Chapter Two Contract Register
Article 18
1. Without prejudice to the provisions of the Companies Law, a joint stock company or more shall be incorporated pursuant to a license from SAMA to register contracts. Such joint stock company shall undertake the following;
a- Prepare a register for contracts without prejudice to the provisions of the Real Estate Registration Law;
b- Register contracts which include information on the leased assets and related rights;
c- Disclose contract records to the licensed finance entities upon the written approval of the lessor.
2. Participation in the incorporation and ownership of the contract registration company provided for in Paragraph 1 of this Article shall be restricted to companies licensed to offer finance leasing. SAMA shall regulate increase of the capital of the contract registration company– by new licensed companies joining in the ownership of said company– and distribution of profits subject to Companies Law and Capital Market Law and its Regulations.
3. The Regulations shall regulate procedures for entry into the register of the contract registration company, the title deed of personal properties, other information required for registration, amendment and cancellation procedures, right of disclosure to third parties, retention period, registration information uniformity, exchange and access as well as fees for services offered.
Article 19
1- Without prejudice to the provisions governing acquisition of real estates, ownership of the leased assets by the lessor vis-à-vis third parties shall be established by contract registration in accordance with this Law and its Regulations.
2- In the event of securitization, the lessor shall take measures for endorsement in the contract register in accordance with rules and measures set out in the Regulations.
3- Amendments made to the contract, whether to terms or parties thereto, may be invoked against third parties only from the date of endorsement of such amendments in the register.
Article 20
Subject to Article 9 of this Law, the lessee shall hand over the leased asset– in the condition agreed upon in the contract – to the lessor upon contract termination, revocation or expiration, unless the lessee opts for ownership of the leased asset subject of the contract.
Article 21
The lessor may stipulate the right to revoke the contract and repossess the leased asset if the lessee defaults in making the due payments in accordance with the Regulations in a manner ensuring fairness between the parties to the contract.
Article 22
1. The contract shall terminate upon total loss of the leased asset.
2. In case of a partial loss of the leased asset that undermines use thereof, and the lessor fails to restore the leased asset to its earlier condition or replace it with a similar asset acceptable to the lessee, the lessee may terminate the contract or agree with the lessor to continue with the contract and amend the rent value in proportion to such loss. In case of contract continuity without change, no payment shall be required for the repair period unless the lessor compensates the lessee during such period with another asset equal to the leased asset.
3. If the lessee is prevented from the full use of the leased asset by an act of a competent authority for a reason not attributed to the lessee, the contract shall terminate and no rent shall be payable as of the date of such prevention.
4. The Regulations shall, upon termination of the contract during the terms of the lease, set the criteria determining the entitlements of each party in an equitable manner according to Sharia principles, taking into account any due insurance compensation.
Article 23
The lessee may, in case of bankruptcy declaration of the lessor or liquidation of the business thereof, continue implementing the contract as per its terms or return the leased asset with the approval of the receiver or the liquidator.