Control Agreement Template for Qatar

A Control Agreement lets lenders maintain security over bank accounts in Qatar while allowing the account holder to keep using them for daily transactions. It's a three-way contract between a bank, a borrower, and a lender that gives the lender control over the secured account without freezing it completely.

Under Qatar's Commercial Code and Banking Law, these agreements help balance security interests with practical business needs. The lender can monitor account activity and step in during default, but the borrower can still make approved transactions. This makes Control Agreements particularly valuable for project financing and corporate lending where ongoing business operations need to continue smoothly.

Consider implementing a Control Agreement when your business needs secured financing but can't afford to have accounts completely frozen. This arrangement works especially well for Qatar-based companies seeking project finance or working capital loans while maintaining daily operations.

The timing is crucial during loan negotiations when lenders need security over bank accounts. Under Qatar's banking regulations, Control Agreements offer more flexibility than traditional account pledges. They're particularly valuable for construction projects, trading companies, and businesses with high-volume cash flows that need both security for lenders and operational freedom.

• Full Control: The most restrictive type, giving lenders complete authority over account transactions in Qatar, typically used for high-risk loans or significant project financing.
• Springing Control: Allows normal business operations until specific trigger events occur, common in Qatari commercial lending where ongoing cash flow is essential.
• Hybrid Control: Combines daily operational freedom with transaction limits and monitoring rights, popular among Qatar's trading and construction sectors.
• Limited Purpose: Restricts control to specific account activities or revenue streams, often used in Islamic banking structures.

• Financial Institutions: Local and international banks operating in Qatar act as account holders and coordinate the control mechanics of the agreement.
• Corporate Borrowers: Companies seeking secured financing while maintaining operational access to their accounts under Qatar's banking regulations.
• Secured Lenders: Banks, investment firms, or other financial institutions requiring security over account assets as loan collateral.
• Legal Counsel: Qatari lawyers and international firms who structure and draft agreements compliant with local banking laws.
• Account Officers: Bank representatives who monitor compliance and execute control provisions when triggered.

• Account Details: Gather complete bank account information, including account numbers and branch details as required by Qatar Central Bank regulations.
• Party Information: Collect legal names, registration numbers, and authorized signatories for all three parties involved.
• Control Mechanics: Define specific trigger events, transaction limits, and notification requirements under Qatari banking laws.
• Operational Rules: Document permitted transactions, approval processes, and daily operational procedures.
• Security Rights: Specify the lender's exact security interests and enforcement rights aligned with Qatar's Commercial Code.
• Compliance Check: Verify alignment with Qatar's Islamic banking principles and local regulatory requirements.

• Party Identification: Full legal names and registration details of the bank, borrower, and lender under Qatar law.
• Account Description: Precise details of controlled accounts, including account numbers and branch information.
• Control Rights: Clear outline of lender's authority, notification requirements, and operational restrictions.
• Default Triggers: Specific events that activate enhanced control mechanisms.
• Islamic Finance Compliance: Statements ensuring adherence to Shariah principles.
• Governing Law: Express submission to Qatar jurisdiction and applicable banking regulations.
• Execution Requirements: Signature blocks for all three parties with proper attestation clauses.

A Control Agreement differs significantly from an Account Agreement in both scope and purpose under Qatar's banking regulations. While both deal with bank accounts, they serve distinct functions in financial relationships.

• Primary Purpose: Control Agreements specifically manage security interests over accounts while maintaining operational access. Account Agreements simply establish basic terms for operating a bank account.
• Party Structure: Control Agreements require three parties (bank, borrower, lender), while Account Agreements involve just the bank and account holder.
• Legal Authority: Control Agreements grant specific intervention rights to lenders, whereas Account Agreements focus on standard banking services and customer obligations.
• Flexibility: Control Agreements can be customized for different security levels and trigger events. Account Agreements typically follow standardized bank terms with limited negotiation scope.