Business Activities and Financial Conduct
Finance Activities
Finance Regulations and Principles
Responsible Lending Principles for Individual Customers
To read the "Responsible Lending Principles for Individual Customers", click here.
The Guidelines on Standing Orders for financing entity
To read "The Guidelines on Standing Orders for financing entity", click here.
Rules Governing Disposal of Finance Assets or Their Contractual
To read the "Rules Governing Disposal of Finance Assets or Their Contractual", click here.
Rules Governing Calculation of Annual Percentage Rate (APR)
To read the “Rules Governing Calculation of Annual Percentage Rate (APR)”, click here.
Debt Collection Regulations and Procedures for Individual Customers
To read the "Debt Collection Regulations and Procedures for Individual Customers", click here.
Disclosure of Interest Rates on Financing and Savings Products
To read the Disclosure of Interest Rates on Financing and Savings Products, click here.
Deposit Taking Finance Companies (DTFCs) Regulations
To read the "Deposit Taking Finance Companies (DTFCs) Regulations", click here.
Instructions on Periods of Issuing the Clearance Letter and Executing Requests for Account Transfer and Debt Transfer
To read the "Instructions on Periods of Issuing the Clearance Letter and Executing Requests for Account Transfer and Debt Transfer", click here.
Guidelines for Financing Entities' Handling of Promissory Notes
To read the "Guidelines for Financing Entities' Handling of Promissory Notes", click here. .
Controls for the Finance of a Natural or Legal Person Regarding the Goods of Their Institution or Services to Their Consumers
In accordance with Article (5) of the Implementing Regulations of the Finance Companies Control Law as amended by the Decision of SAMA Governor No. (79/MFC) dated 08/12/1440H and in order to protect the consumers of financial institutions and maintain the soundness of the financial system and fairness of transactions, SAMA issued the Controls for the Finance of a Natural or Legal Person regarding the Goods of their Institution or Services to their Consumers.
I. The natural or legal person (merchant) shall finance the goods of their institution or services to their consumers through the finance institutions licensed by SAMA. The finance institutions shall comply with the following:
- Verify that the merchant is licensed to perform his business in accordance with the applicable laws, provided that he is an owner or able to own what he seeks to finance.
- The merchant must not reacquire the good sold to the consumer.
II. Real estate finance shall be limited to finance institutions licensed to directly provide real estate financing.
III. Finance institutions may outsource their services or a part thereof to the merchant or any other party in accordance with the Rules on Outsourcing issued by SAMA in this regard.
IV. A person who violates the provisions of paragraphs (I) and (II) of these Controls shall be deemed in violation of the Finance Companies Control Law.
V. SAMA and other relevant entities shall continuously cooperate and coordinate with regard to detecting violators of the provisions of paragraph (I) of these Controls.
VI. These Controls shall enter into force on the date of their approval.
Real Estate Finance
The Rules Governing Real Estate Refinance Companies
To read The "Rules Governing Real Estate Refinance Companies", click here.
Guidelines for the 'Self-Build' Real Estate Financing Product Granted to Individuals
Based on the powers vested to SAMA under the relevant regulations, laws, and instructions, and in light of SAMA's role in protecting the rights of clients of financial institutions under its supervision, and with a view to ensuring the safety of the real estate financing sector and achieving financial stability, real estate financiers must adhere to the following when granting financing under the 'Self-Building' product for real estate financing:
- Determine the total value of construction payments "financing amount" at the start of the contract, and link the payments to specific completion percentages in a single financing contract.
- Reflect the total financing amount in the client’s credit record at the start of the contract, specifying the actual amount granted to the client in the same record.
- Ensure that administrative fees charged by the financing entity to the beneficiary do not exceed (1%) of the financing amount or SAR 5,000 (whichever is lower), in accordance with the instructions issued by SAMA, including those communicated under Circular No. 361000091211 dated 30/06/1436H.
- Disburse the specified payment amount within (15) days from the date of the client's request, provided that the client has met the completion percentages required for each payment as per the contract.
Please take note and implement these provisions within a period not exceeding (30) days from the date of this notice. Additionally, real estate financiers must take all necessary steps to apply the provisions of this circular to existing financing contracts under the 'Self-Building' real estate financing product.
Instructions When Offering Real Estate Finance Products for Individuals
To read the “Instructions When Offering Real Estate Finance Products for Individuals”, click here.
Real Estate Murabaha Finance Buyout
Based on the powers vested to SAMA in accordance with the relevant regulations, rules, and instructions, and with reference to the instructions regarding the time periods for issuing the release letter and transferring the account and debt, issued in accordance with Circular of SAMA No. (43023350) dated 15/3/1443 H, to SAMA Circular No. (42013215) dated 4/3/1442 H, Regarding the subjection of the mortgage contract made between a lender - on behalf of or as an agent for others - and individual customers is subject to the financing regulations and instructions issued by SAMA.
- SAMA wishes to emphasize the following to mortgage lenders:
A- Executing customer requests related to the transfer of mortgage financing debts according to the Murabaha agreement, while adhering to the specified time frames for transferring mortgage financing debts as outlined in the instructions mentioned above. - B- Compliance with SAMA's instructions related to the purchase and transfer of mortgage financing debt between financiers.
- C. The working days related to the procedures for lifting the mortgage are excluded from the time periods mentioned in the instructions above, provided that the reason is related to an external party.
- D- Update internal policies in accordance with these instructions.
- For your information and action as of its date.
- SAMA wishes to emphasize the following to mortgage lenders:
Responsibilities of the Head of the Contracts Register and the Registrars
No: 588400000099 Date(g): 29/9/2019 | Date(h): 30/1/1441 Status: In-Force Translated Document
Reference to the letter of His Excellency the Governor No. 81/M SH T, dated 09/01/1441H, which includes the approval of the powers of the head of the Contracts Register and the registrars based on the powers granted to him by the Finance Lease Law, issued by Royal Decree No. M/48, dated 13/08/1433H, and it's Implementing Regulation issued by the decision of His Excellency the Governor No. 1/M SH T, dated 14/04/1434H, and in accordance with Paragraph (4) of Article Fifteen of the Implementing Regulation of the Finance Lease Law, Which states that "SAMA shall issue a resolution determining the powers of the head of the Contracts Register and the registrars".
Please find the decision regarding the powers of the head of the Contracts Register and the registrars for compliance and implementation.
This decision is issued pursuant to the Finance Lease Law, issued by Royal Decree No. M/48, dated 13/08/1433H, and it's Implementing Regulation issued by the decision of His Excellency the Governor No. 1/M SH T, dated 14/04/1434H, and in accordance with Paragraph (4) of Article Fifteen of the Implementing Regulation of the Finance Lease Law, Which states that "SAMA shall issue a resolution determining the powers of the head of the Contracts Register and the registrars".
Article One: General Provisions
- Without prejudice to the provisions of Article Sixteen of the Implementing Regulation of the Finance Lease Law, the appointment of the head of the Contracts Register and the registrars shall be made after obtaining a letter of no objection from SAMA.
- The head of the Contracts Register and the registrars are directly linked to the Chief Executive Officer of the Contracts Registration Company or their designee.
- SAMA has the authority to remove the head of the Contracts Register and the registrars from their positions by a reasoned decision in the event of failure to fulfill their statutory or professional duties.
- If the registrar of the Contract Register refuses to draft or authenticate any document, the concerned parties have the right to appeal this decision to the company and then to the Central Bank. If the appeal is rejected, they are entitled to take the matter to the competent court.
- Without prejudice to the provisions of Article Sixteen of the Implementing Regulation of the Finance Lease Law, the appointment of the head of the Contracts Register and the registrars shall be made after obtaining a letter of no objection from SAMA.
Article Two: Powers of the Head of the Contracts Register and the Registrars
- The Head of the Contracts Register is responsible for the registration activities in the registry. They receive entries and any amendments thereto, refer them to one of the contract registrar of the Contracts Registry, and carry out the registration in accordance with the Finance Lease Law, its Implementing Regulation, and this decision.
- The head of the Contracts Register and the registrars, each within their area of power, are responsible for the accuracy and correctness of the registration of all financial leasing contracts and the content of the data and documents submitted, unless the error is due to an external party. The affected party has the right to appeal to the relevant authorities if it is proven that they have failed to verify the accuracy of the data or to register it in accordance with the prescribed procedures.
- The Head of the Contract Register shall be directly responsible for the records and registers for a minimum period of ten years from the date of the expiration of the obligations arising from the contract.
- The registrar is provided with an official seal to stamp the transactions they handle. Electronic means may also be used for this purpose, as deemed appropriate.
- The Head of the Contracts Register is responsible for the registration activities in the registry. They receive entries and any amendments thereto, refer them to one of the contract registrar of the Contracts Registry, and carry out the registration in accordance with the Finance Lease Law, its Implementing Regulation, and this decision.
Article Three: Obligations of the Head of the Contracts Register and the Registrars
The head of the Contracts Register and the registrars must adhere to the following obligations:
- They are to perform their duties at their place of work, and they may also carry out their duties at the lessor's premises, with the lessor bearing the associated costs.
- Verify the identity of the contracting parties or their representatives based on official documents issued by the competent authority for identity verification.
- Verify the eligibility of the contracting parties or their representatives, and their qualifications to enter into contracts.
- Verify the accuracy of the documents and decisions issued in the Arabic language, and it is permissible to authenticate those issued in a foreign language after being translated into Arabic by an approved translator. The authentication should be done by both the original and translated versions together.
- Hold all contract registers necessary to record transactions and classify them according to what is determined by SAMA.
- The preservation and organization of the records in the Contracts Register must be in a secured location to protect them from any tampering or factors that may affect their integrity, and this should be done in designated areas.
- Stamping the document of ownership of the asset and the contract with the registration number, or taking the necessary measures regarding documents that cannot be stamped, such as real estate ownership deeds, the use of electronic means for the authentication of documents is permitted.
