Article 25 of the Saudi Finance Companies Control Law
المادة 25 من نظام مراقبة شركات التمويل
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
مع مراعاة ما تقضي به الأنظمة؛ يجب الحصول على موافقة المؤسسة لتعديل رأس مال شركة التمويل، أو تعديل نظامها، أو اندماجها في شركة مماثلة، أو استحواذها عليها.
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 25 explained in plain English
This article specifies fundamental decisions a finance company does not take alone but for which SAMA's approval must be obtained, which are:
- Amending the company's capital.
- Amending its articles.
- Its merger into a similar company.
- Its acquisition of a similar company.
The article begins with the phrase "subject to what the laws provide", which means that SAMA's approval does not replace the procedures and approvals required by other laws. The company needs SAMA's approval in addition to what the relevant laws impose.
The evident aim is that these decisions change the company's financial or legal position and may affect requirements such as capital adequacy, so SAMA's supervision of them was necessary.
It is preceded by Article 24, which requires the company to diversify risk and not exceed the finance limit for a single establishment or interconnected group, and followed by Article 26, which also requires SAMA's approval to open or close branches, agencies and offices.
Before embarking on any merger, acquisition or amendment of capital, it is advisable to consult a lawyer who specializes in banking and finance.
Practical example
A finance company in Riyadh decided to increase its capital to expand its activity. Before carrying out the decision it must obtain SAMA's approval, in addition to meeting what the other relevant laws provide.
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 25 of the Saudi Finance Companies Control Law
Does a finance company need approval to increase its capital?
Yes. SAMA's approval must be obtained to amend a finance company's capital.
May a finance company merge with another company?
SAMA's approval must be obtained for its merger into or acquisition of a similar company, subject to what the laws provide.
More articles on Financial Solvency of Finance Companies
- Article 13
The article requires a finance company to set aside a provision to meet potential operating losses according to the standards the Regulations specify.
على شركة التمويل أن تضع مخصصًا لمواجهة خسائر التشغيل المحتملة وفق المعايير التي تحددها اللائحة.
- Article 14
The 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.
مع عدم الإخلال بما ورد في المادة (الثالثة) من هـذا النظام؛ يجـوز لشـركـة التمويـل - وفق ما تحدده اللائحة وبما يتناسب مع أصولها ومركزها المالي - إصدار الأوراق ال
- Article 22
The article lists subjects the Regulations organize, including finance limits, security ratios, disclosure of the cost of finance, consumer protection, advance payments and debt collection.
تنظم اللائحة ما يأتي: 1- الحد الأعلى لمجموع التمويل الذي يجوز لشركة التمويل تقديمه. 2- منع شركة التمويل من إجراء تعاملات ائتمانية معينة، أو تقيـيـدها في ذلك. 3-
- Article 23
The article requires a finance company to comply with the capital adequacy ratio rules as the Regulations specify.
يجب على شركة التمويل أن تتقيد بقواعد معدل كفاية رأس المال وفقًا لما تحدده اللائحة.
- Article 24
The 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.
يجب على شركة التمويل تنويع مخاطر نشاطها، ولا يجوز أن تمنح تمويلاً لمنشأة واحدة أو لمجموعة مترابطة الملكية بما يتجاوز النسبة التي تحددها اللائحة.
- Article 26
The 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.
يجب على شركة التمويل الحصول على موافقة المؤسسة عند فتح فرع، أو وكالة، أو مكتب داخل المملكة أو خارجها، أو إغلاق أي منها.
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.