Company forms under the Saudi Companies Law: the differences that matter

The Saudi Companies Law sets out five forms a company may take. Choosing between them is not a matter of preference: it determines who carries the company's debts if it fails, what the minimum capital is, and where decision-making power sits.

Where the current law came from

The present Companies Law replaced the Companies Law promulgated by Royal Decree M/3 dated 28/1/1437H and the Professional Companies Law promulgated by Royal Decree M/17 dated 26/1/1441H, and provided that it takes effect 180 days after publication.

Two previous laws — companies and professional companies — are now one document.

The five forms

Article 4 provides that a company shall take one of the following forms:

1. General partnership.
2. Limited partnership.
3. Joint stock company.
4. Simplified joint stock company.
5. Limited liability company.

The difference in a table

Form	Who may form it	Liability for debts	Minimum capital
General partnership	Two or more persons	Personal and joint, across all partners' assets	No minimum stated in the law
Limited partnership	Two classes: general and limited partners	General: all their assets. Limited: up to their share	No minimum stated in the law
Joint stock	One or more persons	Up to the value of shares subscribed	SAR 500,000 issued capital, a quarter paid at incorporation
Simplified joint stock	One or more persons	Up to the value of shares	The joint stock minimum does not apply
Limited liability	One or more persons	Up to the share in capital	No minimum stated in the law

What each form means in practice

General partnership

Founded by two or more persons who are liable personally, across all their assets, and jointly for the company's debts and obligations. A partner acquires the status of a merchant.

"Jointly" means a creditor may pursue any one partner for the whole debt, not merely their portion of it. This is the heaviest form in personal exposure.

Limited partnership

Made up of two classes: at least one general partner liable personally across all their assets and jointly, and at least one limited partner who is answerable only up to their share in the capital. The limited partner does not acquire merchant status.

Its natural use: one partner who works and carries the risk, another who funds and does not manage.

Joint stock company

Its capital is divided into tradable shares, the company alone is liable for its debts, and a shareholder's liability is confined to the value of the shares they subscribed for.

Issued capital must be no less than SAR 500,000, with at least a quarter paid at incorporation. This is the form required for a market listing, and a listed one falls under the Capital Market Authority rather than the Ministry.

Simplified joint stock company

The newest form, and two things the law states about it explicitly are the point of it:

• The minimum capital requirement set for a joint stock company does not apply.
• Shareholders may organise the company's structure and how it operates in its articles of association, and they stand in place of the ordinary and extraordinary general assemblies.

In short: the share-issuing and liability-separating advantages of a joint stock company, without the capital floor and without the heavy governance scaffolding. That is why it is the form startups needing to issue shares to investors tend toward.

Limited liability company

Founded by one or more persons, with a separate financial liability, and a partner answerable only to the extent of their share in the capital.

It is the dominant form in practice: registers passed 612,000, up 173% over five years, according to the Q2 2026 business sector bulletin. The process is in how to set up a limited liability company.

Founding contract or articles of association

A detail many get wrong. Under Article 7, every company has a founding contract except the joint stock company, the simplified joint stock company, and the single-owner limited liability company — each of which has articles of association instead.

Other structures in the law

The law does not stop at the five forms. It devotes chapters to:

• The non-profit company — Chapter 7.
• The professional company — Chapter 8, where each partner is personally answerable for their own professional errors.
• Holding and subsidiary companies — Chapter 9.
• Foreign companies — Chapter 11.

These are not a sixth and seventh form. They are descriptions that attach to a company already taking one of the five.

How to choose

Three questions usually settle it:

1. Am I willing to be pursued for the company's debts in my own assets? If not, the forms that separate liability are the LLC, the joint stock company and the simplified joint stock company.
2. Will I issue shares to investors? If yes, joint stock or simplified joint stock.
3. Do I have SAR 500,000 in issued capital? If not, and you still need shares, the simplified joint stock company is the opening the law created for exactly that.

This article summarises the text; it is not a substitute for legal advice. The law and its implementing regulations are the reference.

Sources

• Companies Law — Bureau of Experts at the Council of Ministers
• Ministry of Commerce — the new Companies Law
• SPA — Q2 2026 business sector bulletin