periodically.

How to set up a Branch or Subsidiary of a Clinic in Saudi?

 

A) Medical Clinic Licensing Guide in KSA: 

1. i) The medical clinic license requires the following:

• The commercial registration from the Ministry of Commerce and Investment
• Location suitability approval from the Ministry of Municipal & Rural Affairs

1. ii) One can easily apply for the clinic setup license in KSA through the SEHA portal which asks for documents such as a copy of the investor (Physician) ID and a copy of the lease or title deed.

iii) Approval of the Directorate of Health Affairs’ medical cadres and submit it to the Ministry of Labor and Social Development.

1. iv) The physician must also obtain a permit from the Ministry of Municipal and Rural Affairs.
2. v) Submit the documents mentioned-below to obtain the medical clinic establishment license:

• A copy of the Ministry of Municipal and Rural Affairs permit.
• Copies of the classification of medical cadres issued by the Saudi Commission for Health Specialties.

1. vi) Once the designated authorities and government departments inspect all the documents, facility site, equipment, required medical cadres, etc., the issuance of a clinic license takes a maximum of five working days.

Required Medical Cadre for Clinic Setup in KSA

Clinic establishment in KSA asks for at least one nurse and a supervisor who should be a Saudi Physician and specialized in a similar field.

B) How to Set Up a Branch of a Foreign Clinic in Saudi Arabia?

The parent company planning to open a branch office in KSA needs to obtain the license issued by SAGIA (Saudi Arabian General Investment Authority) by submitting the documents listed below:

1. A copy of the company’s COI (certificate of incorporation)
2. Copies of the holding company’s AOA and MOA (Articles and Memorandum of Association)
3. Power of attorney attested by the Saudi consulate
4. Prescribed fees payment

C) How to Establish a Subsidiary of Foreign Clinic in Saudi: Process 

The company applying to establish a subsidiary in Saudi Arabia must consider the important aspects mentioned as under:

1. Saudi subsidiary must have a local registered address
2. AOA (Articles of Association) of the subsidiary is mandatory
3. Local bank account opening
4. Requirement for the registration with zakat and tax authority
5. Application for the SAGIA and clinic license issuance 
6. Fulfill the requirement of procuring the company seal and membership in the Chamber of Commerce

Conclusion:

Research shows that Saudi Arabia holds the highest GDP share on healthcare expenses compared to other GCC nations. Moreover, the health sector of KSA is also on the radar of foreign investors and entrepreneurs nowadays.

All in all, you must have obtained a comprehensive idea. How to set up a branch or subsidiary of a foreign clinic in Saudi Arabia. Are you still finding further solutions? Don’t hesitate to get in touch with one of our professional business setup consultants! 

At Business Link, we are here to guide you on underlying rules, regulations, and laws defined by the Saudi Government that you must consider before establishing your medical clinic in the country.