Article 10 of the Saudi Finance Companies Control Law
المادة 10 من نظام مراقبة شركات التمويل
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
1-
ترخص المؤسسة لشركة التمويل بممارسة نوع واحد أو أكثر من أنواع نشاط التمويل الآتية:
أ - التمويل العقاري.
ب - تمويل الأصول الإنتاجية.
ج - تمويل نشاط المنشآت الصغيرة والمتوسطة.
د - الإيجار التمويلي.
هـ - تمويل بطاقات الائتمان.
و - التمويل الاستهلاكي.
ز - التمويل متناهي الصغر.
ح - أي نشاط تمويلي آخر توافق عليه المؤسسة.
ويجوز لشركة التمويل تملك الأصول من أجل تمويل تمليكها للغير.
2- ترخص المؤسسة للمنشأة التي ترغب في ممارسة نشاطات مساندة لنشاط التمويل بما يحقق المنافسة في تقديم هذه الخدمات، وتحدد اللائحة الشكل القانوني لتلك المنشأة، والشروط الواجب توافرها.
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 10 explained in plain English
This article shows what a finance company may carry on. SAMA licenses it for one or more of the following types:
- Real estate finance.
- Finance of productive assets.
- Finance of the activity of small and medium enterprises.
- Finance leasing.
- Credit card finance.
- Consumer finance.
- Microfinance.
- Any other finance activity SAMA approves.
This means that a license may be for a specific type only, so it should not be assumed that every finance company provides all of these types.
The article also allows a finance company to own assets in order to finance their transfer of ownership to others; that is, the company may buy the asset and then transfer ownership of it to the customer through finance.
In the second paragraph, SAMA licenses an establishment wishing to carry on supporting activities for finance activity, in a way that achieves competition in providing these services, and the Regulations specify the legal form of this establishment and the conditions to be met; the article did not name these activities.
It is followed by Article 11, which prohibits a finance company from carrying on any activity other than finance, which completes the picture: the company works in the types of finance it is licensed for and does not go beyond them.
To find the suitable type for a project or finance product, you can consult a lawyer who specializes in banking and finance.
Practical example
Khalid wanted to buy equipment for his small factory in Qassim, so he went to a finance company licensed for finance of productive assets. The company owned the equipment and then financed its transfer of ownership to Khalid, which the article allows finance companies to do.
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 10 of the Saudi Finance Companies Control Law
What types of finance do finance companies get licensed for?
Real estate finance, finance of productive assets, finance of small and medium enterprises, finance leasing, credit card finance, consumer finance, microfinance, and any other activity SAMA approves.
Is a finance company entitled to own assets?
Yes. It may own assets in order to finance their transfer of ownership to others.
Can an establishment providing services supporting finance be licensed?
Yes. SAMA licenses an establishment wishing to carry on activities supporting finance activity, and the Regulations specify its legal form and conditions.
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.