As the deadline approaches for companies to relocate their regional headquarters to the Kingdom of Saudi Arabia, many questions have arisen regarding the process of obtaining regional headquarters licenses and the requirements and restrictions associated with this transition.
In this article, we will explore the importance of regional headquarters, how to obtain licenses and necessary documents, as well as the conditions companies must meet to ensure a successful move to this vibrant economic market.
Regional Headquarters License:
Regional headquarters in the Kingdom of Saudi Arabia are established according to Saudi laws to provide support, management, and strategic guidance to their branches and subsidiaries in the Middle East and North Africa. The Regional Headquarters Program is a joint initiative by the Ministry of Investment and the Royal Commission for Riyadh City, inviting global companies to move their regional headquarters to the Kingdom of Saudi Arabia.
Requirements for Securing a Regional Headquarters License in Saudi Arabia:
What are the required documents to be submitted in an application for an RHQ License?
To obtain a foreign headquarters license in the Kingdom of Saudi Arabia, multinational foreign companies wishing to relocate their regional headquarters must follow these steps:
- A certified copy of the establishment’s commercial registration from the Saudi embassy.
- At least two commercial registers issued in different countries (excluding Saudi Arabia or the applying company’s registry) certified by the Saudi embassy in the relevant countries.
- Financial statements of the foreign company seeking the license, authenticated by the Saudi embassy in the concerned country.
Rules and Restrictions for Regional Headquarters License:
- Parent Company License:
The parent company must be licensed in two different countries, excluding Saudi Arabia and the country where the parent company is located.
- Independent Entity:
The regional headquarters must be established as an independent entity, separate from the multinational company’s entities, either as a company or a branch of a foreign company.
- Non-Different Commercial Activities:
IT is not allowed for regional headquarters to engage in business activities, that generate profits different from the activities specified in the license.
- Commencement of Mandatory Activities:
IT must commence mandatory activities, within a maximum period of six months from the date of obtaining the license.
- Optional Activities:
The regional headquarters must engage in at least three optional activities within one year of obtaining the license, and the applicant can choose these activities during the application process.
- Experience and Employees:
Employees responsible for mandatory activities at the regional headquarters must have relevant experience and skills, with at least three of them at the executive or deputy executive level.
- Number of Employees:
Employ at least 15 full-time employees to carry out the headquarters’ activities within one year of obtaining the license, including top executives.
Revocation of licenses for foreign headquarters :
- Non-compliance with local laws, regulations, and conditions applied by the Kingdom.
- Failure to adhere to the specific conditions of the regional headquarters license.
- Failure to initiate mandatory and optional activities, and failure to employ the minimum number of employees within the specified timeframe.
- Ceasing one mandatory activity or discontinuing at least three optional activities.
- Failure to fulfill the conditions upon which the regional headquarters license was granted by the regional headquarters or the parent company.
- Non-compliance with the values and conditions of investment issued by the Saudi Ministry of Investment (MISA).
What do mandatory activities for regional headquarters include?
Mandatory activities for regional headquarters encompass various administrative tasks and strategic direction for the regional headquarters. These activities include:
- Developing and monitoring regional strategy.
- Coordinating to achieve strategic alignment.
- Introducing products and services in the region.
- Supporting acquisition, merger, and investment withdrawal operations.
- Reviewing financial performance and establishing financial business plans and budgets.
- Coordinating business operations and identifying new market opportunities.
- Monitoring regional market, competitors, and operations.
- Developing a region-focused marketing plan.
- Providing operational and financial reports.
The optional activities that companies can undertake:
- Sales and marketing support.
- Human resources and employee management.
- Training services.
- Financial management, foreign currency exchange, and treasury management.
- Compliance monitoring and internal control.
- Providing accounting and legal services.
- Auditing, research, and analysis, logistics services.
- Exporting and importing raw materials.
- Conducting operations related to information technology systems networks.
- Utilizing raw materials and financial resources.
- Managing intellectual property rights.
Saudi Arabia’s Economy: Promising Investment Opportunities
The decision to relocate the regional management headquarters to Riyadh is considered a strategic move that opens exceptional investment opportunities for local and international companies. It allows them to benefit from the vast Saudi market, reliable infrastructure, and lucrative government contracts. Furthermore, it holds a significant position as the largest economy in the Middle East and North Africa, ranking eighteenth among the world’s largest economies. The diversity of the Saudi economy is evident in its reliance on multiple sources of income, and the Kingdom’s commitment to reforms and economic transformations enhances economic diversification, aiming for sustainable development.
- It should be noted, that some challenges may arise in licensing procedures, document authentication, and compliance with conditions and laws.
Get Your RHQ License with BusinessLink
BusinessLink provides extensive support for the relocation of regional headquarters to Riyadh. Leveraging our profound expertise in the Saudi market and a thorough comprehension of applicable laws and regulations, we stand ready to facilitate your success in this promising economic landscape. Reach out to us today to gain insights into establishing your company’s regional headquarters in the Kingdom of Saudi Arabia. Our dedicated team is committed to assisting you in thriving within this dynamic economy.