- Adhere to the Finance Lease Law and its Implementing Regulations, and to any instructions issued by SAMA or the relevant authorities in this matter.
- They are to perform their duties at their place of work, and they may also carry out their duties at the lessor's premises, with the lessor bearing the associated costs.
Article Four: Enforcement
This decision is effective from the date of its issuance.
Procedural Requirements for Mortgage Registration
To read the “Procedural Requirements for Mortgage Registration”, click here.
Controls for Banks and Real Estate Finance companies Owning Real Estate Located within the Cities of Makkah and AL-Madinah
To read the “Controls for Banks and Real Estate Finance companies Owning Real Estate located within the Cities of Makkah and AL-Madinah”, click here.
The Working Mechanism of Dealing with the Beneficiaries of First Home Regarding Tax Revenues
To read The Working Mechanism of Dealing with the Beneficiaries of First Home Regarding Tax Revenues, click here.
Variable-Cost Real Estate Financing Products for Individuals
SAMA would like to emphasize the importance of the Financial Consumer Protection Principles and Rules , particularly the necessity of Equitable and Fair Treatment (Principle No. 1), disclosure and transparency (Principle No. 2), and financial education and awareness (Principle No. 3). Additionally, SAMA highlights the responsibilities of lender toward their clients, particularly the obligation to ensure that the product is suitable for the client's needs and circumstances, explaining the product’s nature, costs, and associated benefits and risks in a clear and understandable manner. Moreover, lender must provide advice and support to clients facing financial difficulties, working with them to overcome these challenges before proceeding with legal actions.
In light of the challenges some beneficiaries of variable-cost real estate financing products have faced, particularly the increase in monthly installments, and based on a study conducted in this regard, SAMA directs real estate lenders to immediately take all necessary actions to care for their clients. These care measures should include appointing specialists with sufficient knowledge of this type of product to communicate with clients, providing a clear explanation of the product’s nature, its benefits and risks, the relevant contract terms, the repricing mechanism, and addressing any other client inquiries. The due diligence procedures must also include offering clients one or more options, in addition to the option of continuing with the existing real estate financing contract. These options may include converting the contract to a fixed-rate financing contract, rescheduling the payments, or enabling the client to transfer the debt to another real estate lender under conditions that suit the client.
SAMA stresses that none of these options should result in the client being charged any additional costs for the remaining period, in accordance with the Guide for Calculating the Early Payment Amount outlined in the finance regulations and without imposing any additional administrative fees on the client.
SAMA clarifies that these directives are issued to ensure the protection of clients' rights and to promote fairness and transparency in transactions. This is based on the powers granted to SAMA under the Saudi Arabian Monetary Authority Law, issued by Royal Decree No. (23) dated 23/05/1377H, the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/08/1433H, the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/08/1433H, and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/08/1433H, along with the implementing regulations for these laws. SAMA will take legal action in the event of non-compliance with the above directives.
In light of the inquiries received by SAMA on this matter, SAMA emphasizes that real estate lenders must undertake the following:
- Disclose the reference index for the variable cost of real estate financing products on their website.
- Urgently communicate with all customers benefiting from variable-cost real estate financing products regarding the following points:
A. The ability to access the reference index data for the variable cost of real estate financing products on the lender’s website and provide the dedicated link for this information. B. Provide customers with contact details and grant them a period of no less than one month from the date of receipt to offer them options to amend their contract terms or any other options as outlined in the aforementioned circular. C. Inform customers of their right to communicate with a credit advisor who is well-versed in the characteristics of this type of product to provide a clear explanation of the product’s nature, its benefits and risks, the relevant contract terms, the repricing mechanism, and to answer any customer inquiries in this regard. This communication and the outcomes must be properly documented. Please note that SAMA will take all necessary legal actions in the event of non-compliance with the issued instructions in this regard.
Transfer of The Real Estate Financing Debts
Based on Article 2 of the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/08/1433H. which authorizes SAMA to regulate the real estate finance sector, including the issuance of standards and procedures related to real estate financing, further to the circular No. 391000000353 dated 01/01/1439H. Regarding Variable-Cost Real Estate Financing Products for Individuals.
Based on the role of SAMA in protecting the rights of customers of financial institutions under its supervision, and due to the importance of regulating the transfer of customers' debts who meet the conditions of the above circular, it is necessary to adhere to the following:
First: The financing entity (debt seller) must fill out the form for transferring real estate debt (attached) within seven working days of receiving the request from the customer. It should complete all the necessary information while adhering to the accelerated payment standards mentioned in Article 84 of the Implementing Regulation of the Finance Companies Control Law issued by the decision of His Excellency the Governor No. 2/MFC dated 14/04/1434H. which regulates the accelerated payment process, with the necessity of notifying the customer immediately upon issuing the debt transfer document, provided that the offer period specified in the form is not less than ten working days."
Second: After the financing entity (willing to purchase the debt) receives the debt transfer form, it commits to the following: - Grant credit equivalent to (100%) of the value of the offer specified in the form.
- Obtain a written acknowledgment from the customer that includes all obligations, if any, such as, but not limited to, (property safety, appraisal fees, property guarantee, etc.).
Third: Upon the approval of the financing entity (willing to purchase the debt) and completion of the requirements, a cheque in the amount of the debt is issued and the form is returned to the financing entity (the debt seller) to complete the ownership transfer process within a period not exceeding seven working days from the date of receiving the debt transfer form.
Fourth: The financing entity (the debt seller) must, after receiving the form and the bank cheque, commit to the following: - Initiate the process of transferring the property ownership to the financing party (the debt buyer) from the date of receiving the bank cheque.
- Update the customer's credit record and issue a clearance letter for the customer.
Fifth: Taking into account the aforementioned points, the financing entity (willing to purchase the debt) commits to the following provisions, stated in Article 10 of the Implementing Regulation of the Real Estate Finance Law, issued by the decision of His Excellency the Minister of Finance No. 1229 dated 10/04/1434H.
Additional Provisions According to Circular No. (391000086876) dated 09/08/1439H.It has been observed that some real estate financiers, when purchasing real estate financing debt from another financier, provide the customer with an excess cash amount, resulting in an increase in the amount of the new financing.
In order to ensure SAMA's commitment to protecting customers and ensuring that financing entities comply with the relevant regulations and instructions, SAMA would like to emphasize the following:
- Compliance with the provisions of Article (11) of the Implementing Regulation of the Real Estate Finance Law, as well as the subsequent circulars issued by SAMA regarding it, which set the maximum limit for granting credit in real estate finance contracts, in any form of financing, at 90% of the value of the first dwelling for the citizen.
- Compliance with the accelerated payment standards outlined in Article 84 of the Implementing Regulation of the Finance Companies Control Law, which regulate the process of accelerated payment.
- Compliance with paragraph (Second) of the above-mentioned circular, which states that "Grant credit equivalent to(100%) of the value of the offer specified in the form".
- Compliance with the purchase of real estate financing debt at an amount equivalent to the value of the purchase offer only.
For your information and adherence accordingly. Please note that SAMA will take all legal measures against real estate financiers who do not comply with the provisions of this circular.
Collecting Amounts Owed to Finance Entities for Previous Periods in Exchange for VAT on Real Estate Finance Contracts
Referring to The Value Added Tax Law issued by Royal Decree No. M/113 dated 2/11/1438 AH and Executive Regulations of the Value Added Tax Law issued by the Board of Directors of the General Authority for Zakat and Tax under Decision No. (3839) dated 14/12/1438 AH.
SAMA wishes to emphasize the importance for all financing entities to comply with The Value Added Tax Law, and its Executive Regulations, and the guidelines and instructions issued by the General Authority for Zakat and Tax in this regard. Additionally, SAMA confirms that financing entities have the right to demand that clients pay the Value Added Tax amounts due for previous periods from real estate financing contracts. To facilitate clients, financing entities may offer all possible options for payment or settlement in accordance with the relevant regulations and instructions, provided that written consent is obtained from the client if they accept any payment or settlement option before proceeding with any payment of the due amount. If the client does not accept the available options for settling the VAT amounts due for previous periods, the financing entity may seek recourse through the competent judicial authorities to claim the payment of those amounts.
For your information and compliance. SAMA will take the necessary legal measures in the event of non-compliance with these instructions.
Consumer Financing
Rules Regulating Consumer Microfinance Companies
To read the "Rules Regulating Consumer Microfinance Companies", click here.
Instructions for the Purchase of Consumer Financing Debts Between Financing Companies
No: 43033200 Date(g): 18/11/2021 | Date(h): 13/4/1443 Status: In-Force Translated Document
Pursuant to the powers vested in SAMA under the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/08/1433H, and with the aim of regulating the process of purchasing consumer finance debts for individuals between finance companies;
Attached herewith are the Instructions for the Purchase of Consumer Financing Debts Between Financing Companies;
Please be informed and act accordingly by no later than 26/04/1443H, corresponding to 01/12/2021G.
Chapter One: General Provisions
Article One
Without prejudice to the provisions of financing laws, their implementing regulations, and related laws and instructions, these instructions regulate the processes of purchasing consumer financing debts for individuals between financing companies.
Article Two
The financing company wishing to purchase the debt must hold a license from SAMA to conduct consumer financing activities.
Article Three
The financing company may purchase consumer financing debts from individuals without needing to obtain separate approval from SAMA for this purpose.
Article Four
The financing company must adhere to the relevant laws and instructions, particularly those related to customer protection.
Chapter Two: Obligations of the Financing Company Wishing to Purchase the Debt
Article Five
The financing company wishing to purchase the debt must inform the customer of the fees and costs associated with the process of purchasing consumer financing debts from individuals.
Article Six
The financing company wishing to purchase the debt must disclose to the customer the details and costs of the new financing before purchasing the debt and obtain the customer’s documented consent for this.
