TRW & Co · Banking, Finance & Capital Markets
Secured Lending in the UAE
Secured lending in the UAE lets lenders take mortgages, pledges, account security and guarantees so they rank ahead of other creditors. The rules differ onshore, in each emirate and in the DIFC and ADGM, and they changed with the 2025 Central Bank Law and the Civil Transactions Law in force from 1 June 2026. This guide explains the package, perfection and enforcement.
Key pointSince 1 June 2026, Article 1006 of the new Civil Transactions Law discharges a guarantor unless judicial claim procedures start against both debtor and guarantor within six months of the debt falling due, and joint liability must be expressly agreed.
At a glance
Movables registry
Under Federal Law No. 4 of 2020, security over movables is perfected by notice on the Emirates Movable Collateral Registry, by possession or by control.
Six-month guarantee rule
Article 1006 of Federal Decree-Law No. 25 of 2025 discharges guarantors unless judicial claims start against debtor and guarantor within six months of maturity.
Joint liability not presumed
Under the new Civil Transactions Law, a guarantor is jointly liable only if the guarantee says so expressly, otherwise the debtor may need pursuing first.
Dubai mortgage enforcement
Under Dubai Law No. 14 of 2008, a lender serves a notarised 30-day notice before applying to the execution judge for attachment and public auction.
New DIFC security law
DIFC Law No. 4 of 2024 replaced the 2005 regime, covering digital assets and electronic trade documents and adding super-priority acquisition security rights.
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What secured lending in the UAE covers
Secured lending in the UAE is any financing where the lender takes a proprietary right over the borrower's or a third party's assets, or a personal guarantee, so that it can recover from those assets ahead of unsecured creditors if the loan is not repaid. It covers bilateral working-capital lines, syndicated term loans, acquisition and leveraged finance, real estate and project finance, asset-based lending and Islamic structures such as murabaha and ijara.
The legal question is rarely whether a security interest can be created. It is whether the interest has been created in the right form, recorded in the right register, and will actually survive the borrower's insolvency and a contested enforcement. In the UAE that depends on where the asset sits: onshore in one of the seven emirates, in a free zone, or in the common-law financial centres of the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM).
The rules also moved twice in quick succession. The new Central Bank Law took effect in September 2025 and the new Civil Transactions Law on 1 June 2026, changing how guarantees work and how hard a lender can push on enforcement. Credit teams that rely on templates drafted before 2025 should assume some clauses no longer do what they were designed to do.
The legal framework for secured lending in the UAE
Movable assets: Federal Law No. 4 of 2020
Security over receivables, bank accounts, inventory, equipment and other movables is governed by Federal Law No. 4 of 2020 on Securing Rights in Movables, which replaced Federal Law No. 20 of 2016. Its Executive Regulations (Cabinet Resolution No. 29 of 2021) set out the filing mechanics. The law covers tangible and intangible movables, existing or future, but excludes movables that must be recorded in a special registry, wages and salaries, and public and waqf property.
A security right becomes effective against third parties by registering a notice on the Emirates Movable Collateral Registry, operated by Emirates Integrated Registries Company, or by possession or control. Priority generally follows the date and time of third-party effectiveness. For bank accounts, the account-holding bank has priority, and a control agreement ranks ahead of other competing interests.
Real estate: emirate-level mortgage laws
Land is regulated by each emirate. In Dubai, Law No. 14 of 2008 on mortgages and Law No. 7 of 2006 on real property registration govern, and a mortgage has no effect unless registered with the Dubai Land Department. Abu Dhabi and the other emirates have their own registration regimes, so the mortgage form and filing route must follow the emirate where the land is located. For property-backed deals see our page on real estate finance in the UAE.
Guarantees and contract law: the new Civil Transactions Law
Federal Decree-Law No. 25 of 2025 replaced the 1985 Civil Transactions Law with effect from 1 June 2026. It is not generally retroactive, but new limitation provisions apply to periods still running on that date, and amendments, assignments and enforcement after 1 June 2026 may fall under the new code. Its most important change for lenders is Article 1006, which discharges a guarantor if the creditor does not start judicial claim procedures against both the debtor and the guarantor within six months after the debt falls due. Joint liability of a guarantor is no longer presumed and must be expressly agreed.
