Article 5 of the Saudi Law on Security Rights in Movable Assets
المادة 5 من نظام ضمان الحقوق بالأموال المنقولة · الفصل الثاني: نطاق التطبيق
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
لا تسري أحكام النظام على حقوق الضمان المتعلقة بالآتي:
أ- السفن، والطائرات.
ب- الأوراق المالية المدرجة في السوق المالية.
ج- البضائع المودعة في المخازن العامة ما لم يكن حق الضمان قد تقرر قبل الإيداع.
د- العلامات التجارية.
هـ- الحسابات الاستثمارية.
و- الأموال التي لها سجلات ملكية تقيد فيها حقوق الضمان.
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 5 explained in plain English
This article completes the exceptions begun in Article 4, but here it excepts security rights relating to certain assets, so the provisions of the Law do not apply to security rights relating to the following:
- Ships and aircraft.
- Securities listed on the financial market, such as listed shares.
- Goods deposited in public warehouses, with a condition: unless the security right was established before deposit. If the security right arose over the goods before they were deposited, the exception does not cover them.
- Trademarks.
- Investment accounts.
- Assets that have ownership registries in which security rights are recorded, a general item that covers every asset with its own ownership registry in which security rights are recorded.
What is the practical effect? Someone who wants to create security over one of these assets does not rely on the provisions of this Law or on registration in the unified Registry, but refers to the provisions specific to that asset, which this article does not set out.
Note that the exception in item (e) is specific to investment accounts. It is followed by Article 6, which sets out the conditions for the validity of a security right. To confirm whether a particular asset is subject to the Law, it is advisable to consult a lawyer specialized in commercial and finance matters.
Practical example
A businessman in Riyadh wanted to provide shares he owns in a company listed on the financial market as security for a loan. Security rights over securities listed on the financial market are excepted by the text of this article, so this does not proceed under the provisions of this Law.
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 5 of the Saudi Law on Security Rights in Movable Assets
Does the Law on Security Rights apply to pledging ships and aircraft?
No. The article excepts security rights relating to ships and aircraft from the provisions of the Law.
Can listed shares be pledged under this Law?
No. Security rights relating to securities listed on the financial market are excepted.
Are goods deposited in public warehouses always excepted?
No. The exception does not cover them if the security right was established before deposit.
More articles on Definitions and Scope of the Law
- Article 1Amended by M/191
The article defines the key terms of the Law on Security Rights in Movable Assets, such as security right, collateral, grantor, secured party, Registry, registration, real estate by designation and proceeds.
يُقصد بالألفاظ والعبارات الآتية -أينما وردت في هذا النظام- المعاني المبينة أمام كل منها: النظام: نظام ضمان الحقوق بالأموال المنقولة. اللائحة: اللائحة التنفيذية
- Article 2
The 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.
تسري أحكام النظام على أي عقد أو معاملة تتضمن إنشاء حق ضمان على الضمانة، ويشمل ذلك بوجه خاص الآتي: أ- الرهن التجاري. ب- بيع المال المنقول المتضمن شرطًا باسترداده
- Article 4
The 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.
لا تسري أحكام النظام على المعاملتين الآتيتين: أ- حوالـة الحـق لغايات تحصيل الديون. ب- شراء دين يكون جزءًا من اتفاقية تملك مشروع.
- Article 28
The 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.
يصدر الوزير اللائحة خلال (ثلاثين) يومًا من تاريخ نشر النظام في الجريدة الرسمية، على أن تتضمن بوجه خاص الآتي: أ- إجراءات الإشهار. ب- إجراءات البحث في السجل والحص
- Article 29
The article provides that the Law on Security Rights in Movable Assets takes effect from the date of its publication in the Official Gazette.
يعمل بالنظام من تاريخ نشره في الجريدة الرسمية.
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.