The Draft on the Proposed Amendments to Brokerage Licensing Requirements under the Capital Market Law

Clarification

Provisions after Proposed Amendments

Current Provisions

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Paragraph (a) of Article 32 of the Capital Market Law requires that the legal structure of the brokerage company be a joint-stock company.

It is proposed to refer the determination of the legal structure to the implementing regulations, providing the necessary flexibility to determine the legal structures of the brokerage company, based on the nature of the business it will be authorised to carry out. 

Article 32

“a) Broker means a company that carries on brokerage activities and the broker agent who is working at the brokerage company and carries out all or part the following activities: …”

Article 32

“a) Broker means a joint stock company that carries on brokerage activities and the broker agent who is working at the brokerage company and carries out all or part the following activities: …”

1.       

Paragraph (b) of Article 33 of the Capital Market Law requires that the minimum capital requirements that the brokerage company must continually meet should not be less than SR 50 million.

It is proposed to refer the determination of the minimum capital requirements to the CMA implementing regulations, providing the necessary flexibility to determine the capital requirements of the brokerage company, based on the nature of the business it will be authorised to carry out.

Article 33

“b) The Implementing Regulations shall set forth the requirements and conditions that must be met by applicants for obtaining a brokerage license. The conditions for licensing or renewal of a license must include the following:

1. Criteria pertaining to an applicant’s competence to act as a broker or a broker’s agent;
2. Criteria for the integrity and suitability of persons to conduct brokerage activities;
3. Minimum capital requirements that brokerage companies must continually meet.”

Article 33

“b) The Implementing Regulations shall set forth the requirements and conditions that must be met by applicants for obtaining a brokerage license. The conditions for licensing or renewal of a license must include the following:

1. Criteria pertaining to an applicant’s competence to act as a broker or a broker’s agent;
2. Criteria for the integrity and suitability of persons to conduct brokerage activities;
3. Minimum capital requirements that brokerage companies must continually meet, which must not be less than (SR 50 million).”

2.       ​