Shares, regulators and insolvency
Pledges of shares in mainland companies are created under the Commercial Companies Law (Federal Decree-Law No. 32 of 2021) and the company's constitutional documents and recorded with the licensing authority. Banks and finance companies lending onshore are supervised by the Central Bank of the UAE (CBUAE) under Federal Decree-Law No. 6 of 2025, in force since 16 September 2025. Ranking on insolvency is governed by Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy.
DIFC and ADGM
The DIFC replaced its 2005 security law with DIFC Law No. 4 of 2024 (the Law of Security), based on the UNCITRAL Model Law on Secured Transactions. It extends to digital assets and electronic trade documents, introduces a super-priority acquisition security right and limits anti-assignment clauses. ADGM applies its own common-law companies and insolvency framework, under which charges created by ADGM entities are registered with the ADGM Registration Authority.
Building the security package
A well-built package matches each asset to the instrument and register that actually perfects it. The table below summarises the main onshore routes. It is a planning tool, not a substitute for reviewing the specific asset and the emirate concerned.
| Asset | Typical instrument | How it is perfected | Main enforcement route |
|---|---|---|---|
| Receivables and contract proceeds | Security agreement and assignment | Notice on the Emirates Movable Collateral Registry; notice to debtors for payment | Collection or sale under the Movables Law |
| Bank accounts | Account security with control agreement | Control agreement with the account bank, plus registry notice | Debit or transfer under the control arrangement |
| Inventory and equipment | Movables security agreement | Registry notice or possession | Out-of-court notice under Article 27, or repossession via the urgent matters judge |
| Land and buildings | Registered mortgage | Registration with the land department of the relevant emirate | Notarised default notice, then the execution judge and public auction |
| Shares in a mainland LLC | Share pledge | Recording with the licensing authority under the company's constitution | Court-supervised sale, subject to pre-emption and transfer rules |
| Personal or corporate guarantee | Guarantee (kafala) with express joint liability | No registration; evidence of signature and authority | Proceedings against debtor and guarantor within six months of maturity |
Two drafting points drive value. First, describe collateral broadly enough to capture future assets and proceeds, because the Movables Law extends priority to property described in the notice whether it exists before or after registration. Second, align the governing law of each document with the location of the asset: an English-law facility agreement can sit comfortably beside UAE-law security, but the security itself must satisfy UAE formalities.
Free zones outside the DIFC and ADGM, such as those in Dubai and the northern emirates, generally apply federal law to security over movables, so registry notices remain essential even where the borrower's licence comes from a free zone authority. Free zone constitutional documents and authority rules can still restrict share transfers, which affects how a share pledge is enforced. Check the relevant authority's requirements before signing rather than at enforcement.
Islamic structures need the same discipline. In a murabaha the financier typically takes security for the deferred sale price, and in an ijara it may already own the asset. Secured lending in the UAE on Shari'a-compliant terms still relies on the Movables Law, land registration and guarantees, adapted so the security secures a sale or rental obligation rather than interest.
Onshore, DIFC or ADGM: choosing where to lend
Where the borrower is incorporated largely decides which security law applies to its shares and many of its assets. A mainland borrower's land and movables follow federal and emirate law. A DIFC or ADGM holding company offers English-style share charges, receivers and a court familiar with intercreditor arrangements, which is why acquisition structures often place a financial-centre holdco above onshore operating companies.
That structure does not remove onshore risk. The operating company's assets, bank accounts and land remain subject to onshore law, so the lender ends up with a mixed package: a financial-centre share charge at the top and onshore security at the bottom. Intercreditor terms, enforcement triggers and the choice of court or arbitration need to work across both.
Before credit approval, map every asset to its jurisdiction and register. Most enforcement failures in secured lending in the UAE trace back to an asset that was never perfected in the right place, not to a weak facility agreement.
