Article 5 of the Saudi Finance Companies Control Law

This article explains the path to obtaining a finance company license from start to finish:

First: the application and its conditions. The founders or their representatives submit the application to SAMA, and it is required that:

1. The administrative structure, operating systems and an investment plan showing technical capability be submitted, as the Regulations specify.
2. The capital be not less than the amount SAMA sets, and not less than that specified in the Companies Law, and any foreign share not exceed the percentage SAMA sets.
3. Each founder satisfy the Sharia and legal eligibility requirements, and not have failed in his obligations to his creditors, or violated the Capital Market Law and its regulations, the Banking Control Law, the Cooperative Insurance Companies Control Law or the finance laws, or been declared bankrupt, or been convicted of a crime involving breach of trust unless he has been rehabilitated under the laws or as the Regulations specify.
4. Those nominated for supervisory and executive roles have theoretical and practical knowledge of finance, with similar conditions regarding violation of the aforementioned laws and conviction of a crime involving breach of trust.
5. Any other condition the Regulations specify.

Second: once the application is complete, SAMA issues its decision to approve or reject with reasons within a period not exceeding 60 days, taking into account the competitiveness and soundness of the industry and the quality of services.

Third and fourth: approved applications are referred to the Ministry of Commerce and Industry to complete incorporation and registration, and then, after the commercial register is issued, SAMA issues the license for a term of five years.

Fifth: a percentage of the company's ownership is offered for public subscription after at least two fiscal years have passed, provided that it achieves the specified percentage of profits.

Sixth: the Regulations set the fee for issuing, renewing and amending the license.

This article is preceded by Article 4, which prohibits carrying on finance without a license, and followed by Article 6, which requires the company to begin its activity within a year of the license.

Because the procedures include detailed conditions, many of which are referred to the Regulations, founders are advised to consult a lawyer who specializes in banking and finance.