Commercial concealment is a prohibited practice in the Kingdom of Saudi Arabia. The Anti-Commercial Concealment Law regulates the concept, associated crimes and violations, and the resulting penalties and consequences.<\/p>\n
“Economic activity” is defined\u2014pursuant to Article 1 of the Anti-Commercial Concealment Law\u2014as any activity aimed at generating profit that requires approvals or licenses from competent authorities to be conducted. This encompasses commercial, investment, service, professional, industrial, agricultural, and other similar activities.<\/p>\n
Article 2 of the Anti-Commercial Concealment Law defines concealment as:<\/p>\n
An agreement or arrangement enabling a non-Saudi person to conduct an economic activity in the Kingdom that they are not licensed to practice, by utilizing a license or approval issued to the person facilitating the concealment (the concealer).<\/p>\n
Accordingly, concealment entails the existence of an agreement or arrangement that allows a non-Saudi to conduct an unlicensed economic activity in the Kingdom by using a license or approval issued to the party enabling such activity.<\/p>\n
Article 3 of the Anti-Commercial Concealment Law classifies the following acts as crimes punishable under the Law:<\/p>\n
\u2022 Enabling a non-Saudi person to conduct an economic activity in the Kingdom for their own account without a license; this includes enabling them to use the concealer’s name, license, approval, commercial registration, trade name, or the like.<\/p>\n
\u2022 A non-Saudi person conducting an economic activity for their own account in the Kingdom without a license, through the person who enabled them to do so.<\/p>\n
\u2022 Participating in the commission of either of the two aforementioned crimes\u2014whether through incitement, assistance, or the provision of advice\u2014with knowledge thereof, provided the crime is committed or continues as a result of such incitement, assistance, or advice. \u2022 Obstructing or preventing those charged with enforcing the provisions of the Law from performing their duties, including failure to disclose information or the provision of incorrect or misleading information.<\/p>\n
Article 4 of the Anti-Commercial Concealment Law classifies the following acts as violations punishable under the Law:<\/p>\n
\u2022 Illegally granting a non-Saudi instruments that enable them to exercise absolute control over the establishment.<\/p>\n
\u2022 A non-Saudi illegally possessing or using instruments that enable them to exercise absolute control over the establishment.<\/p>\n
\u2022 Using a bank account not belonging to the establishment for transactions related to its economic activity.<\/p>\n
Article 2 of the Implementing Regulations clarifies that instruments enabling absolute control over the establishment include any arrangement or procedure\u2014whether contractual or non-contractual\u2014that empowers an unlicensed non-Saudi to perform acts or enjoy rights and powers belonging to the establishment\u2019s owners or partners, as the case may be.<\/p>\n
Examples stipulated in the Regulations include:<\/p>\n
\u2022 Directing the establishment\u2019s revenues, profits, or contract proceeds\u2014whether directly or indirectly\u2014to a non-Saudi\u2019s account instead of the establishment\u2019s account.<\/p>\n
\u2022 A non-Saudi collecting proceeds or returns from the sale, transfer, or liquidation of the establishment\u2019s assets for their own benefit.<\/p>\n
\u2022 A non-Saudi receiving a variable financial return or payment disproportionate to the nature of the work assigned to them within the establishment (excluding employment contracts that entitle the worker to a share of the establishment\u2019s profits or revenues).<\/p>\n
\u2022 A non-Saudi financing the establishment or any of its economic activities.<\/p>\n
\u2022 Granting a non-Saudi the authority to appoint or dismiss the establishment\u2019s manager.<\/p>\n
\u2022 A non-Saudi possessing the establishment\u2019s commercial paper, documents, or contracts signed in blank. \u2022 Approval of profits to be distributed to company partners and the method of their distribution.<\/p>\n
What is the penalty for the crime of commercial concealment?<\/p>\n
Pursuant to Paragraph 1 of Article 9 of the Anti-Commercial Concealment Law:<\/p>\n
Without prejudice to any penalty stipulated in any other law, anyone who commits any of the offenses set forth in the Law shall be punished by imprisonment for a term not exceeding five years and a fine not exceeding five million Riyals, or by either of these two penalties. When determining the penalty, the following factors shall be taken into account: the scale of the economic activity subject to the offense, its revenues, the duration of the activity, and the consequences resulting from the offense.<\/p>\n
Penalties shall be doubled in the event of a repeat offense. A person is considered a repeat offender if they commit any of the offenses for which they were previously convicted by a final judgment within three years of the date of that judgment.<\/p>\n
Paragraph 3 of Article 9 also permits the Criminal Court to mitigate penalties if, after the Ministry of Commerce becomes aware of the offense, the accused voluntarily provides evidence or information that could not have been obtained otherwise, and such evidence or information is relied upon to prove the offense.<\/p>\n
A conviction for commercial concealment offenses may entail\u2014depending on the specific offense\u2014legal consequences beyond imprisonment or a fine.<\/p>\n
