Article 3 of the Saudi Capital Market Law

المادة 3 من نظام السوق المالية

The article excludes from securities checks, bills of exchange, promissory notes, documentary credits, money orders, interbank instruments and insurance policies.

Official text (Arabic)

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

لا تعد أوراقًا مالية الأوراق التجارية كالشيكات والكمبيالات والسندات لأمر، وكذلك الاعتمادات المستندية، والحوالات النقدية، والأدوات التي تتداولها البنوك حصرًا فيما بينها، وبوالص التأمين.

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 completes the definition of securities in Article 2, but works in the opposite direction: it specifies instruments that are not securities, and so do not fall within the scope of the Capital Market Law as securities. Article 2 expressly provided that its definition is "subject to the provisions of Article 3."

The instruments excluded according to the text are:

Commercial papers such as checks, bills of exchange and promissory notes.
Documentary credits.
Money orders.
Instruments traded by banks exclusively among themselves.
Insurance policies.

In practice this means that the check you write to pay rent, a bill of exchange in a commercial deal, or your car insurance policy are not securities in the sense this Law uses, so its provisions specific to securities, such as the rules on offering and the prospectus, do not apply to them. The article does not state which laws govern these instruments; it merely takes them out of the scope of the definition of securities.

Note that the exclusion of instruments traded by banks is limited to those traded exclusively among banks; the text does not exclude every instrument a bank issues. If you have a financial product and do not know whether it falls within this exception, it is best to consult a lawyer specializing in banking and securities.

Practical example

A commercial establishment in Jeddah deals with its suppliers using checks and bills of exchange, and holds an insurance policy on its warehouse. All of these instruments are excluded from securities under this article, so they are not treated as shares or fund units under the Capital Market Law.

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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