Saudi Central Bank

SAMA
Saudi Central Bank

Ref: 42039135
Date: 1442/06/12
Attachments: None

Circular

To:
Peace, mercy, and blessings of God be upon you,

Subject: Controls and Procedures for Requesting and Issuing Extracts of the Executive Document for Registered Financial Lease Contracts.

Based on the authorities vested in the Central Bank under the Financial Leasing System issued by Royal Decree No. (48/M) dated 13/8/1433 AH, and pursuant to Paragraph (2) of Article 25 of the Executive Regulations of the Financial Leasing System issued by the Governor's Decision No. (8) M/ShT) dated 14/6/1434 AH, and amended by the Governor's Decision No. (93) M/ShT) dated 18/10/1441 AH, which stipulates that "the extract of the executive document for a registered financial lease contract constitutes an executive document, in accordance with Paragraph Eight of Article Nine of the Execution System, and evidences compliance", and as a result of the fruitful cooperation between the Saudi Central Bank and the Ministry of Justice in all matters serving the public interest, including those related to financial lease contracts, and with the aim of regulating the procedures for requesting and issuing extracts of the executive document for registered financial lease contracts issued by financial lease contract registration companies licensed by the Central Bank.

Please find enclosed a copy of the Controls and Procedures for Requesting and Issuing Extracts of the Executive Document for Registered Financial Lease Contracts. The Central Bank emphasizes that lessors and financial lease contract registration companies must fully comply with the provisions of these Controls and Procedures, in addition to the approved systems, controls, and instructions issued by relevant authorities. Lessors and contract registration companies will not be exempt from liability in case of non-compliance. Please note that these Controls supersede the Controls for the Lessor's Recovery of Movable Assets in Financial Lease Contracts issued by the Central Bank under Circular No. 9937/99 dated 16/2/1441 AH.

For your information and necessary action.
Yours sincerely,

Fahd bin Ibrahim Al-Shathri
Deputy Governor for Supervision

Distribution List:

• Banks and financial institutions operating in the Kingdom.
• Financing companies operating in the Kingdom.
• Financial lease contract registration companies licensed by the Central Bank.

P.O. Box 2992 Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000 P.O. Box 2992, Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000

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Controls and Procedures for Requesting and Issuing Extracts of the Executive Document for Registered Financial Lease Contracts

Jumada al-Thani 1442 AH / January 2021 CE

The Saudi Central Bank has issued these Controls based on the authorities vested in it under the Financial Leasing System issued by Royal Decree No. (48/M) dated 13/8/1433 AH

Saudi Central Bank
SAMA
Saudi Central Bank

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Table of Contents

Part	Page Number
Chapter One: Definitions and General Provisions	3
Chapter Two: Procedures for Requesting and Issuing an Extract of the Executive Document for the Recovery of Movable Assets	3
Chapter Three: Procedures for Requesting and Issuing an Extract of the Executive Document for the Request to Deliver the Fixed Asset	5
Chapter Four: Procedures for Requesting and Issuing an Extract of the Executive Document for the Financial Execution Certificate	6
Chapter Five: Final Provisions	7
Chapter Six: Enforcement	8

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Chapter One: Definitions and General Provisions

Article One: Definitions

-1 The terms and expressions used in these Controls and Procedures shall have the meanings assigned to them in the Financial Leasing System and its Executive Regulations.

-2 For the purpose of applying the provisions of these Controls and Procedures, the following terms and expressions – wherever they appear in these Controls and Procedures – shall have the meanings set forth opposite each of them, unless the context otherwise dictates:

Recovery of Movable Assets: The recovery of movable assets from the lessee in cases where the financial lease contract between the parties grants the lessor the right to recover them.

Request to Deliver the Fixed Asset: The lessor's request to the lessee to deliver the fixed asset (the real estate subject to the financial lease contract) in cases where the financial lease contract between the parties grants the lessor the right to recover it.

Financial Execution Certificate: A certificate issued by contract registration companies at the request of the lessor, demanding the lessee to pay a specific amount to the lessor in the cases stipulated in these Controls and Procedures.

Specialized Companies: Companies specialized in the recovery of movable assets licensed by the Ministry of Justice in accordance with the Execution System. They can be viewed through the Ministry of Justice's electronic website.

Parties: The lessee, the lessor, contract registration companies, and the competent judicial authority.

The Ministry: The Ministry of Justice.

Temporary Communication: A registered communication method that can be verified and retrieved in written or electronic form.

