The Divisible Letter of Credit is a crucial trade finance instrument in Saudi Arabia's international commerce landscape. It is specifically designed for transactions where goods or services are delivered in multiple installments, allowing the beneficiary to draw down the credit amount in parts as shipments are made. This document type must strictly adhere to Saudi Arabian law, including compliance with SAMA regulations and Islamic banking principles. The Divisible Letter of Credit is particularly valuable in large-scale international trade deals where phased deliveries are common, such as construction projects, bulk commodity trades, or long-term supply contracts. It provides security to both parties while offering the flexibility needed for complex international transactions.
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1. LC Number and Date: Unique identification number and issuance date of the Letter of Credit
2. Issuing Bank Details: Complete details of the issuing bank including name, branch, and SWIFT code
3. Applicant Details: Full legal name and address of the party requesting the Letter of Credit
4. Beneficiary Details: Full legal name and address of the party in whose favor the LC is issued
5. Currency and Amount: The currency and total value of the Letter of Credit
6. Division Structure: Specific details on how the LC amount can be divided and drawn down
7. Expiry Date: Final date until which the Letter of Credit is valid
8. Place of Expiry: Location where the LC expires
9. Partial Shipments: Terms and conditions for partial shipments and drawings
10. Required Documents: List of documents required for each drawing under the LC
11. Payment Terms: Specific conditions and timing for payment upon document presentation
12. Shipping Terms: Details of shipment requirements and Incoterms
13. Governing Law: Explicit statement of Saudi law governance and Sharia compliance
1. Transferability Clause: Include when the LC needs to be transferable to other beneficiaries
2. Red Clause: Include when advance payment provisions are required
3. Green Clause: Include when storage-related advance payment provisions are needed
4. Revolving Terms: Include when the LC needs to automatically renew under specified conditions
5. Back-to-Back Provisions: Include when the LC will be used as security for another LC
6. Special Instructions for Islamic Banking Compliance: Include when specific Sharia compliance measures need to be detailed
7. Confirmation Instructions: Include when confirmation by another bank is required
1. Schedule A - Drawing Schedule: Detailed schedule showing the planned divisions of the LC amount and timing
2. Schedule B - Document Checklist: Comprehensive list of required documents for each drawing
3. Schedule C - Fee Structure: Breakdown of all applicable fees and charges
4. Appendix 1 - Form of Drawing Request: Standard format for submitting drawing requests under the LC
5. Appendix 2 - Specimen Signatures: Authorized signatures for various parties involved in the LC
6. Appendix 3 - SAMA Compliance Declaration: Required declarations for Saudi regulatory compliance
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Oil and Gas
Construction
Retail
Agriculture
Mining
Textiles
Automotive
Electronics
Chemical Industry
Pharmaceuticals
Food and Beverage
Relevant Teams
Legal
Finance
Treasury
International Trade
Compliance
Risk Management
Banking Operations
Documentary Credits
Procurement
Supply Chain
Islamic Banking
Trade Finance
Relevant Roles
Trade Finance Manager
International Banking Officer
Credit Manager
Import/Export Coordinator
Treasury Manager
Compliance Officer
Financial Controller
Documentary Credits Specialist
Risk Management Officer
Islamic Banking Specialist
Chief Financial Officer
Supply Chain Manager
Procurement Manager
Legal Counsel
Banking Operations Manager
International Trade Specialist
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