Rules Governing Real Estate Refinance Companies

Ramadan 1443 / April 2022 AD

The Saudi Central Bank issued these Rules based on the powers vested in it by virtue of the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/8/1433 AH, and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 AH.

Important Note:

To follow up on updates and amendments to the Rules, the Central Bank emphasizes the necessity of always relying on the version of the Rules published on its website: www.sama.gov.sa

Page No.	Chapter
3	Chapter One: Definitions and General Provisions
5	Chapter Two: Capital Adequacy and Liquidity
5	Chapter Three: Governance of the Real Estate Refinance Company
8	Chapter Four: Activities of the Real Estate Refinance Company
11	Chapter Five: Internal Organization
13	Chapter Six: Outsourcing Tasks to External Service Providers
14	Chapter Seven: Risk Management
15	Chapter Eight: Compliance
17	Chapter Nine: Internal Audit
17	Chapter Ten: Supervision of the Real Estate Refinance Company
20	Chapter Eleven: Secondary Market
21	Chapter Twelve: Concluding Provisions

Chapter One: Definitions and General Provisions

Article One: Definitions

The words and phrases contained in these Rules shall have the meanings assigned to them in the Real Estate Finance Law and its Implementing Regulations.
The following words and phrases – wherever they appear in these Rules – shall have the meanings assigned to each of them, unless the context requires otherwise:

The Central Bank: The Saudi Central Bank.
The Law: The Real Estate Finance Law.
The Rules: Rules Governing Real Estate Refinance Companies.
Real Estate Refinance Company (the Company): The joint-stock company licensed to engage in real estate refinance activity.
Real Estate Financier: Commercial banks and finance companies licensed to engage in real estate finance activity.
Real Estate Finance: Granting credit for the beneficiary to own housing.
Real Estate Finance Contract: Deferred payment contract for the beneficiary to own housing.
Rights of Real Estate Finance Contracts: Cash flows, mortgages, guarantees, and other rights arising from real estate finance contracts.
Beneficiary: The natural person who has obtained real estate finance.
Primary Market: Real estate finance contracts concluded between the beneficiary and the real estate financier.
Secondary Market: Trading of the financier's rights arising from primary market contracts.
Real Estate Refinance Activity: Refinancing real estate financiers and entities engaged in real estate finance to provide liquidity and facilitate the trading of real estate finance contract rights in financial markets.
The Sector: The real estate finance sector.

Article Two: General Provisions

The Real Estate Refinance Company shall be subject to the supervision and control of the Central Bank in accordance with the Real Estate Finance Law and its Implementing Regulations, the Finance Companies Control Law and its Implementing Regulations, and any instructions issued by the Central Bank.
These Rules apply to Real Estate Refinance Companies licensed by the Central Bank to practice real estate refinance activity.
Obtaining a letter from the Central Bank stating its non-objection to granting finance, purchasing finance, or acquiring finance rights from non-real estate financiers, after directing its services and products to real estate financiers and to the Company.

Article Three

The Real Estate Refinance Company shall carry out the trading of real estate finance contract rights and facilitate the flow of funds to real estate financiers, with the aim of:

Achieving growth and stability in the secondary market for real estate finance.
Providing liquidity to the secondary market and offering better means for real estate financiers to finance beneficiaries' housing ownership.
Enhancing the liquidity of real estate finance investments and ensuring the proper distribution of investment capital allocated for real estate finance among different regions and categories.
Acting as an intermediary between the sector and local and international funding sources.

Article Four

To achieve its objectives, the Real Estate Refinance Company may do the following:

a. Acquire, hold, or dispose of entitlements of any type of financing obligations or rights related to financed residential properties.

b. Issue securities in accordance with the provisions of financial market laws after obtaining a letter from the Central Bank stating its non-objection.

c. Grant financing solutions to real estate financiers to finance individual beneficiaries.

d. Invest available cash in its treasury in a manner that enables the Company to manage its assets and liabilities with the highest possible efficiency, after obtaining a letter from the Central Bank stating its non-objection.

e. Issue bonds, sukuk, instruments, securities, and other debt instruments to achieve its objectives after obtaining a letter from the Central Bank stating its non-objection.

f. Carry out any other operations that serve, complement, or support its operations as required by its regulations and approved by the Central Bank.

The Real Estate Refinance Company may obtain financial compensation for its services and products, and achieve a fair profit from them, enabling it to be financially independent. The Central Bank shall monitor the Company's pricing of its services and may restrict it.

