Article 3 of the Saudi Law on Security Rights in Movable Assets

This article answers the question: which assets can be provided as collateral? The rule is very broad, since the collateral may be any movable assets:

• whether tangible, such as equipment, or intangible, such as rights;
• whether present, existing now, or future, coming into existence later; and
• whether owned by the grantor, the secured party or a third party.

The article names in particular the following examples:

1. Rights against third parties, whether due now or deferred, including receivables.
2. Credit balances in accounts with banks and other financial institutions, including deposit accounts and current accounts.
3. Written instruments transferable by delivery or endorsement that prove entitlement to a sum or ownership of goods, such as commercial paper, bank certificates of deposit and bills of lading.
4. Vehicles and the like.
5. Equipment and work tools.
6. Inventory.
7. Animals and their products.
8. Agricultural crops.
9. Real estate by designation.
10. Trees even before they are cut, and minerals even before they are extracted.

This breadth benefits owners of small and medium businesses who may not own real estate, since they can provide their inventory, equipment or amounts owed to them by customers as collateral. However, Article 4, which follows, excepts two transactions from the application of the Law, and Article 2, which precedes it, sets out the transactions to which it applies. To assess whether a particular asset is suitable as collateral, it is advisable to consult a lawyer specialized in commercial and finance matters.