The paramount body of law in Saudi Arabia is The Shariah (Islamic Law). The Shariah is derived from the Holy Quran and the Sunna (words and deeds) of the Prophet Mohammed, as interpreted by influential scholars of Islamic jurisprudence. The Shariah consists of precepts that are often expressed as general principles. This leaves a Saudi Arabian court (or other adjudicatory authority) with considerable discretion regarding how to apply such precepts. Moreover, there are different schools of Islamic jurisprudence and they construe certain precepts differently. The Hanbali school of Islamic jurisprudence is followed in Saudi Arabia, and within the Hanbali school, there are majority and minority views on various issues, either of which may be applied in any particular case. In addition, there are certain instances in which precepts of other schools of Islamic jurisprudence have been applied by the courts where such application was deemed by such courts to be appropriate in the interests of justice and fairness with respect to the particular matter in question. In general, Saudi courts and other adjudicatory authorities do not report their decisions and previous decisions. Such decisions are not considered to establish a binding precedent for the decision of later cases.

The secular authorities are permitted to supplement the Shariah. The Saudi government does so through the issuance of statutes, regulations, decrees and circulars, as well as the adoption of policy positions, all of which can be, and frequently are, changed from time to time to adapt to changed circumstances or to take into account other considerations. However, royal decrees, ministerial decisions and resolutions, departmental circulars and other pronouncements of official bodies of Saudi Arabia having the force of law are not generally or consistently indexed and collected in a central place or made available as a matter of public record.

SAMA rules and regulations

Conventional banking, insurance and re-insurance, and finance activities in Saudi Arabia are governed and regulated through the following main laws:

• The Banking Control Law promulgated by Royal Decree No. M/5 dated 22/02/1386H (corresponding to 12/06/1966G) – The SAMA has also issued a number of secondary implementing regulations that further govern banks in Saudi Arabia.
• The Finance Company Control Law promulgated by Royal Decree No. M/51 dated 13/08/1433H (corresponding to 03/07/2012G) – The SAMA has also issued a number of secondary implementing regulations that further govern finance companies in Saudi Arabia.
• The Cooperative Insurance Companies Control Law promulgated by Royal Decree No. M/32 dated 02/06/1424H (corresponding to 31/07/2003G) – The SAMA has also issued a number of secondary implementing regulations that further govern insurance companies in Saudi Arabia.

CMA rules and regulations

The Capital Market Law promulgated by Royal Decree No. No. M/30 dated 02/06/1424H (corresponding to 31/07/2003G) as amended by the Royal Decree no. M/16 dated 19/01/1441H (corresponding to 18/09/2019G) is the main law that regulates the investment banking sector in Saudi Arabia.

The CMA has also issued a number of secondary implementing regulations that provide further governance rules for the capital markets regime and regulation of other securities activities in Saudi Arabia, such as the Securities Business Regulations issued by the CMA board resolution no. 2-83-2005 dated 21/05/1426H (corresponding to 28 June 2005G) and as amended by the CMA board resolution no. 2-75-2020 dated 22/12/1441H (corresponding to 12/8/2020G) and the Capital Market Institutions Regulations issued by the CMA board resolution no. 1-83-2005 dated 21/05/1426H (corresponding to 28 June 2005G) and as amended by the CMA board resolution no. 3-85-2017 dated 27/12/1438H (corresponding to 18/09/2017G) and resolution no. 2-75-2020 22/12/1441H (corresponding to 12/8/2020G).

Both the SAMA and the CMA have also issued a number of circulars that offer guidance to all banks, insurance companies, finance companies and financial institutions operating in Saudi Arabia. However, not all of these circulars are publicly available.