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Saudi Arabia, Buildings

Jan 24, 2018

Taking Security in the Kingdom of Saudi Arabia

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The Kingdom of Saudi Arabia is a nation with a vast and growing population of over 30 million people and significant requirements for soft and hard infrastructure. Historically, the responsibility for procuring this infrastructure has been borne by the Government, but the oil price decline and reduction of hydrocarbon export revenues, which has resulted in the development of the Kingdom’s vision for social reform and economic diversification away from dependence on hydrocarbon export revenues (Saudi Vision 2030), has forced the Kingdom to rethink how it will meet its infrastructure requirements in the future. As well as calling for a greater focus on the development of non-oil and gas-related industries (which creates additional infrastructure demand in and of itself), Saudi Vision 2030 calls for greater participation by the private sector (i.e., through the use of “public private partnerships” and other models where private sector participants bear funding responsibility) in developing the Kingdom’s infrastructure. This increased participation by the private sector can be expected to result in a spike in the use of limited recourse debt finance.  Although many limited recourse debt financings have been successfully closed in the Kingdom,  the laws of the Kingdom have, historically, presented some challenges for lenders seeking a robust security package in connection with limited recourse debt financings that is comparable to security packages seen in other jurisdictions.

This article examines some of the key issues that are typically faced when taking security over assets in the Kingdom. It begins with a quick overview of the Saudi legal system and then sets out the key issues with respect to movable tangible assets, real estate, intangible assets and shares. The article also discusses assignment under the laws of the Kingdom and the role of powers of attorney in taking security.

View full memo, Taking Security in the Kingdom of Saudi Arabia

Authors and Contributors

Marwan Elaraby

Partner

Capital Markets

+971 4 249 2123

+971 4 249 2123

+971 2 410 8123

+971 2 410 8123

Dubai

Dr. Sultan Almasoud

Partner

Mergers & Acquisitions

+966 11 213 7801

+966 11 213 7801

Riyadh

Sanjarbek Abdukhalilov

Partner

Mergers & Acquisitions

+966 11 213 7802

+966 11 213 7802

Riyadh

Iain Elder

Partner

Project Development & Finance

+44 20 7655 5125

+44 20 7655 5125

+971 2 410 8100

+971 2 410 8100

London

Brendan Hundt

Counsel

Project Development & Finance

+966 11 213 7805

+966 11 213 7805

+971 2 249 2160

+971 2 249 2160

Riyadh