Saudi Arabia is replacing its patchwork of trade rules with a single rulebook, aiming to cut business disputes and speed up court rulings.
The cabinet approved the Commercial Transactions Law on Tuesday. It puts everything a trader deals with, from contracts and account books to cheques and promissory notes, into one document of 271 articles.
Majid Al Qasabi, the minister of commerce, said the law sets the rules for commercial contracts and works alongside the Civil Transactions Law to give the business and investment climate a lift.
#OutWithTheOld
The new law replaces three separate codes: the Commercial Law, the Commercial Papers Law and the Commercial Books Law.
#WhatChanges
Agents and brokers get rules. For the first time, commercial sales, supply contracts, commercial agency and brokerage sit under one set of rules. Until now, no unified law covered these deals.
Teen traders. The minimum age to run a business drops from 18 to 15, with permission from a guardian, custodian or court.
Paperless books. Companies can keep their accounting records electronically, and in another language alongside Arabic. Until now, they had to be on paper and in Arabic only.
Who counts as a trader. The law redefines the term, spelling out which deals count as commercial after a single transaction and which only count when done as a profession.
Fair play. Traders are barred from deliberately harming competitors. A business that is hurt can go to court to stop the harm and claim compensation.
#WhyItMatters
Saudi business law has been scattered across several codes, leaving room for conflicting readings and long court fights. One rulebook should make outcomes easier to predict, cut disputes and speed up commercial cases, the Ministry of Commerce says.
The agency and distribution rules matter most for international brands, which usually enter the kingdom through local agents and distributors. Clear contract rules give both sides firmer ground.
Digital, bilingual record-keeping also lowers the paperwork bar for foreign firms setting up in Saudi Arabia.
#WhatsNext
The law takes effect 180 days after it is published in the official gazette. The ministry says it will protect the dealings of small and medium-sized businesses and help them grow through commercial contracts and agency work.
