Regulatory licensing and capital disclosures

Payment and e-money institutions licensed by SAMA (or other regional regulators) are subject to minimum capital and safeguarding requirements that are not IFRS themselves but commonly require disclosure alongside the financial statements, and can affect going-concern and capital-management disclosures under IAS 1; a breach that is not flagged can leave readers unaware of a solvency or license-continuity risk that is often more urgent than routine IFRS matters.

What specific minimum capital, liquid-asset, or safeguarding ratio applies under the entity's license category, and is compliance monitored intra-period, not just at year end? If a breach occurred or is anticipated, has the going-concern implication under IAS 1/IAS 10 been assessed, including post-year-end breaches? Does the regulatory capital base reconcile to IFRS equity, with reconciling items documented?

1) Identify the specific minimum capital, liquid-asset, or safeguarding ratio(s) applicable under the entity's SAMA (or relevant regulator) license category. 2) Confirm compliance status at each reporting date and monitor intra-period, not just at year end. 3) If a breach occurred or is anticipated, assess whether it triggers a going-concern indicator under IAS 1/IAS 10 (including post-year-end breaches as a non-adjusting or adjusting event as appropriate). 4) Reconcile the regulatory capital base to IFRS equity where these differ (e.g., due to prudential deductions or filters), documenting each reconciling item. 5) Confirm the regulatory rules themselves do not override IFRS classification of any instrument (e.g., certain capital instruments may count as regulatory capital but still be a financial liability under IAS 32). 6) Update the analysis whenever SAMA rulebook changes are issued.

Reconcile, where disclosed, the regulatory capital base to IFRS equity if the two differ due to prudential filters or deductions; measurement of the underlying assets and liabilities still follows IFRS regardless of the regulatory capital treatment; monitor the capital ratio using the same measurement basis the regulator requires, which may not be IFRS-consistent, and clearly label any regulatory-basis figures presented alongside IFRS figures.

Disclose: capital management objectives, policies and processes; whether externally imposed capital requirements were complied with throughout the period; the nature of any breach, its cause, and remedial actions taken; a reconciliation between regulatory capital and IFRS equity if materially different; and any going-concern implications of non-compliance.

• Assuming regulatory capital treatment overrides IFRS classification (e.g., of certain instruments as equity)
• omitting capital-management disclosures because the requirement is '
• only regulatory'
• rather than an IFRS disclosure matter
• not flagging a capital shortfall as a possible going-concern indicator
• disclosing compliance as of year-end only without confirming there was no intra-period breach
• failing to update disclosures when the regulator'
• s minimum requirement itself changes.