The onshore interfaces · room 04 of 09
Saudi Arabia, security in.
A financing against a Saudi asset is priced on three answers: what can be charged where the asset sits, where that charge is perfected, and what the secured party actually receives when it calls. Since 2020 the first two answers are in one law and one registry. The third is in the enforcement courts, and it is shorter than it used to be.
Read from Royal Decrees M/94 of 1441H, M/85 of 1439H, M/53 and M/34 of 1433H, M/50 of 1439H and M/191 of 1444H, as at August 2026.
Where complexity arises · The onshore interfaces · nine rooms
01 · The ground
Three questions, three instruments
A security interest is worth what the register says and what the enforcement judge will do with it.
The financing room of every structure asks the same three questions of every asset. In the Kingdom the answers moved between 2012 and 2020, and a lender reading a pre-2020 memorandum is reading a different country.
The Securing Rights on Movable Assets Law, Royal Decree M/94 of 15/8/1441H, issued on 8 April 2020 and in force two days later, together with the Commercial Pledge Law of 2018 which the same decree amended. Land is charged under the Registered Real Estate Mortgage Law of 2012 and recorded in the Real Estate Registry. Listed securities sit outside the movables law, in the depository's own regime.
For movables, the Unified Registry of Rights on Movable Assets, an online register in which registration perfects the right against third parties and fixes priority by the date and time of registration. For land, the Real Estate Registry. For a bank account, possession or control rather than registration alone.
Where the parties agreed it, an out-of-court realisation by auction, direct sale or appropriation at fair value after notice of default. Otherwise, the enforcement courts created by the Enforcement Law of 2012, which took enforcement away from the Board of Grievances and gave it judges whose only function is to enforce.
Interest is not awarded and not enforced. A facility priced as a loan with interest has a security package the courts will honour and a debt they will not compute, which is the reason the instruments in a Saudi financing are drawn as sale, lease and profit-bearing arrangements rather than as loans. That is a structural decision taken at the term sheet, and this room assumes it has been.
The three questions have published answers. The structure is drawn from the answers, not from the memorandum that pre-dates them.
02 · Movables and the register
Royal Decree M/94
One law, one online register, one rule of priority: the earlier registration wins.
Before 2020 a commercial pledge was registered in one register and an assignment of receivables could not be registered at all. The 2020 law put the whole family of security over movables under one instrument and one registry, and the assignment by way of security became a registrable interest for the first time.
Contracts creating security over movable assets in their various forms: the commercial pledge, the sale with a right of repurchase, the transfer of ownership for security, the retention of title until payment, the assignment of rights by way of security and the sale of receivables. Security may be taken over any movable asset, tangible or intangible, current or future, and over current or future rights, which admits the fluctuating pool a credit fund lends against.
The Unified Registry of Rights on Movable Assets replaced the former register of commercial pledges. Registration is electronic, it perfects the security against third parties, and priority runs from the date and time of the entry. Rights registered under the old regime had to be re-registered by 6 October 2020 or lose their place. A search of the registry is therefore a complete answer to the question of prior charges over movables, which it was not before.
Securities listed on the capital market, which are pledged through the depository under its own rules, and bank accounts, over which a security interest is perfected by actual or constructive possession rather than by registration alone. A package that registers a charge over a collection account and stops there has a registration and no perfection.
A Saudi holder that borrows can now grant a registrable charge over its receivables, its contracts and its future assets in one instrument, searchable by the next lender. The holding company that could not be financed on its own assets in 2018 can be in 2026, and the financing room of the structure moves one level down the chain because of it.
The registry answers the prior-charge question in a search. Before 2020 it was answered by asking everyone.
04 · Enforcement and insolvency
Royal Decrees M/53 and M/50
Where the parties agreed it, the secured party sells. Where they did not, a judge whose only job is enforcement does.
The Enforcement Law of 2012, in force from March 2013, created enforcement courts in place of the Board of Grievances. The 2020 movables law added a route that does not pass through them. The Bankruptcy Law of 2018 fixed what happens to both when the debtor fails.
