Establishing a non-profit training unit in the Kingdom of Saudi Arabia involves a structured process governed by the Technical and Vocational Training Corporation (TVTC). The primary goal of such a unit is to provide technical and vocational training services without the objective of material profit, relying on self-financing, gifts, and donations.
Governing Body and Legal Framework
The main regulatory body is the Technical and Vocational Training Corporation (TVTC), a government agency responsible for overseeing all technical and vocational training in the Kingdom. The rules for non-profit units are specifically outlined in the "Regulatory Rules for Establishing Non-Profit Training Units in the Field of Technical and Vocational Training."
Key Establishment Requirements
To establish a non-profit training unit, applicants must meet the following conditions:
Nationality: Applicants must be of Saudi nationality or be a foreign company.
Legal Capacity: Applicants must possess full legal capacity.
Founder Type: A training unit can be established by an individual, a group, or one or more legal entities.
The Licensing and Setup Process
The process involves multiple government bodies and is executed in stages, from preliminary approvals to final licensing.
Step 1: Initial Business and Investment Approvals
Ministry of Investment (MISA): Foreign investors must first obtain a foreign investment license from MISA. This requires submitting a detailed business plan and proof of capital.
Ministry of Commerce (MOC): Following MISA approval, the entity must be registered with the Ministry of Commerce to obtain a Commercial Registration (CR), which legally establishes the company.
Step 2: Preliminary Approval from TVTC The Governor of the TVTC issues a preliminary approval for the establishment of the unit. This allows the founders to proceed with the foundational steps.
Step 3: Fulfilling Initial Requirements After receiving preliminary approval, the applicant must complete the following:
Form a Board of Directors: A board with no fewer than five members must be selected. These members are nominated by the founder and must be approved by the TVTC Governor. The term for a board member cannot exceed four years, though it is renewable.
Appoint Key Roles: The board must appoint a Chairman, Vice-Chairman, Secretary-General, and Treasurer and inform the TVTC of these appointments.
Select a Bank: The training unit must identify the bank(s) it will use for financial transactions.
Secure a Location: Obtain official approval from the Ministry of Municipal and Rural Affairs for the designated site of the training unit.
Step 4: Submitting the Final License Application The applicant must complete the license application form provided by the TVTC and attach the following documents:
A copy of the personal identification for individual founders.
A copy of the license for associations and charitable institutions.
A copy of the commercial register for establishments and companies.
A detailed statement of the funds and endowments allocated to the unit.
A copy of the unit's proposed basic regulations.
An estimated budget prepared by a certified public accountant.
Step 5: Drafting the Basic Regulations The basic regulations are a critical document that must explicitly include:
The name, headquarters, and geographical scope of the training unit.
Personal information of the founders.
Membership conditions, types, and the rights and duties of members (if applicable).
Rules for management, including the governing bodies and their jurisdictions.
A detailed account of financial resources and spending procedures.
The start and end dates of the fiscal year.
Procedures for amending regulations, establishing branches, merging, or dissolving the unit.
Step 6: Final Licensing and Legal Personality Once all conditions are met and documents are submitted, the Governor of the TVTC will issue a final license. Upon issuance of this license, the training unit officially acquires its legal personality.
Supervision and Ongoing Compliance
Reporting: The training unit must provide the TVTC with minutes from every Board of Directors meeting within twenty days. The TVTC has the right to object to any decisions made.
Financial Reporting: The unit is required to submit an audited financial statement annually and an estimated budget for the upcoming fiscal year.
Oversight: The TVTC is responsible for supervising the unit's activities and has the right to access all its books, records, and documents to ensure compliance.
Dissolution and Liquidation
The Minister of Human Resources and Social Development holds the authority to dissolve a training unit under specific circumstances, including:
Deviating from its primary objectives.
Insolvency or inability to meet financial obligations.
Misuse of funds.
Violation of the established rules and regulations.
In the event of dissolution, a formal process for liquidation and the transfer of remaining assets is initiated by the Minister.