Governance Insights: Saudi Arabia

Highlights from the reforms under the Commercial Registration Law

• A newly unified commercial registration system across KSA: This new system replaces the previous regional approach where commercial registers were issued based on administrative regions.
• Single national commercial registration (SNCR): Companies will now receive a single national commercial registration that encompasses all of their branches, removing the need for individual branch registration.
• Annual electronic confirmation of commercial register data: Commercial registrations will no longer have an expiration date. However, companies must confirm their data electronically every 12 months from the date of issuance.
• Availability of non-financial penalties: Violations of the Commercial Registration Law can be addressed through alternative procedures, such as warnings and corrective actions, which may be used instead of or alongside financial penalties.
• Extended cancellation period for commercial register: For companies ceasing operations in KSA, the commercial register will now be cancelled one year after the registration is suspended.
• Requirement to open bank accounts: As with the previous law, companies must open bank accounts directly linked to their operations. While this requirement remains unchanged, it now aligns with the mandate to consolidate all subsidiaries and branches under a single national commercial register.

New elements of the New Tradename Law

These laws are designed to create a more efficient business environment, attracting a diverse array of investors, stimulating economic growth, and fostering innovation. By enforcing compliance, the government improves the overall business ecosystem, making it easier for new ventures to flourish and for existing businesses to thrive.

• Advance Tradename Reservation: Tradenames can be reserved ahead of time for a specified period.
• Linguistic Flexibility: Tradenames may be in Arabic or any other language, including transliterations or combinations of letters and numbers.
• Independent Tradename Ownership: Tradenames can be considered independent assets, allowing them to be assigned to other entities.
• Arabic Language platform: An Arabic Experts portal will be established to encourage the use of authentic Arabic names in the commercial sector.
• Protection of Reserved Tradenames: Using a reserved tradename without the owner's consent is prohibited.
• Unique Tradename Requirement: Names must be appropriate and not misleading. Tradenames must be unique and not resemble existing names, regardless of the business nature.

Do reach out to your contact within our Global Entity Management team to discuss the implications of this latest requirement.