Article 1 of the Saudi Commercial Agencies Law

This Article sets the basic rule of the Commercial Agencies Law: commercial agency in the Kingdom of Saudi Arabia is limited to Saudis. A non-Saudi may not be a commercial agent, whether a natural person (an individual) or a legal person (a company or establishment).

It is not enough for a company to be registered in the Kingdom to carry on commercial agency business; the text requires of Saudi companies that carry on this business three conditions together:

• Its capital must be wholly Saudi; it is not enough for the majority to be Saudi.
• The members of its boards of directors must be Saudis.
• Those with the right to sign on its behalf must be Saudis.

This means that anyone wishing to be an agent for a foreign brand or product in the Saudi market must first make sure these conditions are met by them or by their company before contracting.

Article 2 deals with the position of agents who were carrying on the business when the Law was issued and to whom this Article does not apply, as it gave them a period to wind up their business and transfer it to Saudi agents of no more than two years from the date the Law took effect, set by the Minister of Commerce and Industry for each agent individually.

If you have a company or partnership and want to know whether these conditions apply to it, it is best to consult a lawyer specialized in commercial cases and agencies.