1. The following terms and phrases, wherever mentioned herein, shall have the same meanings stated in the Finance Companies Control Law.

2. For the purpose of applying the provisions of these Rules, the following terms and phrases, wherever mentioned herein, shall have the meanings assigned thereto, unless the context otherwise requires:

• Consumer Microfinance: extending consumer credit as per controls stated in Article (50) of these Rules.

• Consumer Microfinance Company: a joint stock company licensed by SAMA to practice consumer microfinance activity.

1. Without prejudice to the provisions of the Finance Companies Control Law, the objective of these Rules is to establish licensing provisions for consumer microfinance companies and regulate their activities.

2. These Rules shall be applicable to consumer microfinance companies, licensed pursuant to the provisions of the Law and these Rules.

The founding members or shareholders of a Consumer Microfinance Company, or their representatives, shall submit the license request to SAMA, attached with the following:

• 1. completed application form required by SAMA;

• 2. draft articles of association and by-laws of the Consumer Microfinance Company;

• 3. description of the organizational structure of the Consumer Microfinance Company showing all necessary departments and functions and their main tasks;

• 4. the Fit and Proper forms for founding shareholders, signed by each founding shareholder;

• 5. the Fit and Proper Form for Board members, signed by every candidate for board membership;

• 6. an irrevocable bank guarantee issued in favor of SAMA by one of the local banks for an amount equivalent to the required minimum capital. Such bank guarantee is renewable automatically until the required capital is paid up in full. This guarantee shall be released upon the request of the founding shareholders in the following cases:

  • a. paying up the capital in cash;

  • b. withdrawing the license application; or

  • c. refusing the license application by SAMA.

• 7. any other documents or information required by SAMA.

1. The minimum paid-up capital for a Consumer Microfinance Company shall be (20,000,000) twenty million riyals.

2. Notwithstanding the provision of subsection (1) of this article, the minimum paid-up capital for a Consumer Microfinance Company that carries out the activity using Financial technology shall be (10,000,000) ten million riyals.

3. SAMA may stipulate higher or lower minimum capital based on the prevailing market conditions, or if it deems that the proposed business model or the geographical scope requires so. The capital shall be paid in full at the establishment of the consumer microfinance company.

1. SAMA shall charge a fee of (20,000) twenty thousand riyals for issuing, amending, or renewing a license to practice consumer microfinance activity.

2. Notwithstanding the provision of subsection (1) of this article, the fee for issuing, amending, or renewing a license to practice consumer microfinance activity using financial technology shall be (10,000) ten thousand riyals.

1. Each founding shareholder must comply with the Sharia and legal competence requirements, and the fit and proper requirements stipulated by SAMA, in particular the following:

• a. The founding shareholder must have the sufficient financial solvency and shall not have breached any financial obligations towards his/her creditors nor there is an indication that he cannot continuously comply with his financial obligations towards his/her creditors.

• b. The founding shareholder must not have violated any of the provisions or regulations of the Capital Market Law, the Banking Control Law, the Cooperative Insurance Companies Control Law, Finance Laws, or any other laws or regulations inside or outside Saudi Arabia.

• c. The founding shareholder must not have declared bankruptcy or entered into a general settlement with any creditor.

• d. The founding shareholder must not have been sentenced of a breach of trust offense, unless rehabilitated and at least 10 years have passed since the last sanction for this crime has been completed and on the condition of obtaining a non-objection letter from SAMA.

• e. The founding shareholder have not requested to withdraw license application to carry out finance activity in the last two years.

• f. The founding shareholder must not have a previous application to carry out finance activity refused by SAMA during the last five years

2. A non-objection letter from SAMA is required before acquiring (5%) or more of the consumer microfinance company's capital or voting rights.

All Board members shall comply with the requirements of professional eligibility and fit and proper requirements stipulated by SAMA, in particular the following:

• 1. He/she must not be a Board member in another Consumer Microfinance Company exercising the same activity.

• 2. He/she must not combine work in supervising or auditing the Consumer Microfinance Company with being a member in the Board of the company.

• 3. He/she must not have been dismissed from an executive leadership function in financial facility as disciplinary measure.

• 4. He/she must not have been convicted of violating provisions of any penal law or any provisions or regulations of the Capital Market Law, the Banking Control Law, the Cooperative Insurance Companies Control Law, Finance Laws, or any other laws or regulations inside or outside Saudi Arabia.

• 5. He/she must not have been sentenced of a breach of trust offense, unless rehabilitated and at least 10 years have passed since the sanction for this crime has been completed and on condition that he/she receives a nonobjection letter from SAMA.

• 6. He/she must have the sufficient financial solvency and shall not have breached any financial obligations towards his/her creditors nor there is an indication that he/she cannot continuously comply with his/her financial obligations towards his/her creditors.

Any candidate for a Senior Management position must comply with the requirements of professional eligibility and fit and proper requirements stipulated by SAMA, in particular the following:

• 1. The candidate must be professionally qualified and must have at least two years of relevant experience. SAMA has the right to assess the candidate's completion of such period of experience.

• 2. The candidate must not have been dismissed from a previous job as disciplinary measure.

• 3. Not have been convicted of a violation of any of the provisions of a criminal law, the Banking Control Law, the Capital Market Law, the Co-operative Insurance Companies Control Law or its regulations, the Finance Laws or its regulations, or any other laws or regulations inside or outside the Kingdom of Saudi Arabia.

• 4. The candidate must not have declared bankruptcy or entered into a general settlement with any creditor.

• 5. The candidate must not have been sentenced of a breach of trust offense, unless rehabilitated and at least 10 years have passed since the sanction for this offense has been completed and on condition that he receives a non-objection letter from SAMA.

• 6. The candidate must have the sufficient financial solvency, and shall not have breached any financial obligations towards his/her creditors nor there is an indication that he/she cannot continuously comply with his/her financial obligations towards his/her creditors.