Saudi Arabian Monetary Authority

Reference Conditions for Financing Companies Committees

1437 / 2016 AD

Introduction ..... 4
Definitions ..... 4
Organizational Structure of Financing Companies Committees ..... 5
Committees ..... 6
4/1. The General Committee ..... 6
4/1/1. Committee Formation ..... 6
4/1/2. Nomination and Dismissal ..... 6
4/1/3. Meetings and Quorum ..... 6
4/1/4. Agenda, Minutes, and Reports ..... 7
4/1/5. Responsibilities ..... 8
4/2. The Executive Committee ..... 10
4/2/1. Committee Formation ..... 10
4/2/2. Nomination and Dismissal ..... 10
4/2/3. Meetings and Quorum ..... 11
4/2/4. Agenda, Minutes, and Reports ..... 12
4/2/5. Responsibilities ..... 13
4/3. Sub-committees ..... 16
4/3/1. Committee Formation ..... 16
4/3/2. Nomination and Dismissal ..... 16
4/3/3. Meetings and Quorum ..... 17
4/3/4. Agenda, Minutes, and Reports ..... 17
4/3/5. Responsibilities ..... 18
Saudi Arabian Monetary Authority ..... 20
5/1. Role of the Authority ..... 20
5/2. Role of the Authority Representative ..... 20
5/3. Proposals Submitted by Committees ..... 20

1. Introduction

Based on the provisions of Article 21 of the Financing Companies Control System issued by Royal Decree No. /M/51 dated 13/8/1433 AH, which decided that "the Authority shall supervise the work of financing companies," and exercise its powers under this system, and based on the Executive Regulations of this system issued by the decision of His Excellency the Governor No. /M/2 dated 14/4/1434 AH (corresponding to 24/2/2013 AD), which stated in Article 2 that "the Authority shall regulate the financing sector and supervise the work of financing companies in accordance with the System and Regulations...", and continuing the Authority's supervisory and monitoring role in the financing sector, and based on the authority granted under the provisions of Articles 8 and 19, which stipulated that "a committee, or more, shall be formed by a decision of the Governor to be concerned with providing necessary proposals and recommendations to develop the financing sector," and seeking by the Authority to organize the regulatory frameworks for supervision and monitoring of the financing sector, it has issued these Reference Conditions for Financing Companies Committees to contribute to the growth, stability, and fairness of transactions in the sector.

2. Definitions

The Authority: Saudi Arabian Monetary Authority.

Standing Committee: A committee whose work is characterized by continuity and permanence.

Temporary Committee: A committee formed to examine a specific task and ends upon completion of that task, and is established whenever necessary. The lifespan of a temporary committee must not exceed one year unless otherwise stated in the formation decision.

Chairman of the Committee: The member appointed to chair the committee and manage its affairs.

Vice Chairman of the Committee: The member appointed to replace the Chairman in case of his absence, departure, or dismissal.

Committee Members: The members appointed to work in the committee, tasked with attending meetings and having the right to vote therein.

Secretary: The person appointed to perform support or coordination tasks and other additional duties belonging to the committee, as well as attending meetings without having the right to vote therein.

Deputy Secretary: The person appointed to replace the Secretary in case of his absence, departure, or dismissal.

Expert: Any person hosted or invited to committee meetings or one of them to benefit from his expertise for a specific purpose or consultation, but the expert does not have the right to vote in any of the meetings he attends.

Agenda: A list of topics to be presented and discussed in the meeting, in addition to clarifying the order and sequence of business.

Minutes of the Meeting: An accurate record showing what was discussed in the meetings, serving as the official reference for proposals and reports submitted and members' opinions regarding them.

Quorum: The minimum number of members whose presence makes the meeting regular and their decisions effective, which is represented by two-thirds of the members.

Voting: A right granted to members present at a meeting that has the quorum, to express their opinion on a specific decision. Voting is divided into several cases that can be detailed as follows:

Unanimous Voting: All votes in one direction.
Abstention from Voting: Not voting on any proposed decision, either in approval or rejection.
Majority Voting: Agreement by more than half of the votes of the attending members on a decision after excluding the number of abstentions in a valid meeting where the quorum was met.

