In force
Saudi Finance Lease Law
نظام الإيجار التمويلي
The Finance Lease Law defines its terms and covers the finance lease contract, the register of contracts, violations and disputes, and final provisions.
- Articles
- 28
- In force
- 28
- Amended
- 0
- Issued
- 13/8/1433 AH
Issued by: مرسوم ملكي رقم م / 48 بتاريخ 13 / 8 / 1433
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Finance Lease Law by topic
Definition of Finance Lease4 articlesThe Finance Lease Contract4 articlesFinance Lease Rent1 articleMaintenance of the Leased Asset and Lessee's Duties5 articlesDestruction of the Leased Asset and Insurance2 articlesLessor's Rights over the Leased Asset5 articlesFinance Lease Contract Register3 articlesAcquiring and Returning the Leased Asset2 articlesTerminating a Finance Lease Contract2 articlesRecovering the Leased Asset and Disputes3 articlesPenalty for Disposing of the Leased Asset2 articles
Articles of the Saudi Finance Lease Law
- Article 1The article sets the meanings of the key terms in the Finance Lease Law, such as the lessor, lessee, leased asset, the two kinds of maintenance, and the register of contracts.
- Article 2The article sets when a contract counts as a finance lease, and allows ownership of the leased asset to pass to the lessee under the contract in specified forms.
- Article 3The article requires the finance lease contract to be written or electronic with specified data, to be recorded in the register of contracts, and any amendment to be attached to it.
- Article 4The article allows the lessee to specify the asset's description with the supplier, producer or contractor before the contract, makes the lessee responsible for that, and binds the lessor only within the limits of its approval.
- Article 5If the lessor authorizes the lessee in writing to receive the asset directly from the supplier, receipt must be by a record stating its condition, and the lessee may refuse if the supplier will not sign it.
- Article 6The article obliges the lessee to pay rent on time even if it does not benefit, unless due to the lessor, and regulates acceleration of installments on delay and refund of rent paid in advance.
- Article 7The article obliges the lessee to ordinary use and operational maintenance at its own cost, puts essential maintenance on the lessor unless agreed otherwise, and requires notice of events affecting benefit.
- Article 8The article prevents the lessee from making any change or modification to the leased asset without the lessor's written consent stating its nature, scope and who bears its cost.
- Article 9The lessee does not bear loss of the asset unless through its transgression or negligence; the lessor bears it if due to the lessor or force majeure, and cooperative insurance is on the lessor and may not be imposed on the lessee.
- Article 10The article allows securities to be issued against the lessor's rights, in accordance with the regulations and rules issued by the Capital Market Authority.
- Article 11The article allows the lessee to assign the finance lease contract to another lessee on condition of the lessor's consent, and refers the details to the Regulations.
- Article 12The article allows the lessor to place protective markings on the leased movable, and to inspect the asset to confirm the lessee's continued possession and examine its condition without harming it.
- Article 13The article allows the lessee to apply for a license to acquire or operate the asset on the strength of the registered contract, and makes the lessee bear the license fees and renewal unless agreed otherwise.
- Article 14The article makes the lessee responsible for damage resulting from its use of the leased asset.
- Article 15If the lessor sells the leased asset to a third party, ownership of the asset passes to the buyer burdened with the finance lease contract.
- Article 16The article prevents the lessee from creating rights over ownership of the leased asset or mortgaging it to a third party except with the lessor's written consent.
- Article 17The article provides that a leased movable asset keeps its character as a movable even if fixed to or attached to real estate.
- Article 18The article provides for establishing one or more joint-stock companies licensed by the Authority to register finance lease contracts, and sets their tasks, ownership and what the Regulations regulate.
- Article 19The lessor's ownership of assets is proven against third parties by registering contracts, the lessor must annotate on securitization, and no amendment to the contract may be relied on except from the annotation date.
- Article 20The lessee must hand the asset back to the lessor in the condition agreed in the contract when the contract ends, is terminated or its term expires, unless it chooses to own it under the contract.
- Article 21The article allows the lessor to stipulate a right to terminate the contract and recover the asset if the lessee fails to pay installments due, as the Regulations determine and in a way that achieves fairness.
- Article 22The contract is terminated on total loss of the asset or a ban by the authorities on all use; on partial loss the lessee may terminate or adjust the rent, and the Regulations set what each party is owed.
- Article 23If the lessor is declared bankrupt or its business is liquidated, the lessee may continue the contract on its terms, or return the asset with the consent of the bankruptcy trustee or liquidator.
- Article 24The article makes the competent court the body that decides disputes under the Finance Lease Law and its Regulations, examines their violations and imposes the penalties provided.
- Article 25The lessor may ask the court for a judgment to deliver fixed assets, decided within 30 days, and may recover movable assets if the contract includes that right, under supervision by licensed companies.
- Article 26The article punishes anyone who obliterates the data on the asset, alters its features, or sells or mortgages it without the lessor's consent, with a fine of up to a quarter of the asset's value, imprisonment of up to 3 months, or both.
- Article 27The Governor of the Saudi Arabian Monetary Authority issues the Implementing Regulations of the Finance Lease Law, in agreement with the Minister of Justice, within 90 days of its issuance.
- Article 28The Finance Lease Law takes effect 90 days after its publication in the Official Gazette.