Chapter Two Licensing Provisions
Article 3
The founding members or shareholders of a Consumer Microfinance Company, or their representatives, shall submit the license request to SAMA, attached with the following:
1. completed application form required by SAMA;
2. draft articles of association and by-laws of the Consumer Microfinance Company;
3. description of the organizational structure of the Consumer Microfinance Company showing all necessary departments and functions and their main tasks;
4. the Fit and Proper forms for founding shareholders, signed by each founding shareholder;
5. the Fit and Proper Form for Board members, signed by every candidate for board membership;
6. an irrevocable bank guarantee issued in favor of SAMA by one of the local banks for an amount equivalent to the required minimum capital. Such bank guarantee is renewable automatically until the required capital is paid up in full. This guarantee shall be released upon the request of the founding shareholders in the following cases:
a. paying up the capital in cash;
b. withdrawing the license application; or
c. refusing the license application by SAMA.
7. any other documents or information required by SAMA.
Article 4
1. The minimum paid-up capital for a Consumer Microfinance Company shall be (20,000,000) twenty million riyals.
2. Notwithstanding the provision of subsection (1) of this article, the minimum paid-up capital for a Consumer Microfinance Company that carries out the activity using Financial technology shall be (10,000,000) ten million riyals.
3. SAMA may stipulate higher or lower minimum capital based on the prevailing market conditions, or if it deems that the proposed business model or the geographical scope requires so. The capital shall be paid in full at the establishment of the consumer microfinance company.
Article 5
1. SAMA shall charge a fee of (20,000) twenty thousand riyals for issuing, amending, or renewing a license to practice consumer microfinance activity.
2. Notwithstanding the provision of subsection (1) of this article, the fee for issuing, amending, or renewing a license to practice consumer microfinance activity using financial technology shall be (10,000) ten thousand riyals.
Article 6
1. Each founding shareholder must comply with the Sharia and legal competence requirements, and the fit and proper requirements stipulated by SAMA, in particular the following:
a. The founding shareholder must have the sufficient financial solvency and shall not have breached any financial obligations towards his/her creditors nor there is an indication that he cannot continuously comply with his financial obligations towards his/her creditors.
b. The founding shareholder must not have violated any of the provisions or regulations of the Capital Market Law, the Banking Control Law, the Cooperative Insurance Companies Control Law, Finance Laws, or any other laws or regulations inside or outside Saudi Arabia.
c. The founding shareholder must not have declared bankruptcy or entered into a general settlement with any creditor.
d. The founding shareholder must not have been sentenced of a breach of trust offense, unless rehabilitated and at least 10 years have passed since the last sanction for this crime has been completed and on the condition of obtaining a non-objection letter from SAMA.
e. The founding shareholder have not requested to withdraw license application to carry out finance activity in the last two years.
f. The founding shareholder must not have a previous application to carry out finance activity refused by SAMA during the last five years.
2. A non-objection letter from SAMA is required before acquiring (5%) or more of the consumer microfinance company's capital or voting rights.
Article 7
All Board members shall comply with the requirements of professional eligibility and fit and proper requirements stipulated by SAMA, in particular the following:
1. He/she must not be a Board member in another Consumer Microfinance Company exercising the same activity.
2. He/she must not combine work in supervising or auditing the Consumer Microfinance Company with being a member in the Board of the company.
3. He/she must not have been dismissed from an executive leadership function in financial facility as disciplinary measure.
4. He/she must not have been convicted of violating provisions of any penal law or any provisions or regulations of the Capital Market Law, the Banking Control Law, the Cooperative Insurance Companies Control Law, Finance Laws, or any other laws or regulations inside or outside Saudi Arabia.
5. He/she must not have been sentenced of a breach of trust offense, unless rehabilitated and at least 10 years have passed since the sanction for this crime has been completed and on condition that he/she receives a non-objection letter from SAMA.
6. He/she must have the sufficient financial solvency and shall not have breached any financial obligations towards his/her creditors nor there is an indication that he/she cannot continuously comply with his/her financial obligations towards his/her creditors.
Article 8
Any candidate for a Senior Management position must comply with the requirements of professional eligibility and fit and proper requirements stipulated by SAMA, in particular the following:
1. The candidate must be professionally qualified and must have at least two years of relevant experience. SAMA has the right to assess the candidate's completion of such period of experience.
2. The candidate must not have been dismissed from a previous job as disciplinary measure.
3. Not have been convicted of a violation of any of the provisions of a criminal law, the Banking Control Law, the Capital Market Law, the Co-operative Insurance Companies Control Law or its regulations, the Finance Laws or its regulations, or any other laws or regulations inside or outside the Kingdom of Saudi Arabia.
4. The candidate must not have declared bankruptcy or entered into a general settlement with any creditor.
5. The candidate must not have been sentenced of a breach of trust offense, unless rehabilitated and at least 10 years have passed since the sanction for this offense has been completed and on condition that he receives a non-objection letter from SAMA.
6. The candidate must have the sufficient financial solvency, and shall not have breached any financial obligations towards his/her creditors nor there is an indication that he/she cannot continuously comply with his/her financial obligations towards his/her creditors.
Article 9
1. The license application must comply with the requirements set out in the Law and these Rules. The founding shareholders of the Consumer Microfinance Company must provide SAMA with any additional information or documents that SAMA may require within (15) working days from the date of request.
2. In case of failing to meet the 15 working day period requirement specified in paragraph (1) of this Article, SAMA may refuse the license application.
3. SAMA will issue a written notice to the applicant after the completion of all the requirements set forth in the Law and these Rules.
4. Within (60) days from the day on which SAMA has accepted the license application as being complete, SAMA will either grant a preliminary approval or refuse to grant a License, giving its reasons in case of a refusal. The preliminary approval does not constitute a license or approval to practice the finance activity.
Article 10
1. Founding shareholders must establish the Consumer Microfinance Company as a joint stock company within six months of the granting of the preliminary approval and provide SAMA with copies of the Consumer Finance Company’s commercial registration and by-laws. The preliminary approval will expire after six months unless a non-objection letter has been obtained from SAMA to extend its duration for a maximum of six months.
2. SAMA will issue a decision to grant the license to the company following the company’s fulfillment of the requirements set forth in paragraph (1) of this Article. SAMA may take any necessary actions, such as making a licensing visit to the company headquarters, meeting its executives, and reviewing its regulations, procedures, and records to verify that the specified requirements have been met.
3. SAMA may restrict the License to a certain geographic area or specific types of borrowers or otherwise. The Consumer Microfinance Company is prohibited from engaging in any unlicensed activity or activities that violate the License conditions.
Article 11
The license shall be granted for a term of five years and SAMA may renew it upon the request of the company. The company shall submit the renewal request to SAMA at least six months prior to the expiration of the license using the form set by SAMA.
Article 12
Without prejudice to the provisions of the Finance Companies Control Law and other relevant instructions, a Consumer Microfinance Company may request to amend any condition or limitation in the license, provided that such request is based on reasonable justifications. Any documents, information or studies required by SAMA shall be attached to the request. If the amendment results in adding a new activity or amending the licensed activity, the relevant requirements of such activity shall be met in accordance with the Finance Companies Control Law and its Implementing Regulations, and the Rules of such activity.
Article 13
1. SAMA may revoke the license upon the request of the Consumer Microfinance Company, taking into account the rights of the creditors and borrowers and the integrity of the financial system.
2. SAMA may revoke the license if the Consumer Microfinance Company has submitted false information or failed to disclose material information that should have been provided for licensing purposes.