In force Last amended 15/3/1443 AH
Saudi Finance Companies Control Law
نظام مراقبة شركات التمويل
The law defines its terms and covers general provisions, licensing, the activity and management of finance companies, supervision of them, violations and disputes, penalties, and final provisions.
- Articles
- 40
- In force
- 40
- Amended
- 1
- Issued
- 13/8/1433 AH
Issued by: مرسوم ملكي رقم م / 51 بتاريخ 13 / 8 / 1433
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Finance Companies Control Law by topic
Definitions and Scope of the Finance Law8 articlesLicensing Finance Companies6 articlesTypes of Finance Activity1 articleProhibitions on Finance Companies3 articlesBoard of Directors of a Finance Company6 articlesFinancial Solvency of Finance Companies7 articlesFinance Consumer Protection4 articlesEarly Repayment of Finance1 articleSupervising Finance Companies4 articlesFinance Company Violations and Penalties4 articlesDelay in Repaying Finance1 articleGrievances and Finance Disputes2 articles
Articles of the Saudi Finance Companies Control Law
- Article 1The article defines the key terms in the Finance Companies Control Law, such as finance company, beneficiary, consumer, license and finance.
- Article 2The article defines the scope of the Law: it applies to finance companies licensed under its provisions.
- Article 3The article requires licensed finance companies to carry on finance in a way that does not conflict with Islamic Sharia, according to Sharia committees they choose, and without undermining the soundness of the financial system and fairness of dealings.
- Article 4The article prohibits carrying on finance activities, or using anything indicating them, without a license, and excepts a person who finances the goods or services of his own establishments to his customers, as the Regulations provide.
- Article 5The article sets the conditions and procedure for licensing a finance company, including a decision on the application within 60 days, a license term of five years, and offering a percentage of its ownership to the public.
- Article 6The article requires a finance company to begin its activity within a year of the license and bars it from stopping for more than three consecutive months except with SAMA's approval.
- Article 7The article allows SAMA to cancel a finance company's license if it appears the company provided false information or omitted material information required for licensing.
- Article 8The article bars dealing in a finance company's founders' shares except with SAMA's approval, and requires whoever receives the shares to meet the founders' conditions in Article 5.
- Article 9The article provides that a finance company's license is considered ended if a liquidator is appointed for it or a judgment declaring its bankruptcy is issued.
- Article 10The article sets out the types of finance activity SAMA licenses, allows owning assets in order to finance their transfer of ownership, and provides for licensing establishments for activities supporting finance.
- Article 11The article prohibits a finance company from non-finance business, trading in currencies, gold, securities and real estate, wholesale and retail trade, accepting deposits, and unapproved short-term foreign financing.
- Article 12The article prohibits a finance company from financing without security, against its own shares, or for parties connected to its board members, auditors and staff except as the Regulations specify, and provides for removal of a violating member or auditor.
- Article 13The article requires a finance company to set aside a provision to meet potential operating losses according to the standards the Regulations specify.
- Article 14The article allows a finance company to issue securities and sukuk under the Capital Market Law and its regulations, in proportion to its assets and financial position and without prejudice to Article 3.
- Article 15The article requires a finance company and its staff to keep confidential the customers' data and transactions they learn of during the company's activity, as the Regulations specify.
- Article 16The article sets five conditions for membership of a finance company's board of directors, including not sitting on another finance company's board and no bankruptcy, disciplinary dismissal or conviction for a crime involving breach of trust.
- Article 17The article makes a finance company's board of directors, general manager, senior executives and branch managers responsible, each within the limits of his jurisdiction, for the company's breach of the Law and its Regulations.
- Article 18The article makes the members of a finance company's board jointly responsible for guaranteeing the company's rights against losses resulting from providing finance without security, without prejudice to paragraph (1/a) of Article 12.
- Article 19The article requires an audit committee to be formed in every finance company from non-executive members of the board, with its tasks and membership organized by a general assembly decision on the board's proposal.
- Article 20The article requires the board chairman and members and employees with decision-making power to disclose in writing their relationship, their relatives' relationship or their interest in a finance contract, and allows an injured person to seek voiding of the contract if there is no disclosure.
- Article 21The article provides that the Saudi Arabian Monetary Agency supervises the work of finance companies and exercises its powers under the Law and its Regulations.
- Article 22The article lists subjects the Regulations organize, including finance limits, security ratios, disclosure of the cost of finance, consumer protection, advance payments and debt collection.
- Article 23The article requires a finance company to comply with the capital adequacy ratio rules as the Regulations specify.
- Article 24The article requires a finance company to diversify the risks of its activity and bars it from financing a single establishment or a group of interconnected ownership beyond the percentage the Regulations specify.
- Article 25The article requires SAMA's approval to amend a finance company's capital or articles, or for its merger into or acquisition of a similar company, subject to other laws.
- Article 26The article requires a finance company to obtain SAMA's approval to open a branch, agency or office inside or outside the Kingdom, or to close any of them.
- Article 27The article requires a finance company to appoint one or more licensed external auditors, and allows SAMA to appoint another auditor at the company's expense in the cases the Regulations specify.
- Article 28The article requires a finance company to supply SAMA with the data it requests, requires SAMA to examine its records and accounts periodically, and treats refusing to provide what the examination requires as a violation.
- Article 29The article sets the measures SAMA takes by written decision toward a violating finance company or one whose debts exceed its assets, and requires SAMA to bring a case if it sees cancellation of the license or liquidation as warranted.
- Article 30The article allows any interested person to challenge the Authority's decisions before the competent court within 60 days of learning of the decision.
- Article 31The article makes the competent court the body that decides disputes arising from the application of the Law and its regulations, hears violations of them and imposes the penalties set out in the Law.
- Article 32The article allows the Governor to appoint qualified employees with law-enforcement status for inspection, oversight, investigation of violations and public prosecution before the competent court, and refers their procedures to the regulations.
- Article 33The article requires a finance company to disclose to its customer, before contracting, the early repayment discount formula, so that it applies when early repayment is agreed or resorted to, and refers its criteria to the regulations.
- Article 34The article allows the Authority to impose a fine of up to SAR 250,000 for the violations in Article 29, and a fine of up to SAR 10,000 for each day the violation continues.
- Article 35The article sets a fine for a debtor who delays payment, a fine or imprisonment for violators of the Law, and allows precautionary attachment of the funds of those who violate Article 4 and publication of a summary of the judgment.Amended M/24
- Article 36The article gives companies and entities that carried on finance in the Kingdom before the Law took effect a two-year period to regularize their status in line with its provisions.
- Article 37The article makes the Zakat and Income Authority the body that issues the criteria needed to calculate the zakat base of finance companies.
- Article 38The article provides that the Finance Companies Control Law repeals any provisions that conflict with it.
- Article 39The article requires the Governor to issue the Implementing Regulations within ninety days of the date the Law is issued, to be applied after the Law takes effect.
- Article 40The article provides that the Law takes effect ninety days after the date of its publication in the Official Gazette.