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VISION d الاملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA وزاره التجاره Ministry of Commerce Commercial Papers Law 1383 H. +966 11 294 4444 | Riyadh 11162 لياض Kingdom of Saudi Arabia | المملكه العربيه السعوديه SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION d j6 ال المملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA Commercial Papers Law In the name of Allah the Merciful and Compassionate Royal Decree No. 37, dated 11/10/1383 H. With the help of Allah We, Saud bin Abdulaziz Al Saud King of Saudi Arabia Having Reviewed Articles (19) and (20) of the Council of Ministers' Law, issued by Royal Decree No. (38), dated 22/10/1377 H. Pursuant to the Council of Ministers Decree No. (692), dated 26/9/1383 H. and Based on what the Prime Minister presented to us. Decided as follows: First: Approval of the Commercial Paper Law as follows. Secondly: The Prime Minister and the Minister of Commerce and Industry shall enforce this Decree. +966 11 294 4444 | Riyadh 11162 aliyah Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa Y وزاره التجاره Ministry of Commerce VISION d-ي ال المملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA Council of Ministers Decree No. (692), dated 26/09/1383 H. The Council of Ministers, Having reviewed the recommendation received from the Office of the Presidency of the Council of Ministers, No. (3517), dated 27/02/82 H., relating to the draft Law of Dealing with Cheques in the Kingdom; The letter of the Ministry of Commerce No. (68/m), dated 08/09/80 H., attached to the draft Law of Dealing with Cheques; The letter of the Ministry of Finance and National Economy, No. (478), dated 21/02/22 H., and the draft Law of Dealing with Cheques prepared by the Ministry; In view of the urgent need to establish a law governing the commercial papers of all types and regulate the manner of dealing with them, Prof. Dr. Amin Mohammed Badr has developed a draft of the said law, that was reviewed with the Regulations Committee, in a manner that is consistent with the needs, traditions and laws of the country; and Based on the recommendation of the Regulations Committee, No. (75), dated 13/04/1382 H. Has decided the following: 1. Approving the Commercial Paper Law as per the attached form. 2. Approval of the Explanatory Note of the said Law. 3. Organizing a draft royal decree; a copy of which shall be attached to this Decree. Signed by, The Prime Minister +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه SaudiMCI www.mci.gov.sa T • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • وزاره التجاره Ministry of Commerce VISION d 30 23:30 demolak erebilean KINGDOM OF SAUDI ARABIA Commercial Papers Law Part One: Promissory note Chapter One: Promissory Note Issuance Article (1) The promissory note includes the following data: (A) The word (Promissory Note) written in the body of the instrument and in the language in which it is written/issued. (B) A matter not pending on the condition of payment of a certain sum of money. (C) The name of the person who must fulfill the obligation (the drawee). (D) Maturity date. (E) Place of payment. (F) The name of the person to whom or to whose order the note shall be paid. (G) The date and place of issuing the promissory note. (H) Signature of the person who issued the promissory note. Article (2) The current meaning of the above statements shall be deemed a promissory note except in the following cases: (A) If the promissory note does not include the maturity date, it shall be payable upon receipt. (B) If the note does not include the place of payment or the domicile of the drawee, the place indicated beside the name of the drawee shall be considered the place of payment and the domicile of the drawee. (C) If the note does not indicate the place of its issuance, it shall be deemed issued in the place indicated beside the name of the drawer. Article (3) The promissory note may be withdrawn to the drawer himself, to its holder and to the account of another person. Article (4) It is permissible to require the payment of the promissory note in a domicile other than the place to which it is drawn; whether if that domicile is in the place of the drawee or another place. Article (5) If the amount of the promissory note is written in both letters and numbers, the amount written in letters shall be adopted in cases of difference. If the amount is written several times in letters or numbers, the lower amount shall be adopted in case of differences. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa £ وزاره التجاره Ministry of Commerce VISION d_jj 2-30 Komolka Energiia Sewegie KINGDOM OF SAUDI ARABIA Article (6) Requirement of an interest on the promissory note shall be ignored. Article (7) The eligibility of the obligor with the promissory note shall be determined according to the law followed in his country. However, Saudi persons shall not be deemed an obligor prior to reaching the age of eighteen years. If the person is incompetent in accordance with his national Law, his obligation remains valid if his signature is placed in the territory of a state where he is deemed fully qualified. Article (8) The obligations of minors who are not merchants and the obligations of the disqualified, arising from their signatures on the promissory note are null and void for them only and they may stick to such invalidity in the face of every note holder, even if in good faith. Article (9) If the promissory note carries the signatures of persons who are not qualified to oblige to the same, false signatures, signatures of fictitious persons or signatures that shall not oblige their signatories or the persons signed by their names, then the obligations of the other signatories shall be correct nevertheless. Article (10) A person who signs a promissory note on behalf of another without authorization is personally obliged to that note. If he paid it, then he becomes entitled to the rights of the person who claimed representation thereto. This provision applies to the person who exceeds the limits of representation. Article (11) The holder of the promissory note shall guarantee its acceptance and payment and he may be exempted from guarantee the acceptance without guaranteeing the payment. Chapter Two: Trading in Promissory Note with Endorsement Article (12) The promissory note may be traded in with endorsement, even if it does not expressly state that it is drawn (to the order of). It is not permissible to trade in the promissory note to which the drawer adds the phrase (not to the order of) or any similar statement, except in accordance with the provisions of the transfer of the right. Endorsement is permissible to the drawee either he accepts or refuses the note. Endorsement is also permissible to the drawer or any other obligor. All of them may endorse the note again. Article (13) The endorsement shall be totally unconditional and any condition upon which the endorsement is pending shall be ignored. Partial endorsement is invalid and endorsement to the holder shall be signing on a blank note. Article (14) Endorsement shall be written on the promissory note itself or on another paper attached to it, signed by the endorser. The name of the endorsed-to may not be written in the endorsement. The endorsement may be limited to the