Skip to main content
Back Custom print Text Only Rich Text Print / Save as PDF

  • Governance and Internal Control

    This section should be read in conjunction with:

    - Chapter 4 of the Finance Companies Control Law.

    - Part Five and Part Six of the Implementing Regulation of the Finance Companies Control Law.

    - The Corporate Governance for Financial Institutions.

    • Key Principles of Governance in Financial Institutions

      In accordance with chapter 1.3 of the "Key Principles of Governance in Financial Institutions", issued by SAMA circular No (42081293) dated 30/06/2021, these principles shall apply on a mandatory basis for finance companies and real estate refinancing companies.

      and subject to the mandatory provisions stipulated in relevant laws and regulations, these principles shall apply as guiding rules to, consumer microfinance companies, finance support companies, financial lease contract registration companies, and debt-based crowdfunding companies. The Central Bank may, at any time, enforce all or some of the provisions of these principles on a mandatory basis.

      To read the Key Principles of Governance in Financial Institutions, click here.

       

    • Requirements for Appointments to Senior Positions

      To read the Requirements for Appointments to Senior Positions, click here.

    • Corporate Governance

      • Board of Directors

      • Senior Management

      • Major Departments

      • Audit Committee

    • Shariah Governance Instructions for Finance Companies

      No: 42071901 Date(g): 26/5/2021 | Date(h): 15/10/1442Status: In-Force

      Translated Document

       

      Based on the powers vested in SAMA under its Law issued by Royal Decree No. (M/36) dated 11/4/1442 H, and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H, and in line with SAMA's desire to enhance Shariah governance procedures in finance companies, contributing to the development of Islamic finance in the Kingdom.

      Attached are the Shariah Governance Instructions for Finance Companies, which aim to establish a minimum standard for Shariah governance practices in finance companies and to enhance the environment of compliance with Shariah principles and rules. These instructions also define the roles and responsibilities of the Board of Directors, senior management, the Shariah committee, as well as the principles of independence and confidentiality of information.

      Please take note and act accordingly starting from 01/01/2022 G.
       

      • Chapter One: Preliminary Provisions

        • Article Two: Definitions

          A.The terms and expressions mentioned in these instructions shall have the meanings assigned to them in the Finance Companies Control Law and its Implementing Regulations
          B.For the purposes of applying these instructions, the following terms and expressions - wherever they appear in these instructions - shall have the meanings specified next to each of them, unless the context requires otherwise:

          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.

        • Article Three: Scope

          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.

        • Article Four: General Provisions

          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.

      • Chapter Two: Responsibilities of the Board of Directors and Senior Management

        • Article Five: Responsibilities of the Board of Directors

          1.The Board of Directors is primarily responsible for the financing activities conducted by the finance company and ensuring that these activities comply with the principles and rulings of Islamic Shariah in accordance with the committee's decisions. Specifically, it is responsible for the following:
            A.Overseeing the finance company's adherence to and implementation of the Shariah rulings issued by the committee.
            B. Ensuring the existence of an effective communication policy and mechanism between the key units of the finance company, enabling these units to communicate with senior management on matters related to the compliance of financing activities with the principles and rulings of Islamic Shariah in accordance with the committee's decisions.
            C. Establishing appropriate compensation and remuneration for the members of the committee based on the recommendation of the Nomination and Remuneration Committee in accordance with the scope of their duties and responsibilities.
            D. Evaluating the performance of the committee members based on their competence, knowledge, contribution, and effectiveness.
          2.The committee is directly linked to the Board of Directors.
          3.The Board approves on all policies and procedures governing the work of the committee and oversees their implementation.

        • Article Six: Responsibilities of Senior Management

          1. Identify Shariah-related issues and refer them to the committee for a decision, providing the necessary information and disclosures in a timely manner.
          2. Follow up on and implement the Shariah decisions issued by the committee.
          3. Provide continuous education and training programs for key internal stakeholders, including the Board, the committee, and employees involved in Shariah and financial matters1.
          4. Ensure that financing activities comply with the principles and rulings of Islamic Shariah as outlined in the committee's decisions and recommendations.
          5. Inform the Board and the committee about products suspected of not complying with Shariah principles through official reports, and immediately halt any products found to be non-compliant with Shariah principles.
          6. Promote and instill a culture of compliance with Shariah principles within the finance company and familiarize relevant employees with Shariah-compliant financing products.
          7. Develop financing products that align with Shariah principles and rulings.

          1The paragraph is for guidance purposes.

