• For the purpose of applying the provisions of this Regulation, the following words and phrases - wherever they appear in this Regulation - shall have the meanings specified in the Law, unless the context requires otherwise:

  • Law: Law on the Control of Finance Companies.

  • Finance Laws: Real Estate Finance Law andLeasing Finance Law andLaw on the Control of Finance Companies.

  • Bank: Saudi Central Bank.

  • Micro Consumer Finance Company: A company licensed to practice micro consumer finance activity exclusively without other financing activities.

  • Deferred Payment Company: A company licensed to practice deferred payment activity exclusively without other financing activities.

  • Finance Company Debt Crowdfunding: A company licensed to practice debt crowdfunding activity exclusively without other financing activities.

  • Microfinance Company: A company licensed to practice microfinance activity exclusively without other financing activities.

  • Micro Consumer Finance Activity: Granting credit for consumption purposes in accordance with the regulations stipulated in Article (9) of the Regulation.

  • Deferred Payment Activity: Financing the beneficiary to purchase goods or services from stores without cost for a due term payable by the beneficiary.

  • Debt Crowdfunding Activity: Collecting funds from participants through the debt crowdfunding platform to grant credit through contracts to beneficiary establishments.

  • Microfinance Activity: Granting credit in accordance with the regulations stipulated in Article (9) of the Regulation.

  • Financing Activity or Activities: One or more types of financing stipulated in Article Ten of the Law or any other financing activity approved by the Bank pursuant to the same Article.

  • Finance Contract: A contract under which credit is granted for the activities stipulated in the Law and the Regulation.

  • Installment: The total amount payable by the beneficiary distributed over the term of the finance contract after deducting non-recurring expenses and costs, such as fees, commissions, and administrative service costs.

  • Cost Term: The value of the term imposed on the beneficiary under the finance contract, which can be expressed as a fixed or variable annual percentage of the finance amount provided to the beneficiary.

  • Total Cost of Finance: The costs the beneficiary is obligated to pay other than the finance amount according to the provisions of the finance contract, including the cost of the term, fees, commissions, administrative service costs, insurance, and any necessary expenses to obtain the finance, excluding any expenses that the beneficiary can avoid such as costs or fees due to the beneficiary’s breach of any of the obligations stated in the finance contract.

  • Amount Finance: The maximum limit or total amounts available to the beneficiary under the finance contract.

  • Total Amount Payable by the Beneficiary: The finance amount plus the total cost of finance.

  • Rate Percentage Annual: The discount rate calculated in accordance with the provisions of Article Eighty-Five of this Regulation.

  • Board of Directors: The Board of Directors of the finance company.

  • Management Senior: The managing director, CEO, general manager and their deputies, the financial manager, heads of main departments, and those responsible for risk management, internal audit, and compliance functions in the finance company.

  • Exposure: The value of the asset exposed to any credit risks, such as default risk or downgrade in credit rating.

  • Exposure Large: Exposure to a single beneficiary at a rate of (5%) or more of the paid-up capital and reserves of the finance company.

  • Percentage Significant: (5%) or more of the shares or stakes of the finance company or voting rights therein, whether owned directly or indirectly by one person or several persons acting in concert.

     

• The bank is responsible for regulating the finance sector and supervising the activities of finance companies in accordance with the law and regulations, including the following:

  • 1. Licensing to practice one or more financing activities, in accordance with the provisions of the finance laws and their regulations.

  • 2. Taking the necessary measures to maintain the safety, stability, and fairness of transactions in the finance sector.

  • 3. Taking the necessary measures to encourage legitimate and fair competition among finance companies.

  • 4. Issuing the rules and instructions necessary to regulate the work of the finance sector.

  • 5. Taking appropriate means to develop the finance sector, localize its functions, and enhance the efficiency of its employees, by organizing the obligations of finance companies regarding the training of human resources, improving their skills, and developing the knowledge of their employees.

These regulations apply to every legal entity licensed to engage in one or more financial activities stipulated in Article Ten of the Law or any other financial activity approved by the Bank in accordance with the same article.

No person shall engage in any financial activity except after obtaining a license from the bank in accordance with the law, the regulation, or other applicable systems.

The financing of a natural or legal person's goods, establishments, or services to their customers is subject to the regulations and instructions issued by the bank.

The financing company shall not engage in any activity for which it is not licensed to practice under the financing regulations and their bylaws.

• The founders of the finance company, or their representatives, shall submit the license application to the bank, specifying the financing activities for which the license is requested, accompanied by the following:

  • 1. The license application form prescribed by the bank after completion.

  • 2. The draft articles of association of the finance company or its bylaws, as applicable.

  • 3. A description of the organizational structure of the finance company including all necessary departments and functions and the main tasks of each.

  • 4. A list of the names of the founding members including the number of shares or stakes for each founding member and their percentages.

  • 5. The suitability requirements form for the founding members signed by each founding member.

  • 6. The suitability requirements form for the board members or directors or members of the company’s board of directors or their equivalents - as applicable - signed by each nominee.

  • 7. A feasibility study including identification of the target market, the services to be offered, the business model and strategy of the finance company, and a five-year business plan including at least the following:

    • (A) The financing activities for which the license is requested, the products, and the marketing plan.

    • (B) Credit granting policies and procedures.

    • (C) Estimated financial statements, estimation of annual revenues and expenses, financial margins and targeted growth rates, taking into account the capital adequacy and liquidity requirements prescribed by the bank.

    • (D) Estimation of startup costs and required financing.

    • (E) Estimation of ongoing operational financing.

    • (F) Branches that the finance company intends to open.

    • (G) Risk and compliance monitoring and management plans and programs.

    • (H) Employment and training plan, including estimation of the number of employees, the percentage of Saudis among them in each department and administrative level, and employee training and qualification programs.

  • 8. An irrevocable bank guarantee amounting to 20% of the minimum capital for the activity or financing activities for which the license is requested, according to the form determined by the bank, issued in favor of the bank by one of the local banks or branches of foreign banks, automatically renewed until full capital payment. This guarantee shall be released upon the founders’ request in the following cases:

    • (A) Payment of capital.

    • (B) Withdrawal of the license application.

    • (C) Rejection of the license application by the bank.

    • (D) The company obtaining the bank’s preliminary approval.

  • 9. Draft agreements and contracts proposed with third parties, especially agreements and contracts with related parties and external service providers.

  • 10. Any other documents or information requested by the bank.