Article 17 of the Saudi Finance Companies Control Law
المادة 17 من نظام مراقبة شركات التمويل
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
يكون كل من مجلس إدارة الشركة، ومديرها العام، وكبار التنفيذيين، ومديري الفروع مسؤولين - كل في حدود اختصاصه - عن مخالفة الشركة لأحكام هذا النظام أو لائحته.
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 17 explained in plain English
This article specifies who bears responsibility within the company when a finance company breaches the provisions of the Law or its Regulations. Responsibility does not fall on the company as an entity alone, but extends to:
- The company's board of directors.
- The general manager.
- Senior executives.
- Branch managers.
But the article qualified this with an important phrase: "each within the limits of his jurisdiction". So each of them is not answerable for every breach, but for the breaches that fall within the scope of his work and powers. A branch manager in a city is answerable for what falls within his jurisdiction, not for a decision the board took outside the scope of his work.
The article did not specify the type of responsibility or the penalty that follows, so it establishes the principle of responsibility and leaves the details of penalties to their own places.
It is preceded by Article 16, which requires board members to be of integrity and eligible, such as no bankruptcy and no conviction for a crime involving breach of trust. It is followed by Article 18, which establishes a special joint liability on board members for losses resulting from providing finance without security.
If you hold a leadership post in a finance company and want to understand the limits of your responsibility, it is advisable to consult a lawyer who specializes in banking and finance.
Practical example
A branch of a finance company in Abha breached the Law's instructions in procedures that fall within the branch manager's jurisdiction. Under this article the branch manager is responsible for this breach within the limits of his jurisdiction, alongside whoever within the board or senior management the breach falls within the jurisdiction of.
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 17 of the Saudi Finance Companies Control Law
Who is responsible for a finance company's breaches?
The board of directors, the general manager, senior executives and branch managers, each within the limits of his jurisdiction.
Is a branch manager answerable for all the company's breaches?
No. Responsibility is within the limits of each one's jurisdiction.
More articles on Board of Directors of a Finance Company
- Article 12
The 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.
1- يحظر على شركة التمويل ما يأتي: أ - أن تقدم أي تمويل دون ضمان، واستثناءً من ذلك تحدد اللائحة قواعد التمويل دون ضمان. ب - أن تمول أو تمنح تسهيلات بضمان أسهمها.
- Article 16
The 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.
يشترط لعضوية مجلس إدارة شركة التمويل ما يأتي: 1- ألاّ يكون عضوًا في مجلس إدارة شركة تمويل أخرى. 2- ألاّ يجمع بين العمل في مراقبة شركات التمويل أو مراجعة حساباته
- Article 18
The 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.
مع عدم الإخلال بما ورد في الفقرة ( 1/أ) من المادة الثانية عشـرة من هذا النظام؛ يتحمل أعضاء مجلس إدارة شركة التمويل - بالتضامن- مسؤولية ضمان حقوق الشركة ضد الخسا
- Article 19
The 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.
تكوّن في كل شركة تمويل لجنة مراجعة من غير أعضاء مجلس الإدارة التنفيذيين، يصدر في شأن مهماتها، وقواعد اختيار أعضائها، ومدة عضويتهم، وكيفية عملها؛ قرار من الجمعية
- Article 20
The 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.
يجب على رئيس وأعضاء مجلس الإدارة وموظفي الشركة عند إجراء أي عقد من عقود التمويل التي لهم سلطة اتخاذ قرار في شأنها الإفصاح - كتابة - عن الآتي: 1- أي علاقة لأي من
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.