      • Chapter Three: Shariah Compliance Supervision

        • Article Seven: Shariah Compliance Supervision Activities

          First: Shariah Compliance

          1. The Shariah compliance task involves the regular assessment of the financing activities conducted by the finance company to ensure their alignment with Islamic Shariah principles and rulings.
          2. The person responsible for Shariah compliance must ensure the level of adherence by the finance company to Shariah principles and rulings, and implement corrective procedures to address any non-compliance issues.
          3. This task may be assigned to the compliance department or carried out by qualified Shariah experts within the finance company to perform Shariah compliance duties.
          4. The finance company may engage an external specialized entity to perform Shariah compliance duties after notifying SAMA.

          Second: Shariah Audit

          1. The Shariah audit task involves an independent review process to provide objective assurance that enhances the level of compliance of the finance company's activities with Islamic Shariah principles and rulings.
          2. The person responsible for the Shariah audit must conduct the audit at least once a year.
          3. This task may be assigned to the internal audit department or carried out by qualified Shariah experts within the finance company to perform the Shariah audit.
          4. The finance company may engage an external specialized entity to perform Shariah audit duties after notifying SAMA.
          5. The results and observations of the Shariah audit must be submitted to both the audit committee and the Shariah committee at least once a year.

           

      • Chapter Four: Regulations for the Work of the Shariah Committee

        • Article Eight: Selection of Committee Members and Membership Requirements2

          Members of the committee and its chairperson are selected and appointed by a decision of the Board of Directors—based on the recommendation of the Remuneration and Nomination Committee after obtaining the no-objection letter from SAMA. The finance company may seek approval from the General Assembly to appoint committee members if its internal policy includes such a provision. The committee is to be formed as follows:

          1.The number of committee members must be proportionate to the size and nature of the finance company’s business, with no fewer than three and no more than five members
          2.The chairperson of the committee must be an independent member. Independence is not fulfilled in the following cases
            A. If the chairperson owns five percent or more of the shares of the finance company or its subsidiaries.
            B. If the chairperson represents a person with legal status that owns five percent or more of the shares of the finance company or its subsidiaries.
            C. If the chairperson has a direct or indirect interest in the transactions and contracts made on behalf of the finance company.
            D.If the chairperson receives financial compensation from the finance company other than their salary or membership compensation for serving on the committee.
          3.The committee members must be qualified to carry out the tasks assigned to them, have a clear understanding of their roles and responsibilities, and possess the ability to exercise sound judgment objectively. Collectively, the members must have a range of professional, practical, and administrative skills, as well as appropriate Shariah and financial expertise, particularly honesty, commitment, and a high level of reputation, competence, and responsibility. The effectiveness of the committee depends on the experience of the members and their ability to make comprehensive judgments. The member’s qualifications should include the following:
          ▪Competence: Reflected by the level of education, training, and skills, and having at least three years of experience in relevant fields.
          ▪Shariah and Financial Knowledge: Members should possess appropriate Shariah knowledge as well as the ability to read and understand financial data and reports.
          4.A member of the Shariah committee of a finance company is not allowed to serve more than five Shariah committees of other finance companies3.
          5.The finance company must include a clause on confidentiality in the contract or terms of appointment for committee members to ensure the confidentiality and privacy of the finance company’s information.
          6.The finance company must notify SAMA in writing within five (5) working days if any member’s membership is terminated or if a member resigns for any reason. The termination of a committee member’s membership before the end of their term is only allowed with a valid justification. A resigning member must submit their resignation with the reasons to the Board of Directors.

          (2)This article is for guidance purposes and will be mandatory starting from 01/01/2023G.

          (3)If a finance company contracts with a Shariah consultancy firm, the individual providing Shariah consultancy services on behalf of the firm will be treated as a single committee member.

        • Article Nine: Responsibilities of the Committee4

          The committee is responsible for all of its decisions regarding Shariah matters. The Board of Directors must rely on the committee for issuing Shariah rulings related to the finance company's operations. The committee must undertake the following tasks:

          1-Meet regularly and as needed, with a minimum of one meeting every six months.

          2- Issue timely rulings on the Shariah matters referred to it, ensuring that the finance company's operations are not adversely affected due to delays in obtaining the committee’s decisions.

          3- Ensure that the Shariah policies and procedures developed by the finance company comply with Islamic Shariah principles.

           4-Ensure that the financing products comply with Islamic Shariah principles. The committee must approve the terms and conditions in the product manual, models, contracts, agreements, and other legal documents used in executing transactions.

          5- To ensure the quality and consistency of Shariah rulings, the committee must adopt an organized procedure for making, documenting, approving, and maintaining Shariah decisions to ensure the reliability of the decision-making process and to protect the committee from any potential undue influences.

          6- Notify the Board and recommend appropriate measures if it is determined that the finance company has engaged in activities that do not comply with Islamic Shariah principles. 

