Receivables Pledge Agreement Template for Saudi Arabia

A Receivables Pledge Agreement is a security document that grants a lender enforceable rights over your company's accounts receivable and trade debts. Under Saudi Arabian law, this agreement creates a pledge over future and existing receivables, providing lenders with security against potential default while allowing your business to continue normal collection activities.

When do you need this document?

You need a Receivables Pledge Agreement when securing financing against your company's receivables portfolio. Banks and financial institutions commonly require this security in working capital facilities, trade finance arrangements, and general corporate lending. It's particularly valuable in asset-based lending where your receivables represent a substantial portion of your business assets. The agreement is also essential in syndicated financing where multiple lenders need shared security over your receivables, and in Islamic financing structures where Sharia-compliant security arrangements are required.

Key legal considerations

The agreement must clearly identify the pledged receivables through detailed schedules or dynamic descriptions that capture future receivables. You'll need to include comprehensive representations and warranties about the validity and collectability of the receivables. The document should establish clear collection procedures, including whether you retain collection rights or transfer them to the lender upon default. Priority arrangements are crucial when multiple security interests exist over the same receivables. The agreement must also address notification requirements to underlying debtors and establish enforcement mechanisms that comply with Saudi commercial law principles.

Legal requirements in Saudi Arabia

Under the Commercial Pledge Law 2018, your Receivables Pledge Agreement must be registered in the Unified Saudi Register of Commercial Pledges to achieve legal perfection and priority over competing interests. The registration must occur within 30 days of execution and requires specific information about the pledged receivables and secured obligations. The agreement must comply with the Implementing Regulations, which detail registration procedures, enforcement mechanisms, and priority rules. For foreign lenders or pledgors, you'll need to appoint a process agent with a Saudi address for legal service. The document must also align with Civil Transactions Law principles regarding contract formation and validity, and any disputes will be subject to Commercial Courts Law jurisdiction and procedures.