Organizational Structure of Financing Companies Committees

                            General Committee of General Managers in Financing Companies
                                      |
                                  Executive Committee
                                      |
    +------------------+----------------+----------------+----------------+----------------+----------------+----------------+
|  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Finance Committee | Awareness Committee | Customer Protection Committee | Risk Committee | Compliance Committee | Leasing Committee | Financing Committee |  |
|  | and Media |  |  |  | (Financial) | (Real Estate) |  |
    +------------------+----------------+----------------+----------------+----------------+----------------+----------------+

Committees

4/1. The General Committee

4/1/1. Committee Formation

Chairman and a deputy, chosen by the committee members themselves every two years.
Members consisting of General Managers or Executive Directors of financing companies in the Kingdom of Saudi Arabia.
Secretary for the committee and a deputy.

4/1/2. Nomination and Dismissal

Financing companies appoint a representative from their General Managers or Executive Directors to be members of the General Committee.
The Chairman and Vice Chairman of the General Committee are appointed by the committee members by majority vote every two years.
The Chairman of the General Committee appoints a secretary and a deputy every two years.
A new Chairman for the General Committee is nominated at the last meeting held at the end of the regular term (two years) by majority vote.
The Chairman or Vice Chairman of the committee cannot be nominated for the same position for two consecutive terms.
It is not permissible to hold the position of Chairman of the General Committee and the Executive Committee simultaneously.
A member representing the company is dismissed immediately upon the end of his work with the company, and the company he represents must nominate another member to replace him.

4/1/3. Meetings and Quorum

The General Committee holds its meetings at least once a year, and they may be held more frequently if the Chairman deems it necessary or if requested in writing by (9) nine members of the General Committee.
The General Committee holds the meeting at the Financial Institute or at a place agreed upon by the majority of members.
The General Committee meeting is held with the presence of at least two-thirds of the members.
All members must attend the General Committee meetings, and a member may appoint a company representative to attend the committee meetings and vote on his behalf, provided that the appointed company representative is from the company's senior management.
General Committee members are not allowed to provide other representatives for two consecutive meetings.
The General Committee must adhere to the meeting agenda as prescribed.
The General Committee makes its decisions in meetings by majority vote.
In case of a tie in votes, the Chairman's vote is decisive, and dissenting members may record their observations in the minutes of the meeting.
A member may abstain from voting on any of the decisions issued in committee meetings, and the reasons for abstention are recorded in the minutes of the meeting.
The General Committee may invite any expert to participate in meetings after obtaining the Chairman's approval, without having the right to vote.
Discussions must be conducted with high professionalism and in an organized manner, without including any topics not listed in the prescribed agenda.
All committee members must maintain the confidentiality of information discussed within the meeting.
The Chairman must ensure that members adhere to the rules and regulations governing committee meetings, which all members must comply with.

4/1/4. Agenda, Minutes, and Reports

Members should inform the Chairman of topics they believe will contribute to achieving the desired objectives of the meetings, and the Chairman should take proposed topics into consideration when approving the agenda.
The agenda must be prepared by the Secretary or his deputy, including all topics to be discussed in the meeting, and then approved by the Chairman.
The Secretary or his deputy must send the agenda along with the documents to be discussed in the meeting to all committee members and a copy to the Authority representative via email at least (10) ten days before the meeting.
The Secretary must prepare minutes of the meeting after each committee meeting, including the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention from voting with reasons if any.
The Secretary or his deputy must send the minutes of the meeting to all committee members and the Authority representative after the meeting within a period not exceeding (10) ten working days via email, before it is approved and signed by the Chairman and Secretary. The Secretary must be provided with comments and observations within (5) five working days from receiving the minutes of the meeting.
The Secretary must keep all reports and minutes easily accessible. Upon the expiration of his chairmanship term, the Chairman must provide the Authority representative with all documents through a receipt record, so that the Authority representative counts them and delivers the documents to the new Chairman.

