Security Interest Contract Template for Saudi Arabia

The Security Interest Contract is a fundamental document in Saudi Arabian secured financing transactions, used to create and perfect security interests over various types of assets. It is essential for lenders and borrowers engaging in Sharia-compliant financing arrangements in Saudi Arabia. The document must comply with the Commercial Pledge Law of 2018 and other relevant Saudi regulations while adhering to Islamic Sharia principles. This Security Interest Contract typically accompanies main financing agreements and requires registration in the Unified Saudi Commercial Registry. It contains detailed provisions about the secured assets, obligations, enforcement mechanisms, and the rights and responsibilities of all parties involved. The document is particularly important in the context of Saudi Arabia's evolving commercial law framework, which aims to modernize secured lending while maintaining Sharia compliance.

1. Parties: Identification of the Security Provider (Grantor) and Security Taker (Secured Party), including full legal names and registration details

2. Background: Context of the security interest, reference to main facility/credit agreement, and purpose of the security

3. Definitions: Key terms used throughout the agreement, including specific Saudi law terminology and Sharia-compliant concepts

4. Grant of Security Interest: Explicit creation and grant of the security interest over the specified assets

5. Description of Secured Assets: Detailed description of the assets subject to the security interest, including all relevant identifying information

6. Secured Obligations: Description of the obligations being secured, including principal amounts, profit rates (avoiding interest terminology), and other secured amounts

7. Representations and Warranties: Statements by the Security Provider regarding ownership, authority, and status of the secured assets

8. Covenants: Ongoing obligations of the Security Provider regarding maintenance, insurance, and preservation of the secured assets

9. Registration and Perfection: Requirements and procedures for registering the security interest in the Unified Saudi Commercial Registry

10. Events of Default: Circumstances constituting default and triggering enforcement rights

11. Enforcement: Rights and procedures for enforcement in compliance with Saudi law and Sharia principles

12. Governing Law and Jurisdiction: Specification of Saudi law as governing law and jurisdiction of Saudi courts