Skip to main content
Back Custom print Text Only Rich Text Print / Save as PDF
Download Original PDF

  • Chapter 3: Activities of Finance Companies

    • Article 10

       1.SAMA shall license a finance company to engage in one or more of the following activities:
       
        a.Real estate finance
             		 
        b.Production asset finance
             		 
        c.Small and medium enterprise finance
             		 
        d.Finance lease
             		 
        e.Credit card finance
             		 
        f.Consumer finance
             		 
        g.Microfinance
             		 
        h.Any other finance activity approved by SAMA
             		 
       A finance company may acquire assets in order to finance third parties’ acquisition of such assets.
             		 
       2.SAMA shall license entities seeking to engage in activities supporting finance activity in a manner that achieves competition in providing such services. The Regulations shall specify the legal form of such entity and conditions to be satisfied.
       

    • Article 11

      This article has been amended in accordance with the Royal Decree No. (M/272) dated 04/12/1445H, corresponding to 10/06/2024G. Please refer to the Arabic version of this article to read the last updated version.
      A finance company may not: 
       
       1.Engage in activities other than finance activities.
       
       2.Acquire, directly or indirectly, other entities engaging in activities other than finance activities.
       
       3.Trade in currencies, gold, precious metals or securities.
       
       4.Trade in real estate.
       
       5.Engage in wholesale or retail trading.
       
       6.Accept call deposit.
       
       7.Accept time deposits or non-banking facilities or opening accounts of all types for its clients, unless licensed by SAMA. The company shall deposit with SAMA a percentage of the value of the deposits as specified by the Regulations.
       
       8.Obtain foreign short-term finance without obtaining the approval of SAMA as specified by the Regulations.
       

    • Article 12

      This article has been amended in accordance with the Royal Decree No. (M/272) dated 04/12/1445H, corresponding to 10/06/2024G. Please refer to the Arabic version of this article to read the last updated version.
       1.A finance company may not:
       
        a.extend any finance without collateral, and as an exception, the Regulations shall specify the rules for finance without collateral;
             		 
        b.finance or offer facilities collateralized by its shares;
             		 
        c.finance or offer facilities to an establishment or a company (other than joint stock companies listed in the Saudi Capital Market) if one of the members of the board of directors of the finance company or its external auditor is a partner or a director of the establishment or company receiving such finance;
             		 
        d.finance or offer facilities to persons or entities if one of the members of the board of directors of the finance company or its external auditor is a guarantor for receiving such finance or facilities;
             		 
        e.finance or offer facilities to any board member, director, spouses thereof or a relative to the second degree except upon collaterals specified by the Regulations;
             		 
        f.finance or offer facilities or guarantee any financial obligation of any of its employees in excess of his aggregate salaries for the period specified by the Regulations;
             		 
        g.acquire shares in another finance company without obtaining the approval of SAMA;
             		 
        h.finance or offer facilities to a company or establishment in which the finance company owns, directly or indirectly, a percentage exceeding the percentage specified by the Regulations;
             		 
        i.finance or offer facilities to a company or establishment which owns in the finance company, directly or indirectly, a percentage exceeding the percentage specified by the Regulations;
             		 
       2.Without prejudice to public and private rights prescribed by law, any board member of a finance company or any external auditor who receives finance in breach of sub-clause 1(b), 1(c) or 1(d) of this Article shall be deemed dismissed as specified under the provisions of the Regulations.
       

    • Article 13

      The finance company shall allocate a provision for contingent operation losses in accordance with the criteria specified under the Regulations.

    • Article 14

      Without prejudice to provisions of Article 3 of this Law, the finance company, as specified in the Regulations and in proportion with its assets and financial position, may issue securities and sukuk in accordance with the provisions of the Capital Market Law and its regulations.

    • Article 15

      The finance company and its employees must maintain the confidentiality of their customers' information and transactions they are privy to during the company’s conduct of business, as specified by the Regulations.