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  • LR-1 LR-1 Requirement to Hold a License

    • LR-1.1 LR-1.1 Conventional Bank Licensees

      • General Prohibitions

        • LR-1.1.1

          No person may:

          (a) undertake (or hold themselves out to undertake) regulated banking services within or from the Kingdom of Bahrain unless duly licensed by the BMA; or
          (b) hold themselves out to be licensed by the BMA unless they have as a matter of fact been so licensed.

        • LR-1.1.2

          Only persons licensed to undertake regulated banking services (or regulated Islamic banking services), may use the term 'bank' in their corporate or trading names, or otherwise hold themselves out to be a bank.

        • LR-1.1.3

          Licensees are not obliged to include the word 'bank' in their corporate or trading names; however, they may be required to make clear their regulatory status in their letter heads, customer communications, website and so on.

        • LR-1.1.4

          For the purposes of Rule LR-1.1.2, persons will be considered in breach of this requirement if they attempt to operate as, or incorporate a bank in Bahrain with a name containing the word "bank" (or the equivalents in any language), without holding the appropriate BMA license or obtaining the prior approval of the BMA.

      • Licensing

        • LR-1.1.5

          Persons wishing to be licensed to undertake regulated banking services within or from the Kingdom of Bahrain must apply in writing to the BMA.

        • LR-1.1.6

          An application for a license must be in the form prescribed by the BMA and must contain:

          (a) a business plan specifying the type of business to be conducted;
          (b) application forms for all controllers; and
          (c) application forms for all controlled functions.

        • LR-1.1.7

          The BMA will review the application and duly advise the applicant in writing when it has:

          (a) granted the application without conditions;
          (b) granted the application subject to conditions specified by the BMA; or
          (c) refused the application, stating the grounds on which the application has been refused and the process for appealing against that decision.

        • LR-1.1.8

          Detailed rules and guidance regarding information requirements and processes for license applications can be found in Section LR-3.1. As specified in Paragraph LR-3.1.14, the BMA will provide a formal decision on a Phase 1 license application within 60 calendar days of all required documentation having been submitted in a form acceptable to the BMA.

        • LR-1.1.9

          In granting new licenses, the BMA will specify the specific types of regulated banking service for which a license has been granted, and on what basis (i.e. conventional retail bank licensee or conventional wholesale bank licensee).

        • LR-1.1.10

          All applicants for conventional bank licenses must satisfy the BMA that they meet, by the date of their license, the minimum conditions for licensing, as specified in Chapter LR-2. Once licensed, conventional bank licensees must maintain these criteria on an ongoing basis.

        • LR-1.1.11

          Conventional bank licensees must not carry on any commercial business in the Kingdom of Bahrain or elsewhere other than banking business and activities directly arising from or incidental to that business.

        • LR-1.1.12

          Rule LR-1.1.11 is intended to restrict bank licensees from undertaking any material non-financial business activities. The Rule does not prevent a bank undertaking commercial activities if these directly arise from their financial business: for instance, in the context of Islamic contracts, such as murabaha, ijara and musharaka, where the bank may hold the physical assets being financed or leased. Nor does it restrict a bank from undertaking commercial activities if, in the judgment of the BMA, they are incidental and do not detract from the financial nature of the bank's operations: for example, a bank may rent out spare office space in its own office building, and provide services associated with the rental (e.g. office security or cleaning).

        • LR-1.1.13

          Rule LR-1.1.11 applies to the legal entity holding the bank license. A bank may thus own subsidiaries that undertake non-financial activities, although the BMA generally does not support the development of significant commercial activities within a banking group. Capital invested in such subsidiaries by a bank would be deducted from the bank's capital base under the BMA's capital rules (see Module CA). In addition, the BMA may impose restrictions — such as dealings between the bank and its commercial subsidiaries — if it was felt necessary to limit the bank's exposure to non-financial risks.

