1. SAMA has issued these instructions based on the powers vested to it under the Finance Companies Control Law, issued by Royal Decree No. (M/51) dated 13/8/1433 H, and its Implementing Regulations issued by the decision of the Governor No. (2/BSI) dated 14/4/1434 H.
2. The commitment of finance companies to conduct their financing activities in compliance with Islamic Shariah is one of the requirements of the Finance Companies Control Law, Article (3) of the Finance Companies Control Law, issued by Royal Decree No. (M/51) dated 31/8/1433 H, states that "Finance companies – licensed pursuant to this Law-shall engage in finance activities in a manner not conflicting with principles of Sharia as defined by Sharia committees, whose members are selected by these companies, without prejudice to the integrity of the financial system and equity of transactions."
3. These instructions aim to strengthen the role of Shariah committees in finance companies supervised by SAMA and ensure that financing activities align with the rules and principles of Shariah. To achieve this, it is expected that the Board of Directors and senior management of finance companies have a reasonable understanding of Shariah principles and their broad application in Islamic finance. It is also expected that the Shariah committee has sufficient knowledge of financial matters in general, and Islamic finance in particular, to enable them to understand the Shariah issues presented to them.

Central Bank: The Saudi Central Bank.

Instructions: The Shariah Governance Instructions for Finance Companies.

Board: The Board of Directors of the finance company.

Committee: A specialized Shariah committee responsible for supervising the compliance with Shariah principles and their applications in the financing activities conducted by the finance company.

Committee Members: A group of specialists whose academic backgrounds are not limited to Shariah knowledge but also include an understanding and expertise in contemporary financial transactions that are employed in the form of Shariah rulings directed to the finance company.

Independent Committee Member: A person who has a complete independence in their position and decisions, is able to carry out their duties, express opinions, and vote on Shariah decisions objectively and impartially, and is not subject to any conflicts of interest as specified in these instructions.

Shariah Compliance Supervision: Monitoring and ensuring that the financing activities of the finance company comply with Islamic Shariah principles.

Other words or expressions mentioned in these instructions carry the meanings specified in the Finance Companies Control Law, its Implementing Regulations, and related instructions.

First: These instructions apply to finance company licensed to conduct one or more of the following types of financing activities:

1. Real estate financing
2. Financing of productive assets
3. Financing for small and medium enterprises (SMEs)
4. Finance leasing
5. Credit card financing
6. Consumer financing

Second: These instructions are considered as guidance for other financing activities licensed under the Finance Companies Control Law and its implementing regulations, except for provisions stated in relevant laws and instructions as mandatory. SAMA reserves the right to adhere the application of some or all the requirements of these instructions at any time.

1. The finance company must establish policies and procedures that govern the work of the Shariah committee and provide a copy to SAMA. This includes specifying how meetings are held, the decision-making and documentation process, and the process for preparing and submitting reports.
2. The finance company must ensure that the committee's reports are submitted effectively and in a timely manner to the Board of Directors.
3. The Board must carry out its responsibilities and duties effectively, ensure the independence of the committee, verify the qualifications of its members, and ensure the effectiveness of Shariah compliance supervision.
4. The finance company must disclose the resumes of all committee members on the company's website so that stakeholders can assess their competence and ability to perform their duties effectively.