          7-Prepare an annual report on the compliance of the finance company's operations with Islamic Shariah principles and submit it to the Board.

           8-Inform SAMA if non-compliant activities are not effectively or adequately addressed, or if the finance company fails to take corrective actions regarding such activities.

           

          4 This article is for guidance purposes and will become mandatory starting from 01/01/2023 G.

           

      • Chapter Five: Independence and Confidentiality of Information

        • Article Ten: Independence

          The independence of the committee must always be maintained in the performance of its duties to issue objective and reliable Shariah rulings, as follows:

          1. The Board of Directors must acknowledge the independence of the committee and ensure that it is not subjected to any influence that may hinder its ability to issue objective Shariah rulings when reviewing matters presented to it.
          2. Shariah rulings issued by the committee may not be altered or ignored without the committee’s approval.
          3. The committee must receive accurate and complete information from senior management, and it has the right to request additional information from senior management if the information provided is insufficient.
          4. If the committee is not provided with the required information, the matter must be reported to the Board, which must take appropriate action to correct the situation.

        • Article Eleven: Confidentiality of Information

          1. Committee members are obligated to maintain the confidentiality of internal information obtained during the performance of their duties and must not misuse it. Confidential or sensitive information acquired by any committee member during their work must not be used in any way that may harm the finance company.
          2. Without prejudice to the above, the committee’s disclosure of information to SAMA for the purpose of informing it of any violations by the finance company of Shariah principles and rulings is not considered a breach of the principle of confidentiality.

      • Chapter Six: Final Provisions

        • Article Twelve

          The finance company must review and amend its approved policies and procedures to ensure they do not conflict with these instructions.

        • Article Thirteen

          These instructions shall be effective from 01/01/2022 G.

        • Article Fourteen

          SAMA may exempt a finance company from applying any of the provisions stated in these instructions, provided that it does not conflict with the law.

        • Article Fifteen

          SAMA is responsible for verifying the implementation of the provisions in these instructions. In the event of non-compliance, the finance company will be penalized in accordance with the relevant laws and regulations.

    • The General Committee of General Managers in Financing Companies

      No: 381000003528 Date(g): 10/10/2016 | Date(h): 9/1/1438

      Translated Document

      Referring to the powers granted to the Central Bank* pursuant to The Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H. and based on" Article One Hundred From the Implementing Regulations of the Finance Companies Control Law issued by the Governor's Decision No. (2/BSI) dated 14/4/1434 H. Which stipulates that "A committee, or more, shall be formed by a decision of the governor, concerned with providing necessary proposals and recommendations for the development of the finance sector."

      Accordingly, we inform you of the issuance of the decision by His Excellency the Governor, No. 56/BSI, dated 29/11/1437 H, which includes the formation of a general committee for general managers in financing companies in accordance with the terms of reference attached to this circular.

       

      * The "Saudi Arabian Monetary Agency" was replaced By the "Saudi Central Bank" in accordance with The Saudi Central Bank Law No. (M/36), dated 11/04/1442H, corresponding to 26/11/2020G.

      • 2. Definitions

        SAMA: Saudi Saudi Central Bank*

        Permanent Committee: A committee whose activities are characterized by continuity and permanence.

        Temporary Committee: A committee formed to address a specific task and ceases to exist upon the completion of that task. It is established whenever needed and should not exceed a duration of one year unless otherwise stated in the formation decision.

        Committee Chair: The member appointed to lead the committee and manage its activities.

        Deputy Chair: The member appointed to replace the Chair in case of their absence, departure, or removal.

        ‏Committee Members: The members appointed to work on the committee, responsible for attending meetings and contributing to them.

        ‏Secretary: The person appointed to perform support, coordination, and other additional tasks for the committee. The Secretary attends meetings but does not have the right to vote.

        Deputy Secretary: The person appointed to replace the Secretary in case of their absence, departure, or removal.

        Expert: Any person invited or called to committee meetings for the purpose of providing expertise on a specific matter or consultation. The expert does not have the right to vote in any of the meetings they attend.

        Agenda: A list of topics to be presented and discussed at the meeting, including the order and sequence of the workflow.

        Meeting Minutes: An accurate record of what was discussed in the meetings, serving as the official reference for proposals, reports, and member opinions.

        Quorum: The minimum number of members required to be present for the meeting to be considered valid and for the decisions to be effective. It is represented by two-thirds of the members.

        Voting: The right granted to members present at a meeting with a quorum to express their opinion on a specific decision. Voting is categorized into several scenarios as follows:

        * Unanimous Voting: All votes are in one direction.

        * Abstaining from Voting: Choosing not to vote on any decision, either in approval or rejection.

