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Stock Borrowing Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Stock Borrowing Agreement

"I need a Stock Borrowing Agreement under Saudi Arabian law for a major investment bank acting as borrower, with specific provisions for electronic trading platform integration and enhanced collateral requirements of 120% for all technology sector securities."

Document background
The Stock Borrowing Agreement is essential for financial institutions operating in Saudi Arabia's securities market, providing a legally robust framework for securities lending transactions while ensuring compliance with both secular and Islamic law. This document is typically used when financial institutions need to facilitate short selling, cover settlement failures, or support market-making activities. The agreement must be structured to comply with the Capital Market Authority's regulations and Shariah principles, making it unique compared to conventional securities lending agreements in other jurisdictions. It includes comprehensive provisions for collateral management, corporate actions, default scenarios, and fee structures that are specifically designed to meet Islamic finance requirements. The document is particularly important given Saudi Arabia's growing role in global financial markets and the increasing sophistication of its domestic securities market.
Suggested Sections

1. Parties: Identification of the Lender and Borrower, including their full legal names, registration details, and addresses

2. Background: Recitals explaining the context of the agreement, the parties' authority to enter into the agreement, and Shariah compliance declaration

3. Definitions and Interpretation: Comprehensive definitions of terms used in the agreement and rules of interpretation

4. Loans of Securities: Core provisions governing the borrowing mechanism, including loan procedures, delivery mechanisms, and confirmation requirements

5. Collateral Requirements: Provisions regarding the type, amount, and maintenance of collateral, including marking to market procedures

6. Fees and Compensation: Shariah-compliant fee structure and compensation mechanisms

7. Rights and Obligations: Detailed responsibilities of both parties, including corporate actions, voting rights, and dividend arrangements

8. Representations and Warranties: Standard and specific representations and warranties from both parties

9. Events of Default: Definition of events of default and their consequences

10. Remedies: Available remedies upon default, including close-out procedures

11. Taxation: Treatment of taxes and zakat obligations

12. Governing Law and Jurisdiction: Application of Saudi law and jurisdiction of Saudi courts

13. Notices: Communication procedures between parties

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

Optional Sections

1. Agency Provisions: Required when either party acts as an agent for underlying principals

2. Custody Arrangements: Needed when a third-party custodian is involved in holding collateral

3. Set-off Rights: Optional provisions for set-off rights, if agreed between parties

4. Electronic Trading Platform: Required when transactions will be conducted through specific electronic platforms

5. Multiple Branch Provisions: Needed when either party operates through multiple branches

6. Force Majeure: Optional provisions for extraordinary events affecting performance

7. Shariah Board Approval: Required when specific Shariah board approval is needed for certain aspects

Suggested Schedules

1. Schedule 1 - Form of Loan Confirmation: Standard form for confirming individual loan transactions

2. Schedule 2 - Eligible Securities: List of securities eligible for borrowing under the agreement

3. Schedule 3 - Eligible Collateral: Approved types of collateral and applicable haircuts

4. Schedule 4 - Fee Schedule: Detailed Shariah-compliant fee calculation methodology

5. Schedule 5 - Operating Procedures: Detailed operational procedures for loans and returns

6. Schedule 6 - Contact Details: Contact information for notices and operations

7. Schedule 7 - Form of Power of Attorney: Standard form for any required powers of attorney

8. Appendix A - Shariah Compliance Certificate: Certificate confirming compliance with Shariah principles

9. Appendix B - Required Documents: List of supporting documents required for transactions

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

Relevant legal definitions





























































Clauses
































Relevant Industries

Banking

Financial Services

Investment Management

Securities Trading

Islamic Finance

Asset Management

Brokerage Services

Investment Banking

Wealth Management

Relevant Teams

Legal

Compliance

Risk Management

Securities Operations

Trading

Islamic Finance Advisory

Settlement & Custody

Documentation

Credit

Treasury Operations

Regulatory Affairs

Portfolio Management

Relevant Roles

Securities Lending Manager

Islamic Finance Compliance Officer

Legal Counsel

Risk Manager

Operations Director

Trading Manager

Custody Operations Manager

Shariah Compliance Officer

Portfolio Manager

Settlement Officer

Chief Investment Officer

Regulatory Compliance Manager

Treasury Manager

Documentation Specialist

Credit Risk 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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