Extract of the Executive Document: An extract (registered financial lease) issued by contract registration companies for the financial lease contract regarding the executive document on the leased asset (movable and fixed) in accordance with the provisions of the Execution System and its Executive Regulations. It includes the extract of the executive document for the recovery of the movable asset, the extract of the executive document for the request to deliver the fixed asset, and the extract of the executive document for the financial execution certificate.

Article Two:

It is a prerequisite for issuing the extract of the executive document that the contract be registered with contract registration companies.

Article Three:

All parties must use electronic means in the process of requesting and issuing the extract of the executive document.

Chapter Two: Procedures for Requesting and Issuing an Extract of the Executive Document for the Recovery of Movable Assets

Article Four:

The lessor is prohibited from recovering movable assets except through specialized companies.

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Article Five:

The mechanism for recovering movable assets shall be in accordance with the Controls for the Lessor's Delivery of Movable Assets issued by the Ministry of Justice.

Article Six:

The lessor may submit a request to the contract registration company for the issuance of an extract of the executive document for the recovery of the movable asset in the following cases:

-1 The lessee's failure to pay the agreed monthly installments under the financing contract for three consecutive months, or more than five non-consecutive months throughout the contract period, after the lessor has completed the following steps:
.1 Notifying the lessee through temporary communication of the obligation to pay the overdue installments, otherwise the lessor has the right to recover the movable asset.

-2 The submission of the request to the contract registration company occurs after fifteen days from notifying the lessee as mentioned in Paragraph (1) above.

-3 The expiration of the contract, and the lessee's failure to acquire ownership of the movable asset or return it to the lessor, after verifying the following:
.1 Expiration of the contract term.
.2 Impossibility of transferring ownership of the movable asset to the lessee.

Article Seven:

Upon receiving the lessor's request to issue an extract of the executive document for the recovery of the movable asset and verifying the lessor's file regarding this matter, the contract registration company shall take the following actions:

-1 Issuing the extract of the executive document containing the contract number and date, place of fulfillment, place of issuance, date of the extract, lessor's name, lessee's name, amount due, and paid installments.

-2 Notifying one of the specialized companies - selected by the lessor - of the lessee's breach of contract terms and the lessor's desire to recover the movable asset, providing it with all data regarding the movable asset according to the form approved by the contract registration company.

Article Eight:

The contract registration company shall provide the Ministry with a monthly report covering all lessors' requests related to the issuance of an extract of the executive document for the recovery of the movable asset, along with a list of the specialized companies to which these requests were referred.

Article Nine:

The lessor must directly notify the lessee of the recovery of the movable asset through temporary communication, and the communication text must include at a minimum the following:

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Article Ten:

.1 Name of the lessor and the entity responsible for collecting defaults.
.2 Contact number with the relevant department and/or third party.
.3 Working hours of the relevant department and/or third party.
.4 Name of the employee and name of the lessor and/or third party in case of telephone communication.

Article Eleven:

The lessor must provide the lessee with the approved form for the inventory report of the movable asset, as stated in the Controls for the Lessor's Delivery of Movable Assets issued by the Ministry of Justice, through temporary communication after the financial lease contract.

Article Twelve:

The lessor shall not dispose of the movable asset (including but not limited to: selling the asset, assigning it to another party, or waiving the contract) before the expiration of a period of fifteen (15) days from the date of asset recovery, while notifying the lessee of the amounts due and the necessary documents for delivering the movable asset.

Article Thirteen:

Except for the cases mentioned in Article Six of these Controls and Procedures, the lessor may submit a request to the competent court to terminate the contract and recover the movable asset in financial lease contracts.

Chapter Three: Procedures for Requesting and Issuing an Extract of the Executive Document for the Request to Deliver the Fixed Asset

Article Fourteen:

The lessor may submit a request to the contract registration company for the issuance of an extract of the executive document for the request to deliver the fixed asset in financial lease contracts in the following cases:

.a The lessee's failure to pay the agreed monthly installments under the financing contract for three consecutive months, or more than five non-consecutive months for seven (7) days or more for each installment from its due date for every five (5) years of the contract term, after the lessor has completed the following steps:
-1 Notifying the lessee through temporary communication of the obligation to pay the overdue installments, otherwise the lessor has the right to deliver the fixed asset. The default notice must include the following information: (details of the overdue installments, how to rectify and resolve the default, the period granted to the lessee to rectify the default before initiating procedures to request delivery of the fixed asset, which shall not be less than ten (10) days from the date the lessee receives the notice). This notice shall be sent in accordance with the "Notices" article in the contract. -2 The submission of the request to the contract registration company occurs after failing to reach an agreement with the lessee regarding the payment of overdue installments, or after the lessee submits a request for early ownership of the fixed asset.

