المملكة: Urgent – A new regulation regulates civil society work… prohibiting conflicts of interest and tightening oversight

The National Center for the Development of The non-profit sector The executive regulations for the system of associations and civil institutions, with the aim of strengthening the governance of civil work, developing mechanisms for establishing associations, and organizing their administrative and financial affairs, in a way that contributes to raising the efficiency of the non-profit sector, ensuring its sustainability, and achieving its intended development impact.

The adoption of the executive regulations came as a continuation of the regulatory framework regulating the associations and National institutions, which has set detailed provisions regulating the purposes of associations, the conditions for their establishment, the powers of their general assemblies, and the mechanisms for managing their financial affairs, in addition to regulating the sources of financing and investment, in a way that achieves a balance between operational flexibility and regulatory control.

Broad purposes of civil work

The executive regulations stipulated that the association may be established to achieve any purpose of charity, solidarity, public services, or care, and it also included areas Multiple, including religious, social, cultural, health, environmental, developmental, awareness-raising, and technical fields, in addition to educational, teaching, scientific, research, and training activities.

The permitted purposes extended to include professional, craft, and creative fields, youth, women’s, and children’s activities, tourism, and volunteerism, in addition to consumer protection, family protection, dealing with disasters and crises, achieving community safety, and supporting family and social development, as well as any Another civil activity appreciated by the National Center for the Development of the Non-Profit Sector.

Controls for establishing associations

With regard to the establishment of Associations, the regulations set clear conditions for natural applicants for incorporation, as they stipulated that the founder must be of Saudi nationality, with full legal capacity, and that a final judgment has not been issued against him for a crime prejudicial to honor or trust, unless he has been rehabilitated.

The regulations oblige those who wish to establish an association to submit an official application to the center, submitted by at least ten people, according to the approved form, accompanied by detailed information for the incorporation applicants, including Name, national ID number, profession, national address, and means of communication, in addition to specifying the name of the person authorized to communicate with the center, and submitting basic bylaws for the association that do not conflict with the law or regulations, in addition to the basic data for the members of the Board of Directors for the first session.

Additional requirements for legal persons

In the event that one of the applicants for incorporation is a non-governmental legal person, the regulations are obligated to submit additional documents, including the commercial register, license, endowment registration certificate, or proof of legal status, provided that The documents must be valid, in addition to the national address, the social insurance certificate – if any – and the zakat and income certificate, and any other information requested by the center.

The regulations stress the necessity of informing the center of any change that occurs to establishment applicants with legal status during the course of establishment procedures, while granting the center the authority to take what it deems appropriate, whether by requesting the completion of additional documents or canceling the application with a reasoned decision.

The General Assembly is the highest authority

It stipulates The regulations stipulate that the General Assembly is considered the highest authority in the association, and its decisions are binding on all its members and all of the association’s organs, taking into account the supervisory powers of the center and the supervisory authorities.

It confirmed that the association seeks to increase the number of members of its general assembly, while providing the option for membership to be open to the public or closed to a specific category in accordance with conditions set by the basic regulations. It also permitted the acceptance of membership of those who have reached the age of fifteen, with their ineligibility to run for council membership. Administration.

It indicated that the membership of the General Assembly consists of natural or legal persons, provided that the basic regulations specify the conditions for accepting membership, its categories, and cases of termination, in accordance with the rules issued by the Center, and voting in the Board of Directors elections is also subject to those rules.

Controls for the Assembly’s decisions and delegation

The regulations stressed that the decisions of the extraordinary General Assembly related to the association’s merger, amendment of its basic regulations, or voluntary dissolution, are not effective except after the approval of the Center, And in coordination with the supervising authority regarding technical aspects.

The regulations regulated the provisions for delegation in attendance at the General Assembly meetings, as it allowed a member to delegate only one other member to represent him and vote on his behalf, with the approval of the delegation from the Chairman of the Board of Directors or whoever the Center delegates to him before the meeting date, and it was prohibited to deputize any member of the Board of Directors.

Regulating Financial Affairs and Protection of Funds

On the financial side, the regulations obligated associations to deal with funds. Zakat is placed in an independent account, and a special record is created, with its disbursement in accordance with the provisions of Islamic Sharia.

It held the Board of Directors fully responsible for the association’s funds and properties, and stressed the necessity of documenting financial resources and spending revenues in a way that achieves the association’s objectives, while adhering to responsibility and good faith in managing funds, defining delegated powers and decision-making mechanisms, and following them up through periodic reports.

It obligated the Board of Directors to develop internal policies to familiarize new members with the work of the association, and organize a mechanism for receiving them. And handing over work and documents between successive councils, with official minutes that preserve rights and ensure institutional continuity.

Public benefit and withdrawal of status

The regulations regulate the conditions for granting associations public benefit status, and stipulate that the association’s activity be in the public interest and directed to the whole of society, and that membership in its general assembly be open, and that there are no financial, administrative, or technical violations, with the presence of specialized experts on the board of directors.

It authorized the Council, by a reasoned decision, to withdraw the public benefit status from the association if it loses one of its conditions, without prejudice to the association’s continued implementation of its statutory and contractual obligations.

