Promissory Note Format Saudi Arabia

INSTITUTIONAL PROMISSORY NOTE & EXECUTORY CREDIT INSTRUMENT

Document ID: PIN-KSA-202X-01
Effective Date: [Effective Date]
Version: 3.4 (Institutional Grade)
Governing Jurisdiction: Kingdom of Saudi Arabia (KSA)

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1. STATUTORY & LEGAL COMPLIANCE NOTICE

CRITICAL LEGAL DISCLAIMER: This document is an institutional-grade financial and legal instrument structured to align with the laws, regulations, and commercial enforcement frameworks of the Kingdom of Saudi Arabia, including the Saudi Commercial Papers Law, the Enforcement Law (Royal Decree No. A/53), and applicable Sharia principles governing financial transactions (devoid of Riba / usury). Promissory notes (Sanad Amr) executed within the Kingdom hold high executory status under the jurisdiction of the Enforcement Courts (Mahakim Al-Tanfiz). Parties acknowledge that specialized legal counsel licensed by the Saudi Ministry of Justice (MoJ) should be retained to review cross-border enforceability, notarization requirements, and registration on official digital portals (such as the Najiz platform or approved electronic promissory note systems) prior to capital disbursement.

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2. PARTIES & RECITALS

MAKER (DEBTOR):
Name: [Maker Full Legal Name]
Legal Form: [e.g., Limited Liability Company / Individual / Joint Stock Company]
Commercial Registration (CR) / National ID No.: [CR or National ID Number]
Principal Address: [Principal Address in KSA or Jurisdiction of Incorporation]
Represented By: [Authorized Signatory Name] in their capacity as [Title / Role]
(Hereinafter referred to as the "Maker")

PAYEE (CREDITOR):
Name: [Payee Full Legal Name]
Legal Form: [e.g., Corporation / Financial Institution / Individual]
Commercial Registration (CR) / National ID No.: [CR or National ID Number]
Principal Address: [Principal Address]
Represented By: [Authorized Signatory Name] in their capacity as [Title / Role]
(Hereinafter referred to as the "Payee")

RECITALS:
WHEREAS, the Maker acknowledges a valid, lawful, and subsisting commercial or financial obligation owed to the Payee in the exact principal sum set forth herein;
WHEREAS, the Maker desires to issue this unconditional Promissory Note (Sanad Amr) to evidence, secure, and govern the repayment of said obligation under the laws of the Kingdom of Saudi Arabia;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Maker unconditionally covenants, promises, and agrees to pay to the order of the Payee the Principal Amount, together with any applicable lawful charges, in strict accordance with the terms and conditions set forth below.

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3. EXHAUSTIVE OPERATIVE CLAUSES & LEGAL TERMS

SECTION 1: PRINCIPAL AMOUNT & UNCONDITIONAL PROMISE TO PAY

1.1 Promise to Pay. For value received, the Maker unconditionally promises to pay to the order of the Payee the principal sum of [Amount in USD/SAR] ([Written Amount in Words]) (the "Principal Amount"), in lawful currency of the Kingdom of Saudi Arabia (or United States Dollars as explicitly agreed and stated herein), at such place as the Payee may designate in writing from time to time.
1.2 Unconditional Nature. This obligation is absolute, unconditional, and independent of any counterclaim, setoff, recoupment, defense, or abatement that the Maker may allege against the Payee or any third party. The Maker waives all presentment, demand, protest, notice of dishonor, and notice of protest to the fullest extent permitted by applicable law.

SECTION 2: PAYMENT TERMS, SCHEDULE & MATURITY

2.1 Maturity Date. The entire outstanding Principal Amount, together with all accrued and unpaid administrative charges, enforcement costs, and lawful expenses, shall be due and payable in full on or before [Maturity Date] (the "Maturity Date"), or pursuant to the structured installment schedule set forth in Exhibit A attached hereto, if applicable.
2.2 Method of Payment. All payments made by the Maker under this Promissory Note shall be remitted via wire transfer of immediately available funds to the bank account designated in writing by the Payee, free and clear of any withholding, deduction, taxes, or governmental charges of any nature whatsoever.
2.3 Application of Payments. All payments received by the Payee shall be applied first to any accrued collection costs, legal fees, and administrative expenses, second to any accrued late charges, and third to the reduction of the principal balance.