endorser's signature (endorsement on a blank note). If the endorsement is on a blank note, the holder may fill the statement by typing his name or the name of another person, or may deliver the blank promissory note to another person, without endorsement. +966 11 294 4444 | Riyadh 11162 A @ SaudiMCI Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • وزاره التجاره Ministry of Commerce VISION d-ي demolak erebilean KINGDOM OF SAUDI ARABIA Article (15) The endorser may accept and pay the promissory note unless otherwise specified. He may re-endorse it, in which case he shall not be obliged to guarantee to those to whom the promissory note shall inure by subsequent endorsement. Article (16) The holder of the promissory note shall be deemed to be its legal holder when it is proved that he is the holder of the right therein with uninterrupted endorsements, even if the last of which is endorsement on a blank note. Written off endorsements shall be ignored in this regard. If endorsement on a blank note was followed by another endorsement, the person who signed the last endorsement shall be deemed the person entitled to endorse the blank promissory note. In case a person loses possession of a promissory note as a result of an accident, the holder may not give it up once his right therein is established in accordance with the preceding provisions, unless he has received it in bad faith or has committed a serious mistake for that purpose. Article (17) Endorsement transfers all rights arising on the note. The person against a promissory note claim is held shall not object to its holder with defenses based on his personal relationship with its drawer or former holders, unless the purpose of the holder at the time of receipt of the promissory note is to harm the debtor. Article (18) If the endorsement includes the term (collectible value), (value to third party), (by proxy) or any equivalent statement stating a power of attorney, the holder shall assume all the rights arising from the promissory note. However, it shall not be endorsed except by way of power of attorney. The obligors, in that case, shall not object to the holder except with defenses that may be used against the endorser. The power of attorney obtained from that endorsement shall survive the death of the principal or in case of impairment of his eligibility. Article (19) If the endorsement includes the term (value for security), (mortgage value) or any similar term indicating mortgage, the holder of the promissory note may assume all rights arising therefrom. In case he endorsed the note, such endorsement shall be deemed by way of power of attorney. The debtor subject to that note shall not protest against the its holder with defenses based on his personal relationship with the endorser, unless the endorser meant to hard the debtor at the time of receiving the note. Article (20) Endorsement subsequent to the maturity date arranges the impacts of the prior endorsement, while the endorsement subsequent to the non-payment protest or occurring after the expiry of the time specified for that protest will determine the impacts of the transfer of the right. Undated endorsement shall be deemed to have occurred before the elapse of the time specified for the act of protest, unless otherwise is proven. The date of endorsement shall not be made earlier, otherwise it shall be deemed fraudulent. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION d-ي 2-30 demolak erebilean KINGDOM OF SAUDI ARABIA Chapter Three: Acceptance of the Promissory Note Article (21) The holder of a promissory note, or any holder thereof until its maturity date, may submit it to the drawee in his home country for acceptance. The holder of the promissory note may include a provision to submit it for acceptance on a specified date, or without, and may include a provision that it shall not be submitted for acceptance unless it is payable by a person other than the drawee or in a place other than his domicile or if its payable after a certain period of its receipt. He may also require not to submit it for acceptance before a certain period of time. The endorser may require submitting the note for acceptance on a certain date or not, unless the drawer has stipulated that it should not be submitted for acceptance. Article (22) The promissory note payable after a specified period of time shall be submitted for acceptance within one year of its date and the withdrawer may shorten or extend that date. Any endorser may shorten these dates. Article (23) The drawee may request submitting the promissory for acceptance again the day following the first submission. The concerned parties shall not claim that the above request id rejected, unless this request is proven in the protest paper. The holder of the promissory note submitted for acceptance is not required to give it up and deliver it to the drawee. Article (24) Acceptance shall be written on the promissory note itself and shall be pronounced as (acceptable) or by any other term stating the same meaning, to be signed by the drawee. Acceptance shall be deemed valid upon the drawee's signing the promissory note. If the promissory note is due to be paid after a specified period of time or is liable to be submitted for acceptance by a specific date based on a special condition, the date of acceptance shall be stated on the day on which it was received, unless the holder entails stating the date of acceptance on the day of the submission of the promissory note. If the acceptance does not include a date, the holder may preserve his rights to refer to the endorsers or the drawer to confirm that non-existence of that date, with a protest in a timely manner. Article (25) The acceptance shall be unconditional. However, the drawee may limit it to part of the amount of the promissory note. If the acceptance statement includes an amendment to any other statement of the promissory note, it shall be regarded as refusal, yet the accepting person shall remain obliged to the statement of acceptance. Article (26) In case the drawee cancels his acceptance on the promissory note before it is returned, it shall be regarded as a refusal to accept. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه SaudiMCI www.mci.gov.sa V ● ● ● ● ● ● ● ● ● وزاره التجاره Ministry of Commerce VISIONدي الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA The cancellation shall be deemed valid before returning the promissory note, unless otherwise is proven. However, if the drawee notifies the holder or any other signatory of his acceptance in writing, he shall comply with such acceptance. Article (27) If the drawer specifies a payment place in the promissory note other than the place of the drawee without specifying the person to whom the payment shall be made, the drawee may appoint that person on acceptance; failure of which the accepting person shall be deemed liable to pay in the place of payment. If the promissory note is due to be paid in the domicile of the drawee, he may specify, in the form of the acceptance, an address in the place where payment shall take place. Article (28) In case the drawee accepts the promissory note, he shall be liable to pay its value on its maturity date. Failure to do, the holder, even if the drawer himself, may demand the accepting drawee, through a direct claim