Account Pledge Agreement Template for Saudi Arabia

When you need to secure a loan or financing arrangement using a bank account as collateral in Saudi Arabia, an Account Pledge Agreement provides the legal framework to protect your interests. This specialized security document creates enforceable rights over specific bank accounts, ensuring compliance with the Commercial Pledge Law and SAMA banking regulations while adhering to Sharia principles.

When do you need this document?

You'll require an Account Pledge Agreement when providing corporate loans where the borrower pledges their operating accounts as security, or when structuring project finance deals where project revenue accounts serve as collateral. Islamic banking facilities frequently use these agreements to secure Murabaha, Ijara, or Istisna financing while maintaining Sharia compliance. The document is also essential for trade finance arrangements where letter of credit proceeds or export receivables accounts need to be pledged. Additionally, you'll need this agreement when establishing security over escrow accounts in real estate transactions or when multiple lenders require shared security over the same account through a security agent arrangement.

Key legal considerations

Your Account Pledge Agreement must clearly identify all parties including the pledgor, pledgee, account bank, and any security agent. The pledge creation clause should expressly grant security over specified accounts with detailed account information and confirm Sharia-compliant security interests. Include comprehensive definitions covering Islamic finance terms and ensure interpretation clauses address potential conflicts between common law concepts and Sharia principles. The perfection provisions must comply with Commercial Pledge Law requirements, including proper notification to the account bank and obtaining necessary acknowledgments. Your agreement should address the account bank's obligations, including freezing account operations upon default and following pledgee instructions. Enforcement procedures must align with Saudi court processes and include provisions for out-of-court enforcement where permissible. Consider including corporate guarantor provisions if additional security is required, and ensure all aspects comply with anti-money laundering regulations.

Legal requirements in Saudi Arabia

Under the Commercial Pledge Law (Royal Decree No. M/86), your Account Pledge Agreement must follow specific creation and perfection procedures to be legally valid. The agreement requires written form with clear identification of the pledged accounts and underlying obligations. You must notify the account bank in writing and obtain their acknowledgment to perfect the pledge, creating priority over other creditors. SAMA regulations impose additional requirements on banks regarding pledged accounts, including compliance with banking control laws and proper documentation procedures. The agreement must include Sharia compliance declarations and may require review by the institution's Sharia board for Islamic banking transactions. All parties must have proper legal capacity under Saudi law, and corporate pledgors need board resolutions authorizing the pledge. Consider notarization requirements for enhanced enforceability and ensure compliance with any specific sectoral regulations that may apply to your transaction type.