Where the security agreement provides for it, the secured party may realise a movable by public auction, by direct sale or by appropriation in satisfaction of the debt, after notifying the grantor of the default, and at fair value. It is a contractual route, so the clause is the enforcement. A package drawn without it has chosen the court route by omission.
For everything else, and for land: an enforcement judge acting on an enforceable instrument, with powers that run to seizure, sale, travel bans and the disclosure of assets. The judge enforces the instrument and does not retry its merits, which is the whole point of the 2012 law.
The Bankruptcy Law, Royal Decree M/50 of 1439H, issued on 13 February 2018, provides protective settlement, financial restructuring and liquidation procedures. Transactions in the twelve months before commencement may be set aside, with the rights of third parties in good faith preserved. A secured lender's position is the position its registration gives it, which is why the registry date matters in year one and not only at the call.
Damages for breach of contract are governed by the Civil Transactions Law, Royal Decree M/191 of 1444H, issued on 18 June 2023 and in force from December of that year, the first codified civil law of the Kingdom. Its Article 295 bars a contractual claim three years from discovery or ten from breach, whichever is earlier; the Commercial Courts Law of 2020 sets five years for commercial claims. Interest remains outside what any of them will order. A lender enforces principal, the profit element its instrument was drawn to carry, and costs, and nothing drawn as interest.
The 2012 law made enforcement a function rather than a lawsuit. The 2020 law let the parties agree to skip it.
05 · Awards and judgments
Royal Decree M/34 and the Convention
An award travels into the Kingdom on five conditions. The one that fails most often was written into the award by its tribunal.
The Arbitration Law, Royal Decree M/34 of 1433H, issued in 2012 on the model law, and the Enforcement Law of the same year between them decide what a foreign award is worth against a Saudi asset. The Kingdom acceded to the New York Convention in 1994 with a reciprocity reservation.
The enforcement judge verifies that the Saudi courts did not have jurisdiction over the dispute; that the proceedings met due process; that the award is final where it was made; that it does not contradict a judgment of a Saudi court; and that it contains nothing contrary to public policy, which in the Kingdom means the Sharia. The merits are not reopened.
Interest. An award that orders interest contains something the judge will not enforce, and where the interest cannot be severed from the damages the judge may decline the damages with it. Tribunals seated elsewhere award interest by default. A dispute clause that does not instruct the tribunal otherwise has drafted the enforcement problem into the award before the dispute exists.
The Saudi Center for Commercial Arbitration's 2023 rules established an SCCA Court and emergency arbitrator provisions, and a seat in the Kingdom removes the foreign-award conditions altogether: the award is a domestic instrument, subject to the sixty-day window for an annulment application before enforcement proceeds. Whether the seat is in the Kingdom, in a centre or abroad is a structural choice made at the shareholders' agreement, and it decides which of the two routes in this room the lender is on.
Foreign judgments are enforced by the same courts on reciprocity and on the same public-policy test, under the Enforcement Law and the Gulf and Riyadh conventions where they apply. A judgment of a centre's courts is a foreign judgment here, and a chain that assumes its centre's court reaches a Saudi asset directly has assumed a treaty that does not exist.
The award is drafted at the dispute clause, years before it is written. So is its enforceability.
06 · The binding constraints
Six, each attributed
Six constraints bind a financing against a Saudi asset. Each is created by one instrument and moved by one party.
The list a structure paper carries for this interface, with the party who can move each item named beside it.
The movables law, Royal Decree M/94. Moved by nobody; the registry stamps the time.
The capital market rules and the movables law's own exclusions. Moved by nobody; a different act perfects each.
The movables law. Moved by the parties, once, in the security agreement.
The Bankruptcy Law, Royal Decree M/50. Moved by nobody; it runs from commencement backwards.
The Sharia as public policy, applied by every court and enforcement judge. Moved by nobody. The instrument is drawn around it.
The Enforcement Law, Royal Decree M/53, and the Convention with the Kingdom's reservation. Moved by the parties at the dispute clause: seat, rules and an instruction on interest.
