Saudi Commercial Registry System: Controls for Registration, Notation, and Amendment

The Kingdom of Saudi Arabia is working to strengthen the economic performance of the commercial sector, through supporting evidence for the internal trade movement of commercial establishments and the organization of a database for all commercial activities. Everyone engaged in commercial activity, whether a company, sole proprietorship, merchant, or any other legal entity, is obligated to register their commercial activity database in the Saudi Arabian Commercial Register. The Royal Commission has regulated this matter under the system issued by Royal Decree No. M/1 dated 21/2/1416 AH, and the implementing regulations under Ministerial Resolution No. 1003 dated 21/9/1416 AH, which we will discuss in this article.

The Saudi Commercial Register System
is a central electronic database that records the names and information of those subject to the provisions of the Commercial Register System. The registry aims to regulate registration procedures and facilitate the conduct of business for commercial establishments by making the registry data searchable and accessible. Every merchant is obligated to register their name in the commercial registry where their business is located, whether it is a head office, branch, or agency.

Each region in the Kingdom of Saudi Arabia has a commercial registry, determined by a decision issued by the Minister of Commerce. All merchant and company data is recorded in the registry, with unique numbers and codes. Establishments are also assigned a unique code, depending on their legal form.

How is a commercial establishment registered in the commercial registry and amendments noted?
The process of registering a commercial establishment in the commercial registry and noting amendments to it takes place through several steps, including the following:

First:

A commercial establishment established in the Kingdom must be registered in the commercial registry. Any branch of the company must be registered within 30 days of its establishment. A copy of the company's articles of association or bylaws must be attached to the application.

Second:

Every merchant, company manager, or liquidator is obligated to notate any amendments to the registration data in the commercial registry within 30 days of the amendment date.

Third:

Applications for registration, amendment, or cancellation of the commercial register must be submitted on the designated form. Each application must be accompanied by supporting documents, written clearly in handwriting. It must be submitted by the persons assigned to submit it or by their representatives with a special or general power of attorney that explicitly states the agent's authority to submit such applications. The original power of attorney or a copy thereof must be kept with the original application at the Commercial Register Office.

Fourth:

Everyone registered in the Commercial Register is obligated to do the following:

Deposit a certificate of membership with the Chamber of Commerce and Industry within 30 days of the registration date.

Provide the name of the commercial establishment, the commercial register registration number, and the place of registration in a visible place on all company facades, all documents, correspondence, printed materials, seals, signs, and any electronic means. The information must be written in Arabic.

Who is required to register in the Saudi Commercial Register?

Sole proprietors and anyone who fits the description of a merchant are required to register in the Commercial Register.

Companies stipulated in the Saudi Companies Law are required to register in the Commercial Register.
Commercial representation offices, commercial agencies, and branches of Gulf and foreign companies are required to register in the Commercial Register.
What information must be registered in a company's commercial register?
The following information must be registered in the Commercial Register:

Name, ID number, and address of the applicant for registration.
Trade name under which the business activity is to be conducted.
The legal form of the commercial establishment (the company's legal form).
The amount of capital of the company applying for registration.
Validity of registration data in the Saudi Commercial Register
Registration data in the Commercial Register shall be conclusive evidence for or against the commercial establishment from the date of registration. A statement requiring registration or annotation may not be used against third parties unless this procedure is completed. Interested third parties may use this statement against the merchant.

Registration Controls in the Saudi Commercial Register
The Saudi Commercial Register is a fundamental pillar for regulating commercial activities within the Kingdom. These controls follow precise guidelines for registering commercial establishments and updating their data, facilitating business operations and ensuring compliance with applicable laws and regulations. These are as follows:

First: Top of Form

1. The Commercial Registry Office must verify the availability of the conditions for registration, notation, or deletion. It may require the applicant to submit documents supporting the accuracy of the information contained in the application. The Registry Office may reject the application with a reasoned decision within 30 days from the date of submission.

2. Registration applications for sole proprietorships, companies, and their branches must specify the company contract or articles of association, the director's powers, the right to manage and sign, who has the right to sign transactions and contracts, the powers of the director or persons with the right to sign, whether in terms of type or value, and the transactions and contracts they are prohibited from performing, if any.

Second:

1. Registration applications shall be submitted to the competent employee at the Commercial Registry Office. Each application shall be verified to ensure that the registration requirements are met. The application shall then be marked with the date of submission, accepted if the requirements are met, rejected if not, and the reasons for rejection shall be stated. This shall be accompanied by the employee's signature. In all cases, the employee shall retain the original application at the competent registry office.