Article Five

The Real Estate Refinance Company may not do the following:

Grant finance to a real estate financier against the rights of real estate finance contracts before arrangements are made to transfer those rights to the Real Estate Refinance Company as collateral.
Grant real estate finance directly to beneficiaries.
Acquire real estate or non-real estate assets other than those necessary for managing its operations, except after obtaining the non-objection of the Central Bank.
Conduct any partial or complete liquidation of its activity or the Company itself without obtaining a letter from the Central Bank stating its non-objection.

Chapter Two: Capital Adequacy and Liquidity

Article Six

The Real Estate Refinance Company shall adhere to the required levels of capital adequacy and liquidity in accordance with the seats and requirements determined by the Central Bank, and specifically the following:

a. The capital adequacy ratio determined by the Central Bank.

b. The leverage ratio determined by the Central Bank.

c. The minimum liquidity ratio that the Real Estate Refinance Company must adhere to.

The Real Estate Refinance Company may not increase or decrease its capital without prior written approval from the Central Bank.

Chapter Three: Governance of the Real Estate Refinance Company

Article Seven

Every member of the Board of Directors, or any of its committees, must meet the professional eligibility requirements, appointment requirements, and solvency requirements determined by the Central Bank, and in particular, the member must:

Not combine work in monitoring the Real Estate Refinance Company with managing the Company, auditing its accounts, or membership in the Company's Board of Directors.
Not have been disciplinarily dismissed from a leadership or executive position in a financial institution.
Not be a member of the board of directors of another real estate financier.
Not have been convicted of violating the provisions of any penal law, or the provisions of the Banking Control Law, or the Cooperative Insurance Companies Control Law, or their regulations, or finance laws or their regulations, or any other laws or regulations inside or outside the Kingdom.
Not have been convicted of any crime involving breach of trust, unless his reputation has been restored in accordance with the laws, or a period of no less than ten years has passed since the execution of the government penalty imposed on him for this crime, and provided that a letter from the Central Bank stating its non-objection to this is obtained.
Have sufficient financial solvency, and not have defaulted on any financial obligation towards his creditors, or shown any indication of inability to continue fulfilling his financial obligations towards his creditors.
Be knowledgeable of the laws and instructions related to finance, and have full knowledge of the duties and responsibilities of a board member.

Article Eight

Every candidate for a senior management position must meet the professional eligibility requirements and solvency requirements determined by the Central Bank, and in particular, the following:

Be permanently resident in the Kingdom.
Be theoretically and practically qualified, and have appropriate experience in the same field of no less than five years.
Not have been dismissed or disciplinarily removed from a previous position.
Not have been convicted of violating the provisions of any penal law, or the provisions of the Banking Control Law, or the Capital Market Law and its regulations, or the Cooperative Insurance Companies Control Law, or finance laws.
Not have been declared bankrupt, or entered into a preventive settlement against bankruptcy with any creditor.
Not have been convicted of any crime involving breach of trust, unless his reputation has been restored in accordance with the laws, or a period of no less than ten years has passed since the execution of the government penalty imposed on him for this crime, and provided that a letter from the Central Bank stating its non-objection to this is obtained.
Have sufficient financial solvency, and not have defaulted on any financial obligation towards his creditors, or shown any indication of inability to continue fulfilling his financial obligations towards his creditors.

Article Nine

The Board of Directors shall form specialized committees to expand the scope of its work in areas requiring specific expertise, and the Board of Directors shall define their powers and monitor their performance, provided that they include at least an audit committee, a risk and credit committee, an executive committee, and a nominations and remuneration committee.
The Board of Directors shall determine the Company's policies and procedures related to real estate refinance operations and may impose specialized committees in a way that does not hinder the Board from exercising its roles. These policies and procedures shall be effective after obtaining a letter from the Central Bank stating its non-objection.

Article Ten

The Company's senior management shall form an Assets and Liabilities Committee.
The Assets and Liabilities Committee shall exercise its roles regarding the management of assets and liabilities, their future expectations, the potential effects of changes in term cost, and liquidity and capital adequacy requirements in line with the size and nature of the Company's business.

Article Eleven

Each of the Board of Directors of the Real Estate Refinance Company, the General Manager or CEO and Managing Director, and senior executives shall be responsible – each within the scope of their competence – for the Company's violation of the provisions of these Rules, the Real Estate Finance Law and its Implementing Regulations, and the Finance Companies Control Law and its Implementing Regulations.

