To obtain authorization, an applicant must complete a formal process, which involves the completion of required application forms and the submission of supporting information.

CMA authorization process

In relation to timing, the CMA will notify the applicant of receipt of the completed application and all required documents and information, and it will have 30 days from the date of the notice to determine whether or not to approve the application. In practice, it could take several months (if not longer) for the CMA to process an application and license a Capital Market Institution.

The particular forms that must be completed for submission to the CMA will depend on the nature of the regulated activities to be conducted. In general, the following forms¹ will be required to be completed:

• Application form – This is the main licensing application form, which sets out factual background information relating to the applicant. Whilst the applicant will complete this form and submit it as part of its hard documents submission, the CMA requires the application form to be completed online.
• Controllers – Details must be submitted about identity, ownership (if applicable), integrity, regulatory status, business record and financial position of each proposed controller persons/entities who control or exert influence over the firm.
• Close links – Details about all persons who have, or are proposed to have, close links with the applicant must be submitted, and details of the identity, ownership (if applicable), integrity, regulatory status, business record and financial position of each such person must be provided.
• Governing body resolution – The applicant must submit to the CMA a resolution in the form prescribed by the CMA, approving the application and its contents and certifying the accuracy and completeness of the accompanying information and documents.
• Business profile – The applicant must submit a proposed business profile, including full details of all services the applicant proposes to provide for each securities activity that it is applying to carry on.
• Business plan – The applicant must submit a business plan, setting out a detailed description of the securities business activities that the applicant proposes to undertake during, at least, the first 12 months after authorization, as well as a description of the nature of the proposed clients of the applicant, and a list of any exchanges, clearing houses or depositaries of which the applicant is or intends to become a member.
• Financial statements – The applicant must submit audited financial statements in accordance with the standards issued by the Saudi Organization for Chartered and Professional Accountants and presented in the format prescribed by the CMA. Also, an applicant must submit projected financial statements that state the expected financial position 12 months after the promised date of commencement.
•  Registered person form – The applicant must submit a list of each person who is to be a registered person (as required under the Authorized Persons Regulations) and an application form for registration for each such person in the format prescribed by the CMA, including details of their qualifications and experience.
• Systems and controls – The applicant must submit systems and controls documentation, such as risk management policies and systems, anti-money laundering and anti-terrorism financing procedures, compliance manual, compliance monitoring program, and code of conduct.
• Operations manual – The applicant must submit an operational procedures manual detailing the procedures and systems to be employed in relation to all material business and administrative operations.
• Terms of business – The applicant must submit a copy of the proposed terms of business and of proposed forms.
• Fees – The applicant must submit a list of proposed fees, commissions, charges and other expenses payable by clients.
• Contracts – The applicant must submit any agreements, arrangements and understandings with third parties to provide any material services or operations.
• Insurance – The applicant must submit details of professional indemnity insurance policies in accordance with the requirements prescribed by the CMA.
• Incorporation documents – The applicant must submit a copy of its proposed articles of association and/or by-laws.
• Structure chart – The applicant must submit an ownership structure chart showing the group of which the applicant forms part, including each controller and each person with whom the applicant has close links.
• Organization chart – The applicant must submit an organization chart identifying the applicant’s governing body, the CEO and senior management, the compliance officer, and the MLRO. The chart must outline the reporting lines of each department within the business.
• Business continuity plan – The applicant must submit a copy of the applicant’s business continuity plan.

SAMA authorization process

All applications will be processed within a reasonable time, considering the particular circumstances applicable to each application, including the completeness of information and documents submitted to the SAMA.. Applicants should expect to receive written acknowledgment (by email) of receipt of their application from SAMA along with confirmation of their case officer/s name within 15 business days. The preliminary approval expires within six months from its issuance. An applicant must establish the entity as a joint-stock company within that period in order to obtain a license. Approval does not constitute a license. In most cases, the processing largely depends on the SAMAs discretion, though it is generally a lengthy process.

The particular forms that must be completed for submission to the SAMA will depend on the nature of the regulated activities to be conducted.

In general, the following forms will be required to be completed:

• Application form – The applicant must submit a completed application form.
• Acknowledgment letter – The applicant must submit an acknowledgment letter in the form prescribed by the SAMA, whereby the applicant certifies that the shared information is accurate and correct.
• Incorporation documents – The applicant must submit draft articles of association and by-laws.
• Organization structure – The applicant must submit a description of the bank's organizational structure, including all departments and necessary positions, as well as the main focus of each.
• Founding shareholders – The applicant must submit a list of the founding shareholders, setting out the number and percentage of shares of each founding shareholder.
• Financial statements – The applicant must submit the latest financial statements of any proposed owners.
• Business plan – The applicant must submit a business plan covering at least the background of the applicant, the opportunities identified in the Kingdom of Saudi Arabia, and the business planning (e.g., products and services, target markets, type of clients, three-year financial projections, marketing approach, innovative products and services).
• Risk management and control framework – The applicant must submit any proposed management plan or manual covering how the applicant or applicant's parent (for foreign branch applications) will evaluate and mitigate key risk areas.
• Management/control and outsourcing – The applicant must submit a chart on the allocation of responsibilities and reporting lines, a job description for compliance oversight function, a chart on reporting lines for compliance functions, a compliance manual, a policy on complaints handling, a document on business continuity procedures, and a staff handbook.
• Financial crime and anti-money laundering (AML) – The applicant must submit AML policies and procedures, as well as the job description of the AML officer.
• Human and IT resources – The applicant must submit the organization chart of the back office operations function and the information security policy.
• Fit and proper forms – The applicant must submit the fit and proper form for founding shareholders signed by each founding shareholder and for each candidate for board membership and signed by each candidate of board membership.
• Bank guarantee – The applicant must submit an irrevocable bank guarantee that is at a minimum equal to the minimum capital of the financing activities to be licensed, to be issued by any local bank for the benefit of the SAMA, and automatically renewable until such date the capital is paid in full.
• Contracts – The applicant must submit draft agreements and contracts with third parties, especially those with related parties or external service providers.
• Additional documents – The applicant must submit any other documents or information that the SAMA may request.

1 Certain amendments to Annex 3.1 of the new Capital Market Institutions Regulations provide that these requirements are removed altogether for applicants whose activities will be limited to 'Managing Investments', 'Arranging' and 'Advising'.