Circular Letter No. 49 of 2019 Regarding Factoring Activity Regulations

Circular Letter No. 49 dated 2019/12/22
Regarding Regulations for Factoring Activities

Deputy Chairman of the Authority

In the context of implementing the provisions of Law No. 176 of 2018 concerning the regulation of financing lease and factoring activities, and the Authority's Board of Directors Decision No. 163 of 2018 regarding the executive regulations for practicing factoring activities, and Circular Letter No. 14 of 2019 regarding the approval of additional entities to cover credit risks of financings transferred from financing lease and factoring companies, and in the context of amending the provisions of the aforementioned law, as well as the decisions issued in this regard, the practice of factoring activities shall be subject to the following provisions:

1. The seller is obligated to notify the debtor of the transfer of assigned rights to the factoring company in the event of purchasing rights
   without recourse to the seller, and in the event the seller fails to fulfill this notification obligation, the factor may recourse against him for the value of the unpaid rights, and it may be agreed that the factor shall issue the notification.

2. The factor may finance the seller against the security of the seller's financial rights with its debtors, with the factor retaining the right of recourse against
   the seller in the event the debtor fails to make payment, and the seller may notify the debtor of the transfer of those rights to the factor.

3. In the event of purchasing fixed financial rights based on commercial instruments (checks, promissory notes, bills of exchange), the transfer
   of those rights to the factor shall be governed by the provisions governing the circulation of commercial instruments under the Commercial Law.

Deputy Chairman of the Authority's Board of Directors Dr. / Rida Abdul Mu'ti