Enab Baladi – Jana al-Issa

With a capital of three million Syrian pounds (equivalent to 200 US dollars), Saudis Saleh bin Suleiman bin Nafi al-Habdan and Mohammed bin Suleiman bin Hamad al-Muhaisini established “Iksab LLC,” headquartered in Homs.

According to the second part of issue “27” of the Syrian Official Gazette, published on July 18, the company’s purposes include retail of building materials except for building houses, selling, and trading them of whatever kind. The company has the right to completely or partially amend its purpose by a decision of the general assembly, and without this amendment being considered the creation of a new legal entity. It also has the right to own and purchase the necessary real estate and machinery to achieve the company’s purpose.

Founded by religious figures

Enab Baladi did not find any official website or page for “Iksab” company during its research for this report, but it is likely that its owners are prominent businessmen and religious figures in Saudi Arabia.

Open-source research revealed that Saleh bin Suleiman bin Nafi al-Habdan is the imam of the Al-Rajhi Mosque in Riyadh, while Enab Baladi found no information regarding his economic activities.

Mohammed bin Suleiman bin Hamad al-Muhaisini is known as a Saudi businessman and religious figure, born in 1965 (the same birth year mentioned in the establishment decision of “Iksab” company in the Official Gazette). He works part-time as the imam of Aisha Al-Rajhi Mosque in Mecca.

According to the website “Manhom” (Who Are They), which profiles businessmen and the nature of their companies, Mohammed bin Suleiman bin Hamad al-Muhaisini is a co-founder of “Speed One” with a 50% share.

Why limited liability?

Questions arise about what motivates Saudi businessmen to establish limited liability companies in regime-controlled areas of Syria.

According to Article “55” of Legislative Decree No. “29” of 2011 on company formation, a limited liability company is composed of at least two people, and the partner’s liability is limited to the amount of their shares in the company’s capital.

A limited liability company can also be formed by a single person, in which case it is called a “Single Shareholder Limited Liability Company.”

The regulations for the Single Shareholder Limited Liability Company are issued by a decision of the Minister.

The limited liability company is considered a commercial company subject to the Commercial Law, regardless of its activity.

Academic and economic researcher Sinan Hatahet told Enab Baladi that the concept of a limited liability company or a joint-stock company is a very minor detail. The main idea of the limited liability company is that it is not easily traded, and introducing a new shareholder requires advanced legal procedures. In contrast, joint-stock companies have more potential for expansion, which indicates that “Iksab” is a small company for economic investment measurement purposes only.

Capital amount “natural”

The company’s capital set at three million Syrian pounds is normal. Regardless of its value, there is an obligation imposed on the company towards government institutions in terms of freezing a certain amount within Syrian banks. Additionally, the small amount results in fewer taxes, according to researcher Sinan Hatahet.

In October 2022, the Ministry of Internal Trade in the Syrian regime government announced an increase in the costs of establishing companies in Syria severalfold. The minimum required capital for limited liability companies was set at 50 million Syrian pounds, up from the previously set five million pounds, which indicates that “Iksab” company was announced before this time.

At that time, the minimum capital for different types of companies was set as follows:

• Partnership and limited partnership companies: 15 million Syrian pounds.
• Limited liability companies: 50 million Syrian pounds.
• Single Shareholder Limited Liability Companies: 50 million Syrian pounds.
• Private joint-stock companies: 100 million Syrian pounds.
• Public joint-stock companies: 1 billion Syrian pounds.
• Holding joint-stock companies: 1 billion Syrian pounds.

Types of companies in Syria

In Syria, there are five legal forms of companies: general partnership, limited partnership, joint venture, limited liability company, and joint-stock company.

The Law on Companies, issued under Legislative Decree No. “29” of 2011, classifies seven types of companies:

• Commercial Companies: If their purpose is engaging in commercial activity or if they take the form of a joint-stock company or limited liability company.
• Joint Companies: These are companies in which the state or a public entity holds a certain percentage of their capital, subject to the specific laws governing them.
• State-Owned Joint-Stock Companies: Companies fully owned by the state, represented by the public treasury or one/more public entities. Their shares cannot be traded without the approval of the Council of Ministers.
• Free Zone Companies: Companies located in one of Syria’s free zones, registered in the companies register of one of these zones, taking the form of a general partnership, limited partnership, limited liability company, or a joint-stock company.
• Holding Companies: Private or public joint-stock companies limited to owning shares in limited liability and joint-stock companies, participating in their establishment and management.
• External Companies: Companies whose purpose is limited to making contracts and performing activities outside the Syrian Arab Republic, without engaging in any activities within Syria.
• Civil Companies: Companies established among partners of specialized professions or whose purpose is civil by nature, subject to civil law and their internal regulations.

Normalization leads to more

Economic researcher Sinan Hatahet sees that the normalization of relations between the Syrian regime and Saudi Arabia prompts Saudi businessmen to assess investment opportunities in Syria. However, this case does not constitute a full-scale investment endeavor by the Saudi private sector due to several obstacles.

The prominent obstacles relate to corruption and the fear of western sanctions, explaining why businessmen who might experiment with these investments do not have significant investments in their own country or the region.

Hatahet interpreted the move toward investing in building materials as logical within the Syrian context given the demand for these materials due to the destruction, the lack of local production, the possibility of exporting some building materials from Saudi Arabia to Syria, and trading raw materials found in Syria like stone and marble to Saudi Arabia.

Dr. Firas Shaabo, a finance and banking sciences academic, told Enab Baladi that the Syrian regime tries to create the illusion of having foreign investments, explaining that many foreign investments in Syria do not support the national economy.

Regarding the foreign investors’ motivation, Shaabo believes it might be an attempt to secure a foothold for future investments, especially in reconstruction.

The Saudi openness towards the regime naturally stirs the interest of some investors in building wealth or securing future roles in Syria, regardless of the nature of the investment, according to Shaabo. He anticipates a broader scope for Saudi investments across various commercial, industrial, and agricultural sectors, as the country needs extensive foreign investments.

From early 2023 until the end of October of the same year, the number of registered companies reached about 723, according to a previous statement by Karam Shaar, director of the Syrian program at the Observatory of Political and Economic Networks and a doctor in economics, to Enab Baladi.

Reviewing the Official Gazette publications, the number of new companies in 2018 was 709, 577 in 2019, and 733 in 2020.

In 2021, the numbers reached 819 companies, climbing to 1,400 new companies in 2022, with difficulties distinguishing between real and fake companies, making these numbers less indicative of the nature of new company activities in Syrian regime-controlled areas.