In force Last amended 29/11/1444 AH
Saudi Law on Security Rights in Movable Assets
نظام ضمان الحقوق بالأموال المنقولة
The Law on Security Rights in Movable Assets of Saudi Arabia, issued in 1441 AH. This page presents the official Arabic text of each article with plain-English explanations.
- Articles
- 29
- In force
- 29
- Amended
- 1
- Issued
- 14/8/1441 AH
Issued by: مرسوم ملكي رقم م/94 بتاريخ 1441/04/15 هـ · قرار مجلس الوزراء رقم (512) وتاريخ 1441/8/14هـ
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Law on Security Rights in Movable Assets by topic
Definitions and Scope of the Law6 articlesAssets That May Serve as Collateral3 articlesCreating a Security Right3 articlesEffectiveness of a Security Right Against Third Parties8 articlesRegistering a Security Right3 articlesPriority of Security Rights4 articlesRight to Trace and Transfer of Collateral1 articleEnforcing Against Collateral4 articlesUnified Register of Movable Assets3 articles
Articles of the Saudi Law on Security Rights in Movable Assets
الفصل الأول: التعريفاتArticles 1–1
الفصل الثاني: نطاق التطبيقArticles 2–5
- Article 2The article applies the Law to any contract or transaction creating a security right over collateral, including commercial pledge, sale with repurchase, transfer of title for security, retention of title, assignment security and sale of receivables.
- Article 3The article allows any movable asset, tangible or intangible, present or future, owned by the grantor, the secured party or a third party, to be collateral, and gives examples such as bank accounts, vehicles, inventory and crops.
- Article 4The article excepts two transactions from the Law: assignment of a right for debt collection purposes, and purchase of a debt that is part of an agreement to acquire a business.
- Article 5The article excepts from the Law security rights over ships, aircraft, listed securities, trademarks, investment accounts, assets with ownership registries, and goods in public warehouses unless the right preceded deposit.
الفصل الثالث: إنشاء حق الضمانArticles 6–7
- Article 6The article sets five conditions for a security right to be valid between its parties, including writing, authority of the grantor, a description of the secured obligation and of the collateral, and consideration, and allows securing past, concurrent or later obligations.
- Article 7The article provides that a security right created over assets on which another law bars creating a security right is given no effect.
الفصل الرابع: نفاذ حق الضمان في مواجهة الغيرArticles 8–15
- Article 8The article requires registration, or transfer of possession of the collateral to the secured party, for a security right to be effective against third parties, and refers to the Implementing Regulations the cases where possession is the only means.
- Article 9The article provides that replacing the method of effectiveness of a security right from registration to possession, or the reverse, does not interrupt its continued effectiveness against third parties, subject to the cases where possession is the only means.
- Article 10The article extends a security right's effectiveness automatically to the proceeds of the collateral for fifteen days from the grantor's receipt of them unless excluded, after which it lapses except for identifiable cash proceeds or proceeds described in the registration.
- Article 11The article provides that where the collateral is a right against a third party, the security right becomes effective against that third party from the date he is notified of its creation over the right.
- Article 12The article provides that a condition restricting the grantor's right to provide his receivables or assign his rights as security does not affect the validity or effectiveness of the security right, and the party who required it may still claim against the grantor.
- Article 13The article provides that a registered security right stays effective if the collateral becomes real estate by designation, and is effective against creditors secured by that real estate, unless the collateral was designated before the real estate was mortgaged and the right was not registered.
- Article 14The article provides that a security right stays effective against third parties if the collateral is attached to another movable asset in a way that allows it to be separated.
- Article 15The article provides that where the secured party assigns an effective security right, the assignment need not be registered and the security right's effectiveness against third parties continues.
الفصل الخامس: الإشهارArticles 16–18
- Article 16The article requires the grantor's written consent for a registration to count, and requires it to be completed under the Implementing Regulations by an electronic form stating the grantor and secured party details, the description of the collateral and the registration's end date.
- Article 17The article sets the grounds on which a registration lapses and requires the secured party to end it within fifteen days of the security right ending, and to compensate the grantor for damage caused by failing to do so.
- Article 18The article gives any person the right to inspect the Registry and obtain an extract of any registration's details, and makes the certified extract a recognized means of proving the registration's date, time and content.
الفصل السادس: حق الأولويةArticles 19–21
- Article 19The article allows several security rights over the same collateral and ranks priority among the secured parties by effectiveness, registration and the earlier date and time of registration, possession or creation.
- Article 20The article provides that security rights effective against third parties rank ahead of other debts in priority of payment, including workers' rights and government dues.
- Article 21The article allows the secured party to waive in writing the priority rank of his security right without affecting other security rights, and the waiver is effective against third parties without registration.
الفصل السابع: حق التتبعArticles 22–22
الفصل الثامن: التنفيذ على الضمانةArticles 23–26
- Article 23The article allows a written agreement made before breach to let the secured party enforce against the collateral without the courts by auction, direct sale or taking ownership, and refers the details to the Implementing Regulations.
- Article 24The article allows the secured party to take the steps needed to repair the collateral, improve it and prepare it for sale.
- Article 25The article provides that non-judicial or judicial enforcement against the collateral clears it of the rights attached to it.
- Article 26The article sets the order of distributing enforcement proceeds if they are insufficient, requires the secured party in non-judicial enforcement to return the remainder to the grantor, and keeps any shortfall as an unsecured debt of the debtor.
الفصل التاسع: السجلArticles 27–27
الفصل العاشر: أحكام ختاميةArticles 28–29
- Article 28The article requires the Minister of Commerce to issue the Regulations within thirty days of the Law's publication, covering in particular registration procedures, searching the registry and obtaining extracts, and the fees for registry services.
- Article 29The article provides that the Law on Security Rights in Movable Assets takes effect from the date of its publication in the Official Gazette.