One commercial registration is enough for a firm throughout Saudi Arabia

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RIYADH — The Law of Commercial Registration and the Law of Trade Names, approved by the Saudi Council of Ministers on Tuesday, stipulates that one commercial registration is enough for a firm throughout the Kingdom, according to Minister of Commerce Dr. Majed Al-Qasabi. “These laws will contribute to facilitating the practice of business and reducing the burdens on commercial establishments in the Kingdom,” he said.

In a statement to the Saudi Press Agency, Al-Qasabi unveiled the salient features of the two laws and their role in facilitating practicing businesses in the Kingdom. 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 minister said that the Law of Commercial Registration, which consists of 29 articles, contributes to facilitating the practice of business by organizing the procedures for commercial registration, ensuring the accuracy of the registered data and updating it periodically, and making it available to view in a way that ensures ease of searching for and accessing it. The new law also developed a number of provisions, most notably establishing a central electronic database in which the names and data of traders are recorded, and stating the specializations and procedures for commercial registration.

The law 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 abolished the requirement to renew commercial registration, in addition to the expiry date of the registration. It introduced the requirement for annual confirmation of the commercial registration data electronically, and obligated the merchant to confirm the commercial registration data annually, precisely every 12 months from the date of issuance. The registration will be suspended in the event of a delay of three months from the due date of confirmation, and is automatically deleted after a full year from the start of the suspension. The law introduced a path for alternative procedures for penalties, including warning and obligating the merchant to correct the violation.

Al-Qasabi stated that the Law of Trade Names, which consists of 23 articles, aims to organize the procedures for reserving and registering names in the commercial registration, maximizing their value, and ensuring their protection and the rights related to them. The law allowed the reservation of the trade name before its registration for a specific period that can be extended, specifying the conditions that must be met in the trade names to be registered or reserved, and the prohibited names. The law also expanded its scope by allowing naming with Arabic, non-Arabic, or Arabized words, or consisting of letters or numbers.

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. It stipulated that the trade name should be appropriate and not misleading. The law also prohibited the reservation or registration of a trade name for an establishment that is similar to the name of another establishment, even if the establishment’s activity is different.