The New Commercial Register Law: Key Changes, Obligations of Companies and Establishments, and Its Impact on Contracts and Litigation

What is the Commercial Register, and what is the new law?

The Commercial Register is an official register administered by the Ministry of Commerce, in which merchants, both individuals and companies, are recorded with their basic data: trade name, activity, owners or partners, capital, address, and who has authority to represent them. Its purpose is to make a merchant’s data public and reliable for anyone dealing with them.

The new Commercial Register Law and the new Trade Names Law were issued together by Royal Decree No. (M/83) dated 19/3/1446H, after their approval by the Council of Ministers in September 2024. They were published in the Official Gazette on 1/4/1446H and took effect, together with their Implementing Regulations, on April 3, 2025, replacing the two previous laws.

The register’s importance also extends beyond the Ministry of Commerce: banks rely on it to open accounts and identify authorized signatories, government entities for licenses and tenders, courts to verify the capacity of litigants, and counterparties to know whom they are contracting with. Any discrepancy between the register’s data and reality is therefore quickly reflected in all of these dealings.

What are the key changes in the new Commercial Register Law?

The new law changed the philosophy of the register from a document renewed periodically to a permanent record whose data is updated and confirmed annually. The key changes, as announced by the Ministry of Commerce, are:

• A single commercial register for each establishment across the Kingdom, covering all its activities and branches in different regions.
• No more branch registers for companies and establishments, with a five-year grace period from the law’s entry into force to regularize existing branch registers, after which they are struck off.
• The register has no expiry date; renewal is replaced by electronic confirmation of the data every year.
• A natural person may have one sole proprietorship through which they conduct multiple commercial activities.
• The establishment must have a bank account linked to it and submit the account details within the specified period.
• A ninety-day period to obtain licenses to practice the activity, unless the licensing authority sets a longer period.

In parallel, the Unified National Number for establishments, a number beginning with 7, was adopted as their primary identifier with government entities and banks, instead of relying on the register number alone.

The practical effect of these changes is that an establishment with multiple branches is no longer legally managed through separate registers, each with its own name and number, but through a single record to which activities and branches are added. This simplifies procedures, but it makes data accuracy in that single record more important, because a single error affects all branches and activities.

Who is required to register in the Commercial Register?

The new Commercial Register Law provides that every merchant must register in the Commercial Register. This includes companies of all forms and sole proprietorships whose owner conducts commercial activity in their own name, with limited exceptions specified by the Regulations for certain categories and activities.

The difference between the two forms is legally fundamental: a company acquires an independent legal personality under the Companies Law, whereas a sole proprietorship has no personality separate from its owner, so the merchant is liable with their personal assets for its obligations, and claims arising from its activity are directed at them personally. Choosing the legal form at incorporation is therefore not merely an administrative step but a decision that defines the limits of liability and affects every subsequent contract.

Registration in the register does not replace activity licenses: if the activity requires a license from a competent authority, the merchant must obtain it within ninety days of registration unless the licensing authority sets a longer period, and practicing the activity without its license remains a separate violation.

What is the annual confirmation of the Commercial Register, and what happens if it is neglected?

Annual confirmation is an electronic procedure in which the merchant confirms the accuracy of the register’s data once every year from its date of issuance, and it has replaced periodic renewal. The register remains in effect as long as its data is confirmed and up to date.

According to the Ministry of Commerce, failure to confirm results in the register being suspended ninety days after confirmation falls due, and then struck off if the default continues for a full year. Suspension and striking off have wide practical consequences: dealings with banks and government entities may be disrupted, and the establishment’s ability to contract and issue invoices is affected. In addition, there is a separate obligation to update any change in the data within ninety days of its occurrence, such as a change of manager, address, or activity.

What is new in the Trade Names Law?

The Trade Names Law requires every merchant to adopt and register a trade name, and it regulates the reservation, registration, and protection of names. Among its most notable innovations, it permits a trade name to consist of Arabic or Arabized words or numbers, and also permits forming it in a language other than Arabic subject to statutory controls, whereas the previous law was more restrictive.

The royal decree preserved the protection of trade names registered before the law took effect, as determined by the Ministry of Commerce. The law prohibits using a name reserved or registered to another merchant, and requires the trade name to be displayed on documents and signboards. A trade name is different from a trademark: the former identifies the establishment in the register, while the latter distinguishes products and services and has its own separate protection regime. It is important that neither conflicts with the rights of third parties in the other.