4/1/5. Responsibilities

The General Committee

Form an executive committee from among its members under the name "Executive Committee," nominate its members, and nominate three reserve members for the Executive Committee.
Provide general guidance and direction to the Executive Committee regarding common issues faced by the financing companies sector in the Kingdom of Saudi Arabia.
Monitor the work of the Executive Committee of General Managers and evaluate its performance to ensure its effectiveness and achievement of its intended objectives.
Submit proposals and make necessary amendments to this document and develop it when necessary, by majority vote provided that the Authority does not object to these amendments and before final approval.

Chairman of the Committee

Effectiveness and success of the General Committee, in addition to continuous monitoring of all tasks assigned to the General Committee.
Formulate the plans of the General Committee that contribute to accomplishing and developing the committee's work.
Manage dialogues and discussions in General Committee meetings, and provide suitable conditions in meetings that help achieve the expected benefits from exchanging opinions and viewpoints efficiently.
Communicate with the Executive Committee to verify that tasks and projects assigned to it are proceeding as required.
Provide the Authority representative with all documents through a receipt record upon the expiration of his chairmanship term, so that the Authority representative counts them and delivers the documents to the new Chairman.
Sign with the Secretary and approve the final copy of the meeting report.
Deliver to the Authority at the beginning of each calendar year an updated version of this document including the intended objectives of any changes contained therein, if any.

Vice Chairman of the Committee

In case of the absence, departure, or dismissal of the Chairman of the General Committee before the end of his term, the Vice Chairman replaces him and bears all his responsibilities.

Secretary

Prepare all meeting arrangements, including the meeting venue, in addition to organizing and coordinating proposed topics in the agenda and obtaining approval from the Chairman. He is responsible for sending the agenda along with the documents to be discussed in the meeting to all committee members and a copy to the Authority via email at least (10) ten working days before the meeting.
Prepare minutes of the meeting after each committee meeting, including the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention from voting with reasons if any.
Send the minutes of the meeting to all committee members and the Authority representative after the meeting within a period not exceeding (10) ten working days via email, before it is approved and signed by the Chairman and Secretary. The Secretary must be provided with comments and observations within (5) five working days from receiving the report.
Sign with the Chairman on the final copy of the meeting report.
Keep all reports and minutes easily accessible.

Deputy Secretary

In case of the absence, departure, or dismissal of the Secretary of the General Committee before the end of his term, the Deputy Secretary replaces him and bears all his responsibilities.

Committee Members

Committee members participate in issues, risks, and challenges facing them that have an impact on the financing companies sector.
Review all developments in the financing companies sector, including new rules and changes to existing rules, whether from the Authority or other relevant bodies or regulatory authorities, in addition to facing international developments.
Members commit to high professionalism through active participation in discussions during committee meetings.

4/2. The Executive Committee

4/2/1. Committee Formation

The General Committee forms the Executive Committee every two years.
The Executive Committee is formed from the following:

Chairman and a deputy, chosen by the committee members themselves every two years, subject to obtaining the Authority's approval.
Secretary and a deputy.

4/2/2. Nomination and Dismissal

Members of the Executive Committee and reserve members are nominated every two years by the General Committee members by majority vote, provided that the number of Executive Committee members is not less than (7) seven members and does not exceed (9) nine members, and the number of reserve members is not less than (3) three members.
The Chairman and Vice Chairman of the Executive Committee are appointed by the Executive Committee members by majority vote every two years, after obtaining the Authority's approval.
The Chairman of the Executive Committee appoints a secretary and a deputy every two years.
In case any member of the committee leaves before the end of his current term, the Executive Committee appoints a replacement from the reserve members specified by the General Committee, and the replacement member replaces the resigning member until the end of his current term. The Executive Committee must notify the General Committee of the replacement member.
Any member of the Executive Committee is dismissed in case of his departure, dismissal, or resignation from the company he represents.

