Legal Update: E-Commerce Business Registration

Home » Legal Update: E-Commerce Business Registration

Earlier this month, on June 4, 2024, the Ministry of Commerce updated the rules regarding commercial registration requirements for e-commerce businesses. This update marks a significant shift from the earlier regulations published in 2010, which mandated all e-commerce businesses to comply with the antiquated Commercial Registration Act of 1956. This act imposed burdensome requirements, such as the display of a physical sign at one’s storefront, which were inconsistent with the nature of e-commerce. Failure to comply with these outdated regulations subjected e-commerce businesses to daily fines. The new rules, however, provide much-needed relief and create new opportunities for many online businesses.

The most notable change is the exemption granted to e-commerce businesses operated by juristic persons under the Civil and Commercial Code and public limited companies under the Public Limited Companies Act of 1992. These entities are no longer required to comply with the Commercial Registration Act. This exemption means reduced administrative burden and potential financial penalties, allowing these businesses to operate more efficiently. Without the need to comply with outdated requirements, such as displaying physical signs, these companies can now allocate time and resources toward other matters.

For smaller e-commerce businesses operated by natural persons or non-registered ordinary partnerships, the situation remains unchanged. These businesses must still comply with the Commercial Registration Act to avoid daily fines. The continuation of this requirement means that these smaller or less formally structured businesses will continue to face the complexities and costs associated with compliance. It highlights the need for these businesses to remain vigilant and ensure they meet all required protocols to avoid penalties.

Certifications for e-commerce platforms

Despite the exemptions for juristic persons and public limited companies, there remains a significant opportunity for all e-commerce platforms. Section 82 of the Trademark Act of 1991, requires an online store to undergo rigorous evaluation to enhance its reputation and competitive edge through certification marks offered by the Department of Business Development (DBD). The DBD provides various grades of certification marks, including “DBD Verified Silver”, “DBD Verified Gold”, and “DBD Verified Platinum”. These certification marks are governed by the evaluation process.

The evaluation criteria for these certification marks are comprehensive and include transparency of information, commercial terms offered to customers, IT security of the website, personal data protection, and procedures for handling customer complaints. Obtaining a high-level certification mark may enhance a business’s reputation, signaling to customers that the business adheres to high standards of quality and trustworthiness.

What should e-commerce platforms take note of?

Natural persons and non-registered ordinary partnerships should focus on ensuring compliance with the Commercial Registration Act to avoid fines. In parallel, these businesses may also want to consider obtaining DBD certification. Despite the ongoing compliance requirements, the benefits of certification in terms of enhanced market competitiveness and customer trust can be substantial.

Across all business structures, there should be a concerted effort to improve their platforms. This includes enhancing transparency, ensuring robust IT security, protecting personal data, and establishing effective customer complaint-handling procedures. Lastly, it is crucial for all e-commerce businesses to stay informed about any further regulatory changes. The landscape of e-commerce regulations can evolve, and businesses that are quick to adapt can maintain compliance while maximizing new opportunities that arise.

Silk Legal can provide a range of services for several practice areas. This article is for information only, and while we have tried to keep our updates as accurate as possible, there may be changes to legislation or other factors that can affect your decisions. Please feel free to contact us for a free consultation at [email protected].

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