The following terms and phrases – wherever mentioned in this Law – shall have the meanings assigned thereto unless the context requires otherwise:

Law: Finance Lease Law.

Regulation: Implementing Regulation of this Law.

SAMA: Saudi Central Bank.

Governor: Governor of Saudi Central Bank.

Contract: Finance lease contract.

Lessor: A joint stock company licensed to offer finance lease.

Lessee: A person holding the right to use the leased asset under a contract.

Producer: Producer of the leased asset.

Supplier: Supplier of the leased asset.

Leased Asset: Any asset that can be leased whether real estates, movables, rights, services and intangible rights such as intellectual property rights.

Basic Maintenance: The maintenance indispensable to the original asset as per the norm.

Operational Maintenance: The maintenance needed for the continuation of the asset's benefit as per the norm.

Contract Register: A register for finance lease contracts concluded or executed in the Kingdom, sales contracts resulting from finance lease and any amendments thereto in accordance with the provisions of this Law.

• 1. The finance lease contract is a contract under which the lessor leases fixed or movable assets, rights, services or intangible rights in his capacity as owner or owner of proceeds thereof, or a person able to own or produce such assets, provided that the lessor has obtained such assets for the purpose of leasing them, as a business, to a third party, as specified by the Regulation.

• 2. Without prejudice to provisions governing real estate ownership by nonSaudis, ownership of leased assets may be conveyed to the lessee pursuant to the provisions of the contract either by stipulating that ownership conveyance is conditional on paying the dues of the contract, paying such dues plus a certain amount, promising to sell for a nominal price, paying the price agreed upon in the contract, paying the value of the leased asset at the time of concluding the sale contract, or by way of gift.

• A written or electronic contract shall be concluded between the lessor and the lessee and shall include information relating to contracting parties, leased asset and its condition, lease amount, payment due dates as well as contract term and contract conditions. The contract and any amendments thereto shall be registered in the contract register in accordance with the provisions of this Law.

• Prior to concluding the contract, the lessee may determine the specifications of the asset to be leased with the supplier, producer or contractor. The lessee shall be liable for any consequences resulting from determining asset specifications. If such specifications were determined with the approval of the lessor, such specifications shall be binding to the lessor only within the limits of such approval.

• If the lessor authorizes the lessee in writing to directly receive the leased asset from the supplier, producer or contractor as per the conditions and specifications set out in the contract, such receipt shall be by virtue of a record establishing the conditions of the leased asset. The lessee shall be responsible vis-à-vis the lessor for any information about the leased asset stated in said record. If the supplier, producer or contractor refuses to sign the record, the lessee may refuse receipt of such asset.

• 1. The lessee shall make the agreed lease payments on dates set in the contract regardless to whether the lessee benefits from the leased asset, unless the failure to benefit is caused by the lessor.

• 2. A condition to advance the maturity dates of future lease payments to be made by the lessee in case of default is permissible, provided such payments do not exceed the number of defaulted payments.

• 3. Part of the lease payments may be advanced, and the advance lease payments shall be refunded in case of failure to deliver the leased asset or benefit therefrom for a reason not attributed to the lessee.

• 1. The lessee shall use the leased asset for the agreed purposes within the ordinary use and shall be responsible for performing the operational maintenance at his own expense according to prevailing technical practices. The basic maintenance shall be performed by the lessor unless agreed to be performed by the lessee. In such case, the basic maintenance shall be limited to wear and tear rather than inherent defect or fault in the leased asset.

• 2. The lessee shall promptly notify the lessor at his address of any occurrence that prevents whole or partial use of the leased asset, in accordance with the Regulation.

• The lessee shall not make any alterations or modifications to the leased asset without a written consent by the lessor. Such consent shall determine the nature and scope of such alterations or modifications and the party responsible for the cost.