Finance Contract Template for Saudi Arabia

The Finance Contract serves as a fundamental legal document for establishing financing arrangements in Saudi Arabia, structured to comply with both Shariah principles and Saudi banking regulations. It is typically used when a financial institution provides funding to corporate or individual clients, requiring detailed documentation of the financing structure, profit calculation methods, and security arrangements. The contract must adhere to Saudi Central Bank (SAMA) requirements and Islamic finance principles, avoiding conventional interest-based mechanisms. This document is essential for any significant financing transaction in Saudi Arabia, whether for project finance, corporate funding, or asset financing, and includes specific provisions for regulatory compliance, Zakat considerations, and dispute resolution under Saudi law.

1. Parties: Identification of the finance provider and recipient, including full legal names, commercial registration numbers, and authorized representatives

2. Background: Context of the financing arrangement and confirmation of Shariah compliance

3. Definitions: Key terms used throughout the agreement, including financial, technical, and Shariah-specific terminology

4. Facility Terms: Details of the financing facility, including amount, purpose, and profit rate (avoiding interest-based terminology)

5. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

6. Representations and Warranties: Statements of fact and assurances from the facility recipient

7. Covenants: Ongoing obligations of the facility recipient, including financial and non-financial commitments

8. Events of Default: Circumstances that would trigger default and remedies available to the finance provider

9. Payment Terms: Schedule and mechanics of payments, including profit calculations and payment methods

10. Security: Details of any collateral or guarantees provided

11. Shariah Compliance Declaration: Explicit confirmation of compliance with Islamic principles and relevant fatwa references

12. Governing Law and Jurisdiction: Application of Saudi law and jurisdiction of Saudi courts