Article 15 of the Saudi Law on Security Rights in Movable Assets
المادة 15 من نظام ضمان الحقوق بالأموال المنقولة · الفصل الرابع: نفاذ حق الضمان في مواجهة الغير
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا أحال المضمون له حق ضمان نافذ في مواجهة الغير، فلا يلزم إشهار الحوالة، ويستمر نفاذ حق الضمان في مواجهة الغير.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 15 explained in plain English
A secured creditor, that is the secured party, may wish to transfer his right to another party, for example by selling a financing portfolio to another financier. This article shows the effect of that on the security right.
The rule: if the secured party assigns a security right that is effective against third parties:
- The assignment need not be registered in the Registry.
- The security right's effectiveness continues against third parties as it was.
The condition: the assigned security right must have been effective against third parties before the assignment, that is, its effectiveness was achieved before it. The article does not make the assignment a cause of effectiveness; it preserves existing effectiveness.
Practical effect: this article makes it easier to trade secured debts between financiers, since the assignee does not need a new registration to preserve the right's effectiveness.
This article comes at the end of the chapter on the effectiveness of a security right, after Article 14 on attaching the collateral to another movable, and is followed by Article 16, which opens the provisions on registration by requiring the grantor's written consent. When buying or selling secured debts, it is advisable to consult a lawyer specialized in commercial and finance matters.
Practical example
A financing company in Riyadh gave financing to an establishment secured by its equipment and registered its right in the Registry, then sold this financing and what secures it to another financing company. The assignment need not be registered, and the security right remains effective against third parties.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 15 of the Saudi Law on Security Rights in Movable Assets
Must the assignment of a security right be registered?
No. If the secured party assigns a security right that is effective against third parties, the assignment need not be registered.
Does the pledge remain effective after the secured debt is sold?
Yes. The security right's effectiveness against third parties continues if the assigned right was effective before the assignment.
More articles on Effectiveness of a Security Right Against Third Parties
- Article 8
The 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.
1- يشترط لنفاذ حق الضمان في مواجهة الغير الإشهار، أو انتقال حيازة الضمانة إلى المضمون له انتقالاً مباشرًا أو غير مباشر سواء كان انتقالاً حقيقيًّا أو حكميًّا. 2-
- Article 9
The 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.
مع مراعاة حكم الفقرة (2) من المادة (الثامنة) من النظام، لا يؤثر استبدال طريقة نفاذ حق الضمان على الضمانة من الإشهار إلى الحيازة أو العكس، في استمرار نفاذ حق الض
- Article 10
The 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.
1- يستمر حق الضمان النافذ في مواجهة الغير تلقائيًّا على عوائد الضمانة لمدة (خمسة عشر) يومًا من قبض الضامن لها، ما لم يتفق عند إنشاء حق الضمان على استثنائها. 2-
- Article 11
The 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.
إذا كانت الضمانة حقًّا لدى الغير، فيكون نفاذ حق الضمان في مواجهة ذلك الغير من تاريخ إبلاغه بإنشاء حق الضمان على الحق.
- Article 12
The 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.
لا يؤثر أي شرط في اتفاق يقيد حق الضامن في تقديم ديونه أو حوالة حقوقه ضمانة على صحة عقد إنشاء حق الضمان أو نفاذه، ولا يمنع ذلك الطرف الذي اشترط القيد لمصلحته من
- Article 13
The 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.
1- أ- يستمر نفاذ حق الضمان في مواجهة الغير حتى وإن أصبحت الضمانة عقارًا بالتخصيص؛ إذا كان حق الضمان مشهرًا في السجل. ب- يسري نفاذ حق الضمان المشهر في الضمانة ال
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.