    • LR-1.2 LR-1.2 License Sub-Categories

      • Retail vs. Wholesale

        • LR-1.2.1

          Depending on the nature of activities undertaken, conventional bank licensees must be licensed either as a conventional retail bank licensee or as a conventional wholesale bank licensee. The same legal entity may not hold both types of license.

        • LR-1.2.2

          The nature of activities allowed under each license sub-category is specified below (cf. Rule LR-1.2.4ff). The conventional retail bank licensee category replaces the Full Commercial Bank (conventional principles) category that existed prior to July 2006; the conventional wholesale bank licensee category replaces the Offshore Banking Unit and Investment Bank License (conventional principles) categories.

        • LR-1.2.3

          Banks licensed prior to the introduction of these new license categories in July 2006 are not required to reapply for their license. Rather, their new license category is to be confirmed by an exchange of letters with the BMA, and the issuance of a new license certificate. Where (prior to July 2006) the same legal entity holds multiple licenses, the BMA will agree transitional measures aimed at rationalizing the number of licenses held.

      • Conventional Retail Banks

        • LR-1.2.4

          Conventional retail bank licensees are allowed to transact with both residents and non-residents of the Kingdom of Bahrain, and in both Bahraini Dinar and foreign currencies.

        • LR-1.2.5

          To qualify as a conventional retail bank licensee, the person concerned must undertake (as a minimum), the activities of deposit-taking and providing credit (as defined in Rules LR-1.3.16 and LR-1.3.18). The activity of providing credit must be a significant part of the bank's business, relative to other activities.

        • LR-1.2.6

          When assessing the significance of credit-related activities, in the context of Rule LR-1.2.5, the BMA would normally expect to see loans and other credit-related activity (such as overdraft facilities, loan commitments, letters of credit, guarantees and other activities falling under the definition of providing credit), to constitute at least 20% of the total assets of the institution. Other activities and criteria may also be taken into account, if the BMA believes they are of a credit-related nature, and that such activities constitute a significant share of the bank's overall business.

        • LR-1.2.7

          In the case of new applicants, the above assessment is made based on the financial projections and business plan provided as part of the license application. Where existing licensees fail to satisfy the condition contained in Rule LR-1.2.5, the BMA will initiate discussion with the licensee as to the appropriateness of their license category: this may result in the licensee being required to change its license category. A branch of an overseas bank may nonetheless be allowed to hold a bank license in Bahrain, even if it fails to undertake the activities specified in Rule LR-1.2.5, providing that it undertakes other regulated banking services in Bahrain and its head office is licensed as a bank in its home country.

        • LR-1.2.8

          The purpose of Rule LR-1.2.5 is to ensure that, besides deposit-taking, the core banking activity of providing credit forms part of the definition of conventional retail bank licensees, and accounts for a significant share of their business, in keeping with their intermediation function.

      • Conventional Wholesale Banks

        • LR-1.2.9

          Conventional wholesale bank licensees are allowed to transact with residents of the Kingdom of Bahrain (irrespective of currency), and in Bahraini Dinar (irrespective of the location of the counterparty), subject to the conditions and exemptions specified in Rules LR-1.2.13, LR-1.2.16 and LR-1.2.18. Foreign currency transactions with non-residents are not subject to these conditions.

        • LR-1.2.10

          The effect of Rule LR-1.2.9 is to limit the on-shore/Bahraini Dinar customer business of conventional wholesale bank licensees to larger transactions. By definition, their on-shore client base is therefore wholesale in nature (i.e. other banks, large corporates and high net-worth individuals).

        • LR-1.2.11

          To qualify as a conventional wholesale bank licensee, the person concerned must undertake (as a minimum), the activities of deposit-taking and providing credit (as defined in Rules LR-1.3.16 and LR-1.3.18).

