License Application Guidelines for Engaging in Consumer Microfinance Activity

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License Application Guidelines for
Engaging in Consumer Microfinance Activity

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Saudi Central Bank
Guidelines to Apply for Engaging in Consumer Microfinance Activity 1 Introduction:
The Finance Companies Control Law and its Implementing Regulation set out the provisions governing the licensing of consumer microfinance activities. SAMA has prepared the forms required for submitting a licensing application and published them on its official website, which can be accessed through the following link: (sama.gov.sa) 2 License Application Instructions for Engaging in Consumer Microfinance Activity:

1. The license application should not be modified in any way. The license application
   must be submitted by the founders or their duly authorized representatives with authorization letter.
2. The forms and documents listed in the license application shall be submitted in soft
   copy while the company retains the original documents; and shall provide SAMA with these documents upon request.
3. The terms and phrases mentioned in the license application form shall have the
   meanings stated in the Finance Companies Control Law and its Implementing Regulation. The term (Applicant) shall mean the founders or shareholders of the company applying to obtain SAMA’s approval to complete the incorporation procedures and obtain a license to practice consumer microfinance activity.
4. The Applicant shall ensure that the information provided in the license application is
   valid, accurate, comprehensive, and complete. Providing SAMA with false information or omitting material information that should have been disclosed for licensing purposes shall be deemed a violation of the Finance Companies Control Law, specifically Article 7 thereof, and may lead to the rejection of the license application or cancellation of the license.
5. The license application can be submitted via: NBFI-LIC@SAMA.GOV.SA.
   And for inquiries regarding license applications via: NBFI-LIC-INFO@SAMA.GOV.SA.

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3 Required Documents:
The forms and documents listed in the checklist in the license application form shall be submitted in soft copy via the E-mail provided in Section II above. SAMA shall be provided with the original documents upon request. 4 The documents required to be attached to the license application:

1. License application letter for practicing consumer microfinance activity.
2. SAMA license application form after completing all sections outlined in the form.
3. A copy of the Articles of Association of the Company in accordance with the form
   approved by SAMA.
4. A list of the founding members or shareholders/partners, containing the shares and
   percentages each founding member or shareholder/partner owns in the company.
5. A description of the organizational structure, including all departments and
   necessary functions, and the mandates of each of them.
6. The economic feasibility study and the business plan per the details specified in the
   license application.
7. SAMA’s Fit and Proper Form for each founding member after being completed and
   signed by the founding member, and approved by the person authorized to submit the license application.
8. In the event where a founding member is an entity, a Fit and Proper Form shall be
   submitted for every (natural or legal) person owning 5% or more of this entity.
9. SAMA’s Fit and Proper Form for each candidate for a board membership and its sub￾committees after being completed and signed by the candidate, and after being
   approved by the person authorized to submit the license application.
10. An irrevocable bank guarantee in an amount equivalent to 20% of the minimum
    capital required for the activity to be licensed, issued in favor of the Central Bank by a local bank, and automatically renewed until the capital is fully paid.
11. Draft agreements and contracts proposed with third parties, especially
    agreements and contracts with relevant parties and external service providers.

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5 Licensing Procedures:

1. The Applicant shall complete the license application as described in sections III and
   IV above, and submit the application to SAMA along with all the attachments listed in the license application form’s checklist.
2. SAMA shall notify the Applicant, in writing, of the completion of their application upon
   fulfilling all the requirements set in the Finance Company Control Law, and the Rules Regulating Consumer Microfinance Companies.
3. Upon completion of the application, SAMA shall notify the Applicant, in writing, of its
   initial approval or reasoned rejection within 60 business days. SAMA’s initial approval shall not be considered a license or permission to practice the activity.
4. The application shall be referred to the Ministry of Commerce to finalize the
   procedures for establishing and registering the company in accordance with the Companies Law. The company shall provide SAMA (within six months from the initial approval date) with a copy of the company’s commercial register and Articles of Association after its establishment, in addition to a proof of a full payment of the capital and any additional initial funding indicated in the business plan, and a proof that all necessary steps to start practicing the activity, such as recruiting human resources and procuring systems and necessary equipment, have been taken.
5. The company shall provide SAMA with proof that it has obtained the Legal Entity
   Identifier (LEI) from the Saudi Operating Unit accredited by the Global Legal Entity Identifier Foundation (GLEIF).
6. SAMA’s staff shall visit the company's premises and meet with its executives, and
   review the laws, procedures, and records to verify that the regulatory requirements are met and that the company is ready to practice the activity.
7. SAMA shall issue a decision granting the license after the company has satisfied the
   requirements set in Paragraphs 4 and 5 of this Section.