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Article Fifteen:

.b Expiration of the contract, and the lessee's failure to acquire ownership of the fixed asset or return it to the lessor, after verifying the following:
.1 Expiration of the contract term.
.2 The lessee's failure to transfer ownership of the fixed asset to them within the period agreed upon with the lessor.
.3 Impossibility of signing the delivery report of the fixed asset to the lessor.

Article Sixteen:

Upon receiving the lessor's request to issue an extract of the executive document for the request to deliver the fixed asset and verifying the lessor's file regarding this matter, the contract registration company shall take the following actions:

.1 Obtaining an acknowledgment from the lessor of their right to request the delivery of the fixed asset from the lessee, after confirming that the financing contract permits this, and the lessor attaching all supporting documents for the request.

.2 In individual real estate financing contracts, notifying the Support Department within the Ministry of Housing (if any) of the lessor's desire to deliver the fixed asset to them, and providing them with all required data according to the form approved by the contract registration company, to consider whether the lessee (individual) meets the support criteria approved by the Ministry (if any).

.3 In the absence of support from the Ministry of Housing, or if the lessee (individual) does not meet the support criteria approved by the Ministry, the contract registration company shall issue the extract of the executive document for the request to deliver the fixed asset, and deliver it to the lessor containing the contract number and date, place of fulfillment, place of issuance, date of the extract, lessor's name, lessee's name, amount due, paid installments, and data regarding the ownership deed of the fixed asset.

Article Seventeen:

The lessor may submit the extract of the executive document for the request to deliver the fixed asset to the competent authority for eviction and delivery of the fixed asset, and complete what is necessary in accordance with the approved systems on this matter.

Article Sixteen:

Except for the cases mentioned in Article (Thirteen) of these Controls and Procedures, the lessor may submit directly to the competent court to issue a judgment for the delivery of the fixed asset, which includes financial lease contracts prior to the implementation of the Financial Leasing System.

Chapter Four: Procedures for Requesting and Issuing an Extract of the Executive Document for the Financial Execution Certificate

Article Seventeen:

The lessor may submit a request to the contract registration company for the issuance of an extract of the executive document for the financial execution certificate in the following cases:

.a The lessee's failure to pay any of the agreed monthly installments under the financing contract, and the issuance of the extract shall be for the value of the overdue installments only.

.b Compensation to the lessor for each day of delay in case of the expiration of the financial lease contract, and the lessee's delay in returning the movable asset or completing ownership procedures, after verifying the following:
-1 The contract between the parties stipulates the lessor's right to oblige the lessee to compensate them for each day of delay in returning the movable asset after the contract expires.
-2 The lessor's compensation shall be calculated as a daily payment equal to the daily rent value (due rental installment / number of days in the month the contract was terminated) * number of days of delay.

.c Cost of recovering the movable asset, in cases where the lessor has the right to recover it, after verifying the following:
-1 The recovery of the movable asset has been carried out through one of the cases stipulated in Article (Six) of these Controls and Procedures.
-2 The cost is based on approved invoices issued by contract registration companies and specialized companies.

Article Eighteen:

Upon receiving the lessor's request to issue an extract of the executive document for the financial execution certificate and verifying the lessor's file regarding this matter, the contract registration company shall issue the extract of the executive document for the financial execution certificate containing the contract number and date, place of fulfillment, place of issuance, date of the extract, lessor's name, lessee's name, amount due, and paid installments.

Chapter Five: Final Provisions

Article Nineteen:

The contract registration company must register and preserve all requests received from lessors related to requests for issuing the extract of the executive document, and the conclusions reached, in an organized manner.

Article Twenty:

The lessor must develop internal policies and procedures that align with these Controls and Procedures, and do not conflict with approved systems and instructions.

Article Twenty-One:

These Controls and Procedures supersede the Controls for the Lessor's Recovery of Movable Assets in Financial Lease Contracts issued by the Central Bank under Circular No. 9937/99 dated 16/2/1441 AH.

Chapter Six: Enforcement

Article Twenty-Four:

These Controls and Procedures shall take effect from the date of their issuance.