‍Branch Office

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Definition: A branch is an extension of the foreign parent company. It is not a separate legal entity.

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Key Features:

• Legal Status: Operates under the name and full liability of the parent company.
• Ownership: 100% owned by the foreign company.
• Permitted Activities: Must engage in the same activities as the parent company (subject to Saudi regulations).
• Liability: The parent company bears full financial and legal liability.
• Registration: Must register with the Ministry of Investment (MISA) and the Ministry of Commerce.
• Capital Requirements: Generally lower than subsidiaries but depends on the sector.

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Best For: Companies looking to directly control operations and maintain tight integration with the home office.

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Subsidiary (LLC)

Definition: A subsidiary is a separate legal entity, typically a Limited Liability Company (LLC), incorporated in Saudi Arabia.

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Key Features:

• Legal Status: Independent legal entity (though it may be wholly owned by the foreign company).
• Ownership: Can be 100% foreign owned in many sectors (subject to investment license).
• Permitted Activities: Has flexibility to undertake activities aligned with its own commercial registration.
• Liability: Limited to the company’s own assets. Parent company is not directly liable.
• Corporate Governance: Must follow local corporate rules (e.g., appoint a general manager, hold annual meetings).
• Capital Requirements: Varies by industry, but usually higher than for a branch.

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Best For: Businesses that want legal separation, access to local partnerships, or greater operational flexibility in the Saudi market.

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Contact and Disclaimer

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Should you have any questions regarding the above information, or require assistance with your immigration or global mobility matters, please don’t hesitate to contact our legal team at Hudson McKenzie. You can reach us by email at londoninfo@hudsonmckenzie.com or by telephone at +44 (0) 20 3318 5794.

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For office locations, please visit our Our Offices page.

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The information provided in this blog is for general guidance only and does not constitute legal advice.

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