2. Commercial Registry offices are obligated to record the data of accepted applications in the register prepared for this purpose and issue a certificate of this in the form of an original and a copy. The original shall be delivered to the interested party and the copy shall be retained at the Commercial Registry Office.

Third:

1. Any person may obtain an extract from the commercial registry of any merchant or company. If there is no registration, the person shall be given a certificate of this. The extracted copy may not include a bankruptcy judgment if a court has ruled for the restoration of honor, nor any judgments of interdiction or seizure.

2. If data is entered that changes the data recorded in the register, the new data will be recorded based on the request submitted by the interested party, and a registration certificate will be issued containing the amended data.

Controls for Registering Branches of Foreign Companies and Representative Offices in the Commercial Register
Article 4 of the Executive Regulations issued pursuant to Ministerial Resolution No. 1003 dated 21/9/1416 AH stipulates the following:

First:

Foreign companies licensed to open a branch or office in the Kingdom are required to submit an application to register the branch or office in the Commercial Register within 30 days from the date of opening the branch. A copy of the decision licensing the branch or office and a copy of the documents supporting the establishment of the company, certified by the competent authorities, along with a certified Arabic translation, must be attached to the application for registration. The application for registration must include comprehensive information about the branch and office, including, in particular, the following:

1. The trade name of the branch or office, its address, the activity it engages in, the date of its opening, the name of the manager, and the scope of his powers. 2. Cases for deleting a commercial registry entry, including the following:

·     Every merchant, his heir, or the liquidator must deletion the commercial registry entry in the following cases:

·     The merchant permanently abandons his business.

·     The merchant dies.

·     The company's liquidation is completed.

Second:

The application must be submitted within 90 days from the date of the incident requiring deletion. If the concerned parties do not submit a deletion request, the Commercial Registry Office, after verifying the incident and notifying the concerned parties by registered letter, will automatically deletion the registration 30 days from the date of notification, unless the Office receives a refutation from the concerned party within that period. If a final judgment or decision is issued to deletion the registration in accordance with applicable regulations, the competent Commercial Registry Office will deletion the registration immediately upon notification of the judgment or decision.

Third:

A certificate of deletion of registration will be issued by the Commercial Registry Office in original and copy, according to the form prepared for this purpose. The certificate will indicate the date and reason for deletion. The original will be delivered to the concerned party, and a copy will be retained at the Commercial Registry Office.

Notation of Judicial Rulings and Orders in the Commercial Registry
The Commercial Registry System, issued by Royal Decree No. M/1 dated 21/2/1416 AH, and the implementing regulations issued by Ministerial Resolution No. 1003 dated 21/9/1416 AH, stipulate that:

Judicial authorities issuing judicial rulings and orders are obligated to notify the competent Commercial Registry Office within 30 days of the date on which they are deemed final. These rulings and orders include:

1. Rulings declaring or revoking bankruptcy.

2. Rulings restoring honor.

3. Rulings placing a merchant under guardianship or seizing his assets or lifting them.

4. Orders withdrawing or restricting the trading license for a minor or a person under guardianship.

5. Rulings dismissing partners or removing managers.

6. Rulings on the dissolution or invalidation of the company, and the appointment or removal of liquidators.

7. Rulings issued to ratify, revoke, or invalidate a judicial settlement.

8. The order issued to initiate procedures for a protective settlement against bankruptcy, and rulings issued to ratify, revoke, or invalidate it.

9. Rulings issued with convictions in cases of forgery, counterfeiting, and bribery.

- The competent commercial registry office must record the aforementioned rulings and orders as soon as it is notified of them.

- Commercial registry offices must record these rulings and judicial orders, as well as any penalty imposed on a person registered in the commercial registry, on the relevant page, detailing a summary of these rulings, orders, and violations, the amount of the penalty, the date of issuance of the decision, the date of notification to the violator, the date of filing the grievance, if any, the number and date of the decision issued by the Minister of Commerce in this regard, its summary, and the date of implementation of the penalty.

In conclusion:
In concluding this article on the regulations for registration in the Saudi Commercial Registry System, it can be said that these regulations constitute a fundamental basis for regulating commercial activities in the Kingdom and ensuring compliance with laws and regulations. For more information or to obtain specialized legal advice, you can contact Saadani & Associates, an international law firm specializing in commercial law.