Fiscal year and accounting review

The regulations stipulate that the association’s first fiscal year begins from the date of licensing and ends at the end of December of the same year, provided that its duration is not less than six months, with the duration of subsequent fiscal years set at twelve months.

Associations and institutions were obligated to contract with a licensed external auditor, and to provide the Center with the final account within four months of the end of the fiscal year, in order to enhance financial transparency and accountability.

Finance and investment after the Center’s approval

In a step that enhances financial sustainability, the regulations allowed associations and institutions – after the approval of the General Assembly or the Board of Trustees – to obtain financing or loans, and to mortgage assets, with the exception of operational headquarters that may not be sold or mortgaged except with approval. The Centre.

It permitted the ownership of commercial establishments, the opening of commercial registers, investment, the establishment of companies or participation in them, and the ownership of shares and shares, after completing the necessary regulatory approvals.

The executive regulations permitted private associations and foundations to receive subsidies from outside the Kingdom, provided that they adhere to the relevant regulatory provisions, in a way that ensures the compatibility of funding sources with the applicable regulations, preserves the integrity of financial paths, and enhances confidence in the activities of transient associations.

For borders.

Financial obligations and record keeping

The regulations stressed the obligation of associations and institutions to take into account all applicable regulations in the Kingdom regarding the financial aspect, while requiring them to maintain financial records and documents, account files, financial correspondence, and national identity data for the founders, members of general associations, members of the boards of directors and boards of trustees, and employees and those dealing with them financially directly, for a period of not less than ten years from the date of the end of the transaction.

The regulations permit the preservation of these data and records in electronic form, provided that technical protection controls approved by the competent authorities are adhered to, in a way that keeps pace with digital transformation and ensures data protection and confidentiality.

Prohibition of conflicts of interest with regulatory authorities

The regulation explicitly stipulates that employees of the National Center for the Development of the Non-Profit Sector, or its contractors, in any capacity, as well as employees of supervisory units in supervisory authorities, are prohibited from working in associations or civil society institutions in any functional, administrative or capacity. Consultative or contractual, in order to prevent conflicts of interest and enhance the independence of oversight.

The regulation excluded from this prohibition family funds licensed under the system, as required by their regulatory nature.

Controls for international relations and external participation

The regulation imposed clear restrictions on associations and institutions contracting with countries, organizations, or international institutions, as it required obtaining the approval of the center and the competent authority before concluding any agreements or Contracts.

The regulations also required the approval of the Center and the supervising authority before associations or institutions participate in any external activities, or provide services outside the scope of the Kingdom that fall within their jurisdictions stipulated in its basic regulations, in a way that ensures the unification of regulatory reference and control of external relations.

Cancellation of the license in the event of failure to practice the activity

The regulations gave the Center the authority to cancel the license of an association or institution that does not carry out its work after one year from the date of issuance of the license, with the possibility of extending the deadline. For a similar period if the founders provide an acceptable justification approved by the Center or its delegate, within the framework of enhancing seriousness and preventing suspension of licenses without actual activity.

Expanded supervisory powers for the Center

The regulations approved expanded supervisory powers for the Center and the supervisory authorities, enabling them to visit the headquarters of associations and institutions or their branches, and review their documents, correspondence and records, to verify the extent of their compliance with the provisions of the system, regulations and regulations. These powers allowed obtaining copies of documents, or withdrawing the original of a specific document in an official report, in addition to attending meetings of regular and extraordinary general assemblies, and meetings of boards of directors and boards of trustees, without representatives of supervisory bodies having the right to vote.

The regulations stipulated that these procedures be based on a written authorization issued by the person with the authority, while obligating associations and institutions to fully cooperate with representatives of the center or the supervising body, and to facilitate their tasks, And answer their inquiries and submit the required documents.

Progressive measures for violations

In the event that associations or institutions violate any of the provisions of the law, regulation, basic bylaws, or related regulations, the regulations authorized the center to take progressive measures that begin by warning the violating party and giving it a period not exceeding thirty days to correct the violation or submit an approved corrective plan.

And in the event of non-compliance within the specified period, it authorized The regulations allow the Center to take more severe measures, including removing the association’s board of directors or one of its members and appointing a temporary replacement, or removing the institution’s board of trustees or executive officers, temporarily suspending activity, or merging the association with another association with similar activity, leading to the dissolution of the association or institution when necessary.

Governance rules and naming associations

The regulations confirmed that the Center sets the rules for the governance of associations and civil society institutions, specifying the binding and indicative rules, according to the size and nature of each association or institution. Its activities.

It stipulated the issuance of a special guide for naming associations, civil society foundations, and family and civil funds, which includes the provisions that must be taken into account when choosing names, with the aim of enhancing their value and protecting them legally, and guaranteeing the rights associated with them.

The regulations gave the Center, the supervisory authorities and the competent authorities the authority to decide on the names submitted upon incorporation, with the right to reject any name with a statement of reasons. It also permitted associations and institutions to request the amendment of their names without this resulting in prejudice to their rights or Its previous obligations.

The regulations authorized the center to provide its services and implement the provisions of the system and the executive regulations through technical means, in support of the path of digital transformation and facilitating procedures for associations and institutions.

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