Article Seven
The financing company wishing to purchase the debt must prepare a specific form for requesting the purchase of consumer financing debts. This form must include all necessary customer data, the date of the request, and all relevant documents and information, including: (proof of the final total amount of the debt issued by the financing company selling the debt, the customer’s acknowledgment, the necessary approvals from all parties for the debt purchase request, clarification of the terms of debt purchase and details of executing the process, requirements for contracting with the customer to grant the financing, including updating data in credit records after the customer’s approval), and any other details necessary for purchasing the debt.
Article Eight
The financing company wishing to purchase the debt must use the Saudi Rapid Payments System ("Sarie") to settle existing debts. The payment made through the "Sarie" system must include, at a minimum, the following information:
- Customer’s name. - National ID/Residence number. - Debt amount. - Purpose of the transfer. - Debt reference number. Article Nine
The financing company wishing to purchase the debt must provide the customer with the reference number of the payment transaction to facilitate the completion of procedures with the financing company selling the debt.
Article Ten
The financing company wishing to purchase the debt may not charge the customer any costs or fees for transferring the debt, except for early repayment fees or administrative fees.
Article Eleven
The financing company wishing to purchase the debt may not allow the customer to use the remaining amount of the financing—after the debt has been purchased—until it has received a release letter from the financing company selling the debt and obtained sufficient guarantees for granting the financing, along with any other regulatory and operational requirements, as applicable. These details must be clarified to the customer before proceeding with the debt purchase, as required by Article (7) of these instructions.
Chapter Three: Obligations of the Financing Company Selling the Debt
Article Twelve
The financing company selling the debt may not refuse to issue a statement of outstanding obligations or a letter confirming the debt upon the customer’s request. These statements and the letter must be issued within one business day from the date of receiving the request.
Article Thirteen
The financing company selling the debt must facilitate the debt transfer process and complete it within one business day from the date the requirements are fulfilled. The company may only refuse to approve any debt purchase request if there are sufficient justifications, which must be clearly explained to the customer in writing.
Article Fourteen
The financing company selling the debt must notify the customer of the debt repayment within one business day from the date of receiving the payment for the existing financing. The notification must include all required details, including the IBAN account number and the name of the bank or financial institution to which the debt amount is to be transferred.
Article Fifteen
The financing company selling the debt must issue a release letter to the customer within one business day from the date of receiving the payment for the existing financing and record this in the customer's credit record with credit information companies. An exception is made for customers with credit cards and/or monthly installment cards, for whom the release letter must be issued within seven business days.
Article Sixteen
The financing company selling the debt may not require the customer to pay any amounts for approving the sale of the debt, except in cases where there are delinquencies that the customer has not yet settled.
Article Seventeen
The financing company selling the debt may include early repayment amounts as specified in Article (84) of the implementing regulations of the Finance Companies Control Law in the debt confirmation letter.
Finance Leasing
Regulations and Procedures for Requesting and Issuing Extracts of the Executive Document for Registered Finance Lease Contracts
No: 42039135 Date(g): 25/1/2021 | Date(h): 12/6/1442 Status: In-Force Translated Document
Based on the powers vested to SAMA under the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/8/1433 H, and in accordance with Paragraph (2) of Article Twenty-Five of the Implementing Regulation of the Finance Lease Law issued by the decision of His Excellency the Governor No. (1/M Sh T) dated 14/4/1434 H, and amended by the decision of His Excellency the Governor No. (93/M Sh T) dated 18/10/1441 H, which stipulates "After obtaining an extract of the enforcement instrument for the registered financing lease contract as an enforcement instrument, in accordance with Paragraph Eight of Article Nine of the Enforcement Law, and indicating compliance", and as a result of the fruitful cooperation between SAMA and the Ministry of Justice in all matters serving the public interest, including those related to financing lease contracts, and in the interest of organizing the procedures for requesting and issuing extracts of the enforcement instrument for the registered leasing financing contract issued by licensed financing lease contract registration companies authorized by SAMA.
You will find a copy of the regulations and procedures for requesting and issuing extracts of the enforcement instrument for the registered leasing financing contract. SAMA emphasizes that lessors and leasing financing contract registration companies must fully comply with these regulations and procedures, in addition to the applicable laws, regulations, and instructions issued by the relevant authorities, Lessors and contract registration companies will not be exempted from liability in case of non-compliance. Please note that these regulations supersede the regulations for the recovery of movable assets in financing lease contracts issued by SAMA under Circular No. 9926/99 dated 16/2/1441 H.
Chapter One: Definitions and General Provisions
Article One: Definitions
1. The terms and phrases used in these regulations and procedures shall have the meanings defined for them in the Finance Lease Law and its Implementing Regulation.
2 For the purpose of applying the provisions of these regulations and procedures, the terms and phrases listed below – wherever they appear in these regulations and procedures – shall have the meanings specified next to each term, unless the context indicates otherwise:
Recovery of Movable Assets: The recovery of movable assets from the lessee in cases where the leasing financing contract between the parties includes the lessor's right to reclaim them.
Request for Delivery of Fixed Assets: The lessor’s request for the delivery of the fixed asset (the property subject to the financing lease contract) from the lessee in cases where the leasing financing contract between the parties includes the lessor's right to reclaim it.
Financial Execution Certificate: A certificate issued by contract registration companies upon request from the lessor, which includes a demand for the lessee to pay a specified amount to the lessor in cases outlined in these regulations and procedures.
Specialized Companies: Companies specialized in the recovery of movable assets, licensed by the Ministry of Justice according to the Enforcement Law. They can be accessed through the Ministry of Justice’s official website.
Parties: The lessor, the lessee, contract registration companies, specialized companies, and the competent judicial authority.
Ministry: The Ministry of Justice.
Authenticated communication: A recorded communication method that can be verified and is retrievable in written or electronic form
Extract of the Enforcement Instrument for the Registered Financing Lease Contract (Extract of the Enforcement Instrument ): A document issued by contract registration companies for the execution on the leased asset (both movable and immovable) according to the provisions of the Enforcement Law and its Implementing Regulation. It includes the Enforcement Extract for the recovery of movable assets, the Enforcement Extract for requesting the delivery of fixed assets, and the Enforcement Extract for the Financial Execution Certificate.
Article Two
It is required for the issuance of the Extract of the Enforcement Instrument that the contract must be registered with contract registration companies.
Article Three
All parties must use electronic means for the process of requesting and issuing the extract of the enforcement instrument.
Chapter Two: Procedures for Requesting and Issuing the Extract of the Enforcement Instrument for the Recovery of Movable Assets
Article Four
The lessor is prohibited from recovering movable assets except through specialized companies.
Article Five
The mechanism for recovering movable assets shall be in accordance with the regulations for the delivery of movable assets to the lessor issued by the Ministry of Justice.
Article Six
The lessor may apply to the contract registration company to issue an extract of the enforcement instrument for the recovery of the movable asset in the following cases:
1- The lessee fails to pay the agreed-upon monthly installments in the financing contract for three consecutive months, or more than five scattered months throughout the contract period, after the lessor has completed the following steps: 1. Notify the lessee through documented communication of the obligation to pay the overdue installments, otherwise, the lessor has the right to recover the movable asset. 2. Submit the request to the contract registration company after fifteen days from the notification to the lessee mentioned in Paragraph (1) above. 2- The contract expires, and the lessee does not either take ownership of the movable asset or return it to the lessor, after the following conditions are met 1. The contract term has ended. 2. The transfer of ownership of the movable asset to the lessee is not possible. Article Seven
Upon receiving the lessor’s request for the issuance of the extract of the enforcement instrument for the recovery of the movable asset, and verifying the lessor’s right to do so, the contract registration company shall carry out the following procedures:
1. Issue the extract of the enforcement instrument, including the contract number and date, place of payment, place of issuance, date of the extract, name of the lessor, name of the lessee, amount due, and current installments.
2. Notify one of the specialized companies – chosen by the lessor – of the lessee’s breach of contract terms and the lessor’s desire to recover the movable asset, providing it with all the details of the movable asset according to the form approved by the contract registration company.
Article Eight
The contract registration company shall provide the Ministry with a monthly statement including all lessors' requests related to issuing the extract of the enforcement instrument for the recovery of the movable asset, along with details of the specialized companies to which these requests were referred.
Article Nine
The lessor must directly notify the lessee of the recovery of the movable asset through documented communication, which must include at a minimum the following:
- The name of the lessor and the entity responsible for collecting overdue amounts.
- Contact number for the relevant department and/or third party.
- Working hours of the relevant department and/or third party.
- The lessor must include the name of the employee, the name of the lessor, and/or the third party if the communication is by phone.
Article Ten
The lessor must provide the lessee with the approved form for the inventory of the movable asset as specified in the regulations for the delivery of movable assets to the lessor issued by the Ministry of Justice, through documented communication regarding the financing lease contract.
Article Eleven
The lessor must not dispose of the movable asset (For example but not limited to: selling the asset, transferring it to another party, or closing the contract) before the expiration of fifteen (15) days from the date of recovery of the asset, with notification to the lessee of the amounts due and the necessary documents for returning the movable asset.
Article Twelve
Except for the cases mentioned in Article Six of these regulations and procedures, the lessor may apply to the competent court to request the termination of the contract and the recovery of the movable asset in financing lease contracts.
