On Tuesday, September 17, 2024, the Saudi Council of Ministers issued the New Commercial Registry System and the Commercial Names System. The aim of these new regulations is to facilitate doing business and reduce burdens on commercial establishments and institutions.
The new commercial register system stipulates a single registry for the establishment at the level of the Kingdom, while the commercial names system provides for the regulation of procedures for reserving names to protect them and enhance their value, within the framework of the Kingdom’s 2030 vision to encourage foreign investments and reduce the burdens on investors. In this article, we will learn about the objectives and advantages of both the Commercial Registry System and the Trade Names System.
What is the new commercial registry system?
As part of the Kingdom’s Vision 2030, Saudi Arabia is taking clear and immediate steps to encourage foreign and local investment, and this is represented by the launch of many new laws such as the updated investment law and the new commercial register and trade names system, in addition to the clear facilities issued by the Kingdom day after day to facilitate all the procedures that enterprises must take to establish a company in Saudi Arabia, such as issuing a commercial license, obtaining a commercial register and registering a trade name.
The new commercial registry system launched by the Kingdom seeks to facilitate doing business and eliminate the issuance of subsidiary registries for institutions and companies. It is now possible to conduct all commercial activities throughout the Kingdom of Saudi Arabia with a single commercial registry.
If you already have commercial records, the Kingdom has decided to grant a 5-year grace period to correct the existing sub-registries for organizations and companies, where they can be transferred to another party or transferred to the main registry.
What is the new Trade Names Law?
It is a 23-article system that aims to organize the process of reserving trade names and registering them in the commercial register in the framework of maintaining transparency and clarity as well as preserving property rights in the Kingdom of Saudi Arabia.
The Council of Ministers also made it possible to reserve trade names for a certain period of time that can be extended, given specific conditions set by the Council. It also expanded the scope of trade names, so now you can choose the name in either Arabic or English, and it can be numbers and letters.
In addition, the system allows you to transfer the ownership of the name to another organization or waive its ownership and the possibility of disposing of it freely and independently of the organization.
Objectives of the New Commercial Registry System
The new Commercial Registry Law aims to organize the procedures for registration in the commercial registry, as it ensures the periodic updating of records and facilitates research and access to them. It also contributed to the facilitation of doing business by canceling the issuance of sub-registers for institutions and companies, and suffice with a single commercial register at the level of the Kingdom, which includes all activities of the establishment, which contributes to reducing the financial burdens on commercial establishments.
The system also developed a centralized electronic base to save the names of traders, record them, and save commercial specialties.
What is the goal of the new trade names system?
The new trade names system contributes to regulating the procedures for reserving and registering names in the commercial register, maximizing their value, and ensuring their protection and related rights. It also prohibits the use of a trade name reserved or registered in the commercial register “without the owner’s consent” and stipulates that the trade name must be appropriate and not misleading.
It also prohibits the reservation or registration of a business name that is similar to the name of another business, even when the business’s activity is different.
Key Features of the New Commercial Registry System
The Kingdom is issuing more facilities that incentivize investors to invest directly in Saudi Arabia, which is why the Council of Ministers issued the new Commercial Registration and Trade Names Regulations. The main advantages of the new commercial registration system are as follows:
Only one commercial register at the level of the Kingdom of Saudi Arabia, canceling the issuance of sub-registers for all activities.
Centralization of the commercial register to practice trade with only one register, abolishing the city of the commercial register.
Each person has the right to own one individual organization, through which he/she can practice various commercial activities.
No specific duration for the commercial register.
The establishment is required to open a commercial bank account and conduct its business through it, and owners of sub-registers can amend them within a period of 5 years.
Key features of the new trade name system
Allowing the trade name to consist of letters, numbers or words in Arabic or English.
Disposing of the trade name independently or transferring its ownership.
The trade name can be reserved before it is registered in the commercial register and the duration of the reservation can be extended.
Limits the existence of similarities and achieves transparency, clarity, and continuous verification of the trade name reservation.
Conclusion
The new commercial registry system and the commercial names system are one of the Kingdom’s ways to facilitate business and reduce burdens on large enterprises. This is within the framework of the Kingdom’s Vision 2030 to attract more investments within the Kingdom and encourage investors from all over the world to make the Kingdom the first investment destination.
