Saudi Gazette report

RIYADH — The Ministry of Commerce announced that the new Law of Commercial Registration and the Law of Trade Names, along with their executive regulations, came into effect on Thursday, April 3. The Council of Ministers approved the two laws during its weekly session on Sept. 17, 2024. These laws keep pace with the economic and technological advancements, as well as with the unprecedented transformation that the Kingdom is experiencing in light of the Saudi Vision 2030.

The Law of Commercial Registration, which consists of 29 articles, facilitated the conduct of commercial business by canceling the issuance of sub-registrations for companies and establishments, and then sufficing with one commercial register at the Kingdom level, including all the activities of the establishment, which contributes to reducing the financial burdens on these firms.The law granted a grace period of five years to correct the existing sub-registrations for companies and establishments, either by transferring the sub-registration of the sole proprietorship to another party to be the main register, or transferring the sub-registration of the company or establishment to a new company, or revoking the sub-registration and transferring its assets and activities to the main registrations. It also obligated commercial establishments to open bank accounts linked to the establishment, in order to enhance its reliability and ensure the integrity of its transactions.

The law introduces an annual electronic confirmation of registration data, replacing the former renewal process. Strict measures are implemented regarding non-compliance, with registration suspension and eventual deletion for failure to confirm data within specified timeframes.

Businesses are now required to link bank accounts to their commercial registrations, and must obtain activity licenses within 90 days of registration, with exceptions for extended periods granted by licensing authorities.

The Law of Trade Names and its regulations focus on enhancing confidence in the commercial environment by regulating the reservation and registration of trade names. The law allows for trade name reservation prior to registration, with specified, extendable periods.

It also enables the independent disposal of trade names, separate from the establishment. Crucially, the law prohibits the registration of similar trade names, regardless of differing business activities, to protect brand integrity. Regulations also specify controls for reserving or registering family names, personal names, and names associated with Saudi Arabia and its public places.

The law also expanded its scope by granting Arabic, non-Arabic, or Arabized words, or alphanumeric names to commercial firms. In an effort to enrich Arabic content, the law created the Arabic Language Experts Platform, which aims to increase the linguistic stock of Arabic names in the commercial environment.

The new law allowed the trade name to be disposed of independently from the commercial establishment, and to transfer its ownership in terms of waiver of the trade name so as to enhance the protection of trade names. There is a provision in the law to prohibit the use of a reserved or registered trade name in the commercial registration without the consent of its owner. These legislative changes aim to modernize business practices within the Kingdom, fostering enhanced transparency and aligning with the strategic objectives of Saudi Vision 2030.