        * Majority Voting: Agreement by more than half of the members present on a decision after excluding the number of abstentions, in a valid meeting with a quorum.

        * The "Saudi Arabian Monetary Agency" was replaced by the "Saudi Central Bank" in accordance with The Saudi Central Bank Law No. (M/36), dated 11/04/1442H, corresponding to 26/11/2020G.

      • 3. Organizational Structure of the Financing Companies Committees

      • 4. Committees

        • 4/1. The General Committee

          • 4/1/1. Formation of the Committee

            1. The General Committee is composed of the following:
            • A Chair and a Deputy Chair, selected by the committee members themselves every two years.
            • Members who are General Managers or Executive Managers of financing companies in the Kingdom of Saudi Arabia.
            • A Secretary and a Deputy Secretary.

          • 4/1/2. Nomination and Dismissal

            1. Financing companies shall appoint a representative from their General Managers or Executive Managers to be members of the General Committee.
            2. The Chair and Deputy Chair of the General Committee are appointed by the committee members through a majority vote every two years.
            3. The Chair of the General Committee appoints the Secretary and Deputy Secretary every two years.
            4. A new Chair for the General Committee must be nominated at the last meeting held at the end of the statutory term (two years) through a majority vote.
            5. The Chair or Deputy Chair of the committee cannot be nominated for the same position for two consecutive terms.
            6. The roles of Chair of the General Committee and the Executive Committee cannot be held concurrently.
            7. The member representing a company shall be relieved of their duties as soon as their employment with the company ends, and the company they represent must nominate another member to replace them.

          • 4/1/3. Meetings and Quorum

            1. The General Committee shall hold meetings at least once a year. The meetings may also be convened if the Chair deems it necessary or if nine (9) members of the General Committee request it in writing.
            2. The General Committee shall hold meetings at the Financial Institute or at a location agreed upon by the majority of the members.
            3. A meeting of the General Committee is considered valid if attended by at least two-thirds of the members.
            4. All members are required to attend General Committee meetings. A member may delegate a representative from the company to attend and vote at the meetings, provided that the representative is appointed by the company’s senior management.
            5. General Committee members cannot delegate other representatives for two consecutive meetings.
            6. The General Committee must adhere to the meeting agenda as scheduled.
            7. The General Committee makes its decisions in meetings through majority voting.
            8. In the event of a tie vote, the Chair’s vote is decisive. Members who disagree should record their objections in the meeting minutes.
            9. Members may abstain from voting on any decisions made in the meetings, and the reasons for abstention should be recorded in the meeting minutes.
            10. The General Committee may invite any expert to participate in the meetings with the Chair’s approval, without the right to vote.
            11. Discussions should be conducted with high professionalism and in an organized manner, and should not include topics not listed in the meeting agenda.
            12. All members must maintain the confidentiality of information discussed during the meetings.
            13. The Chair must ensure that members adhere to the rules and guidelines governing the committee meetings, which all members are required to follow.

          • 4/1/4. Agenda, Meeting Minutes, and Reports

             

            1.Members should inform the Committee Chair of the topics they believe will contribute to achieving the desired goals of the meetings. The Chair should consider the proposed topics when approving the agenda.

            2. The agenda should be prepared by the Secretary or their Deputy, including all the topics to be discussed in the meeting, and then approved by the Committee Chair.

            3. The Secretary or their Deputy must send the agenda along with the documents to be discussed in the meeting to all Committee members and a copy to the Central Bank representative at least ten (10) working days before the meeting via email.

            4. The Secretary must prepare meeting minutes after each Committee meeting, recording the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention, including reasons if any.

            5. The Secretary or their Deputy must send the meeting minutes to all Committee members and the Central Bank representative within ten (10) working days after the meeting via email, before being approved and signed by the Committee Chair and the Secretary. The Secretary should be provided with any comments and feedback within five (5) working days from receiving the meeting minutes.

            6. The Secretary must keep all reports and minutes in a manner that allows for easy retrieval. When the Chair's committee, upon the expiration of their term, provide the Central Bank representative with all documents through a handover report. The Central Bank representative will then pass the documents to the new Committee Chair.

          • 4/1/5. Responsibilities

             

            General Committee

            1.Form an Executive Committee from among its members under the name "Executive Committee," nominate its members, and also nominate three reserve members for the Executive Committee.

            2. Provide general guidance and direction to the Executive Committee regarding common issues faced by the finance sector in the Kingdom of Saudi Arabia.

            3. Monitor the activities of the Executive Committee for General Managers and evaluate its performance to ensure its effectiveness and achievement of the desired goals.

