Limited Liability Company Agreement Template for Saudi Arabia

A Limited Liability Company Agreement is a foundational legal document that establishes the structure, governance, and operational framework for your LLC in Saudi Arabia. Under the Companies Law 2015, this agreement is mandatory for forming any limited liability company and serves as the governing constitution that defines relationships between shareholders, management responsibilities, and business operations while ensuring compliance with Saudi Arabian regulations.

When do you need this document?

You need this agreement when establishing a new LLC with multiple shareholders, whether individual or corporate entities. It's required during the company formation process with the Ministry of Commerce and Industry, particularly when foreign investors participate under the Foreign Investment Law. The document becomes essential when structuring management hierarchies, defining capital contributions, or establishing profit-sharing arrangements. You'll also need it when registering for commercial licensing, VAT registration with ZATCA, or when banks require corporate documentation for account opening.

Key legal considerations

Your agreement must specify minimum capital requirements as mandated by Saudi law, typically SAR 500,000 for most business activities. Capital contributions, whether cash or in-kind assets, must be clearly documented and valued according to regulatory standards. Share transfer restrictions are crucial, especially regarding foreign ownership limitations and right of first refusal provisions. The agreement should establish clear management structures, including board composition, voting procedures, and authority limitations. Profit distribution mechanisms must align with Shariah-compliant principles while protecting minority shareholder rights. Additionally, dispute resolution clauses should specify arbitration procedures and governing law to avoid future conflicts.

Legal requirements in Saudi Arabia

Under Saudi Arabian law, your LLC agreement must comply with Companies Law 2015 Articles 151-180, which govern LLC formation and operations. The document requires notarization and registration with the Ministry of Commerce and Industry as part of the commercial registration process. Foreign shareholders must obtain proper licensing through the Saudi Arabian General Investment Authority (SAGIA) and comply with sector-specific ownership restrictions. The agreement must demonstrate compliance with Anti-Money Laundering Law requirements, including beneficial ownership disclosure and due diligence procedures. VAT registration obligations under Saudi VAT Law must be addressed if your company's turnover exceeds the mandatory registration threshold. Additionally, the agreement should incorporate Zakat obligations as required by ZATCA and ensure all provisions align with Shariah-compliant business practices as mandated by Saudi regulatory framework.