Article Twelve

The Real Estate Refinance Company shall adhere to the main principles of governance in financial institutions subject to the supervision and control of the Central Bank.
The Real Estate Refinance Company shall develop internal corporate governance rules and establish its own regulations, approve them by the Board of Directors, and provide the Central Bank with a copy thereof. The regulations must include at least the following:
a. A description of the organizational structure, including all departments and functions, and their respective duties and responsibilities. b. Controls for independence and segregation of duties.
c. Internal control systems and procedures.
d. Powers, formation, and responsibilities of the Board of Directors and its committees. e. Compensation and remuneration policies. f. Controls for working with conflicts of interest. g. Guarantees of integrity and transparency. h. Guarantees of compliance with relevant laws and regulations.
i. Means of preserving information confidentiality.
j. Guarantees of fair dealings. k. Controls for protecting the Company's assets.
l. Protection of stakeholders and dealings with other parties.

Article Thirteen

The Real Estate Refinance Company shall adhere to the appointment requirements for leadership positions in financial institutions subject to the supervision of the Central Bank.

Chapter Four: Activities of the Real Estate Refinance Company

Article Fourteen

The Real Estate Refinance Company and its employees shall maintain the confidentiality of beneficiaries' data. In particular, the following:

The Real Estate Refinance Company or any of its employees may not disclose any personal or credit data or information about any beneficiary, directly or indirectly, except with their written consent, or by a decision from a competent judicial authority, or due to one of the legally permitted cases. The prohibition remains even after the termination of the relationship.
Everyone who becomes aware of information by virtue of their profession, position, or work, directly or indirectly, must maintain the confidentiality of data and information related to beneficiaries. This includes legal accountants and consulting entities appointed by the Central Bank or the Company.
Paragraphs (1-2) are exempted from the provisions regarding disclosure, audit and inspection requirements carried out by the Central Bank, or for the purpose of exchanging credit information, or to prove the client's right in a judicial dispute.

Article Fifteen

The Real Estate Refinance Company shall issue a policy approved by the Board of Directors for accepting real estate financiers.
The Real Estate Refinance Company shall issue a policy approved by the Board of Directors that includes criteria for accepting real estate finance portfolios to be acquired from the real estate financier, in line with the Company's strategy and its approved risk limits, provided that it is reviewed and updated periodically.
The Real Estate Refinance Company may grant direct finance to the real estate financier, after ensuring that the real estate financier meets the conditions stated in the policy referred to in paragraph (1) of this Article.

Article Sixteen

Financing operations must be secured in accordance with the risk management policy and procedures approved by the Board of Directors of the Real Estate Refinance Company. Guarantees are accepted on the condition that they are assessable and clear in execution procedures.
Due diligence must be exercised before purchasing financing to ensure the economic feasibility of these operations and to review risks in an appropriate manner.
The Real Estate Refinance Company shall exercise due diligence to ensure that the real estate financier has made the necessary arrangements if the value of the guarantees is materially affected by the financial position of others or by market fluctuations, and to periodically evaluate those guarantees by the real estate financier.
When granting finance, the Real Estate Refinance Company may require the real estate financier to replace the provided guarantees or provide additional eligible guarantees to compensate for any deficiency in the market value or book value of the provided guarantees.

Article Seventeen

The Real Estate Refinance Company shall keep all work documents, records, and files in an organized, transparent, and secure manner, and verify the completeness and periodic updating of files, for a period of at least ten years from the date of termination of the relationship with the parties dealing with it.
The Real Estate Refinance Company shall verify the existence of the guarantee after completing the finance purchase process and its placement in a secure location, and may outsource this to a third party after obtaining a letter from the Central Bank stating its non-objection to this.

Article Eighteen

The Real Estate Refinance Company shall exercise due diligence when providing its services, including but not limited to:
a. Credit risks of real estate financiers. b. Finance management services.
c. Guarantee management.
d. Management of owned properties. e. Efficiency of accounting systems.