Chapter Three: Procedures for Requesting and Issuing the Extract of the Enforcement Instrument for Requesting the Delivery of the Fixed Asset
Article Thirteen
The lessor may apply to the contract registration company to request the issuance of the extract of the enforcement instrument for requesting the delivery of the fixed asset in financing lease contracts in the following cases:
A. The lessee fails to pay the agreed-upon monthly installments in the financing contract for three consecutive months, or more than five scattered months for seven (7) working days or more for each installment from the date it is due for each five (5) years of the contract term, after the lessor has completed the following steps: 1- The lessor must notify the lessee through a formal, documented communication about the requirement to settle overdue payments. If the lessee fails to comply, the lessor may request delivery of the fixed asset. The notice of default must include the following information: (details of the overdue payments, how to rectify and address the default, the period granted to the lessee to rectify the default before initiating repossession procedures of fixed asset, which must be no less than (10) ten working days from the date the lessee receives the notice). This notice should be sent in accordance with the "Notices" clause of the contract. 2- Submission of Request: The request to the Contract Registration Company should be made after failing to reach an agreement with the lessee regarding the settlement of overdue payments, or if the lessee requests early ownership of the asset. B. Contract Termination, If the lessee fails to take ownership of or return the asset to the lessor after the following conditions are met: 1. The contract term has expired. 2. The lessee has not transferred ownership of the asset to themselves within the agreed timeframe with the lessor. 3. Failure to execute a handover report for the asset to the lessor. Article Fourteen
Upon receiving the lessor's request for the issuance of extract of executive bond for the delivery of the fixed asset and verifying the lessor's entitlement, the Contract Registration Company will undertake the following procedures:
- Obtain a confirmation from the lessor regarding their right to request the repossession of the asset from the lessee, ensuring that the lease contract permits this, and attach all supporting documentation for the request.
- For individual real estate financing contracts, notify any housing support programs at the Ministry of Housing (if applicable) of the lessor's intent to repossess the asset from the lessee and provide them with all required information according to the form approved by the Contract Registration Company. This is to assess whether the lessee (individual) meets the support criteria established by the ministry (if applicable).
- If there are no support programs at the Ministry of Housing, or if the lessee (individual) does not meet the support criteria, the Contract Registration Company will issue an executive bond for the repossession of the asset and provide it to the lessor, including the contract number and date, place of payment, place of issuance, date of the bond, lessor's name, lessee’s name, amount due, current payments, and asset ownership details.
Article Fifteen
The lessor may present the executive bond for the repossession of the asset to the relevant authority responsible for eviction and repossession and complete the necessary procedures in accordance with applicable regulations.
Article Sixteen
Except for the cases outlined in Article (Thirteen) of these regulations and procedures, the lessor may directly approach the competent court to issue a judgment for the repossession of the asset. This also includes financing lease contracts concluded prior to the applicability of the Finance Leasing Law.
Chapter Four: Procedures for Requesting and Issuing Extract of Executive Document for Financial Execution Certificate
Article Seventeen
The lessor may submit a request to the Contract Registration Company for issuing an executive document extract for a financial execution certificate in the following cases:
A. Failure of the lessee to pay any of the monthly installments agreed upon in the financing contract. The extract will be issued only for the amounts of the overdue installments. B. Compensation to the lessor for each day of delay if the financing lease contract has ended, and the lessee has delayed returning the movable asset or completing the ownership transfer procedures, after ensuring the following: 1- The contract between the parties must stipulate the lessor's right to compel the lessee to compensate for each day of delay in returning the movable asset after the contract's end. 2- The compensation to the lessor must be calculated based on the daily rent value of the movable asset according to the contract using the following formula: ((Value of the last due rental installment / Number of days in the month when the contract was terminated) × Number of days of delay) = Rental value. C. The cost of retrieving the movable asset in cases where the lessor has the right to retrieve it, after ensuring the following: 1- The retrieval of the movable asset must have been done through one of the cases specified in Article (Six) of these regulations and procedures. 2- The cost must be based on approved invoices issued by Contract Registration Companies and specialized companies. Article Eighteen
The Contract Registration Company, after receiving the lessor’s request to issue extract of an executive document for a financial execution certificate and verifying the lessor’s entitlement, shall issue the executive document extract including the contract number and date, place of payment, place of execution, date of the extract, the lessor’s name, the lessee’s name, the amount due, and the current installments.
Chapter Five: Final Provisions
Article Nineteen
The Contract Registration Company must record and file all requests received from lessors regarding requests for issuing extract of executive document and the outcomes thereof, in an organized manner.
Article Twenty
The lessor must develop internal policies and procedures that align with these regulations and procedures, and that do not conflict with the applicable laws and instructions.
Article Twenty-One
The lessor and Contract Registration Companies must fully comply with these regulations and procedures, in addition to the applicable laws, regulations, and instructions issued by relevant authorities. Neither the lessor nor the Contract Registration Company is exempt from compliance in case of non-adherence.
Article Twenty-Two
These regulations and procedures are subject to updates and amendments as needed.
Article Twenty-Three
These regulations and procedures invalidate the lessor’s right to recover movable assets in financing lease contracts issued by SAMA under Circular No. 99/9926 dated 16/2/1441 H.
Chapter Six: Enforcement
Article Twenty-Four
These regulations and procedures shall be effective from the date of their issuance.
Controls on Total Loss Settlement in the Financial Lease of Vehicles Contracts
To read the “Controls on Total Loss Settlement in the Financial Lease of Vehicles Contracts”, click here.
Rules for Comprehensive Insurance of Motor Vehicles Financially Leased to Individuals
To read the “Rules for Comprehensive Insurance of Motor Vehicles Financially Leased to Individuals”, click here.
Controls for Registration Procedures in the Contract Registry and Data Requirements for Registration; Provisions and Procedures for Third-Party Access to the Registry
No: 41061554 Date(g): 20/6/2020 | Date(h): 29/10/1441 Status: In-Force Translated Document
These regulations were issued under the decision of His Excellency the Governor No. 94/M SH T dated 18/10/1441H, based on the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/8/1433H, and its implementing regulations issued by the decision of His Excellency the Governor No. (1/M SH T) dated 14/4/1434H. In accordance with Article 30 of the implementing regulations of the Finance Lease Law, which states, "Subject to the provisions of the law and these regulations, a decision shall be issued by the Governor in agreement with the Minister of Justice to include the procedures for registration in the Contracts Register, the data required for registration, and the provisions and procedures for third-party access to the Contracts Register."
The application of these regulations concerns companies that register licensed financial leasing contracts from SAMA.
Chapter One: Definitions and General Provisions
Article One: Definitions
1. The terms and phrases used in these rules shall have the meanings assigned to them in the Finance Lease Law and its Implementing Regulation. 2- For the purpose of applying the provisions of these controls, the following terms and phrases, wherever used in these controls, shall have the meanings set forth below, unless the context indicates otherwise: Controls: The regulations for recording in the Contract Register, the data required for registration, and the rules and procedures for allowing others to view the Contract Register.
Concerned Parties: The contracting parties or individuals authorized by the contracting parties.
Registration: The recording and official documentation of leasing finance contracts in accordance with the provisions of the law, the regulations, and the controls.
Company: The joint-stock company specialized in registering leasing finance contracts, licensed according to the law.
Registered Right: The subject of the leasing finance contract concluded between the parties and recorded or to be recorded in the Contract Register.
Registrar: The Head and Clerk of the Leasing Finance Contract Register.
Head of the Contract Register: The registration head appointed by the company, responsible for registration activities and issuing documented bonds.
Contract Register Clerk: The clerk appointed by the company who is entrusted with recording the contract and its amendments in the register.
Enforcement Document Extract: A document issued by the company for the enforcement of the leased asset in accordance with the provisions of the Enforcement Law and its Implementing Regulation.
Article Two: General Provisions
- If SAMA licenses more than one contract registration company, SAMA shall issue rules for standardizing the registry and provisions for the implementation of registration by these companies.
- If SAMA licenses more than one contract registration company, these licensed companies must take necessary measures to ensure the unity of the contract registry data, data exchange among them, and the protection and preservation of the contract registry data.
- The company shall establish a registry for financial lease contracts and manage it in accordance with the law, the regulations, and the controls.
- The registry shall be owned by SAMA and is subject to its supervision and oversight. The company may not make any changes to it without obtaining written consent from SAMA.
- The company must follow the latest technologies and best practices, including organizing secure access to the contract registry data.
- The company must exercise due diligence in safeguarding the data and ensuring the accuracy of the information contained in the contract registry.
Chapter Two: Registration
Article Three
- The lessor must register the contract and any amendments to it within 10 business days from the date of concluding the contract or making amendments, through the electronic portal of the registry or its replacement.
- All transactions affecting the rights and legal status of the parties, as communicated by the contracting parties or the relevant authorities, shall be recorded in the registry.
- The company is obligated to maintain all contract records necessary for registering transactions and classifying them according to the latest technologies and best practices. SAMA has the authority to establish regulations and instructions related to this.
Article Four
1- The contents of the registry consist of the data included in the registered contracts and their contents. If the content of the registry conflicts with any other documents between the parties to the contract, the registry content shall prevail. Any amendments to the contract must be attached to the registry; otherwise, they will not be accepted for enforcement. 2- Notwithstanding the provisions of paragraph (1) of this article, the previous provisions do not apply to contracts concluded before the establishment of the registry, except after they are recorded in the registry and the parties agree to their content. 3- The registrar must verify the data regarding the subject of the contract, and this data must include, at a minimum, the following: (a) A description of the registered right, including the name, type, serial number—if available—production date, country of origin, and ownership document data of the asset. (b) Insurance data—if available. (c) Contract duration. (d) Total amount of financing under the contract, its duration, method of calculating the rent, and payment mechanism. (e) Bank account number for depositing the rent, and the bank name (if available). (f) Details of the consequences of delay in payment under the contract. (g) Conditions under which the beneficiary may recover the registered right from a third party. (h) Agreement of the contracting parties to disclose contract registry information. (i) Ownership and possession data of the leased asset. (j) Any other data or information that SAMA may later determine or that enforcement authorities may require. Article Five
Financial lease contracts are to be registered according to the model approved by the company and approved by SAMA.
Article Six
- Documents and declarations issued by the Contract Registry Clerk must be written in Arabic.
- Documents in languages other than Arabic may be certified after being translated into Arabic by a certified translator. In this case, the certification must include both the original document and its translation.
Article Seven
- The Head of the Contract Registry issues an official document called the Registered Financial Lease Contract, which includes the data recorded in the Contract Registry.
- The Head of the Contract Registry issues an Enforcement Document for the Registered Financial Lease Contract according to the model approved by the company and SAMA.