arising out of the note, with whatever can be demanded under Articles (60) and (61). Chapter Four: Payment Remuneration Article (29) The withdrawer of the promissory note or the drawer to him own account shall specify a remuneration for the drawee upon payment. However, this provision does not exempt the drawer for the account of a third party from his personal liability to the note's endorsers and holders. Article (30) The remuneration for payment shall be deemed present if the drawee is liable to the drawer or to the order to withdraw at the maturity date of the promissory note with a certain payable sum of money which is, at least, equal to the amount of the promissory note. The acceptance of the promissory note shall be an evidence to the existence of the payment remuneration at the drawee, unless otherwise is proved. The drawer, alone, shall prove in case of denial, whether the promissory note has been accepted or not, that the drawee had its payment remuneration on its maturity date. In case he could not prove as above said, he shall be deemed a guarantor to the payment, even if the protest was carried out after the time specified by law. If, in the latter case, the existence of the remuneration is proved and continued until the expiry of the time specified in the protest, he shall be discharged by the amount of such remuneration, unless it has been in his interest. Article (31) Ownership of the payment remuneration shall be transferred, by law, to the successive note holders. If the amount of the remuneration is less than the value of the note, the holder shall have full rights due to him on that incomplete remuneration. Article (32) If a number of payable notes are due on a single date on a remuneration that is insufficient to pay all of them, the date of their withdrawal shall be considered in respect of the rights of their holders in fulfilling their rights against the said payment. The holder of the promissory which date is prior to the dates of the other promissory notes shall have payment priority to the others. If the promissory notes are drawn on the dame date, the promissory note accepted by the drawee shall have priority. If no promissory note is accepted by the drawee, the promissory note for which payment a remuneration is allocated shall have priority, while the notes that does not require acceptance shall be the last. +966 11 294 4444 | Riyadh 11162 لاري Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa ^ ● ● ● ● ● ● ● ● ● ● وزاره التجاره Ministry of Commerce VISION د.اي الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA Article (33) The drawer, even if the protest is carried out after the scheduled time, shall hand over the holder of the promissory note the documents necessary to obtain the payment remuneration. If the drawer went bankrupt, the Law entails replacing him and the relevant expenses shall be borne by note holder in all cases. Article (34) If the drawer went bankrupt, even before the note's maturity date, the holder alone, from among the other creditors of the drawer, shall properly fulfill his right from the payment remuneration at the drawee. In case the drawee went bankrupt and the payment remuneration is owed by him, that debt shall be included in the bankruptcy assets. If the payment remuneration is an asset that may be refunded in accordance with the provisions of bankruptcy, the holder of the promissory note shall have priority in fulfilling his right of the value of the remuneration. Chapter Five: Collateral Article (35) The amount of the promissory note, in whole or part, may be guaranteed by a collateral, who may be any from any person, even if a person who signed the promissory note. Article (36) The reserve guarantee shall be written on the promissory note itself or on a paper attached thereto, in the form of (acceptable as a collateral) or any other term with the same meaning, to be signed by the guarantor whose name shall be stated in the collateral or it shall be due to the drawer. This collateral shall be used only upon the signature of the guarantor on the promissory note, unless such signature is issued by the drawee or the drawer. However, the collateral may be given in a separate paper stating the place where the collateral was made. The collateral issuer, in such case, shall not be bound except by person to who the guarantee is made. Article (37) The collateral issuer shall be obliged similar to the guaranteed person and the obligation of the collateral issuer shall be correct, even if the obligation guaranteed is null and void for any reason other than the defect in the housing. In case the collateral issuer pays the promissory note, he shall be entitled to the rights rising thereon, towards the guaranteed person and towards each person obliged to him under the note. Chapter Six: Payment of the Promissory Note Section (I): Payment Term Article (38) The due promissory note may be withdrawn upon receipt or after a certain period therefrom, from the date of issuing the promissory note or on a certain day. The promissory note shall not include other maturities or successive maturities, otherwise it shall be void. Article (39) A promissory note payable upon receipt shall be payable once submitted and shall be submitted to payment within one year of its date. The drawee may shorten or extend this period, the endorsers may shorten it and the drawee may require that the promissory note be payable upon receipt before the expiry of a certain period. In that case, the date of submission shall be calculated as of that date. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION د.اي الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA Article (40) The maturity date of the promissory note payable shall commence after a period of receipt, from the date of its acceptance or from the date of protest. If the protest does not work, the undated acceptance shall be valid to the accepting person on the last day specified to submit the note, in accordance with Article (22). Article (41) A promissory note drawn for one or more months from its date or from the date of its receipt shall be due on such date from the month in which it is due. If there is no such date in the month in which it is due, the maturity shall be on the last day of that month. If the promissory note is withdrawn for one month and a half or for months and a half from its date or from the date of its receipt, the account shall start with the full months. If the maturity is in the beginning, middle or end of the month, the intended day is the first, fifteenth or last day of the month. The statement (eight days or fifteen days) does not mean a week or two weeks, but actual eight days or fifteen days and the term (half month) means fifteen days. Article (42) If the promissory note is due on a given day and in a country where the calendar differs from the country of its issuance, the maturity date shall be determined in accordance with the calendar of the country of payment. If the promissory note is withdrawn between two countries with two different calendars and it is due after a period of its date, the date of issuance shall be returned to the corresponding date in the calendar of the country of payment. The maturity date shall be specified accordingly. The date for submitting the promissory note shall be specified