Article Nineteen

The Real Estate Refinance Company shall clarify the policy for setting minimum requirements for contracting with real estate financiers, which shall include, at a minimum, the following:

Requirements for accepting the real estate financier to grant finance to beneficiaries.
Minimum content of contracts concluded with real estate financiers, provided that they include eligible guarantees, duties of the real estate financier, rights of the Real Estate Refinance Company for review and disclosure, rights of access, and consequences of breach of contract.
Requirements for finance contract documents and papers.
Criteria for granting finance to beneficiaries, including criteria for assessing their creditworthiness, and the mechanism for dealing with its decline during the finance period.
Criteria for guarantees accepted from beneficiaries.
Criteria for monitoring, managing, and executing guarantees, and risk provisions.
The necessary time period for holding the finance.
Credit concentration limits to ensure liquidity and financial solvency, if available.
Study of criteria and minimum requirements for guarantees that the real estate financier must provide.
Reports that the real estate financier is obligated to submit to the Real Estate Refinance Company, including reports on cash balances, notifications, reports related to actual or likely changes, and reports on violations and risks.
Management of non-performing financing.

Article Twenty

The Real Estate Refinance Company shall clarify the cases in which it has the right to recourse against the real estate financier, which shall include the following cases:
a. Cases of error and omission that lead to a material difference in the finance from what was contracted. b. Cases of fraud, such as direct or indirect obtaining of a form of financial benefit or recording it for others, leading to any form of loss for the Real Estate Refinance Company.
The Real Estate Refinance Company shall establish a monitoring program and procedures for random evaluation of purchased financing to verify the absence of errors, omissions, or fraud.

Article Twenty-One

The Real Estate Refinance Company shall continuously monitor exposure levels to verify compliance with the Company's risk limits.
The Real Estate Refinance Company shall not exceed the statutory limits for exposure size as determined by the Central Bank.
The Real Estate Refinance Company shall immediately notify the Central Bank if the statutory exposure ratios are exceeded and provide a clear plan to address and reduce this exposure.

Article Twenty-Two

The Real Estate Refinance Company shall ensure that the real estate financier uses sound methods, clear written standards, and transparent procedures to assess the creditworthiness of finance applicants and their ability to repay, in accordance with best practices in this field.
The Real Estate Refinance Company has the right to prevent or restrict the purchase of financing from any real estate financier if they do not follow a superior method, clear, transparent, and written standards and procedures for assessing the creditworthiness of beneficiaries.

Chapter Five: Internal Organization

Article Twenty-Three

The Real Estate Refinance Company shall establish appropriate written organizational policies approved by the Board of Directors, including work manuals and procedures, update them periodically, and communicate them to appointed employees in an appropriate and timely manner to enable them to comply. The organizational policies must include at least the rules governing the following:

Organizational and operational structure, method of exercising competencies, definition of responsibilities, and matrix of authorities.
Granting credit and operational processes, and purchasing finance portfolios.
Policy for accepting real estate financiers.
Treasury operations, including debt management operations.
Balance sheet management operations, including balance sheet size management policies.
Guarantee management.
Business continuity and disaster recovery.
Information systems risk management.
Information technology protocols for each functional system, data processing protocols, data privacy, and security.
Document retention management.
Finance services management for finance retention.
Term cost rate risk management.
Capital management.
Investment portfolio management.
Training program and sukuk management.
Liquidity management.
Financial management and accounting.
Risk management, assessment, treatment, monitoring, and disclosure.
Internal audit.
Compliance with relevant laws, regulations, and instructions.
Outsourcing tasks to external service providers.
Salaries, bonuses, and incentives, including salaries of senior management members and employees, and bonuses for Board of Directors members and its committees.

Article Twenty-Four

It is not permissible to combine an executive function and a supervisory function in the Real Estate Refinance Company. Duties must be segregated to ensure the application of recognized technical procedures, policies, and standards to safeguard the Company's assets and funds and prevent fraud and embezzlement.

Article Twenty-Five

The technical equipment in the Real Estate Refinance Company and its associated systems must be sufficient for the Company's operational needs, the nature of its activity, and its risk status in accordance with recognized standards.
Information technology systems and related procedures must be designed to ensure the availability, integrity, safety, and confidentiality of information. The Real Estate Refinance Company shall periodically evaluate this in accordance with recognized standards, and they must be selected before their first use and after any changes are made to them.
The Real Estate Refinance Company shall develop a plan that includes business continuity in emergency situations, including alternative solutions to resume its activity within a reasonable period.

Article Twenty-Six

The Real Estate Refinance Company must have sufficient and qualified human resources in terms of knowledge and experience to meet operational needs, business activities, and risk status. The financial rewards and incentives offered by the Real Estate Refinance Company to its employees must be fair and balanced with the Company's risk management strategy and must not create conflicts of interest.

