Saudi Arabia - New Commercial Registration and Trade Name Laws Take Effect in 2025

14 November 2024

Bini Saroj

In September 2024, the Council of Ministers in Saudi Arabia approved two significant pieces of legislation: the new Commercial Registration Law and the Tradename Law (“Updated Laws”). These laws will become effective 180 days after their publication on 4 October 2024, meaning they will take effect in April 2025.

Dubai: The updated laws aim to streamline business operations and reduce regulatory burdens for companies operating within the Kingdom.

Aligned with Saudi Arabia’s Vision 2030 initiative, these laws are designed to create a more business-friendly environment by simplifying company registration processes, embracing digital innovations, and enhancing intellectual property protection for tradenames. The government’s goal is to foster private sector growth, attract investment, and contribute to the Kingdom’s broader economic transformation.

This overview outlines the key changes and implications of these updated laws, helping businesses operating in Saudi Arabia adapt to the new regulations and capitalize on the opportunities provided by the evolving business landscape.

I.     Key Elements of the New Commercial Registration Law

• Unified Commercial Registration System: The new law introduces a unified, national commercial registration system, replacing the previous regional-based system. This simplifies the registration process for businesses, as they will only require a single national Commercial Registration Certificate (CR) to cover all their activities, including branch operations.
• Diverse Activities Under a Single CR: Companies can now conduct various types of activities, even if unrelated, under one CR. This flexibility allows businesses to expand operations and adapt to changing market conditions more easily.
• Grace Period for Existing Companies: The law provides a five-year grace period for existing companies to rectify any inconsistencies in their branch CRs. They can either form a new company or transfer their branch activities and assets to their main CR.
• Annual CR Information Confirmation: The CR will no longer have an expiration date, but companies must confirm their CR information annually. Failure to do so within the specified period may lead to suspension or cancellation of the CR.
• Alternative Penalty Measures: The law introduces alternative penalties, such as warnings and rectification orders, which may be imposed instead of or alongside financial penalties. This approach aims to foster a more flexible and supportive regulatory environment.
• Company Bank Account Requirement: Companies will still be required to maintain bank accounts linked to their CRs to promote transparency and protect their financial transactions.
  
  

II.    Key Elements of the New Tradename Law

• Advance Tradename Reservation: Companies can now reserve tradenames in advance for a specified period, with the option for extension.
• Linguistic Flexibility: Tradenames can be in Arabic or any other language, including transliterated words, or combinations of letters and numbers.
• Independent Tradename Ownership: Tradenames can be treated as independent assets, enabling their assignment to other entities.
• Arabic Language Enhancement: An Arabic Experts portal will be established to encourage the use of authentic Arabic names in the commercial environment.
• Protection of Reserved Tradenames: Unauthorized use of a reserved tradename is prohibited, ensuring that owners’ rights are respected.
• Unique Tradename Requirement: Tradenames must be distinct and not too similar to existing names, regardless of the nature of the businesses involved.
  
  

III.    Implications and Conclusion

Saudi Arabia is positioning itself as a dynamic business hub, and the new Commercial Registration and Tradename Laws are expected to significantly enhance its business landscape. By streamlining the registration and incorporation processes and reducing bureaucratic obstacles, the government is actively inviting both domestic and international investors to explore opportunities in this growing market.

In conclusion

These groundbreaking laws aim to foster a more efficient business environment, attract diverse investors, stimulate economic growth, and promote innovation. Through proactive compliance mandates, the government is taking steps to improve the overall business ecosystem, making it easier for new ventures to succeed and existing businesses to thrive in Saudi Arabia.

ALKETBI TOUCH

Contact ALKETBI team of experts, for a customized strategy on understanding and applying the new legislation while optimizing the advantages for your company. Our staff can assist you in creating a solid structure and guaranteeing a seamless introduction or expansion into the Saudi market reflecting our vast regional experience.