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Collateral Management Agreement for Saudi Arabia

Collateral Management Agreement Template for Saudi Arabia

A comprehensive agreement governed by Saudi Arabian law that establishes the framework for managing collateral assets between parties. The document outlines the appointment of a collateral manager, defines eligible collateral types, establishes valuation methodologies, and sets forth the rights and obligations of all parties involved. It incorporates specific provisions to ensure compliance with Saudi Arabian regulations, including SAMA requirements and Sharia principles, while detailing procedures for custody, monitoring, and enforcement of collateral rights. The agreement includes specific mechanisms for dealing with defaults and establishing security interests in accordance with Saudi Arabian commercial and banking laws.

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What is a Collateral Management Agreement?

The Collateral Management Agreement serves as a crucial document in Saudi Arabian financial and commercial transactions where assets are pledged as security. It is typically used when parties require a third-party manager to oversee collateral arrangements, ensuring proper valuation, monitoring, and custody of assets. The agreement becomes particularly important in complex financial transactions, secured lending arrangements, and trading relationships where ongoing collateral management is essential. Compliance with Saudi Arabian law, including SAMA regulations and Sharia principles, is fundamental to the document's structure. The agreement details all aspects of collateral management, from initial posting through to potential enforcement, while accounting for local legal requirements regarding security interests, pledge registration, and enforcement mechanisms. This document is essential for financial institutions, corporations, and investment entities operating in Saudi Arabia who need to establish secure and compliant collateral arrangements.

What sections should be included in a Collateral Management Agreement?

1. Parties: Identification of the contracting parties including the collateral provider, collateral taker, and collateral manager

2. Background: Context of the agreement and relationship between the parties

3. Definitions and Interpretation: Definitions of key terms and interpretation rules, including Sharia-compliant terminology

4. Appointment and Authority: Appointment of collateral manager and scope of authority

5. Eligible Collateral: Types of acceptable collateral and eligibility criteria

6. Delivery and Custody of Collateral: Procedures for delivering, holding, and safeguarding collateral

7. Valuation and Margin: Methods for valuing collateral and maintaining margin requirements

8. Rights and Obligations: Detailed responsibilities of each party

9. Fees and Expenses: Payment terms for collateral management services

10. Representations and Warranties: Standard and Sharia-specific representations by all parties

11. Events of Default: Circumstances constituting default and consequences

12. Enforcement Rights: Procedures for enforcing rights over collateral

13. Term and Termination: Duration of agreement and termination provisions

14. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction

15. Notices: Communication procedures between parties

16. General Provisions: Standard boilerplate clauses adapted for Saudi law

What sections are optional to include in a Collateral Management Agreement?

1. Sharia Compliance: Specific section detailing Sharia compliance requirements - required when parties specifically want to emphasize Sharia compliance

2. Sub-Custodian Arrangements: Details of sub-custodian appointments and responsibilities - needed when sub-custodians will be used

3. Insurance: Insurance requirements for collateral - relevant for physical collateral

4. Tax Provisions: Specific tax-related provisions - needed for international arrangements or complex tax situations

5. Electronic Systems: Provisions for electronic collateral management systems - needed when using digital platforms

6. Regulatory Compliance: Additional regulatory requirements - needed for regulated entities or cross-border arrangements

What schedules should be included in a Collateral Management Agreement?

1. Schedule 1 - Eligible Collateral List: Detailed list of acceptable collateral types and specific eligibility criteria

2. Schedule 2 - Valuation Procedures: Detailed methodology for valuing different types of collateral

3. Schedule 3 - Fee Schedule: Detailed breakdown of fees and payment terms

4. Schedule 4 - Operating Procedures: Detailed operational procedures for collateral management

5. Schedule 5 - Form of Notices: Standard forms for various notices under the agreement

6. Schedule 6 - Authorized Signatories: List of authorized representatives for each party

7. Appendix A - Required Documentation: List of required documents for collateral posting

8. Appendix B - Reporting Requirements: Templates and requirements for regular reporting

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions


















































Clauses





































Relevant Industries

Banking

Financial Services

Islamic Finance

Investment Management

Securities Trading

Asset Management

Corporate Banking

Trading

Commodities

Investment Banking

Insurance

Real Estate

Relevant Teams

Legal

Compliance

Treasury

Risk Management

Operations

Finance

Credit

Trading

Investment Management

Islamic Banking

Securities Operations

Custody Operations

Relevant Roles

Chief Financial Officer

Treasury Manager

Collateral Manager

Risk Manager

Legal Counsel

Compliance Officer

Securities Operations Manager

Credit Risk Officer

Investment Manager

Portfolio Manager

Custody Operations Manager

Islamic Finance Specialist

Financial Controller

Head of Trading

Senior Banking Executive

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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