HomeLicensed to Consult: Auditing and Financial Consultancy in Saudi Arabia

Understanding Financial Consultation and Analysis in Saudi Arabia

Saudi Financial Regulation Update: CMA’s Role in Saudi Financial Consulting Regulation

Historically, the Saudi Central Bank regulated financial consultation activities as part of the financial investment business. However, significant changes occurred in December 2008 when the Saudi Capital Market Authority (CMA) took over this responsibility. This transition aimed to streamline the licensing, supervision, and inspection processes, enhancing risk control within the sector. The CMA’s involvement has introduced more rigorous standards and procedures to ensure that financial consulting firms operate transparently and efficiently.

Defining Financial Consultation and Analysis

Financial Consultation involves providing opinions and recommendations based on thorough economic and financial research. This includes feasibility studies and value assessments of securities, commodities, and companies. Financial Analysis focuses on systematically processing data regarding companies’ past and present performance and making future forecasts. These activities help clients make informed financial decisions, ensuring they adopt strategies that are financially sound and sustainable.

Licensing Requirements and Procedures

Eligibility for Saudi Financial Analysis: Capital Criteria

• Minimum capital requirement: One million Riyals
• Eligible entities:
  • Judicial persons established in Saudi Arabia
  • At least 51% of share capital held by Saudi or GCC nationals
  • Branches of foreign companies with similar licenses in their home countries
  • Minimum of five years of experience required for foreign branches
• Aim: Ensure financially robust and experienced entities offer services

Application Process and Documentation

The application process requires submitting a comprehensive set of documents to the CMA. These documents ensure that the applying entity meets all regulatory requirements and include:

1. Commercial License and Chamber of Commerce Membership Certificate: Valid copies demonstrating the company’s legal standing and operational legitimacy.
2. Memorandum and Articles of Association: In Arabic, outlining the company’s objectives, including financial consultation and analysis activities.
3. License from the Foreign Regulator: For foreign branches, confirming that the company is licensed to undertake financial consultancy and analysis in its home country.
4. Experience Documentation: Proof of at least five years of relevant experience in financial consultancy and analysis.
5. Evidence of Internal Control and Audits: Documents proving robust internal control systems and regular audits to ensure compliance with laws and CMA rules.
6. Conflict of Interest Prevention Statement: Policies ensuring administrative, systemic, and technical separation of licensed activities.
7. Document Storage Methods: Descriptions of how documents and studies are archived and managed.
8. Compliance Declarations: Signed declarations confirming the authenticity of all submitted information and the company’s adherence to applicable laws and regulations.
9. Title-Deed or Lease Contract: A copy of the title-deed or lease contract for the premises where the activity will be practiced.
10. Financial Statements: Approved copies of the financial statements if the company is already existent, for the last three years or at least since the date of incorporation.
11. Management Team Details: Information about the company’s General Manager, CEO, Financial Analysts, and officials in charge of internal audit and control along with a statement of job description for each.
12. Employee Resumes and Certificates: Resume and certificates of work experience for all employees who will work for the applicant in providing the financial consultancy and financial analysis services, and the person in charge of the internal audit and control.
13. Academic Qualifications: The academic qualifications and work experiences of the General Manager or Chief Executive Officer and Financial Analysts.
14. Passport Copies: A passport copy of the General Manager or Chief Executive Officer and Financial Analysts.
15. Client Agreement Form: Agreement form for the transaction to be concluded with the client.
16. Regulatory Adjudications Statement: A statement indicating whether the Applicant or any of its subsidiaries/sister companies/allied companies has been subject to any adjudications, disciplinary or punitive measures by any regulatory bodies or markets.
17. Archiving and Storing Documents: A statement indicating the method of archiving and storing documents and studies and naming the person in charge thereof.
18. Research and Communication Methods: A statement indicating whether the Financial Analyst conducts research that is to be widely published or not, the targeted clients, and the means of communication used for conducting Financial Analyst’s research in Saudi Arabia.
19. Public Information Authorities: A statement indicating whether the Financial Analyst will appear before the public information authorities on behalf of the Applicant.
20. Compliance Declaration: Signing a declaration to state that the submitted information and documents are true and complete and undertake to comply with the applicable laws and regulations.

Saudi Financial Compliance: Steps to Licensing Success

Securing licensing in the Saudi financial market involves a strategic process overseen by local authorities. From initial approval by the CMA to the final issuance of a commercial license, companies must navigate several crucial steps to ensure compliance and readiness for operation.

• Obtain initial approval from the CMA
• Complete registration with the relevant Department of Economic Development
• Fulfill several steps in the registration process
• Receive the issuance of a commercial license
• Meet staff and regulatory requirements
• Obtain the final CMA license

Essential Qualifications for Key Personnel in Saudi Financial Consulting

Key personnel must include a General Manager or CEO and certified Financial Analysts with specific qualifications and experience. The General Manager must hold a university degree or accredited professional certificate and have at least five years of experience in the economic or financial field. Financial Analysts require similar educational backgrounds and at least three years of relevant experience. These stringent requirements ensure that only highly qualified and experienced professionals oversee financial consulting activities.