- The company may issue other documents according to models approved and authorized by SAMA.
Article Eight
Entries in the Contract Registry must be preserved for at least ten years from the date of the expiration of the obligations arising from the contract.
Article Nine
Concerned parties may obtain a signed and certified paper or electronic copy of the registry from the company.
Chapter Three: Registration Documents
Article Ten
1. Pursuant to the provisions of Article (22) of the regulations, the following documents are considered proof of ownership of the leased asset: (a) Real estate ownership deed. (b) Document of ownership of the asset. (c) Customs card. (d) Intellectual property registration certificate. (e) Purchase receipt. 2. The institution may approve other official documents as proof of ownership or specify additional requirements for proving ownership. The company must announce the institution's decision in this regard. Article Eleven
- Registration for identity verification is based on the data from the national identity card, the resident identity card, and commercial registry data or its equivalent for legal entities.
- The registration of the registered right and similar assets is based on the proof of ownership document in accordance with Article (Ten) of the controls, The ownership document must be stamped to indicate the rights arising from the registered contract and the registration of ownership rights. Necessary measures must be taken for documents that cannot be stamped, such as property ownership deeds. The company may use electronic means for this purpose.
- The company may use electronic means for registering contracts and other services, subject to obtaining SAMA’s approval.
Article Twelve
The holder of the ownership document is prohibited from disposing of the registered right in a manner that contravenes the provisions of the registered contract according to these regulations. Interested parties may file a criminal or civil lawsuit as appropriate and must notify the relevant registrar. In such cases, the registrar must inform one or more licensed credit data service providers, in accordance with the Credit Data Law, to include the information in the credit registry of the ownership document holder.
Chapter Four: Access to Registry Data
Article Thirteen
1- The company protects the commercial confidentiality of the concerned parties. However, the company is required to provide registry data to the following entities: (a) The parties to the registered contract. (b) Entities licensed to conduct financing activities, with the lessor's written consent. (c) The judiciary. (d) The institution. (e) Interested parties in the secondary market; the beneficiary may request access to the registry for concerned parties, including advisors, appraisers, and others, in the case of securitization. (f) The Capital Market Authority, subject to obtaining SAMA’s approval. (g) Any other government entity, subject to obtaining SAMA’s approval. 2- Requests must be submitted electronically or in paper form to the company, which will issue a signed and certified copy of the registration data within five (5) business days from the date of the request. Chapter Five: Access
Article Fourteen
These regulations shall come into effect from the date of their approval.
Credit Card Finance
Microfinancing
Rules of Engaging in Microfinance Activity
No: 713300000099 Date(g): 3/10/2019 | Date(h): 4/2/1441 Status: In-Force Translated Document
With reference to the powers granted to SAMA pursuant to Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H, and based on Article 2 of the Implementing Regulation of the Financing Companies Control Law issued by the Governor's Decision No. 2/MFC dated 14/4/1434H, which stated that "SAMA shall organize the Finance sector and supervise the business of the Finance Companies in accordance with the Law and the Regulation as the following: 4- Issuing rules and instructions required to organize the Finance sector.”
We inform you of the issuance of the decision by His Excellency the Governor, No. 80/BSI, dated 16/1/1441H, which includes the approval of the updated Rules of Engaging in Microfinance Activity that apply to microfinance companies, according to the attached format.
Chapter One: Definitions and General Provisions
Article One
- The terms and phrases mentioned in these rules shall have the meanings set out in the Finance Companies Control Law and its Implementing Regulations.
- For the purpose of applying the provisions of these rules: the following terms and phrases, wherever they appear in these rules, shall have the meanings assigned to each of them unless the context requires otherwise:
The Rules: The Rules of Engaging in Microfinance Activity.
SAMA Instructions: Includes any regulations, rules, instructions, or circulars issued by SAMA.
Microfinance Company: The company that finances the production activates and assets of small business owners, crafts people and the like, and which is licensed to engage such activity under the Finance Companies Control Law, its Implementing Regulations, and the rules and instructions issued by SAMA.
Article Two
Taking into consideration the Finance Companies Control Law issued by Royal Decree No. M/51 dated 13/08/1433H and its Implementing Regulations issued on 14/04/1434H corresponding to 24/02/2013, these rules define the specific requirements for practicing microfinance activities and apply to finance companies licensed to engage in microfinance activities.
Chapter Two: Licensing Provisions
Article Three
Microfinance Companies shall be subject to the provisions of licensing finance companies stated in the Law and the Implementing Regulation, and commensurate with the nature and the size of the Microfinance Company’s activity and its type of operations.
Article Four
Notwithstanding Paragraph (2) of Article Twelve of the regulations, a candidate for a senior management position in a microfinance company must be professionally qualified, and must have at least two years of relevant experience in the same field.
Chapter Three: Management and Supervision
Article Five
SAMA specifies what a microfinance company shall comply with in terms of information technology, corporate governance, internal organization, outsourcing, risk management, compliance and internal audit based on the nature and the size of the Microfinance Company’s activity and the type of operations.
Article Six
SAMA specifies the provisions that shall be set by Microfinance companies to cover potential losses and risks.
Article Seven
SAMA specifies what a microfinance companies shall comply with regarding the requirements of anti-financial crimes, specifically money laundering, financing terrorism and Counter-Fraud, in a manner that is consistent with the potential risks in these companies.
Article Eight
The Microfinance Company shall establish internal controls and procedures that ensure compliance with these rules and all relevant laws, regulations and instructions, and when contracting with third parties, the Microfinance Company shall ensure the compliance of all third parties with the provisions of these Rules or any related laws and regulations.
Article Nine
The Microfinance Company shall maintain adequate records to prove its compliance with these Rules and all relevant laws, regulations, instructions and take the required measures to prevent any violations of its provisions.
Article Ten
The Board of Directors of the microfinance company forms an audit committee, and it may also form specialized committees to expand the scope of work in the areas requiring special expertise, and shall grant those committees the necessary powers to perform their work and monitor their performance.
Article Eleven
The Microfinance Company shall set written policies, rules and procedures for finance in line with its activity nature, and ensure their implementation, including, as minimum, the following:
a Rules and conditions for granting Finance and its procedures. b Standards and procedures for assessing the economic feasibility of the activity or the production assets to be financed and the borrower’s ability to repay. c Procedures to ensure the usage of the finance amount for the purpose specified in the contract. d Procedures for monitoring finance performance, and providing advice and guidance to the borrower according to the case. e Procedures and controls for collection due installments as well as procedures for dealing with cases of default. f Measures of calculation finance cost. Article Twelve
A Microfinance Company shall establish a code of conduct, approved by the Board of Directors and provide SAMA with a copy of it. This code shall include principles, policies and clear controls for business ethics to deal with the beneficiaries, especially on Credit granting and installment collection practices. The Microfinance Company should take what is needed to ensure the compliance with its code of conduct in line with the relevant Rules, Regulations and Instructions.
Chapter Four: Activity Provisions
Article Thirteen
Microfinance shall be limited to Financing the production activates of small business owners, crafts people and the like. A Microfinance Company shall not offer consumer finance or exercise finance activities other than Microfinance.
Article Fourteen
The finance amount provided to each beneficiary of Microfinance shall not exceed one hundred thousand riyals (100,000), SAMA may raise the amount to two hundred thousand riyals (200,000), if it deems necessary.
Article fifteen
Taking into account Article (61) of the implementing regulation, A Microfinance Company may grant financing without collateral; or with collateral, taking into account the type and nature of this finance, in accordance with the policies and procedures of risk management approved by the Board of Directors of the Microfinance Company.
Article Sixteen
Without prejudice to the Finance Companies Law and its Implementing Regulation, a Microfinance Company shall not:
a. Exercise any activity other than microfinance.
b. Finance any of the related parties stated in Clause (1) of Article (56) of the Implementing Regulations for the Finance Companies Control Law.
Chapter Five: Concluding Provisions
Article Seventeen
SAMA may take all necessary actions to verify the microfinance company’s compliance with these rules, laws, regulations, and relevant instructions, such as requesting the company’s information and documents or on-site supervision, inspection, meeting their employees and viewing their systems, procedures and records, the company must cooperate with SAMA employees and facilitate their work.
Article Eighteen
Non-compliance with these Rules is a violation of the Finance Companies Control Law and its Implementing Regulations and exposes the Microfinance Company to regulatory sanctions.
Article Nineteen
These rules shall enter into force on the date of their publication on SAMA's website.
Debt Based Crowdfunding
Rules for Engaging in Debt-Based Crowdfunding
Date(g): 1/12/2021 | Date(h): 26/4/1443 Status: In-Force The Saudi Central Bank (SAMA) issued these Rules based on the powers vested in SAMA under the Saudi Central Bank Law issued by Royal Decree No. (M/36) dated 11/04/1442H and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H.
Chapter I: Definitions and General Provisions
Article 1: Definitions
1- The following terms and phrases, wherever mentioned herein, shall have the same meanings stated in the Finance Companies Control Law.
2- For the purpose of applying the provisions hereof, the following terms and phrases, wherever mentioned herein, shall have the meanings assigned thereto, unless the context otherwise requires.
2.1 Rules: the Rules for Engaging in Debt-Based Crowdfunding.
2.2 Debt-Based Crowdfunding: raising funds from finance Participants through a debt-based crowdfunding Platform to be granted to an Institutional Beneficiary in accordance with a loan contract.
2.3 Debt-Based Crowdfunding Company: a joint-stock company licensed to engage in Debt-Based Crowdfunding activity.
2.4 Debt-Based Crowdfunding platform: A web-based platform or any other digital means, including websites and mobile applications, used and run by a Debt-Based Crowdfunding Company to carry out Debt-Based Crowdfunding activity.
2.5 Institutional Beneficiary: a micro, small or medium-sized enterprise registered in the Kingdom of Saudi Arabia that has obtained or seeks to obtain financing through a Debt-Based Crowdfunding Platform.
