Article 34 of the Saudi Commercial Pledge Law

The law permits pledging an economic establishment, which under its definitions is an establishment that carries on a commercial, professional or other activity aimed at making a profit. This article lays down a special rule where the establishment is a company.

In this case a pledge contract over the company includes only:

• Its movable assets, tangible and intangible.
• Its rights.
• Its commercial business.

The word "only" means that the pledge is limited to these elements and does not extend to anything else.

Article 33 refers expressly to this article, as it permits pledging an economic establishment "subject to the provision of Article 34", requires the pledge to be registered in the establishment's commercial register, and makes it include, unless otherwise agreed:

1. All the intangible elements of the establishment that can be transferred to others alone or with the establishment.
2. The establishment's rights and movable assets, except trade goods that the establishment continuously offers for sale as part of its activity, unless their pledge is expressly agreed.

So the two articles are read together: Article 33 sets what the pledge of an establishment includes in general, and Article 34 limits what enters the pledge of a company.

When negotiating a pledge of a company in favor of a financing entity, it is advisable to consult a lawyer specialized in commercial and finance matters to determine precisely which assets fall within the pledge.