Article Twenty-Seven

The Saudization rate for human resources shall not be less than (50%) at the start of the Real Estate Refinance Company's activities, at the level of all departments and administrative levels.
Human resources must be increased annually by at least (5%) of the total human resources until a rate of (75%) is reached. The Central Bank may set a minimum annual increase in the required Saudization rate thereafter.
The appointment of non-Saudis in the Real Estate Refinance Company shall be limited to positions requiring expertise not available in the Saudi labor market.
Priority in filling leadership positions shall be given to Saudis. If the Real Estate Refinance Company needs to appoint or assign a non-Saudi candidate to a leadership position, it must clarify the justifications and prove the unavailability of a qualified Saudi to fill the position, along with an approved plan for replacing them with a qualified Saudi person as part of the request to obtain a prior non-objection letter from the Central Bank. This plan must include the procedures, programs, and courses that the Company undertakes for training and qualifying its Saudi employees nominated for this position, and the necessary period for that.

Chapter Six: Outsourcing Tasks to External Service Providers

Article Twenty-Eight

The Board of Directors shall issue a written policy regulating the outsourcing of tasks to external service providers and update it annually. This policy must include, in particular, the following:
a. The powers and responsibilities of senior management regarding outsourcing tasks to external service providers, as well as essential tasks that may not be outsourced to an external service provider except in emergency cases and for a short period. b. Criteria for qualifying the external service provider.
c. Criteria for identifying risks and how to hedge against them.
d. Rules for continuous monitoring and supervision of operations outsourced to external service providers. e. Criteria for identifying conflicts of interest and rules and procedures that ensure that the interests of the Real Estate Refinance Company are not prejudiced or that the interest of another party is not prioritized over them. f. Procedures for protecting information and maintaining its confidentiality and privacy.
The outsourcing contract with external service providers must stipulate that the Central Bank, the external auditor, and the Real Estate Refinance Company have the right to obtain or inspect any information or documents related to the work of the external service provider at its premises.
The Real Estate Refinance Company shall verify the external service provider's compliance with relevant laws, regulations, and instructions. The Real Estate Refinance Company shall not be exempt from responsibility if the external service provider fails to comply with applicable laws, regulations, and instructions in any of the operations and tasks assigned to it.
The Real Estate Refinance Company shall obtain a prior letter from the Central Bank stating its non-objection to every contract or agreement with an external service provider where a breach or cessation would affect the Real Estate Refinance Company's activities, reputation, or financial position, or if the assigned tasks involve the transfer, processing, or storage of beneficiaries' data and information. In this case, the external service provider may not outsource the assigned tasks to another sub-service provider without the Real Estate Refinance Company obtaining a letter stating the Central Bank's non-objection.

Chapter Seven: Risk Management

Article Twenty-Nine

The Real Estate Refinance Company shall do the following:

Develop a clear work strategy and a written risk management policy approved by the Board of Directors and updated annually. The risk management policy must consider identifying all relevant types of risks and how to deal with them, taking into account all business activities, including operations and tasks outsourced to an external service provider.
Establish appropriate procedures for identifying, assessing, managing, monitoring, and reporting on risks, and place them within a comprehensive risk management framework that ensures the achievement of the following:
a. Early and comprehensive identification of risks. b. Assessment of relationships between risks.
c. Immediate coordination with the Board of Directors, the Audit Committee, the Risk and Credit Management Committee, senior management, responsible employees, and the Internal Audit Department if necessary.
Establish a risk management function that reports directly to the Risk and Credit Management Committee, and the Committee shall submit its recommendations regarding risk management reports to the Board of Directors.

Article Thirty

The Real Estate Refinance Company shall prepare a quarterly risk report for discussion with the Risk and Credit Management Committee and the Board of Directors. This report must include, at a minimum, the following:
a. A comprehensive review of risk development and the performance of financial positions exposed to market price risks. b. Amounts of finance assets owned by the Real Estate Refinance Company and the value of guarantees covering these assets.
c. Risks of mismatch in term cost between finance assets and refinancing sources.
d. Total non-performing assets.

e. Risks of concentration of finance assets. f. Changes in assumptions and factors on which risk assessment procedures were based. g. The level of granted limits, external credit lines, non-performing financing, and comments thereon. h. Analysis of situations where permitted limits are exceeded and analysis of those situations, stating the reasons and risk provisions in the Company.
i. Exposures to bonds, sukuk, other securities, and any other financial derivative products.
j. Any major financing decisions that are inconsistent with the Real Estate Refinance Company's strategies or policies.

