1. The following terms and phrases, wherever used in these Rules, shall have the meanings assigned thereto unless the context requires otherwise:

Central Bank: Saudi Central Bank.

Finance entity: Any bank or finance company licensed by Saudi Central Bank.

Disposal: Encompasses sale of finance assets, or factoring.

First party: A finance entity that intends to dispose its finance assets or their contractual rights.

Second party: An entity that possess finance assets or their contractual rights after being disposed by the first party.

Sale of assets: Transfer of the ownership of finance assets or their contractual rights to the second party.

Factoring: Sale of the rights of finance contracts to the second party, where the ownership of finance assets remains with the first party.

Recourse: Disposal arrangement whereby the first party bears the credit risk of the disposed finance assets or their contractual rights, including default risk.

Partial recourse: Disposal arrangement whereby the first party bears part of the credit risk of the disposed finance assets or their contractual rights, including default risk.

Without recourse: Disposal arrangement whereby the second party bears the credit risk of the disposed finance assets or their contractual rights, including default risk.

Disposal forms: The disposal can be either with recourse, partial recourse, or without recourse.

Finance assets portfolio: A pool of finance assets or their contractual rights, which are intended to be disposed by the finance entity.