The recent Saudi Trade Name Law has introduced significant changes to how businesses can name and register their companies in Saudi Arabia. By banning trade names with religious, military, or political connotations, the Kingdom aims to streamline its business practices, protect public interest, and maintain its economic and social integrity. These changes were part of the Commercial Registration Law and Trade Name Law, both adopted by the Council of Ministers during their session on September 17, 2024 and published in the official Umm Al-Qura newspaper.

Overview of the New Saudi Trade Name Law

The Trade Name Law consists of 23 articles, each focused on organizing the way trade names are selected, reserved, and registered in Saudi Arabia. The law strictly prohibits the use of any trade names that have a religious, military, or political meaning, or any name associated with official organizations, local or international. This step ensures that businesses operate under names that do not mislead the public or harm public order.

The law also includes provisions to safeguard the commercial registration process, ensuring that merchants adhere to the legal frameworks laid out in the Commercial Registration Law.

Strict Penalties for Violations of the Trade Name Law

Businesses that fail to comply with the new Trade Name Law face penalties, including fines of up to SR50,000. According to the law, any merchant who uses a restricted trade name or fails to register a trade name in the commercial register will be subject to this fine. This is designed to enhance the professionalism and transparency of businesses operating in Saudi Arabia, ensuring that trade names are correctly registered and protected.

In addition to the prohibition on religious, military, and political names, the law also forbids using trade names that resemble famous global trademarks, registered trademarks within Saudi Arabia, or names that may mislead the public.

Mandatory Trade Name Registration for All Businesses

The Saudi Trade Name Law makes it mandatory for every merchant to adopt and register a trade name. The commercial registration process must be completed, and businesses are encouraged to ensure their trade names meet the conditions laid out in the law. This new requirement is expected to provide businesses with better protection over their trade names, prevent misuse, and create a clearer system for business registration in the country.

The law allows businesses to reserve a trade name for a specific period before registration, giving them time to ensure that their business names align with the legal requirements.

Ban on Misleading or Offensive Trade Names

A key component of the Saudi Trade Name Law is the focus on eliminating offensive or misleading trade names. The law prohibits any trade name that could disrupt public order or public morals. This includes names that may mislead customers or those that could be confused with well-known businesses or international trademarks. Businesses are encouraged to select names that reflect their identity while aligning with Saudi Arabia’s commercial regulations.

This law has been introduced to bring more organization into the commercial sector and to protect both businesses and consumers from deceptive trade names.

Flexibility in Trade Name Language

The Saudi Trade Name Law also expands its scope by allowing businesses to register trade names in Arabic, non-Arabic, or even Arabized words. Businesses can also use letters or numbers as part of their trade names. This change provides companies with the flexibility to choose names that reflect their brand identity and appeal to their target markets, whether local or international.

This linguistic flexibility is supported by the introduction of the Arabic Language Experts Platform, a government initiative that aims to enrich the Arabic language by creating a rich reservoir of commercial names in Arabic. The platform is designed to help businesses adopt suitable and appropriate Arabic names while complying with the law.

Business Growth and Innovation Through Trade Name Law

The introduction of the Saudi Trade Name Law reflects the Kingdom’s ongoing efforts to modernize its economic environment. The law provides businesses with the opportunity to grow by offering more flexibility in the types of trade names they can register. The ability to choose multiple business activities under a single trade name without requiring homogeneity is another notable feature of the law.

The aim is to enhance business innovation and ensure that companies can diversify their operations without being restricted by naming rules.

Penalties for Providing Incorrect Information

The Trade Name Law also stipulates fines for businesses that provide incorrect information during the registration process. Merchants who intentionally misrepresent their data or trade names will face fines of up to SR50,000, emphasizing the government’s commitment to transparency and accuracy in the business registration process. This step is in line with Saudi Arabia’s broader efforts to modernize and streamline the commercial sector.

Unified Economic Platform: Saudi Center for Economic Business

The law has empowered the Saudi Center for Economic Business to establish a comprehensive and unified economic platform that accommodates all business sectors in Saudi Arabia. This platform is designed to improve efficiency in commercial registration and bring businesses under a unified system. The initiative will be coordinated with the Ministry of Commerce, the Ministry of Investment, and the Saudi Authority for Intellectual Property to ensure that all businesses benefit from a streamlined registration and management process.

Aligning Trade Name Laws with Saudi Vision 2030

The new Saudi Trade Name Law is part of the Kingdom’s broader efforts to align its business regulations with Vision 2030. By prohibiting religious, military, and political trade names, the government ensures that the commercial environment remains fair, transparent, and respectful of public interests.

The law’s provisions for trade name registration and non-compliance penalties emphasize the importance of following proper business practices. As Saudi Arabia continues to grow as a hub for international commerce, these new laws will help foster a safe, organized, and welcoming environment for both local and global businesses.

The Kingdom’s efforts to modernize and reform its business sector are evident in the detailed regulations and protections established by the Trade Name Law and Commercial Registration Law.