Distributor lock-in: when the registration is not in your name

Cause of death: the registration was never in the company's name, and the company only discovered that when it tried to leave.

The commercial relationship ends badly, which happens. The company appoints a replacement. And then it learns that the product registration is held by the distributor it is trying to leave, that the regulator will not move it without that distributor's signature, and that the alternative is to start again.

This is not an agency law problem with a health products footnote. It is a regulatory problem wearing an agency law disguise.

Two locks, and the second one is the real one

The first lock is commercial agency law. In much of the Gulf and MENA the agent, not the principal, is the protected party. In the UAE the agency must be registered to have legal validity, distribution is exclusive to the agent within its territory by statute, termination requires at least a year's notice or half the contract term, and the agent may claim damages where its efforts contributed substantially to the principal's success.¹ In Egypt an indefinite agency cannot be terminated without fault absent compensation, and the protection extends to non renewal of fixed term agencies where the agent's activity "led to obvious success."² In Qatar, termination of an indefinite agency requires mutual agreement or a court order.³ Even in the EU, where the register does not exist, the Commercial Agents Directive makes indemnity or compensation on termination mandatory and non waivable in advance.⁴

That lock is expensive. It is not usually fatal, because it resolves into money.

The second lock is who holds the registration, and that one can be fatal, because it does not resolve into money at all.

What the regulators actually require

In Indonesia, an imported device registration is held by a single appointed distributor, and each brand from one manufacturer may be represented by only one of them. A change of distributor is not a variation. It requires a brand new application. And the governing regulation states that a transfer takes effect only after the existing authorisation expires or by mutual agreement, with a six month dispute clock after which the authorisation is revoked.⁵ No agreement with the incumbent, no transfer, and eventually no registration.

In Brazil, transfer of registration holding is available, but the outgoing holder must physically co sign the declaration alongside the incoming one, both declaring under penalty of law, with both petitions filed within 180 days.⁶ A signature is a veto.

In Malaysia, change of ownership of a device registration preserves the original registration date, which is good. But the current authorised representative must submit a signed declaration, surrender all applicable device certificates, and transfer distribution and complaints records. The guidance is silent on what happens if it refuses.⁷

In Saudi Arabia the lock is subtler and, arguably, tighter. There is no consent form. Instead, an authorised representative's responsibility "shall not expire upon his request to terminate the agreement or its expiration, unless the manufacturer appoints an authorized representative to replace him," while a separate rule forbids appointing a second representative for the same class of device.⁸ The incumbent cannot leave, and the replacement cannot be licensed in parallel. There is no window in which both exist.

Contrast that with the markets that build in an exit. Kenya treats the applicant, not the local representative, as the holder, and a change to the representation agreement is a notification within seven days.⁹ The Philippines lists "change of importer and distributor" as an allowable variation to a certificate of product registration, with no consent requirement in the circular.¹⁰ The EU contemplates cooperation between outgoing and incoming authorised representatives but qualifies it with two words that were clearly chosen on purpose: "where practicable."¹¹ The EU anticipated an uncooperative incumbent and legislated around it.

One widely repeated claim that we could not verify

The consulting literature states almost universally that India's regulator requires a no objection certificate from the outgoing authorised agent before an import licence can move.

We could not find a primary source for it. Not in the Medical Devices Rules, not in the regulator's guidance document, not in its FAQ addendum on authorised agent requirements.¹² It may exist in a circular we did not reach. It may be administrative practice that hardened into folklore. Either answer changes how you would plan an Indian distributor change, and we are not going to assert the one we cannot source.

Treat it as a live risk and get it confirmed locally before you rely on either reading.

The reform direction, and what it does not fix

The Gulf has been liberalising. The UAE's 2022 commercial agencies law is the main event: it permits arbitration of agency disputes for the first time, seated in the UAE unless otherwise agreed, which is the single most useful change for a foreign principal.¹³ Ministerial decisions in 2023 added a mechanism to let goods enter during a live agency dispute, which addresses the customs blockade directly.¹⁴ Qatar went further on parallel imports, empowering its ministry to free specified goods from exclusive agency altogether.¹⁵

But note two things. First, statutory exclusivity survived the UAE reform, and the transitional provisions give agencies held for ten or more years, or involving investment above AED 100 million, a further ten years of protection. The most entrenched incumbent, which is precisely the one you most want to replace, is the last one you can reach. Second, and more important: none of this touches the registration. Agency law reform does not move a marketing authorisation. If the drug or device registration still cannot transfer without the incumbent's cooperation, the commercial reform is cosmetic for health products specifically.

How to see it coming

Ask three questions before signing anything, and ask them of the regulator's rules rather than of the distributor.

Whose name is on the registration? If it is the distributor's, you do not own your market access. You are renting it, from the counterparty.

What does the regulator require to move it? Get the actual instrument, not a summary. The difference between "notify within seven days" and "the outgoing holder must co sign" is the difference between a bad quarter and a lost market.

Is there a window where both representatives can exist? If not, you cannot sequence a handover. You have to negotiate an exit before you have an alternative, which is the weakest possible position and precisely the one the statute intends you to occupy.

The cheapest fix is at contract stage and costs nothing: an obligation on the distributor to execute registration transfer documents on termination, with the regulatory filings specified by name. It will not override a statute that requires consent. It will convert a lost market into a contractual claim, which is a much better place to be than the alternative.