For an overview of regulated lending activity and licensing, see banking and finance in the UAE. Shari'a-compliant facilities raise their own structuring questions, covered in Islamic finance in the UAE.
Process: from term sheet to perfected security
- Term sheet and good-faith negotiation. The new Civil Transactions Law imposes good-faith duties in negotiations and a duty to disclose essential information in some cases, so term sheets and credit-approval messaging should be accurate and clearly non-binding where intended.
- Due diligence. Confirm corporate capacity, constitutional restrictions on borrowing and pledging, existing encumbrances on the registry and land registers, and any licensing conditions affecting the assets.
- Structure and documentation. Agree the facility agreement, security documents, guarantees with express joint liability, account control agreements, intercreditor terms and Arabic translations where a court or registry requires them.
- Corporate approvals. Obtain board and shareholder resolutions, powers of attorney and, where needed, notarisation and attestation of foreign documents.
- Perfection and registration. File registry notices, register mortgages and record share pledges promptly after signing, keeping evidence of each filing with its date and time.
- Conditions precedent and drawdown. Release funds only once perfection evidence, legal opinions and searches are in hand.
- Monitoring. Track maturity and instalment dates against the six-month guarantee window, renew filings that expire, and update descriptions when collateral changes.
Documents and evidence lenders need
Enforcement is won or lost on paper. A UAE court or execution judge will want to see the debt, the default, the security and the authority behind each signature, usually in Arabic or with a certified translation. Assemble the file at closing, not when the borrower defaults.
- Executed facility agreement, security documents and guarantees, with signing authority evidence for each party
- Board and shareholder resolutions, trade licences and constitutional documents current at signing
- Registry confirmations from the Emirates Movable Collateral Registry, title deeds showing registered mortgages, and licensing-authority records of share pledges
- Account control agreements acknowledged by the account bank
- Statements of account, drawdown notices and default and acceleration notices, including proof of service
- Legal opinions on capacity and enforceability, and certified Arabic translations of key documents
Keep a clean statement-of-account trail. Courts and court-appointed experts often reconstruct the outstanding balance, and gaps in the record slow every step.
Enforcement and insolvency
The Movables Law allows out-of-court enforcement: under Article 27 a secured creditor sends a notice to the grantor and debtor stating its intention to enforce, the collateral and the method, time and place of disposal. Alternatively, it can petition the judge of urgent matters for repossession. That judge decides within five working days and may act without notice; an appeal must be lodged within five working days and is decided within ten. The court route under the Civil Procedure Code (Federal Decree-Law No. 42 of 2022) also offers precautionary attachment where a creditor fears losing its security.
Dubai mortgages follow a separate track. The lender serves a notarised notice giving the borrower 30 days to cure, then applies to the execution department of the Dubai Courts, which can attach the property for sale by public auction. Expect contested matters to take materially longer than uncontested ones.
Insolvency changes the picture. Under the Bankruptcy Law, a restructuring or bankruptcy filing can trigger a moratorium that pauses enforcement, and secured creditors then work through the trustee and the court. Our pages on insolvency and bankruptcy in the UAE and debt restructuring in the UAE explain how secured claims are treated, and debt recovery in the UAE covers unsecured routes.
Security is only as good as its registration and its enforcement plan. In secured lending in the UAE, the six-month guarantee rule now makes timing as important as drafting.
Risks and common mistakes
Missing the six-month guarantee window
Article 1006 of the new Civil Transactions Law discharges a guarantor if judicial claim procedures are not started against both debtor and guarantor within six months after the debt falls due. Commentators treat the rule as mandatory, so contractual waivers are unlikely to help, and demand letters and negotiations do not stop the clock. On instalment or accelerated facilities, each missed payment may start its own clock. Whether arbitration satisfies the requirement is untested, so lenders often consider a protective court filing. Diarise trigger dates conservatively and decide early whether to file, especially during standstill talks.
