Chapter Three Real Estate Refinance Company
Article 16
1. SAMA shall license one or more companies to engage in real estate refinance activity in accordance with the Law, this Regulation, the Finance Companies Control Law and its Implementing Regulation, provided that:
a. The license be restricted to real estate refinance activities.
b. The capital of the real estate refinance company be not less than five billion riyals.
2. The real estate refinance company shall be subject to the supervision of SAMA in accordance with the Law, this Regulation, the Finance Companies Control Law and its Implementing Regulation and instructions issued by SAMA.
Article 17
1. PIF or any entity wholly owned by it shall, upon the initial approval of SAMA, incorporate a joint stock company to be named "The Saudi Real Estate Refinance Company" for real estate refinancing.
2. Upon establishment, the Saudi Real Estate Refinance Company may, after obtaining a no objection letter from SAMA, offer its shares to investors.
3. Upon satisfying legal and supervisory requirements and the approval of SAMA, real estate finance entities may acquire shares of the Saudi Real Estate Refinance Company at fair market value provided that their aggregate shareholding does not exceed 30 percent of the total shares of the Saudi Real Estate Refinance Company. Said acquisition shall be on the date SAMA determines the real estate finance market is stable, and upon the passage of at least five years from the incorporation of the Real Estate Refinance Company.
4. Upon satisfying the conditions set out in paragraph 3 of this Article and obtaining a no objection letter from SAMA, the Saudi Real Estate Refinance Company may offer a portion of its shares to the public, in accordance with the provisions of the Capital Market Law and its Regulation.
5. The shares of PIF or the founding entity of the Saudi Real Estate Refinance Company, fully owned by PIF, shall not, at any time, be less than 51 percent.
Article 18
The Real Estate Refinance Company aims to facilitate the trading of real estate finance contracts and the flow of funds thereto in order to:
a. Provide stability and growth in the secondary market for real estate finance;
b. Provide liquidity to the secondary market and provide better means to real estate finance entities to finance dwelling ownership for borrowers;
c. Increase the liquidity of real estate finance investments and ensure proper distribution of investment capital allocated for real estate finance among different regions and categories; and
d. Become an intermediary between the sector and domestic and foreign finance sources.
Article 19
1. To achieve its objectives, the Real Estate Refinance Company may:
a. Acquire, hold and manage any kind of finance obligations or rights related to financed residential real estate;
b. Issue securities in accordance with the provisions of the Capital Market Law upon obtaining a no objection letter from SAMA;
c. Carry out, upon SAMA's approval, any other transactions that serve, complement or support the transactions mandated by its law.
2. The Real Estate Refinance Company may impose charges for its services to cover its costs and expenses and make fair profits in a way that ensures its financial independence. SAMA shall monitor the pricing of the services offered by the Real Estate Refinance Company and may restrict said pricing.
Article 20
1. The real estate assets and the rights derived therefrom may be assigned to the Real Estate Refinance Company in refinancing transactions without the prior consent of the borrower, debtor or guarantor:
2. If the Real Estate Refinance Company has paid the agreed upon amount in full to a transferring real estate finance entity, such transfer shall not be revoked or otherwise rescinded in the event of the bankruptcy of the transferring real estate finance entity. The transferred rights shall not be deemed part of the transferor's assets.
Article 21
The Real Estate Refinance Company may distribute annual profits pursuant to a decision by its board of directors, upon obtaining a no objection letter from SAMA.
Article 22
1. The Real Estate Refinance Company shall ensure that the volume of its sale and purchase transactions, the prices it pays and its charges do not encourage excessive use of its facilities.
2. The Real Estate Refinance Company shall avert excessive use of its facilities that could adversely affect the prices in the real estate market.
Article 23
The Real Estate Refinance Company shall not:
1. Provide financing to a real estate finance entity using real estate finance contractual rights as collateral before such rights have been transferred to the real estate refinance company as collaterals;
2. Provide real estate finance to borrowers; and
3. Ease real estate finance conditions with the objective of affecting housing prices in a way that is contrary to best practices of credit and risk management.
Article 24
The board of directors of the Real Estate Refinance Company shall determine policies and procedures of the Company concerning real estate refinance transactions. Such policies and procedures shall become effective upon obtaining a no objection letter from SAMA.
Article 25
The Real Estate Refinance Company shall prepare and publish annual and quarterly reports on its financial standing, operations, potential risks and management thereof and provide SAMA with such reports. The reports shall include the financial statements compiled in accordance with international accounting standards.
Article 26
The Real Estate Refinance Company shall establish an electronic infrastructure for exchange of information and data with SAMA and real estate finance entities.
Article 27
No natural or corporate person may use the name “The Saudi Real Estate Refinance Company” or any similar name or reference thereto.