2.6 Participant: a natural or legal person who provides finance to an Institutional Beneficiary through a Debt-Based Crowdfunding Company.
2.7 Eligible Participant: a natural or legal person to whom one or more of the following applies:
a. Has assets with a net value of at least SAR 3,000,000 (three million Saudi riyals).
b. Currently working or has worked for at least three years in the financial sector in a position related to finance or investment.
c. Has a professional certificate in finance or investment approved by an internationally or locally recognized establishment.
d. Has an annual income or profits of at least SAR 600,000 (six hundred thousand Saudi riyals) in the past two years.
2.8 Finance Amount: funds raised from Participants via a Debt-Based Crowdfunding Platform to be provided for an Institutional Beneficiary.
2.9 Collection Accounts: Bank accounts that are subject to the Rules for Bank Accounts and used only for the collection and management of the Finance Amount.
2.10 Default: Default occurs only if one or more of the following criteria are met: 2.10.1. The Debt-Based Crowdfunding Company concludes that the Institutional Beneficiary is unable to repay the full Finance Amount after seizing the provided collaterals. 2.10.2. The Institutional Beneficiary fails to pay any of the installments agreed upon with the Debt-Based Crowdfunding Company, either in whole or in part, for a period exceeding (90) consecutive days. 2.11 Significant Shareholders: Anyone who owns five percent (5%) or more of the Debt-Based Crowdfunding Company’s shares or voting rights. Article 2: Scope of Application
These Rules shall apply to licensed Debt-Based Crowdfunding companies and those applying for a license to engage in Debt-Based Crowdfunding activity.
Article 3: Purpose
These Rules aim to:
1- Establish licensing procedures and requirements for Debt-Based Crowdfunding activity.
2- Set the minimum standards and procedures for Debt-Based Crowdfunding Companies when practicing the activity.
Article 4: General Provisions
1- Debt-Based Crowdfunding activity shall not be carried out except after obtaining a license from SAMA in accordance with the Law and these Rules.
2- The Debt-Based Crowdfunding license application shall be submitted to SAMA in accordance with the Law and the requirements, guidelines and procedures set forth herein and as per the instructions issued by SAMA in this regard from time to time.
Chapter II: Licensing Provisions
Article 5: License Requests
The Debt-Based Crowdfunding Company wishing to be licensed shall submit the license request to SAMA. Such request shall be accompanied by the following:
1- A completed license application form as provided by SAMA.
2- Articles of association.
3- A list of the founding members or shareholders, including the number and percentage of shares of each member or shareholder in the Company.
4- The Fit and Proper Form for founding members or shareholders, signed by every founding member or shareholder.
5- The Fit and Proper Form for board members, signed by every candidate for board membership.
6- An irrevocable bank guarantee for an amount equivalent to the minimum capital, issued in favor of SAMA by a bank licensed to operate in Saudi Arabia and renewed automatically until the capital is paid in full, if the license application is submitted for a company under establishment. Such guarantee shall be released upon the request of the license applicant in any of the following cases:
i. If the capital is paid in cash.
ii. If the license request is withdrawn.
iii. If the license request is rejected by SAMA.
7- Draft agreements and proposed contracts with third parties.
8- The proposed business model of the Debt-Based Crowdfunding.
9- Any other documents, data, records or information required by SAMA.
Article 6: Capital
1- Subject to the provisions of the Companies Law, the minimum capital for the Debt-Based Crowdfunding Company shall be SAR 5,000,000 (five million Saudi riyals).
2- Taking into consideration the associated risks of the activity and their nature, SAMA may increase or decrease the minimum capital based on the prevailing market conditions or if it deems that the Company’s proposed business model or the nature of its activity requires so.
3- The Debt-Based Crowdfunding Company shall obtain a written non-objection letter from SAMA before disposing of significant shareholders’ shares, stakes or shares of indirect ownership that affect 5% or more of the Company’s shares or voting rights.
Article 7: Senior Management Requirements
All candidates for supervisory and executive positions in a Debt-Based Crowdfunding Company must:
a. Meet the professional eligibility requirements set by SAMA.
b. Be permanent residents of the Kingdom of Saudi Arabia.
c. Be professionally qualified and have sufficient experience in the field.
d. Have not violated any of the provisions of the Banking Control Law, the Cooperative Insurance Companies Control Law, finance laws, or the Capital Market Law and its Regulations.
e. Have not been previously convicted of an offense impinging upon integrity, unless rehabilitated in accordance with applicable laws.
f. Have the sufficient solvency, and have not breached any financial obligations towards their creditors nor have given an indication that they cannot continue to meet their financial obligations towards their creditors.
Article 8: Providing SAMA with the Information Required
1- The license applicant shall provide SAMA with any additional information or documents required within (30) working days
2- Without prejudice to the provisions of the relevant regulations and instructions, SAMA may reject the application if it fails to meet the period requirement specified in Paragraph (1) of this Article, or if SAMA is provided with incorrect or false information or documents.
Article 9: Application Completeness
SAMA notifies the applicant of the application completeness upon fulfilling all requirements set forth in the Law and these Rules.
Article 10: Initial Approval or Rejection
SAMA informs the applicant of the initial approval or justified rejection within (60) working days from the date the applicant receives notification of application completeness. SAMA’s initial approval shall not be considered a license or permission for companies to engage in Debt-Based Crowdfunding..
Article 11: Requirements for Company Incorporation and Business Activity Registration
1- For a company under establishment, the founding members shall complete the requirements necessary to practice Debt-Based Crowdfunding within six months from the date of SAMA’s initial approval and provide SAMA with a copy of the Company’s commercial register stating the Debt-Based Crowdfunding activity, and a copy of the Company’s articles of association. In case of failure to complete the requirements set out in this paragraph within the specified period, the initial approval shall be deemed expired. In addition, SAMA may extend the period before its expiration for another six months as a maximum.
2- For an existing company, SAMA shall be provided with a copy of the company’s commercial register stating the Debt-Based Crowdfunding activity within six months from the date of SAMA’s initial approval. In case of failure to submit the requirement set out in this paragraph within the specified period, the initial approval shall be deemed expired. In addition, SAMA may extend the period before its expiration for another six months as a maximum.
Article 12: License
1- SAMA may take any necessary actions to verify that the license applicant for Debt-Based Crowdfunding meets the requirements. Such actions include making on-site visits, meeting the holders or candidates of senior positions, and reviewing the regulations, procedures and records.
2- SAMA issues a decision to grant the applicant a license to engage in Debt-Based Crowdfunding upon fulfillment of all established requirements and procedures.
3- The Debt-Based Crowdfunding Company shall not engage in any other finance activity that the Company is not authorized to practice, unless SAMA’s written approval is obtained for such activity.
Article 13: License Term
The license shall be valid for five years and may be renewed by SAMA upon the request of the Debt-Based Crowdfunding Company. In such case, the Company shall submit a written renewal request to SAMA at least three months prior to the expiration of the license.
Article 14: Revocation of License
SAMA may revoke the license in any of the following cases:
1- Upon a written cancellation request submitted by the Debt-Based Crowdfunding Company, taking into account the rights of the Participants and Institutional Beneficiaries as well as the soundness of the financial system.
2- If it is proved that the Debt-Based Crowdfunding Company has provided SAMA with false information or failed to disclose material information that should have been provided for licensing purposes.
Article 15: License Fees
SAMA may charge fees as follows:
1- SAR 5,000 for license issuance.
2- SAR 2,000 for license renewal or amendment.
Chapter III: Internal Organization
Article 16: Internal Policies and Procedures
The Debt-Based Crowdfunding Company shall:
1- Develop written appropriate organizational policies approved by the board. Such policies must include, at least, the internal organization, governance, credit, risk management, compliance, a guide to deal with actual or potential conflicts of interest, confidentiality and security of information, outsourcing, and human resources.
2- Ensure that its technical equipment and related systems are adequate for its operational needs, nature of activity and risk situation and in accordance with best practices and SAMA’s instructions in this regard.
3- Design its information technology systems and related processes in a way that ensures the data availability, integration, safety and confidentiality and preserve the security of such systems and data. The Debt-Based Crowdfunding Company shall assess these systems and processes on a regular basis in accordance with the generally recognized technical standards.
4- Establish business continuity plans for emergencies, including alternative solutions to restore its operations within an appropriate time.
5- Keep all documents, records and files of the Participants and Institutional Beneficiaries in an orderly and safe manner and ensure that all files are complete and updated regularly for a period of at least 10 years from the date of the end of the relationship.
6- Have sufficient and qualified human resources in terms of knowledge and expertise to meet its operational needs, business activities and risk situation.
7- Develop a recruitment plan for vacant positions.
8- Develop a plan for cessation of business to be updated periodically to consider any changes to the Company’s business model or in the risks to which the Company is exposed.
Article 17: Requirements for Information Security and Combating Financial Crimes
1- The Debt-Based Crowdfunding Company shall comply with the information security requirements and the relevant laws, regulations and instructions issued by SAMA.
2- The Debt-Based Crowdfunding Company shall comply with the legal requirements contained in the Anti-Money Laundering Law, Combating Terrorism Crimes and their Financing Law, their Implementing Regulations, and the relevant rules and guidelines as specified by SAMA, in a manner that is consistent with the nature and size of the Company’s activity and risks it may be exposed to. The Debt-Based Crowdfunding Company shall also comply with the requirements and instructions issued by SAMA on financial crimes and fraud.
Article 18: Outsourcing
The Debt-Based Crowdfunding Company shall comply with the Rules on Outsourcing issued by SAMA for finance companies.