in accordance with the preceding provisions. The above provisions shall not apply if it becomes clear from a condition in the promissory note or from its statements that it is intended to follow violating rules. Section (II): Method of Payment Article (43) The holder of the promissory note shall submit it for payment on its maturity date. Submitting the promissory note to one of the recognized clearing houses shall be regarded as a submission for payment. Article (44) Upon the drawee's payment, he may request to receive the note from its holder, signed as cleared. The holder may not refuse partial payment. In case of partial payment, the drawee may request that such payment be proved on the promissory note itself and to be given a clearance with the same. Any amounts paid out of the value of the promissory note shall be discharged from the note's owners, endorsers and the other obligors thereunder. The holder shall limit his protest to the unpaid amount. Article (45) The note holder shall not be forced to receive the value of the promissory note before its maturity date. In case of the drawee's payment of the value of the promissory note before its maturity date, he shall assume responsibility to the same. Whoever pays the note on its due date, without a valid protest shall be discharged, unless he commits a fraud or a major error. The payer shall have to cheque the sequence of endorsements, but he is not obliged to verify the validity of endorsers' signatures. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa 1. ● ● ● ● ● ● ● ● ● وزاره التجاره Ministry of Commerce VISION d_ng 2-30 Komolka Energiia Shwogie KINGDOM OF SAUDI ARABIA Article (46) If the payment of the bill of exchange is required in a currency non-current in the Kingdom, payment shall be done in the currency used therein at its rate of exchange on the date of maturity. In case if the debtor's failure to pay on the said day, the holder may choose to claim the amount of the bill of exchange in a currency used in the Kingdom, at its exchange rate on the day of maturity or on the day of payment. The current exchange in the Kingdom shall be followed in the assessment of foreign exchange. However, the drawee may specify in the bill of exchange the price on which the amount to be paid shall be calculated. If the amount of the bill of exchange is denominated in a currency that bear a common name, but which value differs in the issuing country from its value in the country of payment, the calculation shall be based in the value in the country of payment. Article (47) If the bill of exchange is not submitted for payment on its due date, each debtor may deposit its amount at the authority designated by the Minister of Commerce and Industry, at the expense of the holder and under his responsibility. The said authority shall give the depositor a document stating the deposit of the amount, its value, the date of the promissory note, its maturity date and the names of the person favor whom the note was issued. In case of the holder's demanding the debtor to pay, the latter shall deliver the deposit document in return for submitting the promissory note. The holder may collect the amount from the said authority under that document. In case the debtor shall not deliver the deposit document to the holder, he shall have to pay the value of the promissory note. Section (III): Opposition to Payment Article (48) Payment of the bill of exchange shall not be allowed except in case of its loss, its holder's bankruptcy or the occurrence of any violation of its eligibility. Article (49) In case an unacceptable bill of exchange is lost, and it has been signed in several counterparts, the person entitled to its value may claim its payment under one of such counterparts. If the bill of exchange is signed in multiple counterparts and the one that carries the acceptance statement is missing, payment shall not be claimed under any of its other copies except by an order from the authority appointed by the Minister of Commerce and Industry and a guarantor shall be required. Article (50) The person who lost the promissory note, whether it is accepted or unaccepted, and was unable to submit any of its other copies, may request issuing an order from the authority appointed by the Minister of Commerce and Industry to pay the same, provided proving his ownership to the note and have it registered. Article (51) In case of failure to pay a lost bill of exchange upon being claimed in accordance with the previous provisions, its owner, in order to preserve his rights, shall have to prove the same in a protest paper to be issued on the day following the maturity date, to be assigned to the obligors to the said note in the aspects and on the date specified for the purpose. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION d-lj المركزي العربيه السعوديه KINGDOM OF SAUDI ARABIA The protest paper shall be issued and declared, even if it is not possible to issue the order of the competent authority in due course. Article (52) The owner of the lost bill of exchange may obtain a copy thereof by referring to the person to whom the bill of exchange has been endorsed. The relevant endorser shall have to cooperate and allow to use his name in demanding the previous endorser. The endorsement sequence shall be followed from one endorser to another till the drawer is reached. Each endorser shall write his endorsement on note's copy delivered by the drawer, marked as a replacement to the lost note. That copy shall not be used in demanding the payment except by an order of the competent authority appointed by the Minister of Commerce and Industry and provided that a guarantor is available. All relevant expenses shall be covered by the owner of the lost promissory note. Article (53) The debtor shall have to pay on maturity date according to the order of the competent authority referred to in the preceding articles. The guarantor's liability provided for in Articles 49, 50 and 52 shall be discharged after three years if no claim is made or no suit is brought before the competent authority appointed by the Minister of Commerce and Industry. Section IV: Refuse to Pay First: Protest Article 54: The holder of the bill of exchange shall record the refusal to accept or pay it in an official paper titled (Non-Acceptance protest) or (Non-Payment Protest). However, this does not mean that another action cannot be taken on that protest and the protest paper shall be issued by the authority appointed by the Minister of Commerce and Industry. The protest paper shall include an exact copy of the promissory note, bearing the statements of acceptance, endorsement, guarantee and other statements, as well as the statements on the warning of the note payment, mentioning the presence or absence of the persons obliged to accept or pay. The said authority shall give a copy of the protest paper to the person against whom it has been issued. The said authority shall also record all protest papers, on a daily basis, taking into account the order of the dates, in a special register duly numbered and marked. Recording in the mentioned register shall be in the manner used in the index records. During the first ten days of each month, the said authority shall also send to the Commercial Registry Office a list of the non-payment protests that