4/2/3. Meetings and Quorum

The Executive Committee holds its meetings four times a year at least, and they may be held more frequently if the Chairman deems it necessary or if requested in writing by (2) two members of the Executive Committee.
The Executive Committee holds the meeting at the Financial Institute or at a place agreed upon by the majority of members.
The Executive Committee meeting is held with the presence of at least two-thirds of the members.
Executive Committee members are not allowed to appoint others to attend committee meetings and vote on their decisions.
Executive Committee members must adhere to the scheduled meetings.
The Executive Committee makes its decisions in meetings by majority vote.
In case of a tie in votes, the Chairman's vote is decisive, and dissenting members may record their observations in the minutes of the meeting.
A member may abstain from voting on any of the decisions issued in committee meetings, and the reasons for abstention are recorded in the minutes of the meeting.
The Executive Committee may invite any expert to participate in meetings after obtaining the Chairman's approval, without having the right to vote.
Discussions must be conducted with high professionalism and in an organized manner, without including any topics not listed in the prescribed agenda.
All committee members must maintain the confidentiality of information discussed within the meeting.
The Chairman must ensure that members adhere to the rules and regulations governing committee meetings, which all members must comply with.

4/2/4. Agenda, Minutes, and Reports

Members should inform the Chairman of topics they believe will contribute to achieving the intended objectives of the meetings, and the Chairman should take proposed topics into consideration when approving the agenda.
The agenda must be prepared by the Secretary or his deputy, including all topics to be discussed in the meeting, and then approved by the Chairman.
The Secretary or his deputy must send the agenda along with the documents to be discussed in the meeting to all committee members and a copy to the Authority representative via email at least (10) ten working days before the meeting.
The Secretary must prepare minutes of the meeting for all meetings held, which must include at least the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention from voting with reasons if any.
The Secretary or his deputy must send the minutes of the meeting to all committee members and the Authority representative after the meeting within a period not exceeding (10) ten working days via email, before it is approved and signed by the Chairman and members. The Secretary must be provided with comments and observations within (5) five working days from receiving the minutes.
The Executive Committee must prepare a charter when establishing any sub-committee. The charter must include at least the name of the committee, the purpose of its establishment, its objectives, role, responsibilities, and powers, its formation, the mechanism for nominating and appointing members and dismissing them, the nature of the committee (standing or temporary) with a specified duration if temporary, the meeting mechanism, required reports, and the mechanism for submitting them. The charter must be approved by the Chairman of the Executive Committee, and the Authority's approval must be obtained for each sub-committee establishment charter.
When nominating members of sub-committees, fair representation of licensed financing companies must be ensured, taking into account that there should not be more than one representative from the same company in the same committee.
The Executive Committee must annually prepare a comprehensive report accompanied by all necessary charters and documents and provide it to the General Committee and the Authority. This report must include at least the most important decisions of the committee, the number of meetings held during the period, and the names of attendees, in addition to the names of sub-committees, their status, and their most important achievements during the year.
The committee must ensure clarity and accuracy in the reports submitted by it.
The Secretary must keep all reports, minutes, and documents easily accessible. Upon the expiration of his chairmanship term, the Chairman must provide the Authority representative with all documents through a receipt record, so that the Authority representative counts them and delivers the documents to the new Chairman.

4/2/5. Responsibilities

The Executive Committee

Study and implement all tasks assigned to it by the General Committee.
Establish temporary or standing sub-committees, after preparing a charter including at least the name of the sub-committee, its purpose and objective, its role and responsibilities, its formation, the mechanism for appointing and dismissing members, the nature of the committee (standing or temporary) with a specified duration if temporary, the meeting mechanism, required reports, and the mechanism for submitting them.
Verify that sub-committees do not violate any of the prevailing systems, regulations, rules, controls, and instructions.
The Executive Committee has the right to re-form any standing or temporary sub-committees, as well as dissolve them before the end of their term by a decision made by majority vote.
Evaluate and monitor the performance of existing sub-committees periodically to verify their effectiveness.
Prepare a comprehensive report accompanied by all necessary charters and documents and provide it to the General Committee and the Authority. This report must include at least the most important decisions of the committee, the number of meetings held during the period, and the names of attendees, in addition to the names of sub-committees, their status, and their most important achievements during the year.
Focus on everything that contributes to the development of the financing companies sector in the Kingdom of Saudi Arabia, based on best practices and international standards and everything that benefits the sector in general and its employees in particular.
Take necessary measures to ensure access to all developments in the financing companies sector, especially everything related to international standards and directives and recommendations issued by local and international bodies working to develop corporate governance practices and operational controls.