Article 19: Risk Management
The Debt-Based Crowdfunding Company shall:
1- Establish a written policy including a clear business strategy for risk management, approved and annually updated by its board of directors. The risk management policy shall take into account all relevant types of risks and how to deal with them. Such policy shall cover the analysis of at least the following risks:
a. Credit risk.
b. Market risk.
c. Operational risk.
d. Legal risk.
e. Reputational risk.
f. Technological risk.
g. Fraud risk.
h. Information security risk.
i. Cybersecurity risk.
j. Money laundering and terrorist financing risk.
k. Outsourcing risk.
l. Debt-Based Crowdfunding Platform operational cessation risk.
m. Participant protection-related risk, including the Institutional Beneficiary’s default risk.
2- Develop appropriate procedures to identify, assess, manage, monitor, communicate, and report risks. These procedures must be included in a comprehensive risk management framework that ensures:
a. Early and comprehensive identification of risks.
b. Assessment of correlations between risks.
c. Immediate coordination with the board of directors, senior management and responsible staff, when needed.
d. Immediate communication of identified risks to stakeholders.
Please review Circular No. (44028131) dated 02/04/1444H regarding Quarterly Risk Report Preparation and Submission to the Central Bank, Including Audited Annual and Quarterly Financial Statements, Prudential Data, and Publication on the Company's Website.
Article 20: Auditor
1- The Debt-Based Crowdfunding Company shall appoint one or more certified external auditors. A written non-objection letter for such appointment shall be obtained from SAMA. SAMA may appoint another auditor at the Company's expenses whenever its business' size and nature require so.
2- SAMA may require the external auditor to explain their report or disclose other facts from which they obtain knowledge in the course of an audit that could indicate a violation of the applicable laws, regulations, or instructions or a violation of the by-laws of the Company.
Article 21: Saudization of Human Resources
1- At least 50% of all employees of the Debt-Based Crowdfunding Company shall be Saudi nationals, including different departments and administrative levels, when the Company starts its operations.
2- The percentage of Saudization must be increased annually by at least 5% until it reaches 75%. Afterward, SAMA may determine the minimum required annual increase.
Article 22: Participants and Institutional Beneficiaries’ Protection and Data Confidentiality
1- The Debt-Based Crowdfunding Company shall establish a function for handling complaints and set clear procedures for receiving, documenting, reviewing, and responding to the complaints of Participants and Institutional Beneficiaries within the period specified by SAMA. Such complaints shall be kept in special records that also include all necessary details in relation to the complaint and the procedures taken.
2- All employees of the Debt-Based Crowdfunding Company shall maintain the confidentiality of data and transactions related to the Participants and Institutional Beneficiaries and shall not disclose them to other parties even after the end of service for employees or revocation of license, except in accordance with the relevant laws, regulations and instructions.
3- The Debt-Based Crowdfunding Company shall take all necessary measures to ensure the confidentiality of information and transactions related to Participants and Institutional Beneficiaries.
Chapter IV: Activity Provisions
Article 23: Participant Due Diligence
1- The Debt-Based Crowdfunding Company shall prepare a Participant due diligence program. This program must include policies and procedures for the following, as a minimum:
a. Know Your Customer (KYC).
b. Information security.
c. Data privacy and confidentiality.
d. Combating financial crimes, such as money laundering and terrorist financing.
2- The Debt-Based Crowdfunding Company shall comply with the Electronic Transactions Law and its Implementing Regulations and relevant laws and shall establish the necessary procedures and measures to ensure the validity of information, including:
a. verifying the Participant’s email address and phone number by sending a verification link to the registered email and number (Authentication)
b. Developing procedures necessary to ensure the provision of up-to-date information, such as the national address.
Article 24: Assessment of the Creditworthiness and Due Diligence of the Institutional Beneficiary
1- The Debt-Based Crowdfunding Company shall check and document the credit record of the Institutional Beneficiary after its approval.
2- Upon the Institutional Beneficiary’s approval, the Debt-Based Crowdfunding Company shall register the credit information of the Institutional Beneficiary with one or more of the licensed credit bureaus in accordance with the relevant laws, regulations, and instructions. Such information shall be updated throughout the period of dealing with the Institutional Beneficiary.
3- The Debt-Based Crowdfunding Company must decline the finance request in case of the absence of approval from the Institutional Beneficiary mentioned in paragraphs (1) and (2) of this Article.
4- The Debt-Based Crowdfunding Company shall adopt clear, transparent and documented scientific methods, criteria and procedures to evaluate the creditworthiness of the Institutional Beneficiary and its ability to repay the debt. Such methods, criteria, and procedures shall be applied in accordance with the best practices in this field. The board of directors of the Debt-Based Crowdfunding Company shall approve these criteria and procedures, review them at least on an annual basis, update them when necessary, and document such updates.
5- The Debt-Based Crowdfunding Company shall set clear policies regarding the Institutional Beneficiary due diligence in accordance with the Anti-Money Laundering Law and the Law of Combating Crimes of Terrorism and its Financing, their Implementing Regulations and relevant instructions. The Company shall also set identification criteria and initial due diligence for the Institutional Beneficiary. The due diligence framework shall cover at least the following:
a. Verifying the legal status of the Institutional Beneficiary.
b. Verifying the identity of the Institutional Beneficiary, including its establishment.
c. Verifying the address of the Institutional Beneficiary.
d. Ensuring that there is no conflict of interest between the Debt-Based Crowdfunding Company and the Institutional Beneficiary.
e. Verifying the sufficiency of the Institutional Beneficiary’s resources to carry out the activity, including its solvency, credit history, and past performance.
f. Assessing the Institutional Beneficiary’s business or financing levels (if any) and the existing financing and its source.
g. Assessing the business plan of the Institutional Beneficiary.
6- Without prejudice to the provisions of the relevant laws, the Debt-Based Crowdfunding Company shall inform Participants of the results of the due diligence procedure in the risk assessment process.
Article 25: Service Agreements Between Parties
1- The Debt-Based Crowdfunding Company shall draw up a paper or electronic contract with Participants in accordance with the relevant legal requirements. Each party shall receive a copy of the contract that must clarify at least the following:
a. Contract parties.
b. Contract scope.
c. Contract term.
d. Institutional Beneficiary’s name - and commercial register number or the unified number.
e. Finance type.
f. Finance Amount.
g. Fees.
h. Rights and obligations of the contract parties.
i. Dispute settlement and compensation mechanism.
j. Expected net Profit that Participants will receive.
k. Obligations of the Debt-Based Crowdfunding Company to manage financing, including the method of transferring payments made by the Institutional Beneficiary, to the Participant.
l. Procedures to be followed in case of default.
m. Contingency arrangements to deal with business disruption or cessation of the Debt-Based Crowdfunding Company.
n. Contract termination and expiration.
o. Participants’ right to withdraw their finance amounts before the completion of the Finance Amount.
2- The Debt-Based Crowdfunding Company shall draw up a paper or electronic finance contract with the Institutional Beneficiary when providing finance. Each party shall receive a copy of the finance contract that must clarify at least the following:
a. Names of the contract parties, commercial register number of the Institutional Beneficiary or its unified number, official addresses, and contact information including mobile phone number and email address.
b. Finance type.
c. Contract term.
d. Finance Amount.
e. Conditions for withdrawing the Finance Amount, if any.
f. Term cost and its application conditions.
g. Annual percentage rate (APR).
h. Term of payment of fees or funds required without paying the Finance Amount and the conditions for such payment.
i. Consequences of delayed payment of installments.
j. Guarantee and security required.
k. The number of the account used for depositing finance installments and the name of the bank.
l. Early repayment procedures, if any.
m. Procedures for dealing with guarantees in case of value reduction.
n. Procedures for exercising the right to terminate the finance contract.
o. Permission of the Institutional Beneficiary to include its information in the credit record.
p. Requiring the Institutional Beneficiary to notify the Debt-Based Crowdfunding Company, within a reasonable period, of any material changes that would affect Participants, the Institutional Beneficiary’s business, or the implementation of their projects.
q. Requiring the Institutional Beneficiary to submit its financial statements, including bank account statements, on an annual basis at least.
Any other information specified by SAMA.
Article 26: Credit Limits
1- The total amount of existing finance provided through the Platform shall not exceed 40 times the Debt-Based Crowdfunding Company’s capital and reserves, unless a written non-objection letter from SAMA is obtained.
2- Finance shall be limited to commercial enterprises registered in Saudi Arabia, and the Debt-Based Crowdfunding Company shall not grant financing for consumer purposes.
3- The total amount of existing finance provided to each Institutional Beneficiary that is a micro, small, or medium-sized enterprise shall not exceed SAR 7,500,000 (seven million five hundred thousand Saudi riyals), except for large enterprises, enterprises licensed to practice real estate development activity, or in case a written non-objection letter from SAMA is obtained.
4- The Participant’s contribution shall not exceed 25% of the Finance Amount requested for each Institutional Beneficiary. The existing financing for each Participant shall not exceed SAR 250,000 (two hundred fifty thousand Saudi riyals) for all finance options offered through the Debt-Based Crowdfunding Platform. Eligible Participants shall be excluded. The Debt-Based Crowdfunding Company may increase the maximum limit of existing financing for Participants after obtaining a written non-objection letter from SAMA.
5- Taking into account paragraph (1) of this Article, the Debt-Based Crowdfunding Company may participate in financing Institutional Beneficiaries through the Platform and in this case, it shall consider the following:
a) Obtaining a non-objection letter from SAMA for the Debt-Based Crowdfunding Company to participate in financing Institutional Beneficiaries through the Platform.
b) The Debt-Based Crowdfunding Company shall have an approved policy by the board to organize the participation process in financing Institutional Beneficiaries.
c) The total existing finance provided by a Debt-Based Crowdfunding Company through its participation shall not exceed 8 times the capital and reserves, unless a non-objection letter from SAMA is obtained and provided that the existing finance does not exceed the financing limits referred to in paragraph (1) of this Article.
d) The participation percentage shall not be less than (5%) and shall not exceed (25%) of the total Finance Amount required by the Institutional Beneficiary. SAMA may increase or decrease these percentages as it deems appropriate.
e) SAMA may require the participation of the Debt-Based Crowdfunding Company, which obtains SAMA’s non-objection to finance Institutional Beneficiaries through the Platform, in all available opportunities if deemed necessary.
