Article 4 of the Saudi Finance Companies Control Law
المادة 4 من نظام مراقبة شركات التمويل
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تحظر مزاولة أي من نشاطات التمويل المحددة في هذا النظام إلا بعد الحصول على ترخيص بذلك وفق أحكام هذا النظام، أو الأنظمة المرعية الأخرى.
2- يحظر على أي شخص غير مرخص له أن يستعمل - بأي وسيلة - ما يـدل على مزاولة نشاطات التمويل المحددة في هـذا النظام أو ما يوحي بمعناها، أو أن يستعمل في وثائقه، أو أوراقه، أو إعلاناته، أي لفظ أو عبارة ترادفها.
3- استثناءً من حكم الفقرتين (1) و (2) من هذه المادة؛ تنظم اللائحة أحكام مزاولة الشخص ذي الصفة الطبيعية أو المعنوية تمويل سلع منشآته أو خدماته لزبائنه؛ بما يمكن المؤسسة من ممارسة سلطتها النقدية، ويحمي النظام المالي، ويحقق حماية المستهلك.
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 4 explained in plain English
This article sets the licensing rule for finance activity, in three paragraphs:
- Prohibition on carrying on activity without a license: no finance activity specified in the Law may be carried on except after obtaining a license under this Law or other applicable laws.
- Prohibition on suggesting that finance is carried on: a person without a license may not use by any means anything that indicates carrying on these activities or suggests their meaning, nor use in his documents, papers or advertisements any word or phrase synonymous with them. So the violation here is not limited to actually providing finance but includes merely presenting oneself as a finance body.
- The exception: a natural person (an individual) or legal person (such as a company) who finances the goods or services of his establishments to his customers, such as a store selling its products in installments, is subject to provisions on carrying this out that the Regulations set, in a way that enables SAMA to exercise its monetary authority, protects the financial system and achieves consumer protection. The article did not detail these provisions but referred them to the Regulations.
After this article comes Article 5, which sets out the conditions and procedures for obtaining a license, while it is preceded by Article 3, which regulates how licensed companies carry on their business.
If you sell on installments or are thinking of offering finance services, it is advisable to consult a lawyer who specializes in banking and finance to confirm your legal position.
Practical example
Salem opened an office in Dammam and put the phrase “fast finance solutions” on his sign and advertisements without obtaining a license. This use falls within the prohibition in paragraph (2) even if he has not yet granted any finance, whereas the position of a furniture showroom that sells its products to its customers in installments differs, as the Regulations govern it.
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 4 of the Saudi Finance Companies Control Law
Can finance be carried on without a license?
No. The article prohibits carrying on any of the finance activities specified in the Law except after obtaining a license under its provisions or other applicable laws.
Does it prohibit using the word finance in an advertisement without a license?
Yes. A person without a license is prohibited from using anything that indicates carrying on finance activities or suggests their meaning in his documents, papers or advertisements.
Can a store sell its products in installments?
The article excepts a person who finances the goods or services of his establishments to his customers from the prohibition, and refers the regulation of the provisions on this to the Regulations.
More articles on Licensing Finance Companies
- Article 5
The 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.
أولاً : يقدم المؤسسون لشركة التمويل - أو من يمثلهم - طلب الترخيص إلى المؤسسة، ويشترط لإصدار الترخيص ما يأتي: 1- تقديم الهيكلة الإدارية للشركة ، ونظم تشغيلها، وخ
- Article 6
The 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.
يجب على شركة التمويل البدء في ممارسة نشاطها خلال مدة أقصاها سنة من تاريخ حصولها على الترخيص، ولا يجوز لها بعد ممارسة نشاطها التوقف مدة متصلة تزيد على (ثلاثة) أش
- Article 7
The 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.
يحق للمؤسسة إلغاء الترخيص إذا ظهر أن شركة التمويل زودت المؤسسة بمعلومات زائفة، أو أغفلت الإفصاح عن معلومات جوهرية كان يتعين عليها الإفصاح عنها لأغراض الترخيص وف
- Article 8
The 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.
يحظر التصرف في أسهم التأسيس إلا بعد موافقة المؤسسة، ويشترط فيمن تنتقل إليه تلك الأسهم توافر المتطلبات والشروط الواردة في الفقرة (3) من البند (أولاً) من المادة (
- Article 9
The 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.
يعد الترخيص منتهيًا إذا عين مصفٍ لشركة التمويل، أو صدر حكم بإشهار إفلاسها.
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.