were made during the previous month on accepted promissory notes. The Commercial Register keeps a register to record these protests and any person may review such record and have extracts identical to the originals therein. The Commercial Register shall issue a statement with such protests. Article (55) A non-acceptance protest shall be made within the deadline specified for the submission of the bill of exchange for acceptance. If the first submission for acceptance has taken place in accordance with Article (23) on the last day of the deadline specified for submission, the protest may take place on the following day. Protest to the non-payment of a due promissory note shall be made on a certain day or after a period of its date or from the date of its receipt on one of the two days following its maturity date. If the promissory note is due on receipt, the non- +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISIONدي الملك العربيه السعوديه KINGDOM OF SAUDI ARABIA payment protest shall be made in accordance with the conditions set forth in the preceding paragraph on the non-acceptance protest. Protest shall mean not accepting the provision of the bill of exchange for fulfillment or objecting the non-fulfillment. On the drawee's failure to pay, whether or not he accepts the promissory note, and in case of ineffective confiscation to his money, the holder of the promissory note may not return to his guarantors unless after promissory note has been submitted to payment and after the non-payment protest. In the event the drawee is bankrupt, whether he has accepted the note or not, and in case of the bankruptcy of a drawee of a note that a bears a non-submission condition, the filing of the bankruptcy judgment shall be sufficient in itself to enable the holder to exercise his rights of recourse to the guarantors. Article (56) The note holder shall notify the note drawee and the endorser with its non-acceptance of non-payment within the four working days following the day of the protest or with its non-submission to acceptance or payment if it includes a requirement of recourse without expenses or (without protest). The endorser shall, during the two business days following the date of receipt of the said notification, shall notify the endorser of the promissory note of receiving such notification, indicating the names and addresses of those who made the previous notifications, and so on from on endorser to another till reaching the drawer. The date starts for each endorser as of the date on which the notification is received. Once any if the signatories on the note have been notified as above stated, his collateral issuer shall also be notified at the same time. In case any of the signatories has not specified his address or has written it in an illegible handwriting, it shall be sufficient to inform the previous endorser. The person that should undertake the notification process shall adopt any form, even if by returning the promissory note itself and shall have to prove that he has made the notifications on due time. The notification shall be deemed delivered if sent on the time specified via a registered mail. The rights of the person sending the notifications shall not be waived if he failed to send them on the above-specified time, but shall, where necessary, compensate the damage caused by his negligence, provided that such compensation shall not exceed the amount of the promissory note. Article (57) The drawee and any endorser may exempt the holder of the promissory note from protesting against the non-acceptance or non-payment of the note upon exercising his right of recourse if he added to the promissory note the (return without expenses) or (without protest) condition, or any other statement with similar meaning, and signed the same. This condition shall not exempt the holder from submitting the promissory note on the prescribed dates, neither from making the necessary notifications. Whoever sticks, before the holder, to non-adherence to these dates, shall have to prove the same. In case the drawer adds this condition, its effects shall apply to all signatories. However, if it is written by one of the endorsers of collateral issuers, its effects shall apply to the person who wrote it. If the drawer is the one who signed the condition and the holder protested, he shall solely bear the expenses. If the condition is issued by an endorser or a collateral issuer, it is permissible to recourse to all the signatories with the expenses of the protest if it is accepted. +966 11 294 4444 | Riyadh 11162 لاري Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION d_jj 2-30 momlka erejika shwogdje KINGDOM OF SAUDI ARABIA Second: Holder's Rights A) Right of recourse: Article (58) The promissory note's drawer, the person who accepted it, its endorser and collateral issuer are all jointly responsible to the holder, who may claim them, individually or jointly, without taking any order into account. Such right shall be recorded to each signatory on the promissory note who paid its value to those liable to him. Any claim filed against any of the obligors does not preclude demanding the others, even if their obligation is subsequent to the person against whom the claim is initially raised. Article (59) The holder of the promissory note, in case of non-payment on due date, may recourse to its warder, endorsers and other obligors and he may also recourse to them before the due date in the following cases: 1. In case of total or partial refusal to accept. 2. In the event of the drawee's bankruptcy, whether he has accepted the promissory note or not and if he has stopped paying his dues, even if such failure is not proved by a judgement, as well as in case of confiscating his funds ineffectively. 3. In the event of the bankruptcy of a drawer of a note that bears a condition of non-submission to acceptance. In the cases referred to in items (2) and (3), the guarantors may request the authority appointed by the Minister of Commerce and Industry, within three days of the date of recourse to them, for a period to pay. If the said authority is satisfied that that the request id justified, it shall determine the deadline for payment, provided not to exceed the date specified for the maturity of the promissory note. Such matter is non-negotiable. Article (60) The holder of the promissory note may demand whoever has the right of recourse to him with the following: (A) The principal amount of the not accepted or unpaid promissory note. (B) Expenses of the protest, notifications and other expenses. In cases of recourse before the note's maturity date, the value of the official discount shall be deducted from its value at the date of recourse in the place of the holder. Article (61) It is permissible for any person who pays a promissory note to demand his guarantors to the following: A) Full paid amount. B) Expenses incurred. Article (62) Each obligor required to pay a promissory note or targeted to demand that, may request, upon payment, to receive the note, the protest paper and a clearance with sum he paid. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION د قي الملك العربيه السعوديه KINGDOM OF SAUDI ARABIA Each endorser who paid the note may write off his endorsement and the subsequent endorsements. In case of recourse to any of the obligors with the unacceptable extent of the value of the promissory note, the person who has paid that sum may request the holder to prove such payment on the promissory note and hand him over a clearance with the same. The holder shall also hand over a copy of the promissory note, certified as a true copy, along with the protest paper, to enable him to use his right of recourse to others. Article (63) No extra time shall be granted to pay the e value of promissory note or to carry out any related actions, except in the cases provided for in this Law. Article (64) If a force majeure which cannot be overcome prevents the payment of the promissory note or pleading within the prescribed time limits, such dates shall be extended. The promissory note holder shall promptly notify his/her opponent of the force majeure and shall confirm such date and signed notification in the bill of exchange or in the related paper. The notifications shall be in sequence until they reach the drawer in accordance with article 56. Once the force majeure has been overcome, the bill of exchange holder shall submit the bill of exchange for acceptance or for payment, and may pretest when necessary. If the force majeure continues for more than thirty days calculated from the date of maturity, it is permissible to refer to the contractors without the need to provide the bill of exchange or to protest. If the bill of exchange is due when it is viewed or after the acknowledgement period, the date shall be 30 days from the date on which the bill of exchange holder notifies the one who endorsed the bill of exchange for him/her of the force majeure, even if this date is signed before the end of the bill of exchange submission date. The period of acknowledgement shall be more than the thirty-day period if the bill of exchange is due after a period of its acknowledgement. The matters relating to the bill of exchange holder or to the person entrusted with bill of exchange submission or to protest shall not be considered as a force majeure. Article (65): If the bill of exchange maturity date corresponds to on an official holiday, it may be claimed only on the following business day, and any payment related procedure may not be made, and in particular to be submitted for acceptance or for the protest except on a business day. If any such action is to be carried out on a specific period, the last day of which corresponds to the official holiday, this period shall be extended to the next day, and this holiday shall be calculated from the due period. Unless the system otherwise provides, the first day of the statutory or the agreed upon dates related to the bill of exchange shall not be calculated. B- Redraft Article (66): Any person who has the right of recourse to other persons committed to the bill of exchange shall fulfill his/her right to withdraw a new due payment bill of exchange on one of his/her guarantors when he/she is present in the home of this guarantor unless otherwise stipulated. The amount of the redraft shall include the amounts indicated in articles 60 and 61 plus the commission and payment fee. If the drawer of the redraft is the holder, the redraft amount shall be determined on the basis on +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION د.ال الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA which the value of a due bill of exchange payable upon acknowledgment and shall be withdrawn from the place where the original bill of exchange is due to the place where the guarantor's home is located. If the redraft drawer is one of the two endorsers, the amount shall be determined on the basis on which the value of a due bill of exchange payable upon acknowledgement and shall be withdrawn the place where the bill of exchange drawer's home is located to the place where the guarantor's home is located. If there are multiple redrafts, the claim of the original bill of exchange drawer or any endorser shall be charged at a single redraft. c- Precautionary seizure Article (67): The holder of the non-payment protested bill of exchange may sign a precautionary seizure on movables of any contractor after an order has been issued by the Minister of Commerce and Industry. Chapter Seven: Interference in acceptance or in payment Article (68): The bill of exchange holder, endorser and reserve guarantor may designate the person who accepts or pays the bill of exchange when required. The bill of exchange may be accepted or paid by any person intervening in the interest of any debtor whose purpose is to be reviewed. The intervention may be from third parties, the drawee or any person who is liable under the bill of exchange other than the person who is liable may be involved. The interferer shall notify the applicant of the impact of the intervention in the course of the following two business days. Otherwise he/she shall be liable, if necessary, for the damages caused by his/her actions provided that the amount of the compensation shall not exceed the amount of the promissory note. Article (69): Interference acceptance shall be in all cases in which the holder of the acceptable bill of exchange has the right of recourse before the due date. If the person who accepts or pays the value of the bill of exchange is deemed to be in the place where it is due, the holder may not return it to the person who issued it or the subsequent signatories unless the bill of exchange is submitted to the person appointed for acceptance or payment thereof if necessary and the holder proved this abstention by protest. In the other case, the holder has the right to refuse to accept the intervention, and if the holder accepts this, he/she has no right to return before the due date to the person intervened in his/her favor and on the subsequent signatories. Article (70): The acceptance of the intervention shall be evidenced by the bill of exchange itself and signed by the interferer, stating the name of the person who takes the intervention in his favor. If the acceptance of the intervention is not included in this statement, it shall be considered to be in the interest of the drawer. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION د.اي الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA Article (71): The one who accepts the intervention shall be obliged, towards the holder of the bill of exchange and its endorsers who are affiliated to the person for whom favor the intervention occurred, to what the latter is obliged to do. The person who received the intervention for his benefit and his supporters, despite the acceptance of the intervention, may oblige the holder to pay the amount specified in Article 60 by handing over the promissory note, protest and dispute, if any. If the bill of exchange is not submitted to the person who accepted it with intervention, it shall intervene during the day following the last day of the date specified for the non-compliance protest, the one who accepted the intervention shall be acquitted. Article (72): The bill of exchange may be fulfilled by intervention in all cases in which the bill of exchange holder has the right to recourse to the contractors at or before the due time of payment. This fulfillment shall be by paying all amounts due payable by the one for whom the interference was made. Article (73): If those who accepted the bill of