            4. Propose and make necessary amendments to this document and develop it as needed, by majority vote, provided that the Central Bank does not object to these amendments before final approval.

            Chair of the Committee

            5. Ensure the effectiveness and success of the General Committee, in addition to the ongoing follow-up of all tasks assigned to the General Committee.

            6. Develop the General Committee's plans to contribute to the accomplishment and development of the Committee's work.

            7. Manage discussions and debates in General Committee meetings and provide a conducive environment in meetings to help achieve the benefits of exchanging views and perspectives efficiently.

            8. Communicate with the Executive Committee to ensure tasks and projects assigned to it are progressing as required.

            9. Provide the Central Bank's representative with all documents through a handover report at the end of their term, so the representative can then hand over the documents to the new Committee Chair.

            10. Sign with the Secretary and approve the final version of the meeting report.

            11. Deliver to the Central Bank an updated copy of this document at the beginning of each calendar year, including the desired objectives of any changes made, if applicable.

            Vice Chair of the Committee

            12. If the Chair of the General Committee is replaced, leaves, or is relieved before the end of their term, the Vice Chair will take their place and assume all their responsibilities.

            ‏Secretary

            13. Prepare all arrangements for meetings, including the meeting venue; organize and coordinate the proposed topics in the agenda and have it approved by the Committee Chair. Responsible for sending the agenda along with the documents to be discussed in the meeting to all Committee members and a copy to the Central Bank representative via email at least ten (10) working days before the meeting.

            14. Prepare meeting minutes after each Committee meeting, recording the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention, including reasons if any.

            15. Send the meeting minutes to all Committee members and the Central Bank representative within ten (10) working days after the meeting via email, before they are approved and signed by the Committee Chair and the Secretary. Comments and feedback should be provided to the Secretary within five (5) working days from receiving the report.

            16. Sign with the Chair on the final version of the meeting report.

            17. Keep all reports and minutes in a manner that allows for easy retrieval.

            Deputy Secretary

            18. If the Secretary of the General Committee is absent, leaves, or is relieved before the end of their term, the Deputy Secretary will take their place and assume all their responsibilities.

            Committee Members

            19. Participate in the issues, risks, and challenges facing them that impact the finance sector.

            20. Stay informed about all developments in the finance sector, including new regulations and changes to existing rules, whether from the Central Bank or other relevant regulatory bodies, in addition to keeping up with international developments.

            21. Adhere to high professionalism by actively participating in the discussions during Committee meetings.

        • 4/2. Executive Committee

          • 4/2/1. Formation of the Committee

             

            1. The General Committee shall form the Executive Committee once every two years.

            2. The Executive Committee shall be composed of the following:

            • A Chair and a Deputy Chair, who are elected by the Committee members every two years, subject to the Central Bank's approval.
            • A Secretary and a Deputy Secretary.

          • 4/2/2. Nomination and Exemption

            1. The members of the Executive Committee and the reserve members shall be nominated every two years by the General Committee members through a majority vote. The Executive Committee shall have no fewer than seven (7) members and no more than nine (9) members, and there shall be no fewer than three (3) reserve members.
            2. The Chair and Deputy Chair of the Executive Committee shall be appointed by the Executive Committee members through a majority vote every two years, following approval from the Central Bank.
            3. The Chair of the Executive Committee shall appoint a Secretary and a Deputy Secretary every two years.
            4. If any member leaves before the end of their current term, the Executive Committee shall appoint a replacement from the reserve members designated by the General Committee. The replacement member will assume the position of the resigning member until the end of the current term. The Executive Committee must notify the General Committee of the replacement member.
            5. Any member of the Executive Committee shall be exempted if they leave, are relieved, or resign from the company they represent.

          • 4/2/3. Meetings and Quorum

            1. The Executive Committee shall hold its meetings at least four times a year. It may also convene if the Chair deems it necessary or if two (2) members of the Executive Committee request it in writing.
            2. The Executive Committee shall hold its meetings at the Financial Institute or at a location agreed upon by the majority of members.
            3. A meeting of the committee is valid if attended by at least two-thirds of the members.
            4. Members of the Executive Committee are not allowed to delegate others to attend meetings or vote on decisions.
            5. Members of the Executive Committee must adhere to the planned meetings.
            6. Decisions of the Executive Committee are made by majority vote during meetings.
            7. In the event of a tie vote, the Chair’s vote will be decisive. Members who oppose a decision should record their comments in the meeting minutes.
            8. A member may abstain from voting on any decisions made in the meetings, and the reasons for abstention should be recorded in the meeting minutes.
            9. The Executive Committee may invite any expert to participate in meetings with the Chair’s approval, although they will not have voting rights.
            10. Discussions should be conducted with high professionalism and in an organized manner, ensuring that they do not include topics not listed in the agenda.
            11. All members must maintain the confidentiality of information shared within the meeting.
            12. The Chair must ensure that members adhere to the rules and regulations governing committee meetings, which all members must follow.

