Saudi Arabia continues to make bold moves in its ongoing transformation journey under Vision 2030. The latest development is a sweeping reform to the Kingdom’s Law of Commercial Register and Law of Trade Names, introduced by the Ministry of Commerce. These changes aim to simplify business operations, attract foreign investments, and ensure greater alignment with global commercial standards.
Here’s an in-depth look at the key highlights and implications of the updated laws:
Key Changes to the Law of Commercial Register
Single Commercial Register:
Businesses are now required to maintain only one commercial register, eliminating the need for multiple or subsidiary registrations for different branches or locations. This reduces administrative burdens and operational costs.
Nationwide Validity:
Commercial registrations are no longer city-specific. A single CR is now valid across the entire Kingdom, allowing businesses to operate in multiple regions without additional registrations.
No Expiry:
The commercial register will no longer have an expiration date. Instead, companies will be required to confirm and update their data annually to keep their registration active.
Unified Establishment Number:
Each commercial register will now serve as the business’s unified ID number, starting with the digit “7.” This unique number will streamline interactions with various government entities.
Grace Period for Transition:
Existing businesses using subsidiary registers are granted a five-year grace period to transition to the new system and align with the updated regulations.
Real-time Data Verification:
The Ministry has also emphasized increased digital integration for CR issuance, allowing for real-time verification of business data and a faster registration process.
Fee Structure Adjustments:
Fees for commercial registration may be restructured based on business activity type and size. This is to encourage small and medium enterprises to formalize operations.
Key Changes to the Law of Trade Names:
English Trade Names Now Allowed:
Previously, businesses were restricted to Arabic trade names. Under the new law, trade names can now include English letters and numbers, making branding more global-friendly.
Independent Trade Name Management:
Trade names are now separate from the establishment. They can be registered, managed, and transferred independently, adding flexibility in brand ownership and franchising.
No Duplication of Names:
The system will prevent registration of identical or similar trade names, even if the business activities differ. This helps preserve brand identity and prevent customer confusion.
Online Reservation and Monitoring:
The updated system allows digital reservation and monitoring of trade names, making the process quicker and more transparent.
Additional Benefits and Implications:
- Ease for Foreign Investors: These reforms make it much easier for foreign companies to enter the Saudi market without being burdened by region-specific or multi-license requirements.
- Improved Transparency and Compliance: The unified registration and trade name systems reduce fraud and improve regulatory oversight.
- Boost to E-Commerce and Franchising: With English names permitted and trade names transferable, the law fosters easier market entry for international e-commerce and franchise brands.
- Support for Digital Government Services: The reform aligns with Saudi Arabia’s broader goal of full digital government transformation.
What Should Businesses Do Next?
- Review Your Current Registration: If your company uses multiple CRs, begin planning the transition to a unified registration.
- Update Your Trade Name Strategy: If applicable, consider registering an English trade name or restructuring for independent trade name ownership.
- Ensure Data Accuracy: Prepare for the annual data confirmation requirement by maintaining accurate business records.
- Consult Experts: Seek legal and business consultancy to ensure compliance and take advantage of the new benefits.
At Arab Dreams Business Consulting, we are ready to support you through this transformation. From updating your commercial registration to advising on trade name strategies, our team ensures a smooth and compliant transition.
Contact us today to make your business future-ready in Saudi Arabia.