exchange by interference or those who were designated to pay the bill of exchange have home at the time due for payment, when necessary, bill of exchange holder shall submit the bill of exchange for payment and non-payment protest when necessary not more than the day following the day on which it is permitted to protest. If there is no protest during this period, the one who designated someone for payment or those in their interest the bill of exchange was accepted with interference, or the affiliated endorsers shall not abide for commitment. Article (74): If the bill of exchange holder refuses payment by interference, the holder has no right to refer to the one who shall be quitted by payment. Article (75): The payment shall be proven by writing a clearance on the promissory note, in which the one for whom the payment has been made shall be mentioned. If the statement does not contain this clearance, the payment by interference shall be considered as made in the interest of the drawee and the bill of exchange and the protest shall be given to the one who paid by interference. Article (76): The one who fulfilled a bill of exchange shall acquire all the rights arose of the bill of exchange by interference to the one for whom the payment is made and the contractors of the latter pursuant to the promissory note, however, he/she may not endorse the bill of exchange again. The subsequent endorsers shall be discharged for the one for whose interest the payment was made. If there are several persons for the payment by interference, the one who can discharge the biggest number of contractors shall pay by interference. The one who interfere for payment in violation of the herein role with awareness of this shall have no right to refer to those who were discharged if this role is taken into consideration +966 11 294 4444 | Riyadh 11162 لاباش Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa 1V وزاره التجاره Ministry of Commerce VISION d_jj 2-30 demolak erebilean KINGDOM OF SAUDI ARABIA Chapter eight: Multiple copies and misrepresentation Article (77): The bill of exchange of multiple identical copies may be withdrawn. Each copy of shall be numbered in its entirety, otherwise each copy will be considered as an independent promissory note. Each holder who has a bill of exchange in which he/she has not stated that he/she is the only one to request copies at his/her expense, and shall therefore return to the person who endorsed the bill of exchange to him/her, and therefore to return to the previous endorser, and this shall be sequencing until it ends to the drawer. Each endorser shall record the endorsement of the new versions. Article (78): The fulfillment of the bill of exchange under one of the copies shall be clearing even if it is not conditional on it that this obligation invalidates the other copy provisions, but the drawee remains obliged to fulfill under each accepted copy of the bill of exchange which is not recovered, and the endorser of the bill of exchange of different persons and subsequent endorsers shall be bound by the copies bearing their signatures and is not recovered. Article (79): A person who sends a copy of the bill of exchange for acceptance shall indicate to the other copies the name of the person who is in possession of the copy and the latter shall hand it over to the legal holder of any other copy. If he/she refuses to deliver it, the holder has no right of recourse unless he/she proves in a protest paper that the copy sent for acceptance has not been delivered to him/her despite his/her request, and that acceptance or fulfillment was not obtained under another copy. Article (80): The bill of exchange holder shall make copies thereof, and these copies shall be identical to the original bill of exchange, bearing the endorsement of any statements or any other data in which it is written, and to write that the copies of the original have expired at that time limit. The copy may be endorsed and assured as an alternative in the manner in which the original is endorsed and assured. The copy shall have the same provisions as the original. Article (81): The name of the holder of the original bill of exchange shall be shown in the copy. The latter shall deliver the original to the legitimate holder of the copy. If the holder of the original refrains from delivering the original, the holder of the original shall not have the right of recourse against its endorsement or reserve guarantors unless he proves in protest that the original was not delivered to him/her at his/her request. And if the original is written after the last endorsement before the work of the copy that since now does not allow endorsement only on the copy and every endorsement of the original after that shall be null and void. Article (82): If there is a misrepresentation in the bill of exchange, the subsequent signers shall commit to this misrepresentation in the misinterpreted line, whereas the previous signatories are required to comply with the original text. Chapter nine: Effects of holder's works (Nullity): Article (83): The holder shall lose the rights arising from the bill of exchange to the owner, endorsers and other obligators except by meeting the prescribed dates for the following: +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa 1A وزاره التجاره Ministry of Commerce VISION d-lj المرك الاریه السعوديه KINGDOM OF SAUDI ARABIA (A) The submission of the bill of exchange due upon acknowledgement or after the period of acknowledgement. (B) Non-acceptance or non-compliance protest. (C) Providing the bill of exchange in the event that it includes a requirement of recourse without expenses, or (without protest). However, the drawer does not benefit from this nullity unless he/she proves that he/she found a return for the fulfillment of the due date. In this case, the holder has no choice but to recourse to the drawee. If the bill of exchange has not been submitted for acceptance at the time specified by the drawer, the rights of the holder lapse due to non-acceptance and non-compliance unless the term of condition indicates that the drawer was only intended to exempt himself/herself from the guarantee of acceptance. If the endorser is the one who stipulates the confirmation of the date of bill of exchange submission for acceptance, he/she alone can benefit from this condition. Chapter Ten: Non hearing of the case Article (84): Without prejudice to the rights of the holder which are derived from his/her original relationship with the person who received the promissory note, the claim arising from the bill of exchange shall not be heard to the one who accepts it after three years from the date of maturity. The holder's claims shall not be heard against the drawer or endorsement after one year from the date of the protest written on the due date or from the due date if the condition of recourse is included without expenses or without protest. The endorsers' claims against each other or against the drawer shall not be heard after six months from the day on which the endorser paid the bill of exchange or the day of filing the claim. Article (85): The dates mentioned in the preceding Article shall not apply in the case of filing the lawsuit, except from the last day of the proceedings. These dates shall not apply if a judgment is given by the debtor or by the debtor acknowledgement in a separate paper confirming the renewal of the debt. Article (86): The interruption of dates shall not have an effect on those who have taken such decisive action before such date. Part two: Promissory Note Article (87): The promissory note form shall include the following information: (A) The condition of the order or the words "promissory note" written in the body of the promissory note and in the language in which it is written. (B) An outstanding undertaking on the condition of payment of a certain amount of money. (C) Due payment date. (D) Place of payment. (E) The name of the person to whom he or she shall be liable. