Saudi Central Bank issues regulations for debt crowdfunding activities

By Rahul Vaimal, Associate Editor
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The Saudi Central Bank (SAMA) has issued regulations for the debt crowdfunding activities, which are aimed at regulating the licensing requirements for the companies, following the Finance Companies Control Law.

These regulations are in line with bank’s efforts to ensure financial stability as well as the Kingdom’s ongoing economic growth in the light of Saudi Vision 2030 by supporting and organizing modern financial activities.

The central bank aims to achieve several goals including attracting new categories of investors and small and medium-sized enterprise (SME) owners to work under its supervision while ensuring compliance with information security, corporate governance, internal regulation, risk and compliance management, and internal auditing, in addition to encouraging innovation in financing products, in a way that contributes to providing modern financing products that can meet the needs of the beneficiaries.

According to these regulations, the entity which applies for licensing should have a minimum paid-up capital of $1.3 million (SR5 million), while the central bank is allowed to increase or decrease the minimum capital in compliance with market conditions.

The draft rules for practicing debt crowdfunding activity had been released earlier to collect public opinions and interested individuals, in order to strengthen the concept of transparency and participation.

The Saudi Central Bank further encourages interested investors to participate in debt crowdfunding activities, to familiarize themselves with financing laws and their implementing regulations rules for functioning debt crowdfunding activities, and forms and guidelines for requesting a license to practice in these activities.