Saudi Central Bank issues rules for practicing debt crowdfunding activities

By Edil Corneille

The Saudi Central Bank (SAMA) announced the issuance of rules for practising debt crowdfunding activities, which aim to regulate the provisions for licensing the type of company and to regulate its conduct of activities, in accordance with the powers granted to the Saudi Central Bank under the provisions of the Finance Companies Control Law.

The issuance of these rules comes as part of SAMA’s efforts to support the opportunities for growth and economic development in the Kingdom, in order to achieve the goals of the Kingdom’s Vision 2030 by supporting and organising modern financing activities. Including the activity of debt crowdfunding, and in line with the role of the central bank in promoting financial stability. The central bank seeks through these rules to achieve several goals including attracting a new segment of investors and companies, owners of small and medium capitals, to work under its supervision, in a manner that ensures the efficiency of these companies by adhering to the requirements of information security, corporate governance, internal regulation, attribution, risk and compliance management, and internal auditing, in addition to encouraging innovation in products financing in a way that contributes to providing modern financing products that can meet the needs of the beneficiaries.

The Central Bank indicated that the rules for practising debt crowdfunding activity have set the minimum paid-up capital for the facility wishing a license to five million Saudi riyals, with the authority of the Central Bank to raise or reduce the minimum capital according to market conditions. The draft rules for practising debt crowdfunding activity had been published earlier to collect public opinions and interested individuals, in order to enhance the principle of transparency and participation. All the essential observations and views received were taken into consideration before being finalised.

In conclusion, the Saudi Central Bank invites investors wishing to engage in debt crowdfunding activity to familiarise themselves with financing regulations and their implementing regulations rules for practising debt crowdfunding activity, and forms and guidelines for requesting a license to practise this activity.