In a regulatory move aimed at strengthening transparency and governance principles in the asset liquidation sector, the Enforcement and Liquidation Center (Enfaz) has launched a guide for liquidators of joint funds through the National Competitiveness Center's "Istilaa" platform. This step aims to streamline liquidation, division, and receivership procedures, ensuring the rights of all stakeholders and enhancing performance efficiency in this vital sector.
A regulatory framework to promote effective justice
This guide is issued as part of the pivotal role played by the Enforcement Center, one of the initiatives of the National Transformation Program and the Kingdom's Vision 2030. The center seeks to expedite the fulfillment of rights and enhance beneficiary satisfaction through technical and administrative oversight of asset liquidation entrusted to it by the courts or the private sector. These new regulations are part of a comprehensive legislative framework aimed at transforming liquidation processes into a professional industry that contributes to preserving asset values and preventing their collapse or decline in market value due to lengthy procedures.
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 is tasked with performing their duties in their own capacity and only within the scope of their assigned responsibilities. The liquidator is not, under any circumstances, a representative or agent of the Enforcement Center. Consequently, the Center bears no legal obligations to third parties that may arise from the liquidator's actions. The guidelines also prohibit the liquidator from exceeding their delegated authority, stressing the necessity of refraining from any ambiguous action without first consulting the Center, and stipulating that all of the liquidator's actions are subject to direct oversight and regulatory accountability.
Asset protection and financial controls
Regarding the protection of assets, the guidelines impose strict restrictions preventing the liquidator from appropriating, settling, or disposing of jointly owned funds except under a fully valid power of attorney from all partners. The regulations also require the liquidator to take immediate possession of the assets upon being appointed, holding them liable for any damages resulting from delay. Financially, the guidelines mandate that revenues be deposited into approved bank accounts, audited financial statements be prepared in accordance with the standards of the Saudi Organization for Certified Public Accountants, and provisions be made for debts and a cash reserve not exceeding 10% of the estate's balance.
Legal and technical competence
To ensure high-quality legal representation, the guide stipulated specific experience requirements for cooperating lawyers (5 years for litigation and 8 for appeals), with a preference for amicable settlements. The guide also emphasized technical aspects and cybersecurity, requiring the liquidator to use electronic systems for settling government obligations and taxes, and to archive all documents to ensure a verifiable and auditable documentation record, thus enhancing the reliability of the business environment in the Kingdom.
