Overview of the Ministerial Resolution Issued Regarding the Mechanism for Rectifying the Status of Subsidiary Commercial Registers in KSA
The Minister of Commerce issued Ministerial Resolution No. (267), based on the provisions stipulated in both the Law of Commercial Register and the Trade Names Law, issued by Royal Decree No. (M/83) dated 19/03/1446 AH, and which came into effect as of 03 April 2025 AD. This Resolution includes several fundamental articles aimed at organizing and activating the new commercial regulations.
At the forefront of these provisions was the explicit approval of the two accompanying forms attached to the resolution for both the Implementing Regulations of the Law of Commercial Register and the Implementing Regulations of the Trade Names Law. These regulations represent the detailed framework for the practical application of the provisions of the two laws.
Furthermore, the resolution paid particular attention to the status of existing subsidiary commercial registers, as it established a clear and specific mechanism for rectifying their situations. The owners of these registers were granted a grace period of five years, commencing from the effective date of the Law of Commercial Register and the Trade Names Law, which is 03/04/2025 AD, and ending on 02/04/2030 AD. Three pathways were specified for the merchant or company to follow in order to rectify the status of the subsidiary commercial register: either converting it into a main register by establishing a new company, transferring it to another party not recorded in the commercial register, or permanently deleting it.
The resolution also addressed the matter of licenses, approvals, and activities associated with the subsidiary commercial register within the context of the rectification process. In the event of establishing a new company, these obligations shall transfer to the new entity in accordance with the Companies Law, with emphasis on preserving the rights of creditors and without prejudice to other relevant regulations and bylaws. Similarly, in the event of transferring the subsidiary commercial register to another party, these obligations shall transfer to the successor in accordance with the Trade Names Law, with the same guarantees pertaining to the rights of creditors and other regulations. As for the case of deleting the subsidiary commercial register, the licenses, approvals, and activities remain associated with the main commercial register.
The resolution also specified the mechanism for the transfer of licenses, approvals, and activities associated with the subsidiary commercial register, such that this transfer takes effect from the date of rectifying the register’s status or upon the expiry of the five-year grace period, whichever comes first while emphasizing adherence to relevant laws and regulations.
To ensure the continuous updating of data during the rectification period, the resolution obligated merchants to confirm the data of their subsidiary commercial registers within the specified grace period if the annual confirmation date falls due, with all provisions related to the annual confirmation being applied until the rectification of the status is completed or the grace period expires.
At the end of the specified rectification period, the resolution stipulated that the Registrar shall delete all subsidiary commercial registers whose statuses have not been rectified. To protect the rights related to the trade name, the resolution obligated the Registrar to reserve the trade name associated with the deleted register for sixty days, while providing the merchant with the opportunity to extend the reservation and use or dispose of it after its registration in the commercial register.
Finally, the resolution affirmed that the financial consideration specified in the Implementing Regulations of the Law of Commercial Register applies to all services related to subsidiary commercial registers.
In summary, this resolution represents a significant step towards organizing and modernizing the business sector in line with the new commercial regulations and providing a clear timeframe and framework for commercial entities to regularize their statuses in a manner that ensures the integrity of commercial transactions and the protection of rights.
Let us help you navigate these changes smoothly and protect your business —contact Mahitab Ajlaan, Associate Lawyer, at [email protected] for expert legal advice that ensures your success under the new regulations!