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa وزاره التجاره Ministry of Commerce VISION d_jj 2-30 Momakçı Enerjiğa Şewgöre KINGDOM OF SAUDI ARABIA (F) Date and place of establishment of the promissory note. (G) Signature of the creator of the promissory note (the issuer). Article (88): A promissory note free of any of the statements mentioned in the preceding Article shall not be considered as a promissory note except in the following cases: (A) If the promissory note is free from the due payment date, the payment shall be considered obligatory upon acknowledgement. (B) If the promissory note is free from a statement of the place of payment or the place of the issuer, the place of promissory note creation shall be regarded as a place of fulfillment and a place of the editor. (C) If the promissory note is free from a statement of the place of promissory note creation, it shall be deemed to have originated in the place next to the name of the issuer. Article (89): The following provisions of the bill of exchange shall apply to the promissory note in the amount not inconsistent with its meaning: A- The provisions relating to the payment of the payable bill of exchange in the home of a good person or in a place other than where the home of the drawee is located, the difference in the data of the amount to be paid, the invalidity of the interest clause, the eligibility of the obligation and the consequences of the signature of those who are not entitled to the obligation or non-binding signatures, or the signature of non-commissioner or a commissioner who exceeds the limits of delegation. B- Provisions relating to the endorsement of the bill of exchange and its collateral security, taking into account that if the name of the security is not mentioned in the form of the security, the security shall be deemed to be the interest of the issuer. C- The provisions concerning the entitlement and payment of the bill of exchange, and the opposition in the payment, protest and recourse due to non-compliance and the inadmissibility of granting deadlines for the fulfillment and calculation of dates and working days, as well as the redraft and the precautionary seizure. D- Provisions relating to the fulfillment of the interference and multiple copies, misinterpretation, and the effects of negligence of the holder and non-hearing the case. Article (90): The promissory note issuer shall be bound by the manner in which the bill of exchange holder is bound. The promissory note due payable after a certain period of acknowledgement shall be submitted to the issuer at the time specified in Article 22 for the purpose of indicating the promissory note acknowledgement. Such indication shall be dated and signed by the issuer. The period of access shall commence from the date of such entry. If the editor refrains from this indication, this shall be proven by a protest note. The date of the protest shall be considered the beginning of the validity period for acknowledgement. Part three: Cheque Section I: Cheque writing Article (91): The cheque shall include the following data: +966 11 294 4444 | Riyadh 11162 @ SaudiMCI Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa Y. • • • • • • • • • • وزاره التجاره Ministry of Commerce VISION d_jj الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA A- The word (cheque) shall be written in the instrument's body in the language in which it is written B- Order that is not binding on the fulfillment of a certain amount of money. C- The name of the person who shall fulfill the obligation (the drawee). D- The place of payment. E- Date and place of writing the cheque. F) Signature of the one who writes the cheque (drawer). Article (92): An instrument which is free from one of the statements mentioned in the preceding Article shall not be considered a cheque except in the following two cases: A- If the cheque does not contain a statement of place of its payment, the cheque shall be payable at the place mentioned beside the name of the drawee and if there are multiple places, the cheque shall be due payable at the first mentioned place. If the cheque does not include these statements or is free from any other statement, it shall be considered as due payable at the place where the drawee's main shop is located. B- If the cheque does not contain the statement of the place of its writing, it shall be deemed to be originating in the place indicated beside the name of the drawer. Article (93): Cheques issued in the Kingdom shall not be withdrawn or paid except on a bank. Instruments drawn in the form of cheques not on a bank shall not be considered as valid cheques. Article (94): A cheque may not be issued unless the drawer has money on the drawee at the time of writing the cheque and can dispose of this money by a cheque in accordance with an express or implied agreement. The drawer of the cheque or the one who orders other person to withdraw it on his/her account shall pay the amount of the cheque fulfillment, however, the drawer for the account of others is personally responsible to the endorsers and the holder not others. In case of denial, the drawer himself/herself shall prove that the person who withdrew the cheque had a pay cheque at the time of writing the cheque. If this is not proved, the drawer shall guarantee the cheque payment even if the protest takes place after certain dates. The absence or insufficiency of a fulfillment consideration to pay shall not result in the invalidity of the cheque Article (95): The cheque may be required to be paid to: (A) A particular person, with or without the express provision of the order; (B) A particular person with a condition (not an order) or any other term that indicates this meaning; (C) Cheque Holder. A cheque drawn for the benefit of a particular person and the text of which states the phrase (or to its holder) or any other similar term shall be considered a cheque for the holder. If the name of the beneficiary is not specified, the cheque shall be deemed to be the holder. A cheque containing a (non-negotiable) condition shall be payable only to the holder who has received it attached with this condition. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه @ SaudiMCI www.mci.gov.sa Y1 وزاره التجاره Ministry of Commerce VISION د.اي الملكه العربيه السعوديه KINGDOM OF SAUDI ARABIA Article (96): The cheque may be withdrawn to the same drawer order. It may be withdrawn to the account of another person. It may not be withdrawn by the same drawer unless it is drawn from among branches of a bank controlled by one main center and provided that the cheque shall not be payable to the holde …(15,244 more chars)