Article 27: Fund-Raising and Payment Provisions
1- The fund-raising period for each Institutional Beneficiary shall not exceed (60) days, provided that the funds are transferred to the Institutional Beneficiary within a period not exceeding five working days after the total Finance Amount is raised. In the event that the requested Finance Amount is not covered during the fund-raising period, the finance campaign shall be void, and Participants shall be refunded within (15) days after the end of the fund-raising period.
2- The Debt-Based Crowdfunding Company shall publish the Institutional Beneficiary’s information on the Platform, granting a period of no less than (24) hours for Participants to view this information before the beginning of the fund-raising period. Participants shall be allowed to withdraw their finance amounts at any time prior to the completion of the Finance Amount.
3- The Finance Amount repayment period shall not exceed (60) months. The Debt-Based Crowdfunding Company may extend this period upon the Participants’ approval.
4- Repayment shall only be made through electronic channels, and it is prohibited to repay in cash.
5- The Debt-Based Crowdfunding Company, which enables automatic participation in the financing option, shall clarify this for the Participants and obtain their pre-approval to activate this option and allow them to cancel it at any time.
6- The funds available in the Collection Account shall be separate and independent from the funds of the Debt-Based Crowdfunding Company, and shall not be used for purposes other than collecting and managing the Finance Amount.
7- The account used for Participants’ funds in the Debt-Based Crowdfunding Company shall be named (Finance Amount Management Account - name of the Debt-Based Crowdfunding Company).
Article 28: Disclosure
1- By using the Platform, the Debt-Based Crowdfunding Company shall clarify the nature of the business offered and publish awareness-raising information, in addition to the risks resulting from participation in Debt-Based Crowdfunding. The Company shall also ensure that the nature of the relationship between finance process parties is clarified on the
Platform.
2- The Debt-Based Crowdfunding Company shall prepare the appropriate declarations and pledges and enable the Participants and the Institutional Beneficiary to read and agree to them before using the Debt-Based Crowdfunding Platform. Before using the Platform, the Company shall obtain an electronic acknowledgment from the Participants through a (Pop-Up Window), which includes their acknowledgment of the risks associated with Debt-Based Crowdfunding.
3- The Debt-Based Crowdfunding Company shall clearly share basic information about how the service works on the Platform. Such information shall include, at a minimum, the following:
a. Details on how the Platform works.
b. The extent to which the Debt-Based Crowdfunding Company is participating in financing Institutional Beneficiaries, in addition to the Company’s policy for participation.
c. Details of the service fees
d. Any financial interest of the Debt-Based Crowdfunding Company or a relevant person that may lead to a conflict of interest.
e. Approved standards for assessing the Institutional Beneficiary’s credit rating, including but not limited to: The Institutional Beneficiary’s financial position standard, the solvency of the Institutional Beneficiary and its owners, the Institutional Beneficiary’s credit record, and the collaterals provided by the Institutional Beneficiary.
f. Eligibility criteria of Participants.
g. The mechanism of dealing with the Participants’ funds when the Finance Amount requested is not covered.
h. The steps taken by the Debt-Based Crowdfunding Company and the rights of relevant parties if a material change occurs in the conditions of the Institutional Beneficiary.
i. The mechanism followed by the Debt-Based Crowdfunding Company in case of default.
j. The measures put in place by the Debt-Based Crowdfunding Company for information security and data protection.
k. Contingency arrangements in the event the Debt-Based Crowdfunding Platform ceases to operate.
4- The Debt-Based Crowdfunding Company shall clearly share on its Platform all relevant information about each Institutional Beneficiary, including at least the following:
a. A detailed description of the Institutional Beneficiary’s project for which it aims to obtain the Finance Amount, including the total Finance Amount requested and how the funds will be used.
b. Audited financial statements of the Institutional Beneficiary for the last two years, if any.
c. Current and future key financial indicators of the Institutional Beneficiary.
d. The results of the Institutional Beneficiary due diligence process conducted by the Debt-Based Crowdfunding Company.
e. A statement clarifying that displaying the project on the Platform shall not be considered as advice to provide financing to the Institutional Beneficiary.
f. Details of the term cost and Participants’ expected profits aside from the charges and fees received by the Debt-Based Crowdfunding Company and any other rights related to the financing.
g. Guarantees and any restrictions on their use.
h. The charges and fees received by Debt-Based Crowdfunding Company.
i. The Debt-Based Crowdfunding Company’s participation percentage in financing Institutional Beneficiaries, if any.
j. Payment terms and the preventive controls and measures taken.
5- The Debt-Based Crowdfunding Company shall clearly share information on its Platform about the significant risks that Participants may face from using the Debt-Based Crowdfunding Platform. Such information shall include, but not be limited to, the following:
a. The potential for Participants to be exposed to material risks, including the loss of some or all of their money in case of default.
b. A clear and detailed list of the potential risks that the Institutional Beneficiary may face.
6- The Debt-Based Crowdfunding Company shall clearly share on the homepage of its electronic Platform the main information on the status of its existing finance opportunities and update this information quarterly or upon the occurrence of developments, whichever comes first. Such information shall include, at a minimum, the following:
a. The default percentage of the opportunities financed, classified according to the level of risks.
b. Total amounts collected by the Debt-Based Crowdfunding Company compared to the Finance Amounts to be collected.
c. Clarifying that the data contained in paragraphs (a) and (b) are not considered sufficient indicators to anticipate the future performance of the Debt-Based Crowdfunding Company or that of Institutional Beneficiaries.
7- The Debt-Based Crowdfunding Company shall follow up with the Institutional Beneficiary’s commitment to the financing contract and notify Participants using electronic communication means (SMS messages or email) within (72) hours from the date of occurrence of any of the below-mentioned cases, in addition to clarifying the measures to be taken
by the Debt-Based Crowdfunding Company on a case-by-case basis:
a. Approval of the Institutional Beneficiary’s request for early repayment.
b. Default.
c. Existence of a legal dispute with the Institutional Beneficiary over the financing contract.
Article 29: Conflict of Interests
1- The Debt-Based Crowdfunding Company shall take reasonable measures to avoid and address any conflict of interest to ensure fair treatment of all participants.
2- The Debt-Based Crowdfunding Company shall not provide advice to Participants in relation to the Institutional Beneficiary’s projects displayed on the Debt-Based Crowdfunding Platform.
3- The Debt-Based Crowdfunding Company shall not offer finance or grant facilities to an Institutional Beneficiary in which one of the members of the board of the Debt-Based Crowdfunding Company, its directors, or its employees, as well as their spouses and first- or second-degree relatives has an interest.
4- The staff of the Debt-Based Crowdfunding Company, including members of the board and its committees, in addition to its major shareholders, shall not participate in any finance granted through the Platform. SAMA may issue regulatory controls to allow staff and major shareholders of the Debt-Based Crowdfunding Company to participate in finance granted through the Platform.
Chapter V: Supervision and Compliance
Article 30: SAMA Supervision
1- The Debt-Based Crowdfunding Company shall:
a. Provide SAMA with any other required data, information, and/or documents in accordance with the forms, control, instructions and times determined by SAMA.
b. Provide SAMA, upon its request, with all information and documents related to the Debt-Based Crowdfunding Company, its activities, shareholders, and staff. Refusal to do so shall be deemed a violation of the provisions of these Rules and the Law.
c. Enable SAMA’s specialized staff and appointed auditors, upon request, to access facilities relevant to the Debt-Based Crowdfunding Company’s business and all documents and data (including digital data).
2- The Debt-Based Crowdfunding Company and its staff shall not conceal, or attempt to conceal, any information or violations or refrain from answering any inquiries made by SAMA.
3- MA may take necessary actions to ensure the compliance of Debt-Based Crowdfunding Companies with the relevant rules, laws, regulations, and instructions. Such actions may include making supervisory or inspection visits to the Company’s head office, meeting its staff, and reviewing its regulations, procedures, and records. SAMA may appoint a
third party at the expense of the Debt-Based Crowdfunding Company to carry out any of the procedures taken in accordance with the provisions of the Rules.
Please review Circular No. (44028131) dated 02/04/1444H regarding the Quarterly Risk Report Preparation and Submission to the Central Bank, Including Audited Annual and Quarterly Financial Statements, Prudential Data, and Publication on the Company's Website
Article 31: Compliance
1- The Debt-Based Crowdfunding Company shall establish internal controls and procedures to ensure compliance with the Rules and all relevant laws, regulations, and instructions.
2- The Debt-Based Crowdfunding Company shall keep sufficient records to confirm compliance with the relevant rules, laws, regulations, and instructions, and it shall take the necessary procedures to prevent any violation of its provisions.
3- Without prejudice to the commitments contained in the Rules, the Debt-Based Crowdfunding Company shall not disclose any information to third parties without the approval of SAMA.
4- The Debt-Based Crowdfunding Company shall obtain a written non-objection letter from SAMA before partial or complete liquidation.
Chapter VI: Concluding Provisions
Article 32: Non-Compliance
Non-compliance with the provisions of the Rules shall be deemed a violation of the Finance Companies Control Law.
Article 33: Enforcement
These Rules shall enter into force on the date of their publication on SAMA's official Website.
Buy Now Pay Later (BNPL)
Rules for Regulating Buy-Now-Pay-Later (BNPL) Companies
To read the "Rules for Regulating Buy-Now-Pay-Later (BNPL) Companies", click here.
Financial Support Activities
Model Contracts
Consumer Protection
- Financial Consumer Protection Principles and Rules.
- Instructions for Services Provided to Persons with Disabilities in Financial Institutions.
- Principles of Conduct and Work Ethics in Financial Institutions.
- Rules for Advertising Products and Services Provided by Financial Institutions.
- A Guide for Calculating the Early Payment Amount.
- Consumer Complaints.