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A Hypothecation Agreement lets you pledge assets as collateral for a loan while keeping possession of them - a common practice in Qatar's banking and finance sector. Unlike traditional collateral arrangements, hypothecation means you can still use and benefit from the assets, making it especially valuable for businesses needing working capital.

Under Qatar's Commercial Code, these agreements must clearly specify the pledged assets and loan terms. Banks often use hypothecation for trade financing, where inventory or receivables serve as security. The agreement gives lenders a legal claim to the assets if the borrower defaults, while allowing normal business operations to continue smoothly.

Consider using a Hypothecation Agreement when you need immediate financing but want to keep using your business assets. This arrangement works particularly well for Qatar-based manufacturers who need working capital while maintaining control of their equipment, or traders seeking finance against their inventory or receivables.

The agreement makes sense when traditional collateral arrangements would disrupt your operations. For example, shipping companies in Qatar's ports can secure loans against their vessels while continuing normal trading routes. Similarly, retailers can leverage their stock without surrendering it to the bank, maintaining regular sales activities while accessing needed funds.

• Stock Hypothecation: Used by Qatari retailers and wholesalers to secure financing against inventory while continuing normal sales operations
• Fixed Asset Hypothecation: Common in manufacturing, where equipment serves as collateral while remaining in active production use
• Receivables Hypothecation: Popular among trading companies, using accounts receivable as security while maintaining customer relationships
• Vehicle Fleet Hypothecation: Designed for transport companies to secure loans against their fleet while continuing operations
• Mixed Asset Hypothecation: Combines multiple asset types as collateral, offering greater flexibility for diverse businesses

• Banks and Financial Institutions: Act as lenders, drafting and enforcing Hypothecation Agreements under Qatar Central Bank regulations
• Corporate Borrowers: Manufacturing companies, traders, and businesses seeking secured financing while retaining asset control
• Legal Counsel: Internal or external lawyers who review and customize agreements to comply with Qatari commercial law
• Corporate Officers: Company directors and authorized signatories who execute the agreement on behalf of borrowing entities
• Asset Managers: Oversee hypothecated assets and ensure compliance with agreement terms during the loan period

• Asset Details: Prepare complete descriptions of assets being hypothecated, including values, locations, and identifying features
• Loan Terms: Document the principal amount, interest rates, repayment schedule, and duration as per Qatar Central Bank guidelines
• Corporate Authority: Gather board resolutions and proof of signatory authority under Qatari law
• Asset Verification: Compile ownership documents, valuation reports, and any existing liens or encumbrances
• Operational Plans: Detail how hypothecated assets will be used, maintained, and insured during the agreement period
• Document Generation: Use our platform to create a compliant agreement that includes all required elements under Qatari law

• Identification Details: Full legal names and addresses of lender and borrower, with Qatar ID/CR numbers
• Asset Description: Precise details of hypothecated assets, including location, value, and unique identifiers
• Loan Terms: Principal amount, interest rates, and repayment schedule as per Qatar Central Bank guidelines
• Rights and Obligations: Clear outline of asset usage, maintenance responsibilities, and default consequences
• Insurance Requirements: Mandatory coverage types and minimum amounts for hypothecated assets
• Governing Law: Explicit reference to Qatar Commercial Law and applicable banking regulations
• Enforcement Provisions: Detailed procedures for asset seizure and disposal in case of default

A Hypothecation Agreement differs significantly from an Asset Purchase Agreement in Qatar's legal framework. While both deal with assets, their core purposes and effects are distinct. Hypothecation allows temporary asset pledging while maintaining possession, whereas an Asset Purchase Agreement transfers complete ownership.

• Control and Possession: In hypothecation, the borrower keeps using the assets; with asset purchase, control transfers completely to the buyer
• Duration: Hypothecation is temporary and linked to loan repayment; asset purchase is permanent
• Legal Rights: Hypothecation creates a security interest without ownership transfer; asset purchase involves full title transfer under Qatar's Commercial Code
• Business Impact: Hypothecation maintains operational continuity; asset purchase typically means operational changes for the transferred assets