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Loan Modification Agreement for Saudi Arabia

Loan Modification Agreement Template for Saudi Arabia

A comprehensive legal document governed by Saudi Arabian law that modifies the terms of an existing loan agreement while ensuring compliance with both Shariah principles and Saudi banking regulations. The agreement details specific changes to loan terms such as payment schedules, profit rates, or security arrangements, while maintaining the fundamental Shariah-compliant structure of the original financing. It incorporates necessary approvals from Shariah boards and must comply with Saudi Central Bank (SAMA) regulations, making it suitable for use by financial institutions operating within the Kingdom of Saudi Arabia.

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What is a Loan Modification Agreement?

The Loan Modification Agreement is a crucial document used when parties need to alter the terms of an existing Shariah-compliant loan agreement in Saudi Arabia. It becomes necessary when circumstances require adjustments to payment schedules, profit rates, security arrangements, or other key terms of the original financing agreement. The document must carefully balance commercial requirements with strict Shariah compliance and Saudi Arabian banking regulations. It includes detailed modifications, necessary approvals from Shariah boards, and compliance with Saudi Central Bank (SAMA) guidelines. Typically used during financial restructuring, hardship situations, or when business conditions necessitate loan term adjustments, this agreement ensures that any modifications maintain the Islamic finance principles of the original agreement while providing clear documentation of the changes for all parties involved.

What sections should be included in a Loan Modification Agreement?

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Recitals describing the original loan agreement, reason for modification, and confirmation of Shariah compliance

3. Definitions: Definitions of key terms used in the agreement, including references to original loan agreement terms

4. Modification to Loan Terms: Specific changes to the original loan agreement, clearly stating old and new terms

5. Effective Date: The date when modifications take effect and any conditions precedent

6. Ratification of Original Agreement: Confirmation that unmodified terms of original agreement remain in force

7. Representations and Warranties: Updated representations from borrower regarding financial condition and ability to pay

8. Shariah Compliance Declaration: Explicit statement of compliance with Islamic finance principles

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

10. Execution: Signature blocks and execution requirements

What sections are optional to include in a Loan Modification Agreement?

1. Additional Security: Required when new collateral or guarantees are being added as part of the modification

2. Fee Structure: Include when modification involves changes to fees or charges

3. Payment Schedule Modification: Detailed section needed when payment dates or structures are being modified

4. Events of Default: Include when modifying or adding new default triggers

5. Waiver of Past Defaults: Required when past defaults are being waived as part of the modification

6. Cross-Default Provisions: Include when borrower has other facilities that need to be referenced

7. Required Consents: Include when third-party consents are necessary for the modification

What schedules should be included in a Loan Modification Agreement?

1. Schedule 1 - Modified Payment Terms: Detailed breakdown of new payment schedule, amounts, and dates

2. Schedule 2 - Original Loan Agreement: Copy of the original loan agreement being modified

3. Schedule 3 - Updated Security Details: List and description of all security arrangements, new and existing

4. Appendix A - Shariah Board Approval: Documentation of Shariah board review and approval of modifications

5. Appendix B - Corporate Authorizations: Copies of corporate resolutions and authorizations for the modification

6. Appendix C - Conditions Precedent Checklist: List of all conditions that must be satisfied before modification becomes effective

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

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
































Clauses

























Relevant Industries

Banking & Financial Services

Islamic Finance

Real Estate & Construction

Manufacturing & Industrial

Energy & Resources

Healthcare

Retail & Commercial

Technology & Telecommunications

Transportation & Logistics

Agriculture & Food Production

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Credit Administration

Shariah Advisory

Operations

Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Compliance Officer

Credit Risk Manager

Relationship Manager

Shariah Compliance Officer

Corporate Banking Manager

Loan Officer

Contract Manager

Financial Controller

Corporate Secretary

Banking Operations Manager

Risk Assessment Officer

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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