Saudi businesses risk up to SR15K fines for trade name violations

Dubai: Using a trade name in Saudi Arabia without proper registration or in violation of regulations can now result in fines of up to SR15,000 ($4,000), according to new executive regulations under the Trade Name Law. 

The Ministry of Commerce has published the draft regulations for public consultation on the Istila’a platform before finalising them.

The Trade Name Law, approved by the Council of Ministers on September 17, 2024, requires every merchant to adopt a registered trade name. 

Violations include using a reserved or registered trade name belonging to another merchant, which carries a SR10,000 fine.

Additionally, merchants attempting to register or use prohibited trade names, such as those with political, military, or religious connotations, will face a SR15,000 fine.

The law strictly prohibits trade names that resemble those of local, regional, or international organisations, contain political, religious, or military references, violate public order or morals, or closely resemble a globally recognized trademark or a well-known registered trademark in Saudi Arabia.

However, trade names that include “Saudi Arabia”, as well as names of cities, regions, and public places, may be registered under strict conditions— provided they do not closely resemble a government entity.

Additionally, the use of Mecca or Medina in trade names requires prior approval from the Royal Commission for Mecca City and the Holy Sites or the Medina Region Development Authority.

The regulations divide violations into serious and non-serious offenses, with non-serious infractions carrying fines between SR1,000 and SR5,000. These include failure to display the trade name on business documents, correspondence, or publications, failure to display the trade name on storefronts or business premises, failure to register a new trade name within the legal timeframe after a previous name is deleted, and using a trade name in a misleading or unlawful manner.

Additionally, the Ministry of Commerce has set fees for trade name-related services. Reserving a trade name in Arabic costs SR200, while reserving one in English costs SR500. Extending the reservation period or transferring ownership of a trade name comes with a fee of SR100.

A review committee will oversee trade name violations and impose penalties, with the authority to adjust fines based on the severity of the offence and the size of the business involved.