The words and terms contained in this Regulation shall have the meanings set forth in Article (1) of the Commercial pledge Law, promulgated by Royal Decree No. M/86 and 8/8/1439 AH.

1. The Parties to the pledge contract may agree that the transfer of the possession of the pledged property to the pledger or the escrow shall be the only mean for the validity of the pledge contract.

2. The lien contract shall only be valid by the transfer of the possession of the pledged property to the pledger or the escrow based on the following two cases.

• a. The commercial paper of the bearer, when the value of the value due is pledge pursuant thereto.

• b. Bill of lading, when the goods covered by the policy are pledged.

The transfer of possession of the pledged property is achieved by the actual delivery of the pledged property and this shall be by a transfer of the possession from the pledging and the pledger or the escrow, with the requirement that the possession of the pledger or the escrow of the pledged property continues for the duration of the lien contract.

1. Subject to Article (3) of the regulation, if a common share of a pledged property is pledged - which is impossible to divide or sort - owned by more than one person, it is necessary for the transfer of its possession to the pledger or to the escrow to obtain the consent of all its owners in writing, and if this is not possible, the lien contract will not be valid before the others except by registration.

2. Without prejudice to the execution provisions on the pledged property contained in the regulations, the execution shall be made on the pledged share of the shared property in agreement with all owners to safeguard their rights, and if an agreement cannot be reached with them, the execution is carried out in accordance with the provisions and rules governing execution on the shared property.

1. The current accounts and term deposits shall be pledge after obtaining a letter from the entity holding the account or deposit who is aware of the lien and its undertaking to register the disposition in the assets of the account or the deposit in accordance with the terms of the lien contract. This entity has the right to refuse to submit this letter in any of the following cases:

• a. If the said entity has a right on the assets of the account or the deposit unless it has sufficient security to pay that right.

• b. If the entity undertakes for the benefit of others by registering the disposition of the assets.

• c. If the entity is a bank and the assets of the account are derived from facilities granted by the bank to the pledgee.

2. The Investment account shall be subject to the controls established by the Council of the Capital Market Authority, and Paragraph (1) of this article shall apply while no provision is made in the controls.

3. Without prejudice to the right of the pledger to execute on the pledged property, if the pledger of the account or the deposit is the one who retains that account or deposit, this entity may not use or benefit from the current account or the deposit.

Pursuant to Paragraph (1) of Article (32) of the law, the executor shall warn the debtor and the pledgee to pay the secured debt within (ten) working days, where the warning shall be written and accompanied by a copy of the direct execution extract, and the warning shall include the following data:

• a. Amount of secured debt.

• b. Description of the pledged property.

• c. The date of maturity of the secured debt.

• d. Request for transfer of the possession of the pledged property to the executor or an escrow to be chosen and the title of the pledged property shall be registered in the name of the executor or in the name of an escrow chosen, depending on the circumstances, and this is if the debtor cannot repay the secured debt during the warning period.

• e. The method of selling the secured property, taking into account Paragraph (4) of Article (32) of the law.

• f. The date of sale, and its location.

After the expiry of the warning period without the payment of the debt or the transfer of the possession of the pledged property to the executor or the escrow of his choice or registering the title of the pledged property in the name of the executor or in the name of an escrow chosen, the executor shall submit the direct execution extract to the competent authorities to request one of the following measures:

• a. Transfer of possession of the pledged property to the executor or to an escrow of its choice.

• b. Registering the title of the pledged property in the name of the executor or in the name of an escrow chosen.

• c. Transfer of the possession of the pledged property in the name of the executor or in the name of an escrow chosen.

A request for any of the above measures requires that the action is necessary to execute on the pledged property.

1. If the execution procedures are carried out by the execution agent in accordance with the provisions of Article (31) of the law, the execution agent shall deduct the execution expenses from the proceeds of sale, thereby avoiding the proceeds of the rights of the high-priority pledgers from the executing pledger, and then the executing pledger fulfills his right from the remainder of this proceeds, and the remainder of the proceeds shall be deposited in a bank account in the name of the registry for the benefit of the other pledgers, and the provisions of Article (36) of the law shall apply to this account.

2. The pledge shall, after all the pledgers have fulfilled their rights, submit a request to the registry or the executing agent, as the case may be, to recover the remaining amount in the account.

Pursuant to Paragraph (1/A) of Article (27) of the law, the lien debtor and the pledgee shall be warned to pay the secured debt in writing, with the warning containing the following data:

• a. Amount of secured deb.

• b. Description of the pledged property.

• c. The date of maturity of the secured debt.

The executor shall retain the originals of all documents and papers relating to execution for a period of five years from the date of the warning contained in Paragraph (1/A) of Article (27) of the law or from the date of the extract of the executing title or of direct execution extract as the case may be.