Chairman of the Committee

Maintain the effectiveness and success of the committee, in addition to continuous monitoring of all tasks assigned to the committee.
Formulate the plans of the Executive Committee that contribute to accomplishing and developing the committee's work.
Manage dialogues and discussions in Executive Committee meetings and provide suitable conditions in meetings that help achieve the expected benefits from exchanging opinions and viewpoints efficiently.
Approve the charter of formation of any sub-committees.
Determine strategies and priorities in implementing committee decisions, and search for new ideas that improve and develop the committee's role.
Provide the Authority representative with all documents through a receipt record upon the expiration of his chairmanship term, so that the Authority representative delivers the documents to the new Chairman.
Communicate and follow up with the Authority regarding complex issues, improve performance, and achieve committee objectives.

Vice Chairman of the Committee

In case of the absence, departure, or dismissal of the Chairman of the Executive Committee before the end of his term, the Vice Chairman replaces him and bears all his responsibilities.

Secretary

The Secretary prepares all meeting arrangements, including the meeting venue.
Prepare the agenda, including all topics to be discussed in the meeting and obtain approval from the Chairman.
Send the agenda along with the documents to be discussed in the meeting to all committee members and a copy to the Authority representative via email at least (10) ten working days before the meeting.
Prepare minutes for all meetings held, which must include at least the names of attendees, all topics discussed, decisions voted on, objections, and cases of abstention from voting with reasons if any.
Send the minutes of the meeting to all committee members and the Authority representative after the meeting within a period not exceeding (5) five working days via email, before it is approved and signed by the Chairman and members. The Secretary must be provided with comments and observations within (5) five working days from receiving the minutes.
Keep all reports, minutes, and documents easily accessible.

Deputy Secretary

In case of the absence, departure, or dismissal of the Secretary of the Executive Committee before the end of his term, the Deputy Secretary replaces him and bears all his responsibilities.

Committee Members

Discuss all financial, operational, and supervisory matters, in addition to all major risks, opportunities, and challenges facing them, for the purpose of exchanging expertise and achieving common benefits.
Review all developments in the financing companies sector, including new rules and changes to existing rules, whether from the Authority or other relevant bodies or regulatory authorities. They must also monitor all international developments.
Members commit to high professionalism through active participation in discussions during committee meetings.

4/3. Sub-committees

4/3/1. Committee Formation

The Executive Committee forms standing and temporary sub-committees whenever necessary.
The Executive Committee must, at a minimum, form standing sub-committees concerned with each of the following topics:

Matters related to real estate financing.
Matters related to financial leasing.
Matters related to awareness and media.
Matters related to risks.
Matters related to compliance and combating money laundering and terrorist financing.
Matters related to financial affairs.
Matters related to customer protection.

The sub-committee is formed from a Chairman and a deputy, chosen by the Executive Committee members every two years.
The sub-committee is also formed from a Secretary and a deputy.

4/3/2. Nomination and Dismissal

The Chairman and Vice Chairman of the sub-committee are nominated by majority vote by the Executive Committee members every two years.
The Chairman of the sub-committee appoints a secretary and a deputy every two years.
The Executive Committee has the right to dismiss any member of the sub-committee members after obtaining the Authority's approval based on a decision issued by majority vote.
Any member of the sub-committee members is dismissed in case of his departure, dismissal, or resignation from the company he represents.

4/3/3. Meetings and Quorum

The sub-committee holds its meetings (6) six times a year at least, and they may be held more frequently if the Chairman deems it necessary.
The sub-committee holds the meeting at the Financial Institute or at a place decided by the Chairman in Riyadh or any other place agreed upon by the majority of members.
The establishment charter of the committee must contain everything that regulates meeting matters such as quorum and how decisions are made in meetings, etc.
The sub-committee must adhere to the scheduled meetings.
The sub-committee may invite any expert to participate in meetings after obtaining the Chairman's approval, without having the right to vote.
Discussions must be conducted with high professionalism and in an organized manner, without including any topics not listed in the prescribed agenda.
All committee members must maintain the confidentiality of information discussed within the meeting.
The Chairman must ensure that members adhere to the rules and regulations governing committee meetings, which all members must comply with.

