Article 7 of the Saudi Finance Companies Control Law
المادة 7 من نظام مراقبة شركات التمويل
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 وفقًا لما تحدده اللائحة.
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 7 explained in plain English
This article gives SAMA the right to cancel the license in two cases:
- If it appears that the finance company provided SAMA with false information.
- If it omitted to disclose material information that it was required to disclose for licensing purposes, as the Regulations specify.
It is clear from this that the license rests on the truthfulness of the information provided; the company is bound not only not to lie but not to hide what is material. The article referred to the Regulations the determination of the information that must be disclosed.
Note that the article says "SAMA is entitled", that is, cancellation is a power SAMA exercises; the article does not say that it happens automatically.
This article is preceded by Article 6, which requires the company to begin its activity within a year of the license, and followed by Article 8, which prohibits dealing in founders' shares except with SAMA's approval.
If a company faces a decision of this kind, it is advisable to consult a lawyer who specializes in banking and finance.
Practical example
After licensing a finance company in Riyadh, SAMA discovered that one of the founders had been declared bankrupt and the company had not disclosed this in its application. In this case SAMA is entitled to cancel the license because the company omitted material information it was required to disclose for licensing purposes.
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 7 of the Saudi Finance Companies Control Law
When is SAMA entitled to cancel a finance company's license?
If it appears that the company provided it with false information, or omitted to disclose material information that had to be disclosed for licensing purposes, as the Regulations specify.
Is the license cancelled automatically if wrong information is given?
The article says SAMA is "entitled" to cancel the license, so it is a power SAMA exercises.
More articles on Licensing Finance Companies
- Article 4
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.
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
- 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 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.