Article 12 of the Saudi Banking Control Law

المادة 12 من نظام مراقبة البنوك

The article bars sitting on the boards of more than one bank, requires the Agency's approval to appoint anyone who worked in a liquidated banking business or was dismissed from one, and deems a bankrupt or dishonor-convicted director resigned.

Official text (Arabic)

This article has not been amended since the law was issued.

لا يجوز أن يكون الشخص عضوا في مجلس إدارة أكثر من بنك واحد. ولا يجوز إلا بموافقة كتابية سابقة من المؤسسة أن يختار عضوا في مجلس إدارة أي بنك أو أن يتولى وظيفة مدير فيه:

أ - من كان يشغل مثل هذا المركز أو الوظيفة في منشأة مصرفية صفيت - ولو تمت التصفية قبل تاريخ نفاذ هذا النظام - ولا تصدر موافقة المؤسسة إلا إذا تبين عدم مسئولية هذا الشخص عن هذه التصفية.

ب - من عزل من مثل هذا المركز أو الوظيفة في مؤسسة مصرفية، ولو كان العزل سابقا على تاريخ نفاذ هذا النظام. ويجب أن تبنى موافقة المؤسسة في هذه الحالة على أسباب مقبولة.

ويعتبر مستقيلا كل عضو مجلس إدارة بنك أو مدير له حكم بشهر إفلاسه أو حكم عليه في جريمة مخلة بالشرف.

This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers

Article 12 explained in plain English

This article sets controls on those who manage banks, to preserve their independence and the integrity of those running them.

1. No combining: a person may not be a board member of more than one bank.

2. Prior written approval of the Agency is a condition for choosing either of the following as a board member or manager of a bank:

Anyone who held a position or similar job in a banking business that was liquidated, even if the liquidation took place before the law took effect. The Agency approves only if it is shown he was not responsible for the liquidation.
Anyone dismissed from a position or similar job in a banking institution, even if the dismissal was before the law took effect. The approval here must be based on acceptable reasons.

3. Deemed resignation: every bank board member or manager who has been adjudged bankrupt or sentenced for a crime involving dishonor is deemed to have resigned. It does not depend on a decision of the bank, but follows by operation of the law.

Anyone nominated for a position in a bank whose record includes any of these cases should consult a lawyer specialized in banking and finance.

Practical example

Abdullah was a manager in a banking business that was liquidated, and was then nominated as a board member of a bank in Jeddah. He cannot be chosen except with the prior written approval of the Agency, and the approval is issued only if it is shown that he was not responsible for that liquidation.

Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.

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