Legal Concepts

Commercial Agencies 

A commercial agency means, in accordance with the provisions of Article (1) of the Implementing Regulations to the Saudi Commercial Agency Law, "any person who  contracts with the producer or his representative in his country to carry out business, be it an agent or a distributor,  in any form of agency or distribution,  in return for profit,  commission or any kind of facilities whatever it nature was, including sea, air or land and  agencies for which a resolution by the Minister of Commerce  was issued."

The Saudi agent or distributor may contract with sub-distributors within the agency territory, provided that the original agent or distributor remains responsible for all of the obligations legally decided vis-à-vis the consumer.  In connection with service agencies referred to in the regulation codifying the relationship between the Foreign contractor and his Saudi agent, they shall be governed by all provisions set forth in the Law issued by the Royal Decree No. (M/2) dated 20/1/1398H.

According to Article (3) of the amended Implementing Regulation to the Commercial Agencies Law, "non-Saudis, whether natural or corporate entity, may not act as commercial agents in the Kingdom of Saudi Arabia. The capital of the Saudi companies operating as commercial agents shall be completely owned by Saudis and the members of the Board of Directors and its managers and authorized signatories shall be Saudis."