Assuming a guarantor is jointly liable
Under the new code, joint and several liability is no longer presumed. Without an express clause, the lender may have to pursue the principal debtor and exhaust its assets before turning to the guarantor. The guarantor's liability also cannot exceed the debt or be on more onerous terms, and it may be reduced if the lender loses the value of other security. Review standard guarantee forms, including those signed before 1 June 2026 that will be amended or extended, and make joint liability explicit.
Late or defective registration
A security interest over movables that is not registered, possessed or controlled is not effective against third parties, and priority follows the time of registration. A competing creditor that files first can rank ahead. Mortgages that omit required particulars may be refused by the land department. Build registration into the closing timetable as a condition precedent, keep time-stamped evidence and re-check the registry after filing to confirm the notice is accurate.
Pricing terms that a court will not enforce
The new Central Bank Law restates the prohibition on charging interest on accrued interest for customer facilities, and courts scrutinise default interest, fees and compensation clauses. The new Civil Transactions Law also lets courts adjust obligations where unforeseen events make performance excessively onerous. Model recovery on principal and contractual interest a court will recognise, and avoid relying on penalty-style uplifts.
Aggressive enforcement backfiring
The new code reinforces the prohibition on abuse of rights, and disproportionate enforcement can invite counterclaims or delay. Lenders need a documented, proportionate enforcement path: reservation of rights, a clear default notice, then the chosen remedy. Coordinate this with the guarantee timing so that patience on one front does not forfeit rights on another.
Cross-border angle
Many UAE facilities are booked or syndicated through London, Singapore, Riyadh, Mumbai or Dhaka, and many borrowers hold assets across the GCC and South Asia. English law commonly governs the facility, but security over UAE assets must be taken under UAE law (or DIFC or ADGM law for assets there), and security over foreign assets must comply with the law of their location.
Expect parallel local counsel for foreign collateral. A Bangladeshi or Indian subsidiary's assets need security perfected under local registration rules, and a Saudi guarantor's obligations must be tested under Saudi law. Plan enforcement in advance: where the judgment or award will need recognition, consult foreign judgment enforcement in the UAE and trade finance in the UAE for documentary credit structures.
Sanctions and anti-money laundering checks also shape the package. Lenders must screen grantors, guarantors and beneficial owners, and collateral located in or sourced from higher-risk jurisdictions may be impossible to enforce or sell. Building these checks into due diligence avoids discovering at enforcement that the most valuable asset cannot lawfully be realised.
How TRW & Co helps
We advise lenders, borrowers and sponsors on structuring, documenting and enforcing secured lending in the UAE, working with locally licensed advocates where court representation is required.
Security mapping
We map each asset to the right instrument, governing law and register across onshore emirates, free zones, DIFC and ADGM, and flag gaps before credit approval.
Documentation
We draft and negotiate facility agreements, security documents, guarantees and intercreditor terms updated for the 2025 Central Bank Law and the 2026 Civil Transactions Law.
Portfolio review
We audit existing guarantee and security portfolios for joint-liability wording, registration status and the Article 1006 timing risk, and recommend remediation.
Enforcement strategy
We plan default notices, protective filings and enforcement through the courts or out of court, coordinating with licensed advocates and court-appointed experts.
Restructuring
We support standstills, amend-and-extend deals and positioning in restructuring or bankruptcy proceedings so that security and guarantees are preserved.
Cross-border coordination
We coordinate local counsel in Bangladesh, the UK, Singapore, India and the GCC so that the whole package works together.
See the full range of our practice areas or contact us to discuss a transaction.
Checklist for decision-makers
- Have we mapped every asset to its jurisdiction, instrument and register?
- Are all movables notices filed on the Emirates Movable Collateral Registry, with time-stamped evidence?
- Are mortgages registered with the correct emirate's land department and share pledges recorded with the licensing authority?
- Do our guarantees state joint and several liability expressly, and do they reflect the new Civil Transactions Law?
- Is there a diary for the six-month Article 1006 window on every guaranteed facility, including instalments?
- Are pricing, default interest and fee provisions consistent with Central Bank rules?
