Introduction of a Rule Entitled, “Collection Accounts for Managing the Finance Value of Debt-Based Crowdfunding Companies”

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Reference No.: 42075950
Date: 1442/10/29
Attachments: 1 page

Circular

To: Respected Parties,
Peace, mercy and blessings of God be upon you,

Subject: Introduction of a Rule Entitled, “Collection Accounts for Managing the Finance Value of Debt-Based Crowdfunding Companies”.

Reference is made to Rule No. (300) regarding the opening of bank accounts for legal entities, included within the Banking Accounts Rules, and communicated via Central Bank Circular No. (65681/67) dated 1440/11/01 AH.

You are hereby informed that the following has been decided:

1. Introduction of a sub-rule under the aforementioned Rule No. (300-1-3-8), entitled: “Collection Accounts for Managing the Finance Value of Debt-Based Crowdfunding Companies”, according to the attached format.
2. Addition of a definition for “debt-based crowdfunding company” under Chapter (One) regarding Definitions, as follows: A joint stock company licensed to conduct debt-based crowdfunding activities through a digital platform, or an entity conducting such activities within the regulatory sandbox at the Central Bank.
3. Addition of a definition for “finance value” under Chapter (One) regarding Definitions, as follows: The funds provided by participants to the beneficiary entity through the debt-based crowdfunding platform.

For your information and implementation, effective as of its date.

Yours sincerely,

Fahd bin Ibrahim Al-Shathri
Deputy Governor for Supervision

Distribution Scope:

• Banks and financial institutions operating in the Kingdom.

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The Newly Introduced Rule No. (300-1-3-8) under Rule No. (300) Regarding Rules for Opening Bank Accounts for Legal Entities

300-1-3-8 / Collection Accounts for Managing the Finance Value of Debt-Based Crowdfunding Companies:
Collection accounts are opened and managed for the purpose of collecting funds from participants to grant credit to beneficiary entities, subject to the following requirements:

1. A letter from the Chairman of the Board of Directors of the debt-based crowdfunding company, or his authorized representative, addressed to the bank, specifying the purpose of opening the collection account as “Managing Finance Value (Name of Debt-Based Crowdfunding Company)” and identifying those authorized to manage it.
2. A copy of all founding documents of the debt-based crowdfunding company, including the memorandum of association, articles of association, and board formation resolution.
3. Copies of the identification documents for those authorized to manage the account.
4. The account name shall be “Managing Finance Value Account - Name of Debt-Based Crowdfunding Company”.
5. The account shall be separate and independent from the company’s operational management accounts, including fees and commissions received by the company, and shall not be linked to any financial obligations or rights of the company.
6. Transfers of funds from the collection account to any other account are not permitted without approval from participants, except after submitting evidence confirming no objection from the Central Bank.
7. Cash deposits/withdrawals are not permitted from the account.

End.