Regulatory Alerts2024-10-28
Requirement to Provide Insurance Coverage for Board Members Against Failures and Professional Errors
The Saudi Central Bank mandates that all financial institutions and financing companies under its supervision and listed on the Saudi Stock Exchange (Main Market or Nomu) must secure insurance coverage for their board members against failures and professional errors. This requirement applies effective from the circular's date and does not relieve board members of their statutory obligations or expose them to penalties for non-compliance under relevant regulations. The directive is issued pursuant to the Bank's supervisory authority under Royal Decrees M/36, M/5, and M/51 to ensure sector stability and support financial growth.
Saudi Central Bank
Reference No.: 46025671 Date: 1446/04/25 (Hijri) Attachments:
Circular
To Whom It May Concern, Peace, mercy, and blessings of God be upon you,
Subject: Requirement to Provide Insurance Coverage for Board Members Against Failures and Professional Errors.
Based on the authorities vested in the Saudi Central Bank under its system issued by Royal Decree No. (M/36) dated 1442/04/11H, the Banks Control System issued by Royal Decree No. (M/5) dated 1386/02/22H, and the Financing Companies Control System issued by Royal Decree No. (M/51) dated 1433/08/13H, and in light of the Saudi Central Bank's supervisory and regulatory role over financial institutions under its supervision, and to achieve sector stability and support its growth.
The Saudi Central Bank wishes to inform that financial institutions under its supervision and listed on the Saudi Stock Exchange - Main Market (Tadawul) or Alternative Market (Nomu) - must provide insurance coverage for board members against failures and professional errors. It is worth noting that this insurance coverage does not exempt board members from their statutory obligations and any penalties or violations resulting from non-compliance under the relevant systems and regulations.
For your information, and to be acted upon effective from its date.
Yours sincerely,
Yazeed bin Ahmed Al-Sheikh Deputy Governor for Supervision
Distribution Scope:
- Banks and financial institutions operating in the Kingdom listed on the Saudi Stock Exchange.
- Financing companies operating in the Kingdom listed on the Saudi Stock Exchange.