Regulatory Alerts2015-06-15
Ensuring the Recovery of Movable Assets from the Lessee: The Lessor’s Right to Recover Them Shall Be Exclusively Through the Competent Authorities
The Saudi Central Bank mandates that licensed financial leasing entities must exclusively utilize competent authorities, such as the Ministry of Interior or Ministry of Justice-licensed specialized companies, to recover movable assets from lessees when contractually permitted. This directive reinforces existing Ministry of Interior instructions and clarifies that direct recovery actions by financing company employees are strictly prohibited until specialized execution companies are formally licensed. Any personnel attempting unauthorized asset recovery shall face legal prosecution, ensuring strict compliance with Article 25 of the Financial Leasing System.
In the Name of Allah, the Most Gracious, the Most Merciful
Saudi Central Bank Headquarters
General Directorate for the Supervision of Financing Companies
Ref. No.: 361000115987 Date: 27/08/1436 Attachments:
Circular
To: ................................................................................................. Peace, mercy, and blessings of Allah be upon you.
Subject: Emphasizing that the recovery of movable assets from the lessee in cases where the contract between the parties includes the lessor's right to recover them shall be exclusively through the competent authorities.
Pursuant to Paragraph (2) of Article (25) of the Financial Leasing System, which stipulates that "the lessor, in accordance with the provisions of this System, may recover movable assets from the lessee in cases where the contract between the parties grants the lessor the right to recover them. The supervision of the execution of asset recovery from the lessee shall be carried out by specialized companies licensed by the Ministry of Justice in accordance with the Execution System." And referring to the instructions of the Ministry of Interior regarding the non-recovery of vehicles in cases where the contract between the parties grants the lessor the right to recover them, except through the competent authorities.
Accordingly, licensed financing entities engaged in financial leasing activities must comply with the Ministry of Interior's instructions on this matter, until the Ministry of Justice licenses specialized companies to carry out this task based on the provisions of the aforementioned Article. We also clarify that any employee of a financing entity who proceeds with the recovery of movable assets without referring to the competent authorities shall be subject to legal prosecution.
For your information and strict compliance.
Yours sincerely,
(Signature) Abdulaziz bin Abdulrahman Al-Halisi Deputy Governor for Supervision
Distribution Scope:
- Banks operating in the Kingdom.
- Financing companies operating in the Kingdom.
- General Directorate of Bank Supervision.
- General Directorate of Legal Affairs.
- Center of Excellence.
P.O. Box: 2992, Riyadh: 11169, Tel: +966 9662020 466, Fax: +966 9662488 466