Asad and three business associates have decided to start a business: Saudi Construction. They will do work for oil companies in Saudi Arabia at first, but he hopes the firm will grow within two or three years to gain heavy construction contracts throughout the Middle East. Asad wonders whether he should form a corporation, a partnership, or maybe a limited liability company under Saudi Companies Law.
Asad believes they will initially need about $10 million in capital to run the business and have sufficient financial reserves to do large-scale projects. After two years, they will need an additional $20 million in capital.
Asad will be in charge of business operations. He realizes they need a business plan that will address how to value the corporation in order to raise the necessary capital in two years. It also needs to address how Saudi Construction can legally protect its assets in an industry where lawsuits are a common hazard.
Meanwhile, his associates have pressured Asad to kick-start the business by signing a couple of lucrative contracts right away; they tell him he shouldn’t worry about the administrative paperwork. They say that nobody ever looks at the paperwork once a business is formed and it’s no big deal.
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