# FD001 — Legal Entity Decision

> **Status**: OPEN — founder decision required by Week 2
> **Author of this template**: Coding agent (scaffolding only; no legal advice)
> **Binding decision**: Requires founder + counsel signature

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## Decision Required

Select the legal structure for Dealix. This decision is **irreversible-ish** (can be restructured, but costly). Make it with counsel after reading this brief.

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## Options

### Option A — MISA KSA LLC (RECOMMENDED DEFAULT)

**What**: 100% foreign-owned LLC under Ministry of Investment (MISA) license. Direct Saudi operations.

**Pros**
- Aligns with "Saudi-first" positioning (customers, procurement, regulators)
- ZATCA e-invoicing built-in from day one
- Eligible for government tenders (subject to IKTVA, Saudization thresholds later)
- Bank account opening straightforward (SNB, Al Rajhi)
- Cleaner PDPL compliance posture

**Cons**
- Minimum capital: 500,000 SAR (in some MISA tracks) — consult counsel on current thresholds
- Saudization requirement scales with headcount (after 5+ employees)
- Corporate tax + Zakat filings (15% income tax non-GCC shareholders, 2.5% Zakat GCC)
- Slower setup than DIFC (4–8 weeks with expeditor)

**Best for**: Plan to serve KSA-primary customers. Willing to commit to KSA as HQ.

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### Option B — DIFC / ADGM (UAE)

**What**: Free-zone company in Dubai International Financial Centre or Abu Dhabi Global Market.

**Pros**
- Common-law jurisdiction (English language, familiar to VCs)
- Faster setup (2–4 weeks)
- 0% corporate tax up to AED 375K (current ADGM terms — verify)
- Easier repatriation of profits
- No Saudization
- Preferred by many MENA VCs

**Cons**
- Weaker positioning on "Saudi sovereignty" story
- Still need a Saudi branch or distributor to bill KSA customers properly
- ZATCA e-invoicing requires separate KSA presence
- Possibly lower credibility with KSA government buyers

**Best for**: Plan to raise UAE/international VC; KSA is 1 of N markets, not THE market.

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### Option C — Delaware C-Corp + KSA Subsidiary

**What**: Parent in Delaware (for US VC), operating subsidiary in KSA.

**Pros**
- US VCs typically only invest in Delaware C-Corps
- QSBS eligibility (US tax advantage for founders if residency qualifies)
- Clean IP holding structure
- 83(b) elections possible for early equity grants

**Cons**
- Two entities = two sets of books, two tax regimes, two counsel bills
- ~$80K–$150K annual compliance overhead minimum
- Delaware franchise tax, US federal tax filings even at zero revenue
- FIRRMA / CFIUS considerations for Saudi operators
- Complicates fundraising from Saudi funds (reverse-flip later is painful)

**Best for**: Planning Series A from Silicon Valley. Already have US investors committed.

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## Decision Framework

Answer 4 questions:

1. **Where is revenue?** If >80% KSA → Option A. If >80% UAE/global → Option B. Mixed → Option C.
2. **Where is capital?** Saudi/Gulf funds → A or B. US funds → C. Self-funded → A (cheapest).
3. **Where will the team live?** Riyadh-primary → A. Dubai-primary → B. Remote/US → C.
4. **What's the exit story?** Tadawul/Saudi strategic acquirer → A. Regional strategic → B. US IPO/M&A → C.

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## Recommended Default

**Option A — MISA KSA LLC**

Reason: The entire Phase 2 Blueprint positions Dealix as "Saudi-native infrastructure." A UAE or Delaware entity would undermine that positioning in customer and regulator conversations. The cost premium vs Option B is offset by procurement advantages in KSA enterprise.

Reversibility: Can re-domicile later via parent holdco if US fundraise materializes.

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## Counsel Engaged

Deadline: Week 2. Shortlist:

| Firm | Type | Indicative KSA Setup Cost |
|------|------|---------------------------|
| Al Tamimi & Company | Full-service, regional | 40–80K SAR |
| Clyde & Co | Full-service, international | 50–100K SAR |
| Hammad & Al-Mehdar | Local KSA boutique | 25–50K SAR |
| Baker McKenzie | Full-service, global | 80–150K SAR |

Send identical RFP to 3 firms; compare scope, KSA track record, turnaround.

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## Decision Record (FILL AFTER DECISION)

- **Selected option**: [ ] A [ ] B [ ] C
- **Counsel engaged**: ________________
- **License/incorporation number**: ________________
- **Date**: ________________
- **Signed**: Founder ________________
- **Rationale** (3 sentences): ________________