Receivables Pledge Agreement Template for the United Arab Emirates

When your business needs financing secured by receivables in the United Arab Emirates, a Receivables Pledge Agreement creates the legal framework for using outstanding debts owed to your company as collateral. This security document establishes enforceable rights for lenders while allowing you to continue operating your business and collecting receivables under agreed conditions.

When do you need this document?

You need a Receivables Pledge Agreement when securing bank facilities, working capital loans, or trade finance arrangements where your company's receivables serve as primary or additional security. This document is essential for asset-based lending facilities, revolving credit facilities backed by trade receivables, and syndicated lending arrangements where multiple lenders require security over your receivables portfolio. It's also required when refinancing existing facilities or when lenders demand additional security over liquid assets. The agreement becomes particularly important for businesses with substantial receivables portfolios seeking to unlock working capital while maintaining operational flexibility.

Key legal considerations

The agreement must clearly define which receivables are subject to the pledge, including existing and future receivables, and specify any excluded categories. You need provisions addressing the collection and management of pledged receivables, including whether you retain collection rights or transfer them to the lender. The document should include representations and warranties about the validity and enforceability of the receivables, along with covenants governing your ongoing obligations. Essential clauses cover notification procedures to account debtors, requirements for maintaining receivables records, and conditions for releasing security. You must also address subordination arrangements if other creditors have claims over the same receivables, and include clear enforcement mechanisms specifying the lender's rights upon default.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 4 of 2020 on Securing Interest in Movable Property, your Receivables Pledge Agreement must contain specific elements to create an enforceable security interest. The pledge requires registration in the Emirates Movable Collateral Registry within the prescribed timeframe to achieve perfection and priority over competing claims. The agreement must identify the pledged receivables with sufficient specificity, either by listing individual receivables or describing categories that allow clear identification. You must comply with notification requirements under the Security Interest Law when the pledge affects account debtors' payment obligations. The document should reference Cabinet Resolution No. 5 of 2021 implementing regulations for detailed procedural requirements. Additionally, the agreement must align with UAE Civil Code and Commercial Code principles governing contract formation, validity, and interpretation, ensuring enforceability under UAE law.