The Real Estate Refinance Company shall provide the Central Bank with the report referred to in paragraph (1) of this Article, after it has been discussed by the Risk and Credit Management Committee and the Board of Directors and approved, including the decisions taken thereon.

Chapter Eight: Compliance

Article Thirty-One

The Real Estate Refinance Company shall comply with applicable laws, regulations, and instructions, and shall take the necessary measures and controls to prevent their violation.

Article Thirty-Two
A Real Estate Refinance Company shall do the following:

Establish a compliance department or function, and appoint a compliance officer who reports directly to the Audit Committee. The Audit Committee shall raise their recommendations regarding compliance reports to the Board of Directors.
Prepare a written compliance policy approved by the Board of Directors, which includes the powers and responsibilities of the compliance department, its compliance programs, and related procedures. The Audit Committee shall verify the application of this policy, evaluate its effectiveness, update it, and propose necessary amendments annually.
Take the necessary measures to ensure the application of the compliance policy referred to in paragraph (2) of this Article.

Article Thirty-Three

The Board of Directors shall appoint the compliance officer by a resolution based on the recommendation of the Audit Committee, and after obtaining a letter from the Central Bank stating its non-objection.
The Real Estate Refinance Company shall provide independence to the compliance officer in performing their assigned duties, and shall not assign them any other administrative tasks.

Article Thirty-Four
The compliance officer must submit a report on compliance to the Audit Committee at least semi-annually, and then to the Board of Directors for review. The report must include the main compliance-related risks facing the company, analyze existing operations and procedures, evaluate their effectiveness, and propose any amendments or changes.

Article Thirty-Five
The number of employees and resources in the compliance department must be sufficient and proportionate to the business model and size of the Real Estate Refinance Company. Compliance employees shall report only to the compliance officer in performing their duties.

Article Thirty-Six
The compliance department is responsible for verifying the Real Estate Refinance Company's compliance with applicable laws, regulations, and instructions, and performing the necessary tasks for that purpose. Specifically, it must do the following:

Identify and address all non-compliance risks and monitor their developments.
Analyze new policies, procedures, and operations and recommend measures to deal with related compliance risks.
Follow a risk-based program and include its findings in the report referred to in Article (Thirty-Four) of these Rules.
Prepare compliance-related guidelines for employees whenever necessary.
Ensure that real estate financiers have internal policies and procedures to combat financial crimes such as money laundering and terrorist financing.
Monitor compliance with anti-money laundering and counter-terrorist financing laws, regulations, and rules.
Develop awareness of compliance issues and train employees on their topics through periodic programs.
Immediately report any violations or breaches to the Central Bank and the Audit Committee.

Article Thirty-Seven
A Real Estate Refinance Company shall comply with the statutory requirements contained in the Anti-Money Laundering Law and the Anti-Terrorism Crimes and Financing Law, and adopt the related inspection procedures, rules, and guiding manuals as determined by the Central Bank, in a manner commensurate with the nature and size of the company's activity and the level of risks it may be exposed to, in addition to complying with the requirements and instructions issued by the Central Bank related to financial crimes and financial reserves.

Chapter Nine: Internal Audit

Article Thirty-Eight

A Real Estate Refinance Company shall establish an internal audit department that reports directly to the Audit Committee, and shall be independent in performing its duties. Its employees shall not be assigned any other tasks.
The internal audit department shall evaluate the internal control system and verify the extent to which internal audit and its employees comply with applicable laws, regulations, instructions, and the company's policies and procedures, whether operations are managed by the company or by an external service provider. The internal audit department must be enabled to access and obtain information, documents, and records without restriction or condition.

Article Thirty-Nine

The work of the internal audit department in a Real Estate Refinance Company must be in accordance with a comprehensive audit plan approved by the Audit Committee, provided that this plan is updated annually.
The internal audit department in a Real Estate Refinance Company shall review key activities and operations, including risk management and compliance management, at least annually.