- Do our intercreditor, governing-law and dispute-resolution clauses work across onshore, DIFC and ADGM assets?
- Do we have a documented enforcement and insolvency plan before the first default?
A short review now usually costs far less than a lost guarantee or an unperfected charge discovered at enforcement. If you need a second pair of eyes on secured lending in the UAE, our team can help.
Frequently asked questions
01What security can a lender take over a UAE company's assets?
Onshore, lenders typically take registered mortgages over land, security over movables such as receivables, accounts, inventory and equipment under Federal Law No. 4 of 2020, pledges of shares recorded with the licensing authority, and guarantees from parents or shareholders. Each instrument has its own perfection step: a registry notice, land registration or a licensing-authority record. Entities in the DIFC or ADGM grant security under those centres' own laws. The right package depends on which assets carry value and where they are located.
02How is security over movable assets registered in the UAE?
The secured creditor files a notice on the Emirates Movable Collateral Registry, operated by Emirates Integrated Registries Company. Registration takes effect when the information is entered, and priority generally follows the date and time the security became effective against third parties. Possession or control are alternatives for some assets; for bank accounts, a control agreement with the account bank is standard. The registry does not check accuracy, so the lender must ensure the grantor details and collateral description are right.
03What changed for guarantees on 1 June 2026?
The new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, took effect on 1 June 2026. Article 1006 discharges a guarantor if the creditor does not start judicial claim procedures against both the debtor and the guarantor within six months after the debt falls due, and commentators consider this mandatory. Joint liability is no longer presumed and must be stated expressly. Guarantees signed earlier are generally still governed by the old code as to validity, but periods running on 1 June 2026 should be treated cautiously.
04Can a lender enforce security without going to court?
For movables, yes in principle. Article 27 of the Movables Law allows enforcement after a notice to the grantor and debtor setting out the intention to enforce, the collateral and the method, time and place of disposal. If the collateral is not handed over, the lender can ask the judge of urgent matters for repossession; that judge decides within five working days. Real estate mortgages and share pledges generally require the court execution process, and insolvency proceedings can pause enforcement.
05Does the new Central Bank Law affect existing loan documents?
Federal Decree-Law No. 6 of 2025 took effect on 16 September 2025 and gave institutions until 15 September 2026 to align with it. Article 132 provides that Central Bank regulations and circulars are not retroactive and do not prevent agreements made before they were issued from being implemented. Existing facilities therefore generally stand, but amendments and new deals must comply, including the restated prohibition on charging interest on accrued interest for customer facilities.
06Is a DIFC or ADGM holding company better for lenders?
It often helps. DIFC and ADGM offer common-law share charges, familiar insolvency tools and courts used to complex intercreditor arrangements, and DIFC Law No. 4 of 2024 modernised DIFC security. But the operating company's land, accounts and contracts usually stay onshore, so lenders still need onshore security. The benefit lies in combining a financial-centre share charge at the top with properly perfected onshore security below it.
07What happens to secured creditors if the borrower goes bankrupt?
Under Federal Decree-Law No. 51 of 2023, opening restructuring or bankruptcy proceedings can impose a moratorium that pauses individual enforcement, and secured creditors then participate through the trustee and the court. Properly perfected security generally preserves the creditor's priority over the secured asset, which is why registration evidence matters. Lenders should file claims on time, monitor the process and consider whether to support a restructuring plan or seek permission to enforce.
Sources and official materials
- Federal Law No. 4 of 2020 on Securing Rights in Movables — Movables security, registry and enforcement
- Cabinet Resolution No. 29 of 2021 (Executive Regulations) — Registry filing mechanics
- Federal Decree-Law No. 42 of 2022 (Civil Procedure Code) — Urgent relief, attachment and execution
- Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy — Moratorium and secured creditor ranking
- UAE Legislation: New Central Bank Decree-Law — Federal Decree-Law No. 6 of 2025
- Federal Decree-Law No. 32 of 2021 on Commercial Companies — Share pledges and company approvals
- UAE Legislation portal — Official texts incl. the 2025 Civil Transactions Law
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
