Law & Regulation
Commercial Pledge Law
The Commercial Pledge Law governs consensual security over qualifying movable commercial assets and rights. It modernizes creation, publicity, priority and enforcement through a registry-oriented framework and accommodates security over categories of present and future assets where statutory conditions are met. It complements, rather than replaces, the registered real-estate mortgage regime. Asset eligibility and perfection method must be tested under the exact collateral type and current registry rules.
Legal Significance
What This Instrument Does
The Law defines pledge agreements, eligible secured obligations and collateral, establishes registration/publicity and priority principles, regulates third-party effects and provides enforcement routes and realization protections. It also addresses proceeds, substitutions and competing interests within its scope.
Why It Matters
Project finance frequently relies on movable plant, equipment, receivables, accounts, contractual rights and other assets. The Law determines whether the intended package creates effective, opposable security and how it ranks and can be enforced; transaction documents alone cannot override statutory perfection or priority rules.
Key Provisions
- Secured obligation
Permits security for qualifying present or future obligations. Transaction relevance: supports revolving, contingent and multi-facility structures subject to drafting certainty.
- Eligible collateral
Defines movable assets and rights capable of pledge. Transaction relevance: determines security-package coverage and exclusions.
- Pledge agreement requirements
Establishes necessary content/form. Transaction relevance: a deficient description or obligation link can weaken enforceability.
- Present and future assets
Allows defined categories beyond individually existing assets where conditions are met. Transaction relevance: important for changing project asset pools.
- Registration and third-party effectiveness
Uses publicity/registry mechanisms. Transaction relevance: central to perfection and closing evidence.
- Priority
Ranks competing security and interests. Transaction relevance: drives intercreditor diligence and existing-lien searches.
- Proceeds and substitutions
Addresses value derived from collateral. Transaction relevance: relevant to receivables, insurance and disposal proceeds.
- Debtor use and preservation
Balances operational use with collateral protection. Transaction relevance: allows project operation while protecting secured value.
- Default and enforcement
Provides realization routes and conditions. Transaction relevance: determines whether contractual enforcement steps are legally available.
- Registry information and discharge
Governs amendment, release and termination. Transaction relevance: required for refinancing, asset release and clean exit.
When You Would Use This
Designing movable-asset and receivables security.
Testing whether an asset/right is pledgeable.
Preparing registry filings and closing evidence.
Reviewing priority against existing secured creditors.
Drafting asset-use, disposal and proceeds controls.
Planning enforcement, refinancing releases or security discharge.
InfraLex Relevance
The Law is a Security Primary for movable commercial collateral. Companies, enforcement and bankruptcy laws are important interfaces but are not persisted related instruments under the frozen model.
Legal Framework Position
- Security / CollateralPrimary / Framework Instrument
Instrument Overview
- Official Citation
- Royal Decree M/86, 8/8/1439H
- Instrument Type
- Law / Act
- Source Language
- Arabic
- Last Verified
- 6 September 2026