Licensing Guidelines for Consumer Microfinance Activity
Status: In-Force I. Introduction
The Finance Companies Control Law and the Rules Regulating Consumer Microfinance Companies set forth the provisions regulating licensing for microfinance activity. SAMA has prepared and published the required licensing forms on its website, which can be viewed through the following link: Finance (sama.gov.sa)
II. License Application Instructions for Consumer Microfinance
1. The license application must not be modified in any way. The license application and a copy thereof must be submitted by the founders or their duly authorized representative.
2. The forms and documents listed in the license application must be submitted in hard or soft copies, as specified in the checklist.
3. The terms and phrases mentioned in the license application shall have the same meanings stated in the Finance Companies Control Law and its Implementing Regulations and the Rules Regulating Consumer Microfinance Companies. The term "Applicant" shall mean the founders or shareholders of the company applying to obtain SAMA's approval to complete the incorporation procedures and obtain a license to practice consumer microfinance activity.
4. The applicant must ensure that the information provided in the license application is valid, accurate, comprehensive, and complete. Providing SAMA with false information or omitting material information that should have been disclosed for licensing purposes shall be deemed a violation of the Finance Companies Control Law, in particular Article 7 thereof, and may lead to the rejection of the license application or cancellation of the license.
5. The license application can be submitted to the following e-mail: (LICFCC@SAMA.GOV.SA).
III. Required Documents
The forms and documents specified in the checklist in the license application may be submitted in hard copies or using a USB flash drive containing identical electronic copies, as stated in Section IV below. The forms and documents may also be submitted electronically through the e-mail provided in Section II above. The original documents must be presented upon request.
IV. Documents Required to be Attached to the License Application
1. License application letter (hard or soft copy).
2. SAMA's license application form, after completing all sections (soft copy).
3. A copy of the company's draft memorandum of association and the articles of association, if any (soft copy).
4. A list of founding members or shareholders/partners, the shares they own in the company, and their percentage.
5. The organizational structure including all necessary departments and functions with their mandates (soft copy).
6. The economic feasibility study and the business plan per the details specified in the license application (soft copy).
7. SAMA's Fit and Proper Form for each founding member after being completed, signed by each founding member and approved by the person authorized to submit the license application (hard or soft copy).
8. SAMA's Fit and Proper Form for each candidate for membership in the board of directors and its sub-committees after being completed and signed by the candidate and approved by the person authorized to submit the license application (hard or soft copy).
9. An irrevocable bank guarantee equal to the minimum capital of the activity to be licensed issued by any local bank for SAMA and automatically renewed until the capital is paid in full.
10. As an exception to Paragraph (9) of this Section, the bank guarantee provided to companies that practice the activity only through financial technology must be equivalent to 20% of the minimum capital of the activity, provided that the minimum capital is paid before obtaining the final license.
11. Draft agreements and contracts proposed with third parties, especially agreements and contracts with related parties and external service providers (soft copy).
V. Licensing Procedures
1. The license applicant must complete the license application as described in Sections III and IV above and submit the application to SAMA along with all the attachments listed in the application's checklist.
2. SAMA will notify the license applicant, in writing, of the completion of their application upon fulfilling all the requirements stipulated in the Finance Company Control Law and its Implementing Regulations.
3. After completion of the application, SAMA will notify the applicant, in writing, of its initial approval or reasoned rejection within 30 business days. SAMA's initial approval must not be considered a license or permission to practice the activity.
4. The application is referred to the Ministry of Commerce to finalize the procedures for establishing the company and registering it in accordance with the Companies Law. The company must provide SAMA with the following: a. a copy of the commercial register indicating the activity licensed according to SAMA's initial approval (within six months from the initial approval date). b. a copy of the memorandum of association and the articles of association after the company's establishment. c. proof of full payment of the capital and any additional initial funding indicated in the business plan. d. proof that all necessary steps to start practicing the activity have been taken, such as recruiting human resources and procuring systems and equipment.
5. The company must provide SAMA with proof that the company has obtained the Legal Entity Identifier (LEI) from the Saudi Operating Unit accredited by the Global Legal Entity Identifier Foundation (GLEIF).
6. SAMA's staff will visit the company's premises, meet the executives, and review the regulations, procedures and records to verify that the regulatory requirements are met and that the company is ready to practice the activity.
7. SAMA will issue a decision to grant the license after the company fulfills the requirements mentioned in this Section's Paragraphs (4) and (5).
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