commercial concealment Empowering a foreign person, whether he is an expatriate who came to work or a non-Saudi foreign investor from self-employment in a prohibited activity whether by using his name, license, commercial register, or in any other way.
Therefore, our topic in this article is about what is commercial concealment, and does it have types. And what is his punishment?
What is commercial concealment?
cover up commercial enabled A non-Saudi is prevented from working for his own account by a Saudi or a foreign investor in an activity prohibited to him, whether by using his name, license, commercial register or in any other way.
What is meant commercial activity is any work that a person does for profit, provided that this activity is licensed and in line with Saudi law.
Commercial concealment in the Kingdom is a crime punishable by both the Saudi citizen and the foreign person as well, whether he is an investor or a resident who came to work in the Kingdom or elsewhere.
Parties to the commercial concealment process
The parties to the commercial concealment process are two “disguised” and “disguised” parties:
- The concealed person (whether a citizen or a foreign person): is the one who conceals the person who does this work, by giving him licenses to carry out an illegal business that violates laws and regulations, and using his legal identity to register the company or business process and represent it in commercial activities. It varies whether this sneaky person is a natural or legal person, such as a company or an organization.
- The concealed person: He is the one behind the commercial process, and he is the one who does this illegal act in order to be able to obtain profit, but in a manner that violates the established laws, regulations, and rules.
- And this following work must be affiliated with the private personal accountBalmtester He must, by using the documents and papers belonging to the citizen or the foreign investor, he can carry out this process in secret.
- There are also fictitious companies and entities that are established for the purpose of conducting covert business operations, and these companies have a legal existence, but they are used to finance illegal activities or to achieve illegitimate goals.
The government seeks to detect such attempts and to impose appropriate penalties on them.
Types and pictures of commercial concealment
The types of commercial concealment and its forms are many, and the Anti-Commercial Concealment Law identified them in some forms, including:
- Commercial concealment is when a person, whether a Saudi citizen or a foreign investor, establishes any commercial activity in Saudi Arabia for his own account without obtaining a license to carry out this activity, and thus enables any non-Saudi person to use this license or his trade name and so on.
- Another form of commercial concealment is when a non-Saudi person carries out commercial activity in the Kingdom of any kind on his personal account.
- It is also a picture that whoever participates in any of the two pictures that have been mentioned is considered an aide and assistant in committing this crime, regardless of the assistance or even inciting them to do this act, or by providing them with advice and so on.
- For any company or establishment to give the right to a non-Saudi person to dispose of the facility in an absolute, illegal and unapproved manner, enabling this non-Saudi person to dispose of this facility and giving him some powers that only the owner or his partners have, and among these powers is the appointment of the manager, or his dismissal or Possession of important papers and contracts related to the establishment or the distribution of profits, all of which are contrary to the regulations, and is considered commercial concealment.
- That a different bank account be used than the account of the company or establishment that it uses in its commercial activity.
What is the penalty for commercial concealment in Saudi Arabia?
The penalty for commercial concealment is one of the penalties that are severe due to the magnitude of the committed crime. Therefore, the Anti-Commercial Concealment Law has imposed the most severe penalties, but we will differentiate between the penalties imposed on the Saudi citizen and the foreign investor:
Punishment for the commercial concealment of the Saudis
- Whoever commits this crime shall be punished with imprisonment for a maximum of two years, in addition to a fine of one million Saudi riyals or more, and in some cases, both penalties are applied together.
- In some cases, the fine is multiplied if the number of the perpetrators of this act is more than one person, in addition to the alimony for publishing the decision of the penalty to be on the concealed person.
- The license is withdrawn and permanently canceled, and the private commercial registration is deleted Balm tester Not only that, and the cancellation of all his work that violates the system, but he is also prohibited from carrying out any other activity for a period of no less than five years.
- In addition, the system for combating commercial concealment increased the penalty by paying an amount that may reach five million Saudi riyals, in addition to imprisonment for at least five years.
- All illegally and unlawfully obtained profits and funds that became the property of the perpetrators of the crime after the issuance of the court decision shall be confiscated.
- The imposed sentence can be mitigated as approved by the criminal court, but in the event that the accused provides evidence proving his act if the court cannot find evidence against him.
- The convicted investor is expelled if he is a foreigner and not a Saudi citizen, but he is prevented from entering Saudi Arabia again.
- The court is also entitled to issue a decision to close that company or establishment that is involved in the crime of commercial concealment, as well as cancel its commercial registration and all licenses as mentioned, and also not to engage in any commercial activity for a period of 5 years.
Penalty for commercial concealment of foreigners
As for the penalty for the concealer, if he is a foreigner, based on what was determined by the Anti-Commercial Concealment Law, it will be:
- To be imprisoned for a period of no less than two years, in addition to imposing a fine of 1,000 Saudi riyals or more.
- If the perpetrators are a group of persons or an institution or company, the fine penalty will be increased and may reach 2,000 Saudi riyals or more.
- This news must also be published in more than one local newspaper, and the alimony shall be at the expense of the person violating the regulations.
- The Public Prosecution has the right to issue a decision banning the travel of any person who commits this crime unless the court issues the final decision.
- And if it is proven that the foreign investor committed this act of “commercial concealment”, then it will be completed take it out From the Kingdom of Saudi Arabia, after the expiration of the sentence, and the payment of all the fines imposed on him, after which he will be prevented from entering the Kingdom again.
- The system deletes his commercial registration, cancels any licenses for his commercial activity, liquidates all his business, and prevents him from carrying out any activity for a full 5 years or more.
