1- The terms and phrases contained in these rules shall have the meanings specified in the Law on the Supervision of Financing Companies.

2- For the purpose of applying the provisions of these rules; the terms and phrases listed below - wherever they appear in these rules - shall have the meanings specified next to each of them, unless the context requires otherwise.

• 2- 1 The Law: The Law on the Supervision of Financing Companies.

• 2- 2 The Rules: Rules for Practicing Crowdfunding Activities through Debt.

• 2- 3 Crowdfunding Activity through Debt: Collecting funds from participants through a digital platform, to grant credit through contracts to the beneficiary establishments.

• 2- 4 Crowdfunding Establishment through Debt: The joint-stock company licensed to practice crowdfunding activities through debt, via a digital platform.

• 2- 5 The Beneficiary: The commercial establishment registered in the Kingdom of Saudi Arabia that seeks to obtain financing through the crowdfunding platform for debt.

• 2- 6 The Participant: The natural or legal person who provides an amount to the crowdfunding establishment through debt to grant it as financing to the beneficiary establishment.

• 2- 7 The Qualified Participant: The natural or legal person who meets one or more of the following criteria:

  • (a) His net asset value is not less than (3,000,000) three million riyals or more.

  • (b) He has worked or has previously worked for at least (3) years in the financial sector in a professional position related to financing or investment.

  • (c) He holds a specialized professional certificate in the field of financing or investment accredited by an internationally recognized body.

  • (d) His annual income is not less than (600,000) six hundred thousand Saudi riyals in the past two years.

• 2- 8 The Value of Financing: The funds provided by the participants to the beneficiary establishment through the crowdfunding platform for debt.

• 2- 9 The Crowdfunding Platform for Debt: An internet-based platform or any other digital means managed by the crowdfunding establishment for debt to conduct the activity, including, for example, the website and electronic applications.

• 2- 10 Collective Accounts: Bank accounts limited to collecting and managing the value of financing and are separate and independent from the funds of the crowdfunding establishment for debt.

These rules apply to the licensed entity by the Central Bank to engage in crowdfunding activities related to debt.

The purpose of these rules is as follows:

• 1- To define the procedures and requirements necessary to obtain a license to engage in crowdfunding activities related to debt.

• 2- To establish the minimum standards and procedures that debt crowdfunding entities must adhere to.

1- The practice of crowdfunding activities through debt is prohibited unless a license is obtained from the Central Bank in accordance with the provisions of the law and these rules.

2- The application for a license to engage in crowdfunding activities through debt shall be submitted to the Central Bank in accordance with the Law on the Supervision of Financing Companies and the requirements, controls, and procedures set forth in these rules, in addition to what the Central Bank may specify in this regard from time to time.

The applicant for the crowdfunding institution license for debt shall submit the license application to the Central Bank, accompanied by the following:

1- The license application form prescribed by the Central Bank after completion.

2- The founding contract of the crowdfunding institution for debt and its articles of association.

3- A list of the founding members or shareholders, including the amount of each founder's or shareholder's share and its percentage in the crowdfunding institution for debt.

4- The suitability requirements form for the founding members or shareholders, signed by each founding member or shareholder.

5- The suitability requirements form for the board members, signed by each candidate for board membership.

6- An irrevocable bank guarantee - in case the applicant is a company under establishment - in an amount equivalent to the minimum capital, issued in favor of the Central Bank from one of the licensed banks in the Kingdom, and it shall be automatically renewed until the full capital is paid. This guarantee shall be released upon the request of the license applicant in the following cases:

• i. Payment of the capital in cash.

• ii. Withdrawal of the license application.

• iii. Rejection of the license application by the Central Bank.

7- Draft agreements and contracts proposed with third parties.

8- The proposed business model for the company to engage in crowdfunding activities.

9- Any documents, data, materials, and other information requested by the Central Bank.

1. Subject to the provisions of the Companies Law, the minimum capital for a crowdfunding debt establishment shall be (5,000,000) five million Riyals.

2. The Central Bank may raise or lower the minimum capital in accordance with market conditions, or if it deems that the proposed business model of the crowdfunding debt establishment or the nature of its activities necessitates such action, taking into account the size and nature of the associated risks.

It is required for every person nominated for supervisory and executive roles in a crowdfunding institution for debt to meet the following:

(a) The professional capacity requirements set by the Central Bank.

(b) Must be a permanent resident in the Kingdom.

(c) Must be theoretically and practically qualified, and have appropriate experience in the same field.

(d) Must not have violated the provisions of the Banking Control Law, the Cooperative Insurance Companies Control Law, financing regulations, or the Capital Market Law and its regulations.

(e) Must not have been convicted of any crime involving dishonesty, unless he has been rehabilitated in accordance with applicable regulations.

(f) Must have sufficient financial solvency, and must not have defaulted on any financial obligation to his creditors, or shown any indication of inability to continue fulfilling his financial obligations to his creditors.

The central bank shall notify the license applicant of the completion of their application after fulfilling all the requirements stipulated in the law and these regulations.