Article Forty

The internal audit department shall prepare a written report on its work and submit it to the Audit Committee at least semi-annually. This report must include the scope of the audit, its findings and recommendations, in addition to including the actions taken by each department regarding the results and recommendations of the previous audit, and any observations thereon, especially if they were not addressed in a timely manner, and the reasons for that.
The internal audit department in a Real Estate Refinance Company shall – during the quarter following the end of the financial year – prepare a general written report and submit it to the Audit Committee regarding the audit operations conducted during the financial year and compare them with the approved plan, indicating the reasons for any breach or deviation from the plan, if any.
A Real Estate Refinance Company shall preserve audit reports and work documents, clearly documenting what has been accomplished, the findings and recommendations, and the actions taken regarding those recommendations.

Chapter Ten: Supervision of Real Estate Refinance Companies

Article Forty-One
A Real Estate Refinance Company shall provide the Central Bank with prudential data at specified times and according to the forms, controls, and instructions determined by the Central Bank.

Article Forty-Two

A Real Estate Refinance Company shall provide the Central Bank with quarterly financial data from the financial statements, prudential data, the auditor's report, and the risk report after discussion by the Risk and Credit Management Committee and the Board of Directors and its approval, including the decisions taken thereon, within thirty working days from the end of the Gregorian calendar quarter.
A Real Estate Refinance Company shall provide the Central Bank with annual financial data from the audited financial statements, the auditor's report, and the Board of Directors' report within forty-five working days from the end of the Gregorian calendar year.
A Real Estate Refinance Company shall provide the Central Bank with annual prudential data within sixty working days from the end of the Gregorian calendar year.
A Real Estate Refinance Company shall immediately inform the Central Bank of any losses exceeding (10%) of its paid-up capital.
The Central Bank may amend the periods mentioned in this Article whenever it deems appropriate.

Article Forty-Three
A Real Estate Refinance Company shall obtain a letter from the Central Bank stating its non-objection before distributing profits, provided that the distribution does not lead to a decrease in the level of capital adequacy and liquidity according to the rules, requirements, and standards approved by the Central Bank.

Article Forty-Four
A Real Estate Refinance Company shall obtain a letter from the Central Bank stating its non-objection before launching any new financing products or making material amendments to existing products.

Article Forty-Five

A Real Estate Refinance Company shall follow International Accounting Standards in preparing its accounts and financial statements.
A Real Estate Refinance Company shall make provisions for risks and losses, in accordance with International Accounting Standards. The Central Bank may oblige the Real Estate Refinance Company to make one or more additional provisions to meet potential losses and risks.
Subject to International Accounting Standards, a Real Estate Refinance Company shall determine asset impairment criteria and provisioning criteria, and verify their regular application.

Article Forty-Six

A Real Estate Refinance Company shall appoint an external auditor after obtaining a letter from the Central Bank stating its non-objection.
The Central Bank may oblige the Real Estate Refinance Company to change its external auditor, or appoint another external auditor at the company's expense in the following cases:
a. If the size and nature of its business require it. b. If the external auditor commits professional violations.
c. If a reason arises to believe there is a conflict of interest with the external auditor.
d. If considerations of sector safety or governance and protection of the interests of stakeholders in the Real Estate Refinance Company require it.
The external auditor shall immediately inform the Central Bank if, during the audit, facts become apparent that would:
a. Justify a reservation in the audit report or a disclaimer of opinion. b. Threaten the Real Estate Refinance Company's continuity in conducting its business.
c. Seriously impede the Real Estate Refinance Company's progress.
d. Indicate a violation by the directors of any applicable laws, regulations, instructions, or internal policies and procedures of the Real Estate Refinance Company. e. Lead to the termination of the contract before its end, stating the reasons for that.
The Central Bank may instruct the external auditor to explain their report or disclose other facts they may have discovered during the audit that indicate a violation of the laws, regulations, instructions, or internal regulations of the Real Estate Refinance Company.

Article Forty-Seven

A Real Estate Refinance Company, its Board members, and its employees shall provide all information and documents related to the company, its activities, its shareholders, and its employees to the Central Bank immediately upon request.
The Central Bank may examine the records and accounts of the Real Estate Refinance Company through its employees or through auditors appointed by the Central Bank, provided that the examination takes place at the company's premises.
A Real Estate Refinance Company and its employees shall facilitate the task of those assigned by the Central Bank for examination and cooperate with them, specifically by:
a. Allowing the examiner to review the company's records, accounts, and documents deemed necessary for their task. b. Providing the examiner with information and clarifications immediately upon request.