A new commercial mortgages law (CML) was promulgated in the Kingdom of Saudi Arabia by Royal Decree number M/86 dated 08/08/1439H (corresponding to April 24, 2018) and by Council of Ministers Resolution number 426 of the same date. The CML came into force on April 24, 2018. The implementing regulations to the CML were issued pursuant to resolution number 43902 of the Minister of Commerce and Investment and came into force on May 02, 2018.
The CML takes the place of an earlier commercial mortgages law which had been issued by Royal Decree number M/75 dated 21/11/1424H (corresponding to January 14, 2004). The CML is more extensive than the previous law and introduces a number of new concepts not covered by the previous law, such as floating charges, and codifies the order of priority of security. The CML also overturns certain provisions of the previous law by, for example, permitting security to be taken over future property.
Affected parties have until September 24, 2018 to ensure that any security instruments to which they are a party dated prior to April 24, 2018 are amended to comply with the provisions of the CML. The priority of security executed prior to April 24, 2018 will not be affected by the CML until September 24, 2018, following which the provisions of the CML will govern the priority of such security.
The following summarizes the new features of the CML as compared with the previous law.