4/3/4. Agenda, Minutes, and Reports

Members should inform the Chairman of topics they believe will contribute to achieving the intended objectives of the meetings, and the Chairman should take proposed topics into consideration when approving the agenda.
The agenda must be prepared by the Secretary or his deputy, including all topics to be discussed in the meeting, and then approved by the Chairman.
The Secretary or his deputy must send the agenda along with the documents to be discussed in the meeting to all committee members and a copy to the Authority representative via email at least (10) ten days before the meeting.
The Secretary must prepare minutes of the meeting for all meetings held, which must include at least the names of attendees, all topics discussed

and the decisions that were voted on, and objections and abstentions with reasons if any.
5. The Secretary or their deputy must send the meeting minutes to all committee members and the institution's representative within a period not exceeding (5) five days after the meeting via email, before they are approved and signed by the Committee Chair and members, with the Secretary being provided with comments and observations within (5) five working days of receiving the minutes.
6. The sub-committee must annually prepare a comprehensive report accompanied by all necessary documents, which is provided to the Executive Committee and the institution. This report must include, at a minimum, the most important decisions of the committee, the most important achievements and difficulties, and suggestions, in addition to the number of meetings held during the period and the names of attendees.
7. The committee must ensure clarity and accuracy in the minutes and reports prepared by it.
8. The Secretary must keep all reports, minutes, and documents so that they are easily accessible. The Committee Chair must, upon the expiration of their term, provide the institution's representative with all documents through a receipt protocol, so that the institution's representative then delivers the documents to the new Committee Chair.
9. The charter establishing the committees may organize any other documents that the committee deems necessary to add.

4/3/5. Responsibilities
Sub-committees

Discuss all topics and issues related to them, providing their recommendations to the Executive Committee for review and to take final recommendations.
Execute all tasks assigned to them by the Executive Committee, and they must periodically report to the Executive Committee on all matters regarding the progress of operations.
Sub-committees are responsible for everything that the Executive Committee considers within their responsibilities.
Prepare a comprehensive annual report accompanied by all necessary documents, which is provided to the Executive Committee and the institution. This report must include, at a minimum, the most important decisions of the committee, the most important achievements

and difficulties and suggestions, in addition to the number of meetings held during the period and the names of attendees.
Committee Chair
5. The effectiveness and success of the sub-committee, as well as their responsibility to continuously follow up on all tasks assigned to the committee.
6. Manage dialogues and discussions in meetings, and provide suitable environments that facilitate the exchange of opinions and viewpoints with high professionalism and efficiency.
7. Communicate with the Executive Committee and follow up on work with them, and they must provide them with all recommendations, reports, and other matters.
8. Provide the institution's representative with all documents through a receipt protocol upon the expiration of their term, so that the institution's representative then delivers the documents to the new Committee Chair.
Vice Committee Chair
9. In the event of the absence, departure, or dismissal of the sub-committee Chair before the end of their term, the Vice Chair replaces them and assumes all their responsibilities.
Secretary
10. Prepare all meeting arrangements, including the meeting venue.
11. Prepare the agenda, which must include all topics to be discussed in the meeting and be approved by the Committee Chair.
12. Send the agenda accompanied by the documents to be discussed in the meeting to all committee members and a copy to the institution's representative at least (10) ten days before the meeting via email.
13. Prepare minutes for all meetings held, which must include, at a minimum, the names of attendees, all topics discussed, the decisions that were voted on, and objections and abstentions with reasons if any.
14. Send the meeting minutes to all committee members and the institution's representative within a period not exceeding (5) five days after the meeting via email, before they are approved and signed

Reference Conditions for Financing Companies Committees

Saudi Arabian Monetary Authority

Reference Conditions for Financing Companies Committees

Table of Contents

1. Introduction

2. Definitions

Lineage: In force