������Ƶ

A Control Agreement lets a lender take secure control over a borrower's bank accounts or investment assets in Saudi Arabia. It's a three-way contract between the lender, borrower, and the financial institution holding the assets, commonly used in Islamic finance and commercial lending.

Under Saudi banking regulations and the Commercial Pledge Law, these agreements give lenders real-time monitoring rights and the ability to restrict account access when needed. This protection is especially important for Shariah-compliant financing, where the bank needs clear control over the pledged assets while still allowing the borrower to conduct normal business operations.

You need a Control Agreement when securing business financing against bank accounts or investment assets in Saudi Arabia. This is especially important for large commercial loans, project financing, or when setting up Islamic banking facilities that require Shariah-compliant asset control mechanisms.

The agreement becomes crucial during major transactions like corporate acquisitions, infrastructure projects, or when expanding business operations. It protects lenders under Saudi banking regulations while giving borrowers continued operational access to their accounts. Many Saudi banks require these agreements before releasing funds for significant commercial ventures or when accepting deposit accounts as collateral.

• Active Control Agreements: Give lenders immediate control over bank accounts, letting them freeze funds or redirect payments instantly under Saudi banking regulations
• Passive Control Agreements: Allow monitoring rights without direct intervention powers, commonly used in lower-risk Islamic financing arrangements
• Hybrid Control Agreements: Combine monitoring and selective control rights, popular in project financing where staged access is needed
• Multi-Account Control Agreements: Cover multiple accounts or investment portfolios under a single agreement, streamlining administration for complex business relationships

• Commercial Banks: Draft and enforce Control Agreements as primary lenders, ensuring their security interests comply with Saudi banking regulations
• Corporate Borrowers: Sign as account holders, maintaining operational access while pledging accounts as collateral
• Account Banks: Act as custodians, implementing control mechanisms and monitoring account activities per agreement terms
• Legal Counsel: Review and customize agreements to ensure Shariah compliance and protect all parties' interests
• Compliance Officers: Monitor adherence to agreement terms and Saudi financial regulations

• Account Details: Gather complete information about all bank accounts or investment assets being controlled, including account numbers and types
• Party Information: Collect legal names, registration numbers, and authorized signatories for the lender, borrower, and account bank
• Control Rights: Define specific control mechanisms, notice requirements, and operational limitations under Saudi banking laws
• Shariah Review: Ensure agreement structure aligns with Islamic finance principles and local regulatory requirements
• Documentation: Prepare corporate authorizations, specimen signatures, and account mandates needed for implementation

• Party Identification: Full legal names and registration details of lender, borrower, and account bank under Saudi law
• Account Description: Detailed listing of all controlled accounts with specific account numbers and types
• Control Mechanisms: Clear procedures for implementing account restrictions and exercising control rights
• Notice Requirements: Specific timeframes and methods for communications between parties
• Shariah Compliance: Express statements ensuring alignment with Islamic finance principles
• Governing Law: Reference to Saudi commercial laws and banking regulations
• Dispute Resolution: Specified Saudi courts or arbitration procedures for conflict resolution

A Control Agreement differs significantly from an Account Agreement in both scope and purpose within Saudi Arabia's banking system. While both deal with bank accounts, they serve distinct functions in commercial relationships.

• Purpose and Control: Control Agreements specifically grant lenders security rights over accounts, while Account Agreements simply establish basic banking relationships and services
• Parties Involved: Control Agreements require three parties (lender, borrower, bank), whereas Account Agreements are bilateral between bank and customer
• Legal Framework: Control Agreements align with Saudi secured lending and Islamic finance regulations, while Account Agreements focus on standard banking terms and conditions
• Enforcement Rights: Control Agreements provide specific mechanisms for account restriction and fund access, but Account Agreements typically don't include security provisions