New Announcement: Measures Impacting Commercial Agencies in the Kingdom of Saudi Arabia (KSA)
Type
E-journal
Date
9 Apr 2015
Jurisdiction
Saudi Arabia
Taxonomy
Agency, General Commercial Law
Copyright
LexisNexis
Relevant company
Clyde & Co
Legal reference
Saudi Arabia Royal Decree No. M5/1389
Analysis
On 22 March 2015, the Ministry of Commerce & Industry (the MoCI) issued an announcement requesting all companies and establishments (a KSA Agent) in KSA, which have commercial agencies or distribution agreements, to take the initiative and register these agreements in the Agents and Distributors Register. MoCI in its announcement stressed that it will apply the penalties set forth in the Commercial Agencies Law as enacted by Saudi Arabia Royal Decree No. M5/1389 dated 11/06/1389H (corresponding to 25/08/1969) (the Agencies Law) and its Implementing Regulations (the Implementing Regulations) against those who do not adhere to register during a period of six months starting from 01/06/1436 H (corresponding to 22 March 2015) (the Grace Period).
The Agencies Law establishes a comprehensive framework that govern the relationship between the KSA Agent and foreign principal. As required by Article (3) of the Agencies Law and Article (6) of the Implementing Regulations the KSA Agent must register in the Agents and Distributors Register each agreement into which it enters, although failure to register will not invalidate an agreement or adversely affect the foreign principal.