Confiscation of Proceeds<\/p>\n
In the event of a conviction for the two offenses stipulated in Paragraphs (a) and (b) of Article 3, Article 10 mandates the confiscation of proceeds by judicial order\u2014without prejudice to the rights of bona fide third parties\u2014whether such proceeds are in the possession of the convicted person or owned by another party.<\/p>\n
If confiscation of the proceeds is impossible, or if they have been commingled with funds acquired from legitimate sources, or if their location cannot be determined, other assets equivalent in value shall be confiscated by judicial order. Dissolution of the Establishment, Revocation of License, and Prohibition from Engaging in Activity<\/p>\n
A conviction for the offense stipulated in Paragraph (a) of Article 3 entails the following, unless the Criminal Court rules otherwise:<\/p>\n
\u2022 Dissolution of the establishment involved in the offense.<\/p>\n
\u2022 Revocation of the license or approval issued to the establishment to conduct the activity.<\/p>\n
\u2022 Cancellation of the convicted party\u2019s commercial registration.<\/p>\n
\u2022 Prohibition of the convicted party from engaging in the economic activity involved in the offense, as well as any other commercial activity, for a period of five years commencing from the date the judgment becomes final.<\/p>\n
Deportation of Non-Saudis<\/p>\n
If a non-Saudi is convicted of committing any of the offenses stipulated in Article 3, they shall be deported from the Kingdom and barred from re-entering it, in accordance with relevant laws, rules, and the provisions of the Implementing Regulations. Such action shall be taken following the execution of the judicial judgment and the settlement of all outstanding fees, taxes, and other obligations as determined by the Criminal Court.<\/p>\n
Publication of the Judgment Summary<\/p>\n
The judgment convicting the perpetrator of either of the two offenses stipulated in Paragraphs (a) and (b) of Article…<\/p>\n
Thirdly, the judgment summary must be published after the judgment becomes final. The Ministry of Commerce is responsible for publishing the summary via a medium it deems appropriate.<\/p>\n
Collection of Zakat, Taxes, and Fees<\/p>\n
Zakat, taxes, fees, and any other obligations imposed on the establishment shall be collected jointly and severally from those convicted of committing either of the two offenses stipulated in Paragraphs (a) and (b) of Article 3.<\/p>\n
Pursuant to Article 14 of the Anti-Commercial Concealment Law, anyone who commits any of the violations stipulated in Article 4 shall be subject to one or both of the following penalties:<\/p>\n
\u2022 A fine not exceeding five hundred thousand Riyals.<\/p>\n
\u2022 Closure of the establishment for a period not exceeding ninety days.<\/p>\n
When determining the penalty, consideration shall be given to the size of the economic activity subject to the violation, its revenues, the duration of the activity, the gravity and recurrence of the violation, and the resulting impact.<\/p>\n
Summary<\/strong><\/p>\n Commercial concealment is an agreement or arrangement enabling a non-Saudi to engage in an economic activity in the Kingdom that they are not licensed to conduct, by using a license or approval issued to another person. Committing the offenses stipulated in the Law may result in imprisonment and fines; penalties are doubled in the event of a repeat offense, in addition to other legal consequences specified by the Law based on the nature of the offense.<\/p>\n Furthermore, providing a foreigner with the means to exercise absolute control over the establishment, a foreigner\u2019s unlawful possession or use of the establishment, and the establishment\u2019s use of a bank account not belonging to it for transactions related to its economic activity, constitute independent violations punishable under Article 14 of the Law.<\/p>\n Finally, If you are facing an accusation of commercial concealment, or suspect that practices within your business entity could expose you to legal liability, do not hesitate to contact the Mohammed Al-Khelaifi Law Office for appropriate legal support. We will conduct a detailed assessment of your entity\u2019s situation\u2014reviewing contracts, financial transactions, and administrative authorities\u2014to precisely identify legal risks and propose the necessary regulatory measures to address them.<\/p>\n Disclaimer: The content above does not constitute legal advice, and the firm assumes no legal liability. Please contact us for legal consultation.<\/strong><\/p>\n \n","protected":false},"excerpt":{"rendered":" Commercial concealment is a prohibited practice in the Kingdom of Saudi Arabia. The Anti-Commercial Concealment Law regulates the concept, associated crimes and violations, and the resulting penalties and consequences. “Economic activity” is defined\u2014pursuant to Article 1 of the Anti-Commercial Concealment Law\u2014as any activity aimed at generating profit that requires approvals or licenses from competent authorities…<\/p>\n","protected":false},"author":4,"featured_media":10345,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_post_transparent":"default","_kad_post_title":"default","_kad_post_layout":"default","_kad_post_sidebar_id":"","_kad_post_content_style":"default","_kad_post_vertical_padding":"default","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-10344","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1"],"acf":[],"yoast_head":"\n