What are the penalties for violating the Commercial Register Law?

Both laws punish violations with a fine not exceeding fifty thousand riyals, doubled for repeat offenses. Violations clarified by the Ministry of Commerce include:

• Conducting commercial activity without registration in the register.
• Failing to update data within ninety days, or failing to confirm it annually.
• Submitting incorrect data.
• Failing to submit bank account details within the specified period.
• Failing to display the trade name, or using a name reserved or registered to another merchant.

Instead of or in addition to the fine, the competent committee may take other measures, such as a warning, requiring the violator to take corrective action, or correcting the data. A person against whom a decision is issued may challenge it before the competent court within thirty days.

The statutory penalty does not replace civil liability. Anyone harmed by the use of their trade name, or by incorrect data in the register of an establishment they dealt with, may still claim compensation before the courts under the general rules. Submitting incorrect data may also give rise to more serious liability if it is accompanied by misrepresentation or fraud, which makes data accuracy a matter of protecting the establishment itself, not mere compliance.

How does the commercial register affect contracts and litigation?

The commercial register is the primary reference for identifying a commercial party and the capacity of its representative, so any error in it carries directly into the contract and the lawsuit:

• Identifying the parties: The contract should state the name matching the register and the unified national number, not the marketing name or branch name, especially after the abolition of branch registers.
• Signatory capacity: Verify from the register and the articles of association that the signatory is a manager or authorized signatory acting within their powers.
• Register status: Contracting with an establishment whose register is suspended or struck off raises risks in enforcement and collection.
• Sole proprietorship: Its owner is personally liable for its obligations, so the lawsuit and enforcement are directed accordingly.
• Statement of claim: The defendant’s details are written as they appear in the register, since errors in them are among the causes of delay in registering the lawsuit.

The Commercial Court has jurisdiction over most disputes between merchants, and before signing any important contract it is advisable to use the contract review checklist to verify the other party’s details and authority.

What should a company or establishment do now?

Adapting to the new law requires one comprehensive review followed by periodic follow-up. Practical steps include:

• Listing existing branch registers and planning to merge them, transfer their ownership or strike them off before the transitional period ends.
• Updating the unified national number and official name in contracts, invoices, correspondence and bank accounts.
• Setting the annual confirmation date and assigning an internal person responsible for it.
• Matching the details of managers and authorized signatories with reality, and updating them within the statutory period upon any change.
• Reviewing the trade name and trademark to avoid conflict with third-party rights.

The review is not limited to the administrative side. Long-term contracts signed under an old branch register, and bank guarantees and powers of attorney issued under previous numbers, need review to ensure that the establishment is still clearly the named party in them. Where needed, a consultation can be requested to review the establishment’s legal status or choose the appropriate form before incorporation.

Frequently asked questions

When did the new Commercial Register Law take effect?

The Commercial Register Law and the Trade Names Law, together with their implementing regulations, took effect on April 3, 2025. They were issued by Royal Decree No. (M/83) dated 19/3/1446H and published in the Official Gazette on 1/4/1446H.

Does the commercial register still need renewal?

No. The new law abolished the register’s expiry date, and renewal has been replaced by electronic confirmation of data once a year. According to the Ministry of Commerce, the register is suspended if not confirmed within ninety days of the due date, and is then struck off if the failure continues for a year.

What happens to existing branch registers?

The royal decree gave register holders a five-year grace period from the law’s entry into force to regularize branch registers, after which they are struck off under procedures set by the Ministry of Commerce, as an establishment now has a single register covering its activities and branches.

What is the fine for violating the Commercial Register Law?

A fine not exceeding fifty thousand riyals, doubled for repeat offenses. Instead of or in addition to it, a warning or an obligation to take corrective action may be imposed. A person against whom the decision is issued may challenge it before the competent court within thirty days.

Can a trade name be in a foreign language?

Yes. The new Trade Names Law permits a trade name to be formed in a language other than Arabic, alongside Arabic or Arabized words and numbers, in accordance with the controls set by the law and its implementing regulations.

Can an individual own more than one sole proprietorship?

Under the new law, a natural person has one sole proprietorship, through which they may conduct multiple commercial activities. If they need another entity with separate liability, the usual route is to establish a company.