Four of the six are fixed by statute and two are fixed by the parties at signing. Both of the second kind are usually left to a precedent.
07 · Where it breaks
Failure points
Each of these was decided at the facility agreement and found at the call.
Six failures particular to security taken over a Saudi asset. None is cured by drafting after the event.
A collection account was registered in the movables registry and nobody took control of it. Surfaces at the call, when the bank pays the debtor's other creditor first because the registration perfected nothing.
A 2019 commercial pledge was not re-registered by October 2020. Surfaces when a 2021 lender's registration outranks it, which it does.
The security agreement was silent on out-of-court realisation. Surfaces at default, when a sale that could have closed in weeks becomes an enforcement file.
The holder listed on the Parallel Market in year three and the share pledge stayed where the LLC pledge had been recorded. Surfaces when the depository has no record of a charge over the listed shares.
A tribunal seated abroad awarded damages and interest in one sum. Surfaces before the enforcement judge, who will not sever what the tribunal did not separate.
The shareholders' agreement gave jurisdiction to a centre's courts and the asset sat in the Kingdom. Surfaces when the judgment arrives as a foreign judgment on reciprocity and the debtor's counsel asks which treaty.
Every one of the six was visible in the instruments at the term sheet. Each is instead found at the call, by the lender, in the month it can least afford to learn it.
08 · Where the work stops
The line
Your counsel signs the law. We design the structure that advice is set against, and stress-test it before the documents are drawn.
Three rows: what returns from a reading of this interface, what stays with the manager's own regulated, legal and tax advisers, and who takes the decision at the end of it.
The security package as a map of registers with a closing sequence: which asset is charged under which law, where each charge is perfected, the order of the entries and the date the facility may be drawn. The enforcement route chosen in the agreement, the seat and rules chosen at the dispute clause, and the instruction on interest written into both.
Every security document, registration and filing; the choice of instrument for the financing and its characterisation; the opinions on perfection, priority and enforceability; the insolvency analysis; every question of the Sharia as applied by a Saudi court, which is counsel's in its own name; and every tax consequence of the instrument chosen, which is the tax adviser's.
The manager and its lender, on those opinions, with the registers sequenced before the facility agreement fixes a drawdown date.
The long reading of the Kingdom runs room by room: marketing in, holding into, this one on security in, and exit from. What is on this page is the interface as it binds a foreign vehicle, read from the instruments and stated at their date.
Nothing on this page is advice, and nothing here invites any investment. It is our reading of published instruments, stated as at its date, and your counsel signs the law.
Read at the Securing Rights on Movable Assets Law, Royal Decree M/94 of 1441H; the Commercial Pledge Law, Royal Decree M/85 of 1439H; the Enforcement Law, Royal Decree M/53 of 1433H; the Arbitration Law, Royal Decree M/34 of 1433H; the Bankruptcy Law, Royal Decree M/50 of 1439H; and the Civil Transactions Law, Royal Decree M/191 of 1444H · stated as at August 2026
Where complexity arises · 12 minute readKuwait, holding and exitHow a structure holds a Kuwaiti asset and leaves it: the forty-nine per cent default and the licence that lifts it, a 2025 decree that let listed companies and licensed funds own real estate, security that in practice is the pledge of shares, and enforcement under Articles 199 and 200 and the Convention.
Where complexity arises · 10 minute readThe onshore interfacesWhere the investor or the asset sits onshore in the Gulf, the structure crosses a different kind of border: Saudi Arabia, Qatar and Kuwait read as interfaces, four questions each, from their own instruments and dated.
Where complexity arises · 13 minute readQatar, holding and exitHow a structure holds a Qatari asset and leaves it: the 2019 law that opened most sectors to full foreign ownership, the Centre as a holding seat with its own court and its own registry, land in the designated areas of 2020, and the exit routes each of them permits.
What this room is attached to
- The structure it binds Structures · security and enforcement
- The financing it prices Structures · fund and asset financing
- The failure it produces Worked structures · unavailable security