Official Gazette publishes new Commercial Transactions Law

The Official Gazette, Umm Al-Qura, has published the Cabinet’s decision approving the Commercial Transactions Law. The decision clarifies that the implementation of the law—referenced in item (First) of this decision—does not affect the statutory duties and powers of the Saudi Central Bank regarding entities and bodies under its supervision and oversight.

According to Umm Al-Qura, the term “accounting records” will replace “commercial books” in all relevant regulations from the effective date of the law as specified in item (First) of this decision. A draft Royal Decree has been prepared accordingly, with its text attached.

The Cabinet also approved that the Ministry of Human Resources and Social Development—coordinating with the Ministry of Commerce and other relevant bodies—will review provisions defining activities not considered as commercial practice for the purposes of the Civil Service Law (Royal Decree No. M/49 dated 10/7/1397 AH), the Code of Conduct and Public Service Ethics (Cabinet Decision No. 555 dated 25/12/1437 AH), and the Executive Regulations for Human Resources in Civil Service (Ministerial Decision No. 1550 dated 9/6/1440 AH). These activities will include: buying, selling, and leasing real estate; trading securities; owning shares or stakes in joint-stock, simplified joint-stock, limited liability, and simple partnership companies; and related transactions, provided they do not conflict with the employee’s statutory duties. Necessary amendments will be made to ensure these changes are implemented before the law’s effective date as referenced in item (First) of this decision.

The Ministry of Transport and Logistics Services has also been tasked with studying the current status of transport contracts and submitting its recommendations within twelve months from the date of this decision.

Below is the Commercial Transactions Law

Chapter One: General Provisions
Article 1:
The provisions of this law apply to the following:
A- Commercial activities, regardless of the status of the person conducting them or whether they are carried out electronically or traditionally.
B- The merchant.
Article 2:
1- The provisions of this law apply to transactions that are commercial for one party and non-commercial for the other.
2- By exception, parties may agree that the provisions of this law do not apply to transactions that are commercial for one party and non-commercial for the other.
Article 3:
The application of this law does not affect special statutory provisions.
Article 4:
Parties to a commercial transaction may agree on terms and conditions unless these conflict with public order or mandatory statutory provisions. In the absence of agreement and where this law is silent, the following rules apply in order:
1- Commercial custom and practice, with specific local or sectoral customs taking precedence over general commercial custom.
2- Provisions of the Civil Transactions Law.
Chapter Two: Commercial Activities
Article 5:
The following are considered commercial activities even if not conducted professionally:
A- Purchasing movable property for resale or lease, whether as-is or after modification or manufacture, or leasing for sublease.

B- Transactions involving commercial papers, regardless of the parties’ status or the nature of the underlying right.
C- Activities related to maritime and air navigation, including building, selling, purchasing, leasing, chartering, repairing, and maintaining ships and aircraft, as well as maritime and air shipments, including regular sea and air transport, and the sale or purchase of ship or aircraft equipment, tools, or supplies.
D- Railway, airport, port, and road services provided for a fee, as well as ground services at airports and ports, including loading and unloading, auxiliary navigation services, towing, piloting, and maritime rescue.
E- Telecommunications and internet services, including supporting services and infrastructure.
F- Hotel, restaurant, entertainment, and gaming activities.
G- Publishing newspapers and magazines, and broadcasting radio and television for profit.
H- Renting exhibition, conference, and event halls.
I- Postal services.
J- Public warehouse operations.
K- Power and water generation for sale, and the supply and sale of produced energy and water.
L- Distribution, transmission, delivery, storage, or management of energy.
M- Extraction of natural resources such as oil, gas, minerals, salt, and quarries, as well as oil refining, gas liquefaction, and hydrocarbon processing.
Article 6:
For the purposes of this law and related commercial regulations, the following are considered commercial activities if conducted professionally:
A- Purchasing real estate for resale at a profit, whether as-is or after modification or subdivision.
B- Securities.
C- Banking, granting finance and credit facilities, accepting deposits, currency exchange, and money transfer services.
D- All types of insurance.
E- Commercial agencies and distribution agreements.
F- Industry.
G- Brokerage.
H- Supply.
I- Leasing facilities or real estate.
J- Land transport.
K- Construction contracting.
L- Tourism and travel services.
M- Export, import, and customs clearance.
N- Public services and recruitment.
S- Auction sales services.
ʿ- Printing, publishing, photography, audio-visual recording, and advertising.
F- Marketing services.
Ṣ- Maintenance of movables and real estate.
Q- Leasing movables.
R- Management of real estate, projects, and intangible assets.
Sh- Information technology.
Article 7:
Any activity similar in nature and purpose to those listed in Articles 5 and 6 is also considered a commercial activity.
Article 8:
Any non-commercial activity conducted by a merchant for reasons related to their business is considered a commercial activity by association. All activities of a merchant are presumed related to their business unless proven otherwise.
Article 9:
The following are not considered commercial activities:
A- The sale by a natural person of a work they created, either personally or through assistants, or the sale of copies, or any permitted exploitation of that work.
B- Handicraft activities primarily involving physical effort.
C- Professional activities based on intellectual knowledge and skills.
D- Agriculture and horticulture, including the sale by a farmer of crops from land they own or cultivate, even if processed using customary means, unless processed or sold through a dedicated shop.
E- Animal husbandry and sale, and fishing and sale, where these rely primarily on the physical effort of the breeder or fisher.
Chapter Three: The Merchant
Article 10:
A merchant is defined as any of the following:
A- A natural person who professionally conducts one or more commercial activities in their own name and for their own account.
B- A private legal entity that professionally conducts one or more commercial activities in its own name and for its own account, and is not established as a company under the Companies Law.
C- Any company established under the Companies Law, regardless of its purpose, including those established or participated in by the state or other public legal entities.
Article 11:
The status of merchant is established for:
A- Anyone who publicly announces the establishment of a shop for commercial purposes, even if not professionally engaged in commerce, and retains merchant status until the effects of the announcement and resulting transactions expire.
B- Anyone who professionally conducts commercial activities in their own name for the account of another, or through a visible person acting for another.
Article 12:
The state, other public legal entities, and non-profit organizations are not considered merchants, though their commercial activities are subject to this law.
Article 13:
A person lacking legal capacity under relevant laws does not acquire merchant status unless authorized to conduct commercial activities as provided in Article 14 of this law.
Article 14:
1- By exception to Article 13, a minor who has reached the age of fifteen may conduct commercial activities if authorized by their guardian or by the court if the guardian refuses.
2- Authorization for a minor may be general or limited, and may be withdrawn or restricted at any time, provided this does not affect previously established legal positions.
3- A minor so authorized is treated as a fully competent merchant for the authorized activities, except regarding liability for obligations and bankruptcy, which are limited to assets invested in the business, and is not subject to criminal penalties specified in this law.