The Saudi Cabinet has recently approved a new set of regulations concerning the registration and management of trade names, aimed at enhancing transparency and reliability in the business environment. These regulations, published in Official Gazette No. 5050 on October 4, 2024, will become effective 180 calendar days after the publication date and introduce significant updates to the existing framework for commercial registry and trade names.

Applicability:

The new regulations apply primarily to local Saudi traders or businesses conducting direct business in Saudi Arabia. Companies that do not have a registered trade name in Saudi Arabia and do not engage in direct business within the Kingdom will not be affected by these changes.

Key Highlights of the New Regulations:

  • Mandatory Registration: All local merchants and businesses engaging in direct business in Saudi Arabia are required to register their trade names in the Commercial Registry. Failure to do so will result in penalties.
  • Enhanced Name Protection: Registered trade names are legally protected, preventing unauthorized use by other entities. Under Article 7 of the new law, trade names that are identical or similar to well-known trademarks, or registered trademarks in Saudi Arabia, cannot be registered unless filed by the trademark owner. This provision helps strengthen trademark protection by closing the gap between trade name and trademark registration.
  • Restrictions on Certain Names: The regulations prohibit the registration of misleading, offensive, or politically sensitive names. Additionally, names similar to globally recognized trademarks cannot be registered unless they belong to the trademark owner.
  • Unified National Commercial Registration (SNCR): The new system replaces the previous regional registration approach with a single, nationwide registration process. Companies will now receive one commercial registration for their entire operation, including all branches, eliminating the need for separate registrations by region.
  • Administrative Process: Applications for trade name registration must now be processed within ten days, allowing for faster administrative procedures and giving businesses the ability to operate under their chosen name more swiftly.
  • Annual Electronic Confirmation of Commercial Register Data: There is no expiration date for commercial registrations. However, businesses must electronically confirm their registration details annually. Failure to confirm within three months of the due date will result in suspension, and if not rectified within a year, the registration will be canceled.
  • Extended Cancellation Period: For businesses that cease operations, the commercial register will be canceled one year after suspension of the registration, as opposed to the previous 30-day window. This gives companies more time to manage their exit from the market.
  • Public Transparency: Registered trade names must be clearly displayed at business premises and on all official documentation. The public can access basic trade name information, enhancing transparency within the business community.
  • Non-Financial Penalties: The new regulations introduce non-financial penalties, such as warnings or corrective actions, to address violations. Financial penalties, up to SAR 50,000 (approximately USD 13,300), still apply but can be used alongside these alternatives.

Compliance and Penalties:

Businesses must ensure their trade names are registered to comply with these new regulations. Non-compliance can lead to fines of up to SAR 50,000, and errors in registration can now be corrected under a newly introduced mechanism. For existing companies, a five-year grace period is granted to update commercial registers for their branches under the new system.

This legislative update underscores the Saudi government’s commitment to streamlining business practices, fostering trust in the marketplace, and safeguarding intellectual property rights across the Kingdom.

For more information or assistance with trade name registration in Saudi Arabia, feel free to contact Saba IP at  news@sabaip.com.