          • 4/2/4. Agenda, Meeting Minutes, and Reports

            1. Members should inform the Committee Chair of topics they believe will contribute to achieving the desired goals of the meetings. The Chair should consider the proposed topics when approving the agenda.
            2. The agenda should be prepared by the Secretary or their Deputy, including all topics to be discussed in the meeting, and then approved by the Committee Chair.
            3. The Secretary or their Deputy must send the agenda along with the documents to be discussed in the meeting to all Committee members and a copy to the Central Bank's representative at least ten (10) working days before the meeting via email.
            4. The Secretary must prepare meeting minutes for all meetings, which should include at a minimum the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention, including reasons if any.
            5. The Secretary or their Deputy must send the meeting minutes to all Committee members and the Central Bank's representative within ten (10) working days after the meeting via email, before they are approved and signed by the Chair and the members. Comments and feedback should be provided to the Secretary within five (5) working days from receiving the minutes.
            6. The Executive Committee must prepare a charter when establishing any sub-committee. The charter should include at a minimum the committee’s name, purpose, objectives, role, responsibilities, authority, composition, the process for nominating, appointing, and relieving members, whether the committee is permanent or temporary (with duration if temporary), meeting procedures, required reports, and their submission process. The charter must be approved by the Chair of the Executive Committee and must receive the Central Bank's approval for each sub-committee charter.
            7. When nominating members for sub-committees, there should be fair representation of licensed finance companies, ensuring no more than one representative per company on the same committee.
            8. The Executive Committee must prepare an annual comprehensive report, accompanied by all charters and necessary documents, and provide it to the General Committee and the Central Bank. The report should include at a minimum the key decisions made by the committee, the number of meetings held during the period, the names of attendees, and the names, status, and major achievements of sub-committees throughout the year.
            9. The committee must ensure clarity and accuracy in the reports it prepares.
            10. The Secretary must keep all reports, minutes, and documents in a manner that allows for easy retrieval. At the end of their term, the Chair must provide all documents to the Central Bank's representative through a handover report, so the representative can then pass the documents to the new Chair.

          • 4/2/5. Responsibilities

             

            Executive Committee

            1. Study and implement all tasks assigned to it by the General Committee.

            2. Establish temporary or permanent sub-committees, including preparing a charter that, at a minimum, covers the name of the sub-committee, its purpose and goals, its role and responsibilities, its composition, the process for appointing and relieving members, whether the committee is permanent or temporary (with duration specified if temporary), meeting procedures, required reports, and their submission process.

            3. Ensure that sub-committees comply with all applicable regulations, rules, guidelines, and instructions.

            4. The Executive Committee has the right to reconstitute any of the permanent or temporary sub-committees and to dissolve them before their term ends through a decision made by a majority vote.

            5. Evaluate and monitor the performance of existing sub-committees periodically to ensure their effectiveness.

            6. Prepare a comprehensive report, accompanied by all charters and necessary documents, and provide it to the General Committee and the Central Bank. This report should include, at a minimum, key decisions made by the committee, the number of meetings held during the period, the names of attendees, as well as the names, status, and major achievements of sub-committees throughout the year.

            7. Focus on contributing to the development of the finance sector in the Kingdom of Saudi Arabia by adhering to best practices and international standards that benefit the sector in general and its stakeholders in particular.

            8. Take necessary actions to stay updated on all developments in the finance sector, particularly those related to international standards and guidelines issued by local and international bodies that work on enhancing corporate governance practices and regulations.

            Chair of the Committee

            9. Ensure the effectiveness and success of the committee, as well as continuously follow up on all tasks assigned to the committee.

            10. Develop plans for the Executive Committee that will contribute to the accomplishment and advancement of the committee’s work.

            11. Manage discussions and debates during Executive Committee meetings, providing a conducive environment for meetings that facilitates achieving the desired benefits from exchanging opinions and viewpoints efficiently.

            12. Approve the charter for establishing any sub-committees.

            13. Define strategies and priorities for implementing committee decisions and seek new ideas to improve and develop the committee's role.

            14. Provide the Central Bank's representative with all documents through a handover report at the end of their term so the representative can then transfer the documents to the new Chair.

            15. Communicate and follow up with the Central Bank regarding pending issues, performance improvement, and achieving the committee's objectives.

            Deputy Chair of the Committee

            16. If the Chair of the Executive Committee is absent, leaves, or is relieved before the end of their term, the Deputy Chair will assume their responsibilities.