As for the penalty for the “non-Saudi covert person”, it will be as follows:
- The Anti-Commercial Concealment Law imposed a financial penalty of 400,000 Saudi riyals on him.
- All licenses related to its activities shall be withdrawn, any company or facility affiliated therewith shall be closed down, and any commercial activity carried out by it shall be canceled.
- It is prohibited from continuing its commercial activity and its commercial registration is revoked.
- The violation committed by him shall be published in the newspapers, and he shall pay the expenses of publication from his own money.
- After implementing the court’s decision, the accused will leave Saudi Arabia and never return to it.
Commercial Concealment Penalty
The Ministry of Commerce imposed severe penalties on anyone who violates the system and carries out commercial concealment, and the new sanctions system was implemented in February 2021.
The Ministry of Commerce also indicated that whoever is found guilty of committing this crime is not exempted from punishment, whether he is referred to the Public Prosecution Office or to the competent court, and the penalty imposed on him is implemented.
The penalties imposed against any person who carries out commercial concealment are imprisonment for a period of up to five years, or a financial penalty of five million Saudi riyals is imposed, and sometimes both penalties are applied together.
All his illegal money, which he obtained as a result of his commercial concealment and violation of established laws and regulations, will also be confiscated.
In addition to deleting his commercial register, evacuating all his commercial activities, withdrawing all licenses he owned, and preventing him from carrying out any other commercial activity, while taking all taxes and fees, in addition to expelling the concealed persons from Saudi Arabia and never returning to it again in order to work.
The ministry also warned that there should be no complacency or negligence in the implementation of any penalty imposed against violators and perpetrators for a crime of commercial concealment, and they did not provide any correction to put them adverb.
The system added that whoever corrects his situation will be exempted from punishment. and forgiveness Also from the fines imposed on him, while ensuring that he carries out his commercial activities again in a regular manner.
How to protect yourself from commercial concealment
- Not to sign any commercial contract with foreigners for any reason.
- The Saudi person must be present continuously at the location of the institution or company, and his absence from the institution shall not be prolonged.
- Not giving any non-Saudi person the right to manage the establishment or the commercial activity it is carrying out.
- Expatriates are not allowed to deal with customers and are not given any management powers in any way.
- Before making any business transaction, you must verify the identity of potential partners and customers, in addition to inquiring about the details of companies and individuals and verifying their reputation. And their reliability.
- Careful legal research is recommended on potential companies and associated persons, checking their formal registration, required licenses, business records, and legal history of the company.
- Avoid doing business with companies that have a bad reputation or a past record of commercial concealment.
- Stay away from illegal practices and avoid engaging in any commercial activity that is suspected of legality or that is considered commercial concealment. You should also stay away from companies that suggest or suspect the practice of illegal activities.
- Cooperate with the official authorities in the event that any commercial concealment activity is discovered or suspected, you must report it to the competent courts.
Hiring the best commercial concealment lawyer in KSA (Saudi Arabia)
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Common commercial concealment cases
Among the cases of commercial concealment are the following:
- That the Saudi citizen gives a commercial establishment to a non-Saudi person in exchange for a sum of money per month.
- A non-Saudi person may establish a partnership in any commercial activity but without a foreign investment license.
- For any non-Saudi person to work in any commercial activity in the name of a Saudi citizen.
- To enable any non-Saudi person to carry out a commercial activity under the sponsorship of individual employment household.
Here is an example: A Saudi citizen made an agreement with a non-Saudi person to open a store, and this store was registered in the name of the Saudi citizen, and the non-Saudi gives him a monthly amount of money, amounting to, for example, 6 thousand riyals, provided that the non-Saudi manages the store and takes Full affiliate profits.
It should be noted that any non-Saudi person has the right to carry out any commercial activity, provided that he is subject to a foreign investment license.
Is covering up the violating employment considered commercial concealment?
Concealment of employment is not considered commercial concealment, as there is a difference between concealment of violating employment and commercial concealment, and commercial concealment as we mentioned: that the institution or company is registered in the name of the Saudi citizen and is affiliated with him and he gives it to a non-Saudi person to manage it and takes a sum of money in exchange for that.
While the cover-up of the violating employment is represented in the Saudi citizen sponsoring a non-Saudi person in exchange for a sum of money per month without him supervising a currency. Rather, this non-Saudi person works for someone else, and all of these actions are in violation of the Saudi system and the laws and regulations that have been put in place in the Kingdom.
Thus, we have come to the end of the article, in which we talked in detail about the commercial concealment and its image, in addition to the penalties imposed by the Kingdom on every violator and perpetrator of the crime, and the appointment of a lawyer specialized in such cases facilitates many complex matters.
Conclusion
In conclusion, we would like to say that commercial concealment is a phenomenon that attracts the attention of official authorities and businesses alike, as it disrupts the growth of the economy and discredits legitimate businesses, and its negative effects include illegal money flow, tax evasion, commercial fraud, and non-compliance with commercial laws and regulations.
The Kingdom of Saudi Arabia is also considered one of the leading developing countries economically and is keen to provide a transparent and fair work environment. However, commercial concealment is still a major challenge in Saudi Arabia, due to the legal complexities and challenges faced by those responsible for business regulation and law enforcement.
We note that the Saudi authorities are working to combat commercial concealment and enhance integrity in business by tightening laws and regulations related to commercial registration and monitoring commercial activities, and the government is also working to enhance awareness and education for businesses and investors to understand the risks of commercial concealment.
