New Commercial Registration and Trade Name Laws Take Effect In 2025

In September 2024, the Council of Ministers approved two significant pieces of legislation the new Commercial Registration Law and Tradename Law (“Updated Laws”). These laws are to be effective one-hundred and eighty (180) days after their publication on 4 October 2024 in the Official Gazette (i.e April 2025). These updated laws aim to streamline business operations and reduce regulatory burdens for companies operating in Saudi Arabia.

Aligned with Saudi Arabia’s Vision 2030 initiative, these new laws seek to create a more business-friendly environment by simplifying company registration processes, embracing digital innovations, and strengthening intellectual property protection for tradenames. By doing so, the government aims to stimulate private sector growth, attract investment, and contribute to the Kingdom of Saudi Arabia’s ambitious economic transformation.

This Client Alert provides an overview of the key changes and implications of these updated laws for businesses operating in Saudi Arabia. By understanding these changes, businesses can adapt their operations to comply with the new regulations and capitalize on the opportunities presented by Saudi Arabia’s evolving business landscape.

Key elements of the new Commercial Registration Law:

1. Unified Commercial Registration System: The new law introduces a unified national commercial registration system, replacing the previous regional-based system. This simplifies the process for businesses, as they will only need a single national Commercial Registration Certificate (CR) to cover all their activities, including branch activities.
2. Diverse Activities Under a Single CR: A company can now conduct various types of activities, even if they are unrelated, under a single CR. This flexibility allows businesses to expand their operations and adapt to changing market conditions.
3. Grace Period for Existing Companies: To provide a smooth transition, the law offers a five-year grace period for existing companies to rectify any inconsistencies in their branch CRs. They can either establish a new company or transfer their branch activities and assets to their main CR.
4. Annual CR Information Confirmation: The CR will no longer have an expiration date. Instead, companies are required to confirm their CR information annually. Failure to do so within the specified timeframe may result in suspension or cancellation of the CR.
5. Alternative Penalty Measures: The law introduces alternative penalty measures, such as warnings and rectification orders, which may be applied instead of or in conjunction with financial penalties. This approach aims to foster a more lenient regulatory environment.
6. Company Bank Account Requirement:

It is still incumbent upon companies to maintain bank accounts associated with their CR to promote transparency and safeguard their transactions.

Key Elements of the New Tradename Law:

1. Advance Tradename Reservation: Tradenames can be reserved in advance for a specific period, which can be extended.
2. Linguistic Flexibility: Tradenames can be in Arabic or any other language, including transliterated words or combinations of letters and numbers.
3. Independent Tradename Ownership: Tradenames can be treated as independent assets, allowing for their assignment to other entities.
4. Arabic Language Enhancement: An Arabic Experts portal will be established to promote the use of authentic Arabic names in the commercial environment.
5. Protection of Reserved Tradenames: The use of a reserved tradename without the owner’s consent is prohibited.
6. Unique Tradename Requirement: Tradenames must be distinct and not similar to existing names, regardless of the nature of the businesses involved.

It is undoubted that the Kingdom of Saudi Arabia is emerging as a dynamic business hub, and the upcoming Commercial Registration Law and Trade Name Law are poised to revolutionize its business landscape. By streamlining registration and incorporation processes and reducing bureaucratic hurdles, the government is actively inviting both domestic and international investors to seize the opportunities in this thriving market.

These groundbreaking laws aim to create a more efficient business environment, attracting a diverse range of investors, stimulating economic growth, and fostering innovation. By mandating compliance, the government is taking a proactive approach to enhance the overall business ecosystem, making it easier for new ventures to flourish and existing businesses to thrive.

For a tailored approach to navigating the new laws and maximizing the benefits for your business, reach out to Hesham Al Homoud H.AlHomoud@tamimi.com; Omar AlHumaid O.AlHumaid@tamimi.com or Somaia Bugis S.Bugis@tamimi.com . With our extensive regional and global expertise, our team can help you develop a strategic plan and ensure a smooth entry or expansion into the Saudi market.