In a strategic move aimed at enhancing the business environment and modernizing the legislative structure in the Kingdom of Saudi Arabia, the Council of Ministers issued a decision approving the new versions of the Commercial Registry and Trade Names Laws. This comes as part of the Kingdom's efforts to keep pace with economic developments and achieve the goals of Saudi Vision 2030.

Adoption of the two laws in their updated forms:

The decision included approval of the Commercial Registry and Trade Names Laws, representing a qualitative shift in regulating the commercial sector, ensuring clarity of procedures and increasing the efficiency of transactions related to establishing and conducting commercial activities.

Grant for Correcting Branch Records:

Among the most prominent provisions of the decision is granting those registered in the Commercial Registry a five-year grace period, starting from the effective date of the new system, to correct the status of their branch commercial records. The decision emphasized that this grace period is final, as all violating branch records will be deleted after its expiration, based on a mechanism determined by the Ministry of Commerce.

Objectives of the two systems: Harmonization, Efficiency, and Transparency

• Trade Names System: aims to enhance confidence in the commercial environment by regulating procedures for reserving and registering trade names, enhancing the value of trade names, and ensuring the protection of the name and related rights.
• Commercial Registry System: aims to facilitate the conduct of business through transparency: making commercial registry data available for search and review, and reliability: ensuring the accuracy, validity, and periodic updating of data.

Implementing Regulations and Complementary Controls

In implementation of these two systems, a supporting regulatory package was issued pursuant to Ministry of Commerce Resolution No. (288) dated Ramadan 29, 1446 AH, and was officially published on Shawwal 1, 1446 AH. It includes:

• Implementing Regulations for the Trade Names System.
• Implementing Regulations for the Commercial Registry System.
• Controls for previously registered trade names.
• Mechanism for correcting the status of sub-commercial registers.
  

Method of writing a trade name according to the new system

In light of recent updates, the Ministry of Commerce has clarified the mechanism for writing a trade name in accordance with the new Trade Names System when applying through the Saudi Business Center platform. According to the clarification, the new procedure allows for reserving a trade name without the need to specify the legal entity type (institution or company) or the type of business activity when submitting the application. This simplification is part of facilitating the procedures for starting a business and reducing the initial stages for entrepreneurs. This procedure also reinforces the objectives of the system for each confirmation.

Impact of these amendments on the business environment
These updates represent a fundamental regulatory step that contributes to enhancing the efficiency of the commercial market, increasing the reliability of establishments, and improving the quality of data available to investors and the public. They also represent a true translation of the Kingdom's Vision 2030 in building a competitive commercial environment at the regional and global levels.

In summary

This decision represents a qualitative shift in commercial regulation in the Kingdom and opens new horizons towards more flexible and transparent business practices. It also enhances the ability of regulatory authorities to achieve integration between systems and monitor the commercial market more effectively. It is important for commercial establishments and owners of existing records to review their status and prepare to correct their subsidiary commercial records within the specified deadline, to avoid any legal repercussions after the deadline. You can view the regulations and all related matters through Legal.

References

• Commercial Registry Law and its Implementing Regulations
• Trade Names Law and its Implementing Regulations
• Controls for Trade Names Registered Before the Effectiveness of the Trade Names Law
• Mechanism for Correcting the Status of Sub-Commercial Records