Enforcement approves controls for the operation of joint fund liquidators and asset protection
In a move aimed at enhancing transparency and improving the efficiency of the liquidation system in Saudi Arabia, the Enforcement and Liquidation Center (Enfaz) has published a guide for liquidators of jointly owned assets through the government's "Istilaa" platform. This step aims to streamline processes related to liquidation, division, and judicial receivership, putting an end to individual interpretations that could affect the rights of beneficiaries.
A regulatory framework to enhance economic confidence
The release of this guide comes within the framework of the Kingdom's ongoing efforts, under Vision 2030, to develop the judicial and economic sectors. The "Enforcement" Center is a key pillar aimed at expediting the fulfillment of rights and reducing the burden on the courts. These controls are of paramount importance given the volume of assets and shared funds subject to liquidation, necessitating a precise governance framework to ensure that these assets are not disrupted or their market value diminishes, thus allowing for their swift and efficient reinvestment into the national economy.
Limits of liability and powers of the liquidator
The new guidelines definitively clarify the nature of the relationship between the Center and the liquidator, emphasizing that the liquidator acts in their own capacity, carrying out specific tasks, and does not represent the Enforcement Center nor act as its agent. This means the Center bears no legal responsibility towards third parties for the actions of the liquidator. The guidelines also strictly prohibit exceeding the granted powers, obligating the liquidator to immediately consult the Center in case of any ambiguity or confusion, thus reinforcing the principle of "no interpretation when the text is clear" in sensitive financial matters.
Asset protection and financial controls
Regarding the protection of funds, the guidelines established strict red lines, prohibiting the liquidator from making any declaration, settlement, or transfer of joint funds without obtaining legal authorization from all partners, provided that no minors or endowments are among the beneficiaries. The regulations also require the liquidator to take possession of the assets immediately upon being appointed, holding them fully responsible for any delays that may harm the assets.
Financially, the regulations imposed strict accounting standards in accordance with the Board of Auditors and Accountants, including depositing revenues in approved accounts, creating a cash reserve of 10% of the estate balance (up to a maximum of one million riyals) to meet emergencies, in addition to provisions for fixed debts.
Legal and technical competence
To ensure high-quality legal representation, the guide stipulates specific experience requirements for cooperating lawyers (5 years for litigation and 8 for appeals), with a preference for amicable settlements. The guide also keeps pace with technological advancements by requiring the liquidator to use electronic systems for tax and wage payments, while strictly adhering to cybersecurity controls and protecting personal data, reflecting the center's commitment to the highest standards of digital professionalism.
