Run a business, or planning to start one? Tuesday brought a change worth knowing about. At its session in Riyadh on 27 October, chaired by His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, the Council of Ministers approved the Commercial Transactions Law. According to the Ministry of Commerce, the law has 271 articles and replaces three older laws: the Commercial Law, the Commercial Papers Law and the Commercial Books Law. Rules on merchants, contracts and negotiable instruments that were scattered across several texts, the oldest going back to the Commercial Court Law of 1350 AH (1931), now sit in a single reference.
When does it apply? The law takes effect 180 days after it is published in the official gazette, Umm Al-Qura, so the start date depends on the publication date.
Can a teenager trade? Yes, from the age of 15, provided a guardian, a legal custodian or a court gives permission. The law also redefines who counts as a merchant and separates activities that become commercial after being done once from those that only become commercial when carried out as a profession.
What changes in your books? Some categories of merchants are exempt from keeping accounting records altogether. Those who must keep them can do so on paper or electronically, with Arabic as the main language and another language allowed alongside it.
What about contracts and competition? For the first time, commercial sale, supply sale, commercial agency and brokerage are covered in one legislative text, which the ministry says clarifies each party's rights and duties, cuts disputes and supports small and medium-sized businesses as they expand through contracts and agencies. The law also bans practices that harm competitors, and anyone affected can go to court to stop the harm and claim compensation.
Are bills of exchange and cheques included? Yes. The law covers all three negotiable instruments: bills of exchange, promissory notes and cheques. Its approval comes two days before the new Enforcement Law starts on 29 October, which requires bills of exchange and promissory notes to be registered on national electronic platforms before they can be enforced.