            Secretary

            17. Prepare all arrangements for meetings, including the meeting venue.

            18. Prepare the agenda, including all topics to be discussed in the meeting, and obtain approval from the Chair.

            19. Send the agenda along with the documents to be discussed in the meeting to all committee members and a copy to the Central Bank's representative at least ten (10) working days before the meeting via email.

            20. Prepare meeting minutes for all meetings, which should include at a minimum the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention, including reasons if any.

            21. Send the meeting minutes to all committee members and the Central Bank's representative within five (5) working days after the meeting via email, before they are approved and signed by the Chair and the members. Comments and feedback should be provided to the Secretary within five (5) working days from receiving the minutes.

            22. Keep all reports, minutes, and documents in a manner that allows for easy retrieval.

            Deputy Secretary

            23. If the Secretary of the Executive Committee is absent, leaves, or is relieved before the end of their term, the Deputy Secretary will assume their responsibilities.

            Committee Members

            24. Discuss all financial, operational, and regulatory issues, as well as all risks, opportunities, and key challenges they face, with the aim of exchanging expertise and achieving mutual benefits.

            25. Stay informed about all developments in the finance sector, including new rules and changes to existing rules, whether issued by the Central Bank or other relevant regulatory bodies, as well as international developments.

            26. Members must maintain high professionalism by actively participating in discussions during committee meetings.

        • 4/3. Sub-Committees

          • 4/3/1. Formation of Committees

            1. The Executive Committee shall form permanent and temporary sub-committees as needed.

            2. The Executive Committee must, at a minimum, establish permanent sub-committees to address the following topics:

            • Matters related to real estate financing.
            • Matters related to leasing financing.
            • Matters related to awareness and media.
            • Matters related to risk management.
            • Matters related to compliance, anti-money laundering, and counter-terrorism financing.
            • Matters related to financial issues.
            • Matters related to the protection of customers.

            3. Each sub-committee is composed of a Chairperson and a Vice-Chairperson, who are elected by the Executive Committee members every two years.

            4. Each sub-committee also includes a Secretary and a Deputy Secretary.

          • 4/3/2. Nomination and Exemption

            1. The Chairperson and Vice-Chairperson of the subcommittee are elected by a majority vote of the Executive Committee members every two years.

            2. The Chairperson of the subcommittee appoints a Secretary and a Deputy Secretary every two years.

            3. The Executive Committee has the right to exempt any member of the subcommittee with the approval of the Central Bank, based on a decision made by a majority vote.

            4. Any member of the subcommittee is exempted if they leave, are exempted from, or resign from the company they represent.

          • 4/3/3. Meetings and Quorum

            1. The subcommittee shall hold its meetings at least six times a year, and it may convene if the Chairperson deems it necessary.

            2. The subcommittee shall hold meetings at the Financial Institute or at a location determined by the Chairperson in Riyadh or any other place agreed upon by the majority of the members.

            3. The charter establishing the committee must include all regulations concerning meetings, including quorum and decision-making procedures.

            4. The subcommittee must adhere to the scheduled meetings as planned.

            5. The subcommittee may invite any expert to participate in meetings with the Chairperson's approval, but without voting rights.

            6. Discussions must be conducted with high professionalism, in an organized manner, and should not include topics not on the agenda.

            7. All members of the committee must maintain the confidentiality of the information exchanged during the meeting.

            8. The Chairperson must ensure that members adhere to the rules and instructions governing the committee meetings, which all members must follow.

          • 4/3/4. Agenda, Meeting Minutes, and Reports

            1. Members should inform the Chairperson of any topics they believe will contribute to achieving the objectives of the meetings. The Chairperson should consider these suggested topics when approving the agenda.

            2. The agenda should be prepared by the Secretary or their Deputy, and must include all the topics to be discussed in the meeting. It should then be approved by the Chairperson.

            3. The Secretary or their Deputy must send the agenda along with the documents to be discussed to all committee members and a copy to the Central Bank representative at least ten working days before the meeting via email.

            4. The Secretary must prepare minutes for all meetings, which should at a minimum include the names of attendees, all topics discussed, decisions made, any objections or abstentions with reasons if applicable.

            5. The Secretary or their Deputy must send the meeting minutes to all committee members and the Central Bank representative within no more than five working days after the meeting via email, before they are approved and signed by the Chairperson and members. The Secretary should receive comments and feedback within five working days of receiving the minutes.

            6. The subcommittee must prepare an annual comprehensive report, accompanied by all necessary documents, to be provided to the Executive Committee and the Central Bank. This report should, at a minimum, include the key decisions of the committee, significant achievements, difficulties encountered, suggestions, as well as the number of meetings held during the period and the names of attendees.

