Article Eight: Selection of Committee Members and Membership Requirements2
| No: 42071901 | Date(g): 26/5/2021 | Date(h): 15/10/1442 | Status: In-Force |
Translated Document
Members of the committee and its chairperson are selected and appointed by a decision of the Board of Directors—based on the recommendation of the Remuneration and Nomination Committee after obtaining the no-objection letter from SAMA. The finance company may seek approval from the General Assembly to appoint committee members if its internal policy includes such a provision. The committee is to be formed as follows:
| 1. | The number of committee members must be proportionate to the size and nature of the finance company’s business, with no fewer than three and no more than five members | ||
| 2. | The chairperson of the committee must be an independent member. Independence is not fulfilled in the following cases | ||
| A. | If the chairperson owns five percent or more of the shares of the finance company or its subsidiaries. | ||
| B. | If the chairperson represents a person with legal status that owns five percent or more of the shares of the finance company or its subsidiaries. | ||
| C. | If the chairperson has a direct or indirect interest in the transactions and contracts made on behalf of the finance company. | ||
| D. | If the chairperson receives financial compensation from the finance company other than their salary or membership compensation for serving on the committee. | ||
| 3. | The committee members must be qualified to carry out the tasks assigned to them, have a clear understanding of their roles and responsibilities, and possess the ability to exercise sound judgment objectively. Collectively, the members must have a range of professional, practical, and administrative skills, as well as appropriate Shariah and financial expertise, particularly honesty, commitment, and a high level of reputation, competence, and responsibility. The effectiveness of the committee depends on the experience of the members and their ability to make comprehensive judgments. The member’s qualifications should include the following: | ||
| ▪ | Competence: Reflected by the level of education, training, and skills, and having at least three years of experience in relevant fields. | ||
| ▪ | Shariah and Financial Knowledge: Members should possess appropriate Shariah knowledge as well as the ability to read and understand financial data and reports. | ||
| 4. | A member of the Shariah committee of a finance company is not allowed to serve more than five Shariah committees of other finance companies3. | ||
| 5. | The finance company must include a clause on confidentiality in the contract or terms of appointment for committee members to ensure the confidentiality and privacy of the finance company’s information. | ||
| 6. | The finance company must notify SAMA in writing within five (5) working days if any member’s membership is terminated or if a member resigns for any reason. The termination of a committee member’s membership before the end of their term is only allowed with a valid justification. A resigning member must submit their resignation with the reasons to the Board of Directors. | ||
(2)This article is for guidance purposes and will be mandatory starting from 01/01/2023G.
(3)If a finance company contracts with a Shariah consultancy firm, the individual providing Shariah consultancy services on behalf of the firm will be treated as a single committee member.