Saudi Arabia’s Qiwa platform has clarified how businesses operating without a commercial registration can transfer ownership, while Article 18 of the Labor Law protects employees’ contracts, wages, and other entitlements during the transition.

How to Transfer Business Ownership Without Commercial Registration

Businesses in Saudi Arabia that operate under a license without holding a commercial registration can transfer ownership to another person through the relevant licensing authority, according to the Qiwa platform.

Once the ownership transfer is completed, the updated business ownership details will be reflected on the Qiwa platform.

The procedure depends on the business’s registration status. If the establishment holds a commercial registration, the ownership transfer is handled by the Ministry of Commerce. For businesses operating under a license, the transfer must be completed through the relevant licensing authority.

Saudi Labor Law Protects Employees After Ownership Changes

A change in business ownership does not automatically invalidate existing employment contracts or interrupt employees’ service periods.

Article 18 of the Saudi Labor Law stipulates that employment contracts remain valid and employees’ service is considered continuous when an establishment is transferred to a new owner or undergoes a legal restructuring, including a merger, division, or other changes.

This provision helps protect employees from losing their contractual rights simply because the business they work for has changed ownership.

Who Is Responsible for Employees’ Rights After a Transfer?

Under Article 18, the previous and new owners are jointly responsible for employees’ rights arising from the period before the ownership transfer. These rights include:

• Outstanding wages and salary payments.

• End-of-service benefits due on the date of the ownership transfer.

• Other employment-related financial entitlements arising before the transfer.

This shared responsibility helps ensure that employees’ existing entitlements are protected when a business changes hands.

Can Employees Refuse the Transfer of Their Rights?

For individual establishments, the previous and new owners may agree to transfer all existing employees’ rights and obligations to the new owner. However, this arrangement requires the employee’s written consent.

If an employee does not agree to the transfer of their rights under this arrangement, the employee has the right to request termination of the employment contract and receive the dues owed by the previous owner.

Employers should therefore ensure that the ownership transfer process complies with the applicable licensing requirements and Saudi Labor Law provisions, including the rules governing employees’ consent and financial entitlements.

What Business Owners and Employees Should Know

Business owners should identify the appropriate authority before initiating an ownership transfer, based on whether the establishment holds a commercial registration or operates under a license.

Employees, meanwhile, should understand that Article 18 generally preserves the validity of their employment contracts and continuity of service following a business ownership change. They should also review any proposed agreement concerning the transfer of their existing rights before providing written consent.

For further information about employment procedures in Saudi Arabia, readers can explore Qiwa's clarification of job transfer rules and employment procedures and learn more about Saudi Arabia's requirements for modifying employment contracts through Qiwa.