The Kingdom of Saudi Arabia (KSA) has introduced two pivotal laws on September 17, 2024, reshaping the legal landscape for all entities operating and aiming to operate within the KSA market. The Commercial Registration Law and the Trade Name Law, ratified by a decision from the Council of Ministers, are set to fully replace existing legislation, with full enactment expected 180 days after publication in KSA’s official gazette, Umm Al-Qura.

These laws mark a significant overhaul aligning to modernize and simplify business registration, streamline trade name regulations, and improve the commercial environment alongside the recently enacted Investment Law to enhance transparency and equality between the investors.

The new trade names system contributes to organizing the procedures for reserving names and registering them in the commercial register, maximizing their value, and ensuring their protection and the rights related to them.

1. Purpose of the Commercial Registration Law

The Commercial Registration Law, consisting of (29 articles) is designed to update business operations by establishing a unified national registration system, contributes to facilitating the practice of business by organizing the procedures for registration in the Commercial Registry, ensuring the accuracy of the registered data and updating it periodically, and most important making it available for viewing in a way that ensures ease of searching for and accessing it.

These Law changes aim to streamline and decrease administrative processes for commercial establishments, promote ease of doing business, and modernize the regulatory framework to align with international standards

• Main changes and Highlights:

Unifying Commercial Registration System, to moving from a regional to a national system, all commercial registrations are now standardized across KSA, simplifying the process and ensuring uniformity throughout KSA.

Single National Commercial Registration (SNCR) Companies will operate under one national registration, encompassing all branches, replacing the previous requirement for separate registrations by branch, that must require annual electronic updates.

This reform of issuing a unified national commercial registration that consolidates all branch operations under a single registration removes the former requirement mandating separate commercial registrations for each individual branch, as outlined in the previous law. Practically branches will no longer have an expiration date to be reissued and a simple confirmation of data electronically every 12 months from the date of issuance will be enough.

By restructuring registration, this change reduces administrative redundancy, simplifies compliance obligations, and enhances regulatory transparency. Furthermore, a unified commercial registration facilitates easier tracking and management of corporate activities across branches, supporting both regulatory oversight and the efficient operation of businesses.

Allowing Alternative and light penalties, such as warnings and corrective measures, are now available alongside or in place of financial sanctions for infractions. Unlike the previous law, which imposed specific financial penalties for infractions typically assessed on a case-by-case basis, these changes are expected to strengthen the trust relationship between government institutions and commercial establishments.

Extended Cancellation Timeline For companies ceasing operations, the cancellation process has been extended to one year after suspension. The system cancelled the requirement to renew the commercial register and the expiry date of the register, and introduced the requirement for annual “electronic” confirmation of the commercial register data, and obligated the merchant to confirm the commercial register data annually, every 12 months from the date of issuance, and the register is suspended in the event of a delay for a period of (three months) from the due date of confirmation, and is automatically deleted (after a full year from the start of the suspension).

Grace Period, Existing companies will have a five-year grace period to update registrations, either by transferring branch registrations to their SNCR or by consolidating assets and activities under the SNCR.

The Commercial Register System facilitated the conduct of commercial business by cancelling the issuance of sub-registers for institutions and companies, thus making it sufficient to have one commercial register at the Kingdom level, including all the establishment’s activities, which contributes to reducing the financial burdens on commercial establishments.

2. Highlights of the Trade Names Law:

With regard to the new trade names system, the system, which consists of (23 articles), aims to regulate the procedures for reserving names and registering them in the commercial register, maximizing their value, and ensuring their protection and the rights related to them.

The system allows the reservation of a trade name before its registration officially for a specific period that can be extended, specifying the conditions that must be met by the trade names to be registered or reserved, and the prohibited names. This step will allow companies to secure their preferred trade names ahead of time.

• Key Differences Between the New and Previous Systems

Expend the Trade Names Options: Art 4 allows the trade name to be in a language other than Arabic or to consist of letters and numbers, unlike the previous system, through stating the way of forming the trade name formation:

• The trade name is taken from the trader’s personal name or from a distinctive name or both. It consists of Arabic or Arabized words, or Arabic letters or numbers, or one or more of them.
• The trade name may consist of words, letters, numbers, or one or more of them in a language other than Arabic.

The regulation will specify the provisions specific to this article, including the non-Arabic language of the trade name, the method of displaying the trade name in the commercial register, and the provisions for reserving and registering the name (Saudi Arabia) and the names of (cities, regions and public places) and (families), as well as the guidelines for prohibited names. This ensures a clear and consistent registration process.

Ownership Transfers, art 10 allows the trade name to be disposed of independently from the commercial establishment by transferring its ownership, after the trade name was linked to the establishment and was not permitted to be disposed of independently according to the previous system. Consequently, the ownership assignment of a trade name can be done according to the new Law without necessitating the transfer of the entire business.

Tradenames Protection and Prohibited selections, the recent regulation has set clear and precise criteria for prohibited names, whereas the criteria were general in the previous system. In this context art 7 has listed the Banned and prohibited Names to reserve or register a trade name that violates public order or public morals or that leads to misleading, or whose use is prohibited based on the relevant regulatory provisions, including if the name is:

1. It is similar to a trade name reserved or registered in the commercial register, regardless of the type of activity. The regulation shall specify the criteria for similarity of trade names and the aspects of distinction between them.
2. It is similar to a globally famous trade name or trademark, or is similar to a registered or famous trademark in the Kingdom, unless the trademark is owned by the applicant.

• It contains a political, military or religious meaning, connotation or content.

1. Resembles a name, badge of honor or symbol of any organization – local, regional or international one of its institutions.

Therefore, to enhance the protection of trade names, the law decided to prohibit the use of a trade name reserved or registered in the commercial register “without the consent of its owner”, and stipulated that the trade name must 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. The Ministry shall prepare a list of the most prominent names that are prohibited from being reserved or registered as trade names in accordance with paragraph (1) of article 7, and shall update it periodically.

3. Practical Considerations for Our Clients:

The new laws are applicable to all commercial establishments operating within Saudi Arabia, including both newly established and existing businesses.

Businesses currently holding sub-registers for branch locations will be granted a five-year transition period to comply with the new requirements. During this period, they must either transfer their branch registrations into the unified national registration system or cancel them. This grace period is designed to minimize business disruption and facilitate a smooth transition to the new centralized registration framework.

The establishment of a centralized commercial registration (CR) database under the new law will link the commercial registration system with other government services, simplifying administrative procedures.

This integration allows businesses to open bank accounts directly linked to their commercial registration, further streamlining financial operations and enhancing regulatory transparency.

4. Conclusion:

Both Law, integral to Saudi Arabia’s Vision 2030 reforms, aim to restructure business operations and reduce costs by eliminating redundant requirements, such as branch-level registrations and periodic renewals. The new Tradenames Law grants businesses greater freedom to select trade names that align with their branding strategies, while also addressing a key concern for foreign investors, by avoiding direct translations of names that may not effectively represent their brand. This flexibility, combined with stronger protections for registered names, encourages investment in distinctive branding and demonstrates the Kingdom’s commitment to a favorable business environment for both domestic and international investors.