Article 11 of the Saudi Payments and Payment Services Law
المادة 11 من نظام المدفوعات وخدماتها
Requires a member of an important payment system to disclose its memberships when bankruptcy or judicial deposit procedures are opened for it, and to notify the operator of what it knows about other members.
Official text (Arabic)
This article has not been amended since the law was issued.
يلتزم أي عضو في نظام مدفوعات مهم بالآتي:
1- الإفصاح للبنك ولمشغل نظام المدفوعات عن أي نظم مدفوعات مهمة يكون عضواً فيها، وذلك عند قيد أو افتتاح أي من إجراءات الإفلاس أو الإيداع القضائي له، بناء على نظام الإفلاس.
2- إشعار مشغل نظام المدفوعات المهم بقيد أو افتتاح أي من إجراءات الإفلاس أو الإيداع القضائي -بناء على نظام الإفلاس- لأي عضو آخر في النظام نفسه عند علمه بذلك، وفقاً للضوابط التي تحددها اللوائح.
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 11 explained in plain English
This article concerns the situation in which bankruptcy or judicial deposit procedures begin under the Bankruptcy Law, and imposes two obligations on every member of an important payment system:
- Disclosing itself: when any bankruptcy or judicial deposit procedure is registered or opened for it, it must disclose to the Central Bank and to the operator of the payment system any important payment systems of which it is a member.
- Notifying about others: if it learns that any of these procedures has been registered or opened for another member of the same system, it must notify the operator of the important payment system of that, under the controls set by the regulations.
Note that the second obligation is limited in two respects: the other member must be in the same system, and notification is due when it learns of this. A member, under Article 1, is any person who has an account in payment systems through which he issues payment orders or is the beneficiary of them.
The purpose of the two obligations is to enable the operator to deal with the possibility of default in good time, which is connected with Article 10, requiring the rules of the important system to include rules for managing members' default and protecting clearing arrangements on default. Breach of the provisions of the Law in general has its penalties dealt with in Article 12. A person facing bankruptcy procedures who is a member of a payment system would do well to consult a lawyer specializing in banking and finance and payment systems.
Practical example
A financial institution that is a member of an important payment system has had bankruptcy procedures opened for it under the Bankruptcy Law. It must disclose to the Central Bank and to the system's operator all the important payment systems of which it is a member. If another institution in the same system learns of this, it must notify the operator under the controls set by the regulations.
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 11 of the Saudi Payments and Payment Services Law
What must a member of an important payment system do when bankruptcy procedures are opened for it?
It must disclose to the Central Bank and to the operator of the payment system any important payment systems of which it is a member.
Is a member required to report another member's bankruptcy?
Yes. If it learns that bankruptcy or judicial deposit procedures have been registered or opened for another member of the same system, it must notify the operator of the important system under the controls set by the regulations.
More articles on Systemically Important Payment System and Settlement Finality
- Article 1
Defines the key terms of the Payments and Payment Services Law, such as payment systems and services, payment order, member, customer, consumer, collateral and settlement finality.
يقصد بالكلمات والمصطلحات الآتية -أينما وردت في هذا النظام- المعاني الموضحة أمام كل منها، ما لم يقتضِ السياق غير ذلك: النظام: نظام المدفوعات وخدماتها. البنك المر
- Article 6
Provides that final payment orders, settlement operations, clearing arrangements, default management arrangements and collateral are binding and effective and cannot be amended, cancelled or invalidated.
تعد أوامر المدفوعات النهائية وعمليات التسوية وترتيبات المقاصة وترتيبات إدارة التعثر والضمان؛ ملزمة،ً ونافذة، وغير قابلة للتعديل أو الإلغاء أو الإبطال.
- Article 7
Makes the Central Bank the regulator, supervisor and overseer of payment systems and services, and lists thirteen specific powers.
يتولى البنك المركزي التنظيم والإشراف والرقابة على نظم المدفوعات ومشغليها، وخدمات المدفوعات ومقدميها، وفقاً لأحكام النظام وما تحدده اللوائح. وله على وجه خاص الآت
- Article 9
Requires the operator of a payment system classified as "important" to work, from the date it is notified, under special rules it sets for this purpose as the regulations specify.
يلتزم مشغل نظام المدفوعات الذي يصنف بأنه نظام مدفوعات مهم، من تاريخ إشعاره بذلك؛ بالعمل وفق قواعد خاصة بـ (نظام المدفوعات المهم) يضعها لهذا الغرض، بحسب ما تحدده
- Article 10
Sets four elements the rules of an important payment system must include, among them when a payment order becomes final, enforcing against collateral, and managing members' default.
يجب أن تشتمل القواعد الخاصة بــنظام المدفوعات المهم على الآتي: 1- الوقت الذي يصبح فيه أمر المدفوعات الذي أنشأه عضو معين نهائيّاً، والوقت الذي يخضع فيه لنهائية ا
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.