Saudi Arabia has undergone a lot of legal reform in the field of secured transactions in the past decade. Firstly, in 2018, the Commercial Pledge Law (CPL) was enacted on the 24th of April 2018 by Royal Decree No. M/86. This law was issued alongside the Implementing Regulations of the Commercial Pledge Law two days later. This framework was comprehensive, and regulated how to create all types of security interests, how to perfect them and how to enforce them. However, on the 8th of April 2020, The Movable Assets Security Law (MASL) was enacted on by Royal Decree No. M/94. This new law was enacted alongside the Implementing Regulation of the MASL, which came into force on the 12th of April, issued by Ministerial Resolution No. 00312. This amended the 2018 Commercial Pledge Law (CPL). One of the amendments is that under the MASL, the value and condition of the pledged assets need not be in the pledged agreement. Under the CPL, this was a requirement. The MASL has also amended the law insofar as assignments. The CPL did not allow for assignments to be the subject of security interests, and the MASL does. The MASL provides a wide scope for assets that may be used as security interests. This includes movables, tangibles, intangibles such as rights, future property or existing property. Notably, the definition of what may constitute a security interest is left open in the MASL. The MASL states that any asset can be used as security to enforce any kind of obligation. The MASL also established a public, online register called the Unified Register of Rights on Moveable Assets,Under the MASL, there are two ways to perfect a security interest. The first method is registration in the Unified Register of Rights on Moveable Assets, and the second method is a transfer of the title to the asset in question to the creditor.
Another notable amendment is that the MASL has removed the ability to create floating charges. The asset in question thus must be identified. The MASL does not govern immovables such as land, ships and aircrafts, trademarks, inventory that is stored in public warehouses, investment accounts or securities that are listed on the stock exchange.
Last Checked October 2020
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