            7. The committee should ensure clarity and accuracy in the minutes and reports it prepares.

            8. The Secretary must archive all reports, minutes, and documents for easy retrieval. Upon the expiration of their term, the Chairperson should provide all documents to the Central Bank representative through a handover report, allowing the Central Bank representative to transfer the documents to the new Chairperson.

            9.The charter establishing the committees will govern any additional documents that the committee deems necessary to include.

          • 4/3/5. Responsibilities

            Subcommittees

            1. Discuss all topics and related issues, and provide recommendations to the Executive Committee for review and final decisions.

            2. Carry out all tasks assigned by the Executive Committee and regularly report on the progress of these tasks to the Executive Committee.

            3. Subcommittees are responsible for all tasks deemed to fall under their purview by the Executive Committee.

            4. Prepare an annual comprehensive report, accompanied by all necessary documents, to be provided to the Executive Committee and the Central Bank. This report should include at a minimum the key decisions made by the subcommittee, major achievements, difficulties encountered, suggestions, the number of meetings held during the period, and the names of attendees.

            Chairperson

            5. Ensure the effectiveness and success of the subcommittee; it is also their responsibility to continuously monitor all tasks assigned to the subcommittee.

            6. Manage discussions and debates during meetings, and create a conducive environment that facilitates professional and efficient exchange of opinions and viewpoints.

            7. Communicate with the Executive Committee and follow up on tasks with them, and provide them with all recommendations, reports, and other relevant information.

            8. Hand over all documents to the Central Bank representative through a handover report upon the expiration of their term, so that the Central Bank representative can then transfer the documents to the new Chairperson.

            Vice-Chairperson

            9. In the absence, departure, or early exemption of the Chairperson, the Vice-Chairperson will assume their responsibilities and duties.

            Secretary

            10. Prepare all arrangements for meetings, including the meeting location.

            11. Prepare the agenda, ensuring it includes all topics to be discussed in the meeting, and obtain approval from the Chairperson.

            12. Send the agenda along with the documents to be discussed to all committee members and a copy to the Central Bank representative at least ten working days before the meeting via email.

            13. Prepare minutes for all meetings, which should at a minimum include the names of attendees, all topics discussed, decisions made, any objections or abstentions with reasons if applicable.

            14 .Send the meeting minutes to all committee members and the Central Bank representative within no more than five working days after the meeting via email, before they are approved and signed by the Chairperson and members. The Secretary should receive feedback within five working days of receiving the minutes.

            15. Archive all reports, minutes, and documents for easy retrieval.

            Deputy Secretary

            16. In the absence, departure, or early exemption of the Secretary, the Deputy Secretary will assume their responsibilities and duties.

      • 5. Saudi Central Bank

        • 5/1. Role of the Central Bank

          1. The Central Bank performs its supervisory and regulatory role in committee meetings by appointing one or more qualified individuals to attend all committee meetings as "observers."

          2. Committee meetings are held with the Central Bank’s knowledge and approval; the institution's representative must be provided with meeting schedules and minutes. The Central Bank has the right to propose amendments or additions to the minutes.

          3. The Central Bank reviews proposals submitted by the executive committee on supervisory and regulatory matters, as well as other topics.

        • 5/2. Role of the Central Bank Representative(s)

          1. The representative of the central bank attends committee meetings as an "observer," and their role is limited to supervision and oversight. They do not have the right to vote on any decisions or proposals.

          2. The representative of the central bank ensures that financing companies are aware of all central bank instructions and directives, to ensure the committee operates efficiently and effectively.

          3. During meetings, the central bank representative provides committee members with documents related to the committee’s work.

          4. The central bank representative acts as the liaison between the central bank and the committees.

        • 5/3. Proposals Submitted by the Committees

          1. All proposals issued by various sub-committees must be submitted to the executive committee for review and evaluation. The executive committee will then study the proposals.

          2. Opinions and proposals submitted to the central bank must have been thoroughly discussed by the executive committee.

          3. The executive committee should conduct research and analysis and review best practices and local and international standards to ensure the effectiveness of the proposal before submitting it to the central bank.

          4. The proposal submitted to the central bank should clearly outline the nature of the issues being addressed, current practices both locally and internationally in dealing with such issues, and analyze the advantages and disadvantages of the current situation along with the proposed changes.

          5. The proposal submitted to the central bank must include the following minimum information:

          •  The main topic in a specific and clear manner.
          •  Key problems and current and potential risks.
          • Available alternatives.
          •  Sector practices related to the proposed topic, including references to best practices.
          •  Recommendations.
          •  Identification of necessary resources and methods for securing them.