SECTION 3: INTEREST, LATE CHARGES & DEFAULT PRICING

3.1 Stated Interest. Prior to maturity, this Promissory Note shall bear interest at the rate of [Interest Rate, e.g., 5%] per annum, calculated on the basis of a 365-day year and the actual number of days elapsed, unless specified as zero percent.
3.2 Default Interest. Upon the occurrence of an Event of Default (as defined herein) and continuing until such default is fully cured, the outstanding principal balance shall accrue default interest at the maximum rate permitted under applicable laws and regulations of the Kingdom of Saudi Arabia, without violating prohibitions against excessive interest or Riba.
3.3 Late Payment Fee. If any payment installment or the final principal balance is not received by the Payee within [Number, e.g., 5] business days of its due date, the Maker shall pay a late administrative fee equal to [Late Fee Percentage, e.g., 2%] of the overdue amount, subject to statutory limits.

SECTION 4: PREPAYMENT PROVISIONS

4.1 Voluntary Prepayment. The Maker reserves the right to prepay the Principal Amount under this Promissory Note, in whole or in part, at any time prior to the Maturity Date without penalty, provided that written notice of such prepayment is delivered to the Payee at least [Number, e.g., 10] business days prior to the proposed prepayment date.
4.2 Mandatory Prepayment. Upon the occurrence of a material asset sale, corporate restructuring, insolvency filing, or change of control involving the Maker, the Payee may, at its sole discretion, demand immediate mandatory prepayment of the entire outstanding balance under this Promissory Note.

SECTION 5: EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall constitute an immediate "Event of Default" under this Promissory Note: 5.1 Failure to Pay. The Maker fails to pay any principal, interest, or other fee due under this Promissory Note within [Number, e.g., 5] days of its respective due date.
5.2 Breach of Covenants. The Maker breaches or fails to perform any other material covenant, term, or condition contained in this Promissory Note or any ancillary security agreement.
5.3 Insolvency & Bankruptcy. The Maker becomes insolvent, ceases to pay its debts as they mature, makes an assignment for the benefit of creditors, or petitions/files for bankruptcy, reorganization, liquidation, or receivership under the KSA Bankruptcy Law or any equivalent foreign jurisdiction framework.
5.4 Execution & Attachment. Any attachment, execution, or judicial seizure is levied against a material portion of the Maker’s assets and is not released or discharged within [Number, e.g., 30] days.
5.5 Misrepresentation. Any representation, warranty, or financial statement furnished by or on behalf of the Maker to the Payee proves to have been materially false, misleading, or inaccurate when made.

SECTION 6: ACCELERATION & ENFORCEMENT REMEDIES

6.1 Immediate Acceleration. Upon the occurrence of any Event of Default, and at any time thereafter during the continuance thereof, the Payee may, by written notice to the Maker, declare the entire unpaid Principal Amount of this Promissory Note, together with all accrued interest and collection costs, to be immediately due and payable, without presentment, demand, protest, or further notice of any kind.
6.2 Enforcement Actions in KSA. The Maker expressly acknowledges that this Promissory Note constitutes an enforceable executive instrument (Sanad Tanfizi) pursuant to Article 9 of the Enforcement Law of the Kingdom of Saudi Arabia. In the event of a default, the Payee shall be entitled to initiate direct enforcement proceedings before the competent Enforcement Courts (Mahakim Al-Tanfiz) without the necessity of filing a preliminary substantive lawsuit.
6.3 Cumulative Remedies. All remedies available to the Payee under this Promissory Note, at law, or in equity are cumulative and may be exercised concurrently or successively. Failure by the Payee to exercise any right or remedy shall not operate as a waiver thereof.

SECTION 7: REPRESENTATIONS AND WARRANTIES

The Maker hereby represents and warrants to the Payee as of the Effective Date that: 7.1 Organization & Authority. The Maker is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation, and has full corporate power and authority to execute, deliver, and perform its obligations under this Promissory Note.
7.2 Binding Obligation. This Promissory Note has been duly authorized, executed, and delivered by the Maker and constitutes a legal, valid, and binding obligation of the Maker, enforceable against it in accordance with its terms.
7.3 No Conflict. The execution and delivery of this Promissory Note do not violate any provision of the Maker’s constitutional documents, articles of association, or any material agreement, court order, or statutory regulation binding upon the Maker.

