10.2 Freezing in the Event of Death, Bankruptcy or Loss of Legal Competence
10.2.1 Official Notice on Freezing by Reason of Death, Loss of Legal Competence, Starting Any Liquidation or Administrative Liquidation Procedures Under the Bankruptcy Law, or Going into Liquidation Under Companies Law
I. In accordance with the applicable laws, the bank must stop all dealings related to the account and freeze the balance therein if it becomes aware of, or receives official notification from a competent authority about, any of the following:
a. Death of the account holder or one of the account holders.
b. Restriction on the legal competence of the account holder or one of the account holders.
c. Issuance of a judicial order or a decision from the company’s general assembly or partners to liquidate the company that owns the account.
d. Starting any liquidation or administrative liquidation procedures under the Bankruptcy Law for the account holder.
II. When carrying out the above, the following shall be considered.
- The absence of a provision in the company’s memorandum of association and articles of association that allows the company to continue if any of the cases mentioned in Paragraphs (a) and (b) of Item (I) stated above occurs.
- The account must be operated in accordance with Paragraph (c) of Item (I) stated above by the liquidator appointed by a judicial liquidation decision or a decision of the company’s general assembly or partners. The decision should include the appointment of the liquidator, restrictions imposed on its power and the period needed for liquidation (provided that such period shall not exceed five years if the decision is issued by the company’s general assembly or partners). The exception to the provisions of this paragraph and Paragraph (c) of Item (I) above is when the company’s memorandum of association, its articles of association, or partners’ agreement contain(s) a provision on how to liquidate the company. In such case, the liquidation should be performed thereby, as the case may be.
- The account shall be operated in accordance with Paragraph (d) of Item (I) above by the liquidator or bankruptcy committee as determined in the decision of the competent court.
- Checks issued before the occurrence of any of the cases mentioned in Item (I) above should be considered, unless otherwise stated by a court order issued thereon.
10.2.2 Request of Heirs, Guardians and Curators to Banks to Disclose Transactions and Account Balances of their Deceased or Incompetent Persons and the Like
10.2.2.1 Inquiring About and Operation of a Deceased’s Account
- If any person requests a bank to disclose transactions, accounts’ balances or banking relationships of his/her legator, the bank must respond to the request after verifying the existence of the necessary documents, which empower him/her to act so, including, as a minimum, the death certificate and determination of heirs deed (or an original copy thereof) that defines the names of heirs, including the person requesting the disclosure. If the requesting person is a legal agent of all the heirs or of one of them, he should produce the original power of attorney of his heirs or any of them that gives him the right to inquire about the legator's balances. The inquirer should be provided with the answer in a written form. The statement provided should be accurate and should include all banking relationships pertaining to the deceased. The Bank should keep a copy of the statement after being signed by the recipient.
- To operate the accounts of a deceased after freezing balances and stopping dealings because of death, the bank must verify the persons who have the right to the account of the deceased. Disbursement should be made based on legal practices and documents, including, as a minimum, the provision of the determination of heirs deed (or an original copy thereof) and the presence of heirs or their representatives collectively or individually, provided that such representatives have a power of attorney thereon. In addition, the decision of disbursement or distribution made by mutual agreement or by the competent court should be presented to the bank. If it is impossible to provide any of the required documents in connection with the deceased expatriate, the bank, after obtaining an attested death certificate, should issue a banking check with the amount of the balance in the name of the deceased’s country’s embassy to hand it to his/her heirs. The bank must comply with the requirements and procedures for heirs’ accounts set forth in Rule (200.1.1).
- Providing heirs or their representative with the deceased’s account statements or account activity for the period preceding the date of death is prohibited unless SAMA informs the bank of the issuance of a judicial order requiring so.
10.2.2.2 Inquiring About Incompetent Persons’ Accounts
If any person contacts a bank to inquire about or require disclosing of transactions, accounts’ balances or banking relationships of an incompetent person, the bank must respond to the request after verifying the existence of the necessary empowering documents, including, as a minimum, a legal document that proves the person’s guardianship or custody over the incompetent person. The inquirer should be provided with the answer in a written form. The statement provided should be accurate and should include all banking relationships pertaining to the incompetent person. The bank should keep a copy of the statement after being signed by the recipient. Providing curators or guardians with the incompetent person’s account statements or account activity information for the period preceding the issuance of the custody or guardianship deed is prohibited. For account operation, the provisions of the related rules should be applied on a case-by-case basis (interdicted, disabled, etc.).