Chapter 4: Management of Finance Companies
Article 16
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 board member shall not:
1. be a board member in another finance company;
2. combine the duty of monitoring finance companies or auditing their accounts with membership in board of directors in the same company;
3. have been dismissed, as a disciplinary action, from a senior executive position in a finance institution;
4. have been previously declared bankrupt.
5. have been convicted of a crime impinging on integrity, unless rehabilitated in accordance with law or as specified under the Regulations.
Article 17
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.Members of the board of directors of the company as well as its general manager, senior executive directors and branch managers, each within their powers, shall be liable for the company’s breach of the provisions of this Law and its Regulations.
Article 18
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.Without prejudice to Article 12(1) (a) of this Law, members of the board of directors of a finance company shall be jointly and severally liable for guaranteeing the company’s rights against losses resulting from granting finance without collateral.
Article 19
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.An audit committee shall be formed in each finance company from non-executive board members. Committee duties, selection of its members, term of membership and work procedures shall be determined pursuant to a resolution by the general assembly of the finance company upon a proposal by the board of directors.
Article 20
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.Upon concluding any finance contract falling within their powers, the chairman, board members and employees of the finance company shall disclose in writing the following:
1. Any relation with respect to the contract.
2. Any relation to the contract of any relative up to the second degree.
3. Any financial interest they have with any contract party.
In case of non-disclosure, an aggrieved party may file a lawsuit before the competent court to invalidate the contract.