In its meeting held today, Tuesday, the Council of Ministers has issued the decision to approve the Law of Commercial Register and the Law of Trade Names.
H.E. Dr. Majid bin Abdullah Al-Kassabi, Minister of Commerce, explained that the issuance of the Law of Commercial Register and the Law of Trade Names contributes to facilitating the conduction of business, reducing the burdens on commercial establishments, for which it will be sufficient to hold one register at the level of the Kingdom, and regulating the procedures for reserving names to protect them and enhance their values. He added that the two laws keep pace with economic and technical developments and the unprecedented transformation that the Kingdom witnesses under Saudi Vision 2030.
The Law of Commercial Register, consisting of 29 articles, contributes to facilitating the conduction of business by regulating the procedures for registration in the Commercial Registry, ensuring the accuracy of the recorded data, updating it periodically, and making it available and easily searched and accessed.
In addition, the new law developed a number of provisions, most notably establishing a central electronic database in which the names and data of merchants are recorded and stating the competencies and procedures for commercial registration.
The Law of Commercial Register facilitates the conduct of commercial business by canceling the issuance of subsidiary registers for establishments and companies, thus, making it sufficient to hold only one commercial register across the Kingdom, including all the establishment’s activities, which would reduce the financial burdens on commercial establishments.
The law shall grant a grace period of 5 (five) years to correct the existing subsidiary registers of establishments and companies, either by transferring the subsidiary register of the sole establishment to another entity to be the main register, by transferring the subsidiary register of the company or establishment to a new company, or by canceling the subsidiary register and transferring its assets and activities to the main register.
The law 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 cancelled the requirement for renewing the commercial register and the expiry date of the register and introduced the requirement for annual “electronic” confirmation of the commercial register data. The merchant is required to confirm the commercial register data annually, every 12 (twelve) months from the date of issuance; in the event the merchant is delayed for 3 (three) months from the due confirmation date, the register will be suspended, and it shall be automatically cancelled (after a lapse of one year from the suspension start date).
The Law of Commercial Register introduced alternative procedures to penalties, which include “warning and obligating the merchant to correct the violation”.
The new Law of Trade Names, which consists of 23 articles, aims to regulate the procedures for reserving and recording names in the commercial register, maximize their value, and protect them and their rights.
The law allows a trade name to be reserved before it is recorded for a specific period that can be extended. It sets the requirements that must be met by trade names to be registered or reserved, and the criteria for prohibited names.
Further, the Law of Trade Names expanded its scope by allowing the use of Arabic, non-Arabic, Arabized words, or words that consist of letters or numbers in names.
In an effort to enrich the 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 law allows the trade name to be disposed of independently from the establishment and its ownership to be transferred (assigning the trade name).
To enhance the protection of trade names, the law prohibits the use of a reserved or registered trade name in the commercial register “without the consent of its owner”. Trade names must be appropriate and not misleading. The law also prohibits the reservation or registration of a trade name of an establishment that is similar to the name of another establishment, even if the establishment’s activity is different.