October 29, 2024

New Saudi Commercial Register and Trade Names Laws: Navigating the Changes

Overview

On October 4, 2024, the Saudi government issued Royal Decree No. (83/M), enacting the New Saudi Commercial Register and Trade Names Laws. Set to take effect 180 days after publication, these laws replace existing regulations and align with Saudi Vision 2030, aiming to foster a vibrant economic environment.

Key Highlights

1. New Saudi Commercial Register Law

  • Structure: Comprises six chapters with 29 articles, improving accessibility by grouping related provisions.
  • Transparency and Trust: The law emphasizes the importance of transparent and trustworthy business practices, allowing the Ministry of Commerce to establish a central electronic commercial register.

Major Changes:

  • Electronic Registration: Transition to a fully electronic registration process simplifies requirements and improves efficiency.
  • Annual Confirmation System: Businesses must confirm their registration details annually, eliminating the cumbersome renewal process.
  • Grace Period for Existing Registrations: Companies registered under the old system have a five-year grace period to comply with the new regulations.
  • Bank Account Requirement: Establishments must maintain a bank account for trade transactions, enhancing financial oversight.

2. New Saudi Trade Names Law

  • Structure: Comprised of five chapters with 23 articles, this law enhances clarity in trade name registration and protection.

Key Features:

  • Flexible Naming Options: Merchants can now use non-Arabic names and numbers, offering greater flexibility in brand identity.
  • Reservation System: Merchants can reserve trade names temporarily, streamlining the registration process.
  • Stricter Protections: The law clearly defines prohibited trade names, preventing overlap with existing names and ensuring greater protection against misuse.
  • Separate Trade Name Disposal: Merchants can now transfer trade names independently of the business, adding flexibility to ownership structures.

3. Offences and Sanctions

Both laws introduce a structured approach to offences, with penalties up to SAR 50,000. The introduction of “Alternative Procedures” allows for more nuanced responses to violations, focusing on correction rather than punishment.

Conclusion

The new laws are a significant advancement for the Saudi business landscape, reflecting the goals of Vision 2030. By reducing administrative burdens and enhancing the registration process, these laws pave the way for a more dynamic commercial environment. The introduction of clearer guidelines for trade names not only fosters business identity but also protects merchants from potential conflicts. As the Ministry of Commerce develops executive regulations, stakeholders should prepare for these changes, ensuring compliance and leveraging new opportunities in the evolving market. The future of business in Saudi Arabia looks promising!

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