Article 3 of the Saudi Bankruptcy Law
المادة 3 من نظام الإفلاس · الفصل الأول: أحكام عامة
Article 3 specifies which entities are regulated entities and requires the competent authority's approval before a request to open any bankruptcy procedure for them is registered.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يعد ما يأتي كياناً منظماً في تطبيق أحكام النظام:
أ- الشركات المصرفية وشركات التمويل وشركات التأمين وشركات الصيرفة.
ب- الأشخاص المرخص لهم بممارسة أعمال الأوراق المالية.
ج- السوق المالية، وشركات التسوية والمقاصة والحفظ المالية.
د- شركات التصنيف الائتماني.
هـ- شركات المعلومات والسجلات الائتمانية.
و- شركات الاتصالات والمياه والكهرباء والغاز.
ز- شركات التنقيب عن مصادر الطاقة والمعادن.
ح- الشركات المشغلة للأنشطة الرئيسة في المطارات والقطارات والموانئ وما في حكمها، وفقاً لما تحدده اللائحة.
ط - المنشآت ذات الأغراض الخاصة.
ي - أي شخص آخر تنص عليه اللائحة.
2- إذا كان المدين كياناً منظماً فلا يجوز قيد طلب افتتاح أي من إجراءات الإفلاس أو الإيداع القضائي له إلا بعد صدور قرار بالموافقة من الجهة المختصة.
3- تصدر الجهة المختصة -بعد اكتمال الطلب- قراراً بالموافقة أو الرفض خلال مدة لا تزيد على (ثلاثين) يوماً، ويعد مضي هذه المدة دون صدور قرار من الجهة المختصة بمثابة قرار ضمني بالموافقة.
4- تختص المحكمة بنظر الدعاوى الناشئة عن قرار الجهة المختصة بموجب الفقرة (3) من هذه المادة.
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 3 explained in plain English
This article deals with a special category of debtors called regulated entities, which are bodies connected with financial activity or public utilities, and whose bankruptcy may affect the economy or essential services.
Who are the regulated entities?
- Banking companies and finance, insurance and exchange companies.
- Those licensed to carry out securities business, the financial market, and settlement, clearing and custody companies.
- Credit rating companies, and credit information and records companies.
- Telecommunications, water, electricity and gas companies, and companies exploring for energy sources and minerals.
- Companies operating the main activities at airports, railways and ports and the like as determined by the Regulations, special purpose entities, and any other person the Regulations name.
What is the special rule for them? If the debtor is a regulated entity, a request to open any bankruptcy procedure or a judicial deposit for it may not be registered except after a decision of approval from the competent authority that regulates and supervises its activity.
The competent authority must, once the request is complete, issue its decision of approval or rejection within a period not exceeding 30 days, and if the period passes without a decision, that is considered implied approval. As for anyone who objects to the competent authority's decision, the court has jurisdiction to hear the claims arising from it.
The definition of a regulated entity is used in Article 4, which lists regulated entities among those to whom the provisions of the Law apply.
Practical example
A finance company in Riyadh is going through a financial crisis and wants to request the opening of a financial reorganization procedure. Under this article its request is not registered with the court until the authority that supervises it approves, and if 30 days pass from the completion of the request without a decision, that is considered implied approval.
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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Frequently asked questions about Article 3 of the Saudi Bankruptcy Law
Can a bank request bankruptcy directly from the court?
No. Banks are regulated entities, and a request to open any bankruptcy procedure for them is not registered except after a decision of approval from the competent authority.
What if the competent authority does not respond to the request?
If 30 days pass from the completion of the request without a decision being issued, that is considered an implied decision of approval.
Where is the competent authority's decision challenged?
The court has jurisdiction to hear the claims arising from the competent authority's decision of approval or rejection.
More articles on General Provisions and the Bankruptcy Committee
- Article 1
Article 1 defines the key terms of the Bankruptcy Law, such as debtor, creditor, defaulting debtor, bankrupt, related party and the different bankruptcy procedures.
يقصد بالألفاظ والمصطلحات الآتية -أينما وردت في هذا النظام- المعاني المبينة أمام كل منها ما لم يقتض السياق خلاف ذلك: النظام: نظام الإفلاس. اللائحة: اللائحة التنف
- Article 2
Article 2 lists the seven bankruptcy procedures the Law regulates, from protective settlement to administrative liquidation.
يهدف النظام إلى تنظيم إجراءات الإفلاس، وهي: 1- التسوية الوقائية. 2- إعادة التنظيم المالي. 3- التصفية. 4- التسوية الوقائية لصغار المدينين. 5- إعادة التنظيم المال
- Article 4
Article 4 specifies who is subject to the Bankruptcy Law: individuals carrying on commercial, professional or profit-making business, registered companies and profit-making entities, and non-Saudi investors to the extent of their assets in the Kingdom.
تسري أحكام النظام على كلّ من: أ - الشخص ذي الصفة الطبيعية الذي يمارس في المملكة أعمالاً تجارية، أو مهنية، أو أعمالاً تهدف إلى تحقيق الربح. ب - الشركات التجارية
- Article 5
Article 5 sets out the objectives of bankruptcy procedures: enabling the debtor to organize its affairs, treating creditors fairly, maximizing asset value, cutting costs and time, and administrative liquidation when assets are weak.
تهدف إجراءات الإفلاس إلى الآتي: أ - تمكين المدين المفلس أو المتعثر أو الذي يتوقع أن يعاني من اضطراب أوضاعه المالية من الاستفادة من إجراءات الإفلاس، لتنظيم أوضاع
- Article 6
Article 6 gives the court the power to issue the judgments and decisions needed for bankruptcy procedures, supervise their execution, decide their disputes and impose penalties.
تصدر المحكمة الأحكام والقرارات اللازمة لتطبيق الإجراءات المنصوص عليها في النظام، وتتولى الإشراف على تنفيذها، والفصل فيما ينشأ عنها من نزاعات، وإيقاع العقوبات ال
- Article 7
Article 7 bars the liquidation of any person under another law unless its assets cover all its debts and it is not defaulting, and makes management members jointly liable if this is violated.
1- مع مراعاة ما ورد في المادة (الرابعة) من النظام، لا يصفى أي شخص بموجب نظام آخر إلا إذا كانت أصوله تكفي لسداد جميع ديونه وكان غير متعثر. 2- إذا تم حل المدين وت
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.