Saudi Arabia Introduces Reformed Commercial Registry System With Alternative Penalties And Simplified Procedures

Riyadh: Saudi Arabia’s Ministry of Commerce has implemented a revamped commercial registry and trade name system, introducing alternative penalties such as warnings and corrective measures instead of immediate fines, according to an official statement. The new systems, which took effect on Thursday, aim to streamline business operations while ensuring compliance in a rapidly growing market that saw over 1.6 million commercial registrations by the end of last year.

Flexible Penalties to Encourage Compliance

Abdulrahman Al-Hussein, the Ministry of Commerce’s official spokesperson, told Al-Eqtisadiah that the updated framework allows for gradual enforcement, including:

- Formal warnings to merchants

- Mandatory corrective actions to resolve violations

- Data rectification orders for inaccurate commercial registry entries

However, financial penalties remain for serious breaches, ranging from 500 to 10,000 Saudi riyals for offenses such as:

- Failure to submit annual confirmation data

- Operating without proper commercial registration

- Providing misleading information in registry filings

Key Changes in the New System

Al-Hussein highlighted major structural reforms, including:

- Elimination of sub-registries, with businesses now required to maintain a single commercial registry covering all regions of Saudi Arabia.

- A five-year grace period for existing sub-registries to align with the new rules.

- Mandatory annual electronic verification of commercial data, replacing the previous renewal system tied to registration dates.

Enhancing Business Credibility and Efficiency

The reforms are designed to reduce bureaucratic hurdles and lower costs for businesses. Key facilitations include:

- Mandatory business bank accounts linked to commercial registries to boost financial transparency.

- A 90-day window to obtain necessary activity licenses after registration (extendable based on regulatory requirements).

Al-Hussein emphasized that the updated system reflects Saudi Arabia’s commitment to modernizing its business environment, aligning with Vision 2030’s goals of economic diversification and ease of doing business.

Industry Expectations

The Ministry anticipates widespread adoption, citing the reforms’ benefits for startups and established enterprises alike. By centralizing registries and introducing flexible compliance mechanisms, the government aims to foster a more dynamic and transparent commercial ecosystem.

With these changes, Saudi Arabia continues to position itself as a leading investment hub in the region, balancing regulatory oversight with business-friendly reforms.