SECTION 8: COSTS OF COLLECTION & INDEMNIFICATION

8.1 Legal Fees and Expenses. The Maker agrees to pay all reasonable costs and expenses incurred by the Payee in exercising any of its rights or remedies under this Promissory Note, including, without limitation, reasonable legal fees, court costs, arbitration expenses, translation fees, and enforcement fees incurred through the KSA judicial or administrative systems.
8.2 Indemnity. The Maker shall indemnify, defend, and hold harmless the Payee, its directors, officers, employees, and agents from and against any and all losses, claims, damages, liabilities, or expenses arising out of or resulting from any Event of Default or the enforcement of the Payee’s rights hereunder.

SECTION 9: GOVERNING LAW AND DISPUTE RESOLUTION

9.1 Governing Law. This Promissory Note, and all claims or causes of action arising out of or relating to it, shall be governed by, construed, and enforced in accordance with the laws of the Kingdom of Saudi Arabia, and, where applicable, the provisions of Islamic Sharia principles as applied within the Kingdom.
9.2 Jurisdiction & Dispute Resolution. Any dispute, controversy, or claim arising out of or relating to this Promissory Note, including its formation, validity, breach, or termination, shall be subject to the exclusive jurisdiction of the competent courts of the Kingdom of Saudi Arabia (specifically, the Commercial Courts or Enforcement Courts located in [City, e.g., Riyadh]). Alternatively, by mutual written consent of the parties, disputes may be referred to binding arbitration administered by the Saudi Center for Commercial Arbitration (SCCA) in accordance with its Arbitration Rules.

SECTION 10: MISCELLANEOUS PROVISIONS

10.1 Severability. If any provision of this Promissory Note is held to be invalid, illegal, or unenforceable by a court or competent authority, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall remain in full force and effect.
10.2 Amendments & Waivers. No modification, amendment, waiver, or discharge of any provision of this Promissory Note shall be valid unless executed in writing and signed by an authorized representative of both the Maker and the Payee.
10.3 Assignment. The Maker may not assign, transfer, or delegate any of its rights or obligations under this Promissory Note without the prior written consent of the Payee. The Payee may freely assign, transfer, or pledge this Promissory Note, in whole or in part, to any third party upon written notice to the Maker.
10.4 Entire Agreement. This Promissory Note constitutes the entire agreement between the Maker and the Payee with respect to the subject matter hereof and supersedes all prior oral or written negotiations, commitments, and understandings.
10.5 Language. This Promissory Note may be executed in both the English and Arabic languages. In the event of any discrepancy, ambiguity, or conflict between the English and Arabic texts, the Arabic text shall prevail for all regulatory and enforcement purposes within the Kingdom of Saudi Arabia.

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4. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be duly executed by its authorized representative as of the Effective Date first written above.

FOR THE MAKER ([Maker Full Legal Name]):
Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company: [Maker Full Legal Name]
Date: [Date]
Official Seal / Corporate Stamp (if applicable):

FOR THE PAYEE ([Payee Full Legal Name]):
Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company: [Payee Full Legal Name]
Date: [Date]
Official Seal / Corporate Stamp (if applicable):

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5. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Document Customization: Open this template in Microsoft Word or Google Docs. Locate all bracketed text strings (e.g., [Maker Full Legal Name], [Amount in USD/SAR], [Maturity Date]) and replace them with precise, verified data. Remove all formatting brackets.
2. Identity & Authority Verification: Inspect the corporate registration documents (Commercial Registration certificate, Articles of Association, and valid Board Resolution or Power of Attorney) of the Maker to ensure the signing officer possesses the legal capacity and authority to commit the entity to financial liabilities.
3. Sharia & Regulatory Review: Confirm that the financial terms comply with KSA financial regulations, ensuring that any interest structures do not conflict with local regulatory ceilings or Islamic banking frameworks.
4. Digital or Physical Execution:
   • Physical Execution: Print two (2) original hard copies. Ensure wet-ink signatures are accompanied by the official corporate stamp/seal of both entities.
   • Digital Execution: Execute via compliant digital signature platforms (such as DocuSign or Adobe Sign) adhering to the Saudi Electronic Transactions Law.
5. Notarization & Registration (Recommended for KSA Enforcement): To maximize executory potency before the KSA Enforcement Courts (Mahakim Al-Tanfiz), register and notarize the instrument via authorized Ministry of Justice channels (such as the Najiz portal or licensed Saudi notaries public) as required by current commercial statutes.
6. Record Retention: Archive the fully executed original instrument in a secure, fireproof vault or encrypted digital repository for the statutory duration of the debt obligation plus applicable limitation periods.