        • LR-1.2.12

          The purpose of Rule LR-1.2.11 is to ensure that the core banking activities of deposit taking and providing credit form part of the definition of conventional wholesale bank licensees. However, unlike conventional retail bank licensees, there is no requirement that the activity of providing credit must be a significant part of the bank's business, relative to other activities. This is to allow conventional wholesale bank licensees greater flexibility as to the nature of their activities; it also recognises that, because of the wholesale nature of their client base, there is less need to limit the scale of non-credit related risks to which their depositors may be exposed. Rule LR-1.2.11 does not in any way prevent conventional wholesale bank licensees from developing the provision of credit as a major activity, should they wish to. The Guidance provided in Paragraph LR-1.2.7 with regards to overseas banks is also applicable to Rule LR-1.2.11.

        • LR-1.2.13

          Conventional wholesale bank licensees may transact with residents of Bahrain and/or in Bahrain Dinar, with respect to the activities (a) to (e) listed in Rule LR-1.3.1, only where the individual transaction is BD 7 million or above (or its foreign currency equivalent).

        • LR-1.2.14

          To comply with Rule LR-1.2.13, the initial amount taken as a deposit must be BD 7 million or above (or its equivalent in foreign currency); however, subsequent additions and withdrawals from that deposit account may be for any amount. The initial amount taken as deposit may be split between different types of accounts (e.g. call, 3-month and 6-month accounts) — providing at least BD 7 million is taken from the customer on the same day and the bank's records can demonstrate this. Where subsequent withdrawals lead to a zero balance on an account (or the aggregate of accounts where more than one was originally opened), then a further BD 7 million must be deposited to re-start the 'wholesale' relationship, before additional deposits for smaller amounts may be made.

        • LR-1.2.15

          Similarly, with respect to credit-related transactions, the initial facility amount advised must be for BD 7 million or above (or its equivalent); but drawdowns (and repayments) under the facility may be for any amount, as may any subsequent changes to the facility amount. If the facility is fully repaid, then a further BD 7 million transaction must be agreed in order to re-start the 'wholesale' relationship.

        • LR-1.2.16

          Conventional wholesale bank licensees may transact with residents of Bahrain and/or in Bahrain Dinar, with respect to the activities (f) to (l) listed in Rule LR-1.3.1, only where the individual transaction is US$ 250,000 or above (or its foreign currency equivalent).

        • LR-1.2.17

          With respect to activities (f) and (g) (dealing in financial instruments as principal / agent), the threshold refers to the individual transaction size. With respect to activities (h) and (i) (managing / safeguarding financial instruments), the threshold refers to the initial investment amount. With respect to activity (j) (operating a Collective Investment Undertaking), the threshold refers to the minimum investment required for participation in the scheme. With respect to activities (k) and (l) (arranging deals in / advising on financial instruments), the threshold refers to the size of the deal arranged or of the investment on which advice is being given.

        • LR-1.2.18

          Note that the threshold with respect to activities (h) and (i) applies to the initial investment amount: where a subsequent distribution to a client or a reduction in the mark to market value of the investment reduces the initial investment amount below US$ 250,000 it is still considered a wholesale transaction. The threshold in Rule LR-1.2.16 applies to a client even if the same client satisfies the BD 7m threshold in Rule LR-1.2.13, with respect to deposit/credit activities. Finally, the initial amount taken as an investment may be split between two or more investment products — providing at least US$ 250,000 is taken from the customer on the same day and the bank's records can demonstrate this.

        • LR-1.2.19

          Conventional wholesale bank licensees may only undertake activities (m) and (n) listed in Rule LR-1.3.1, on behalf of residents of Bahrain and/or in Bahrain Dinar, where the customer concerned meets either of the thresholds specified in LR-1.2.13 or LR-1.2.16 (in which case, activities (m) and (n) may be undertaken for any amount).

        • LR-1.2.20

          Notwithstanding Rules LR-1.2.13, LR-1.2.16 and LR-1.2.19, conventional wholesale bank licensees are allowed to transact in Bahraini Dinar (or any other currency) for any amount with the Government of Bahrain, Bahrain public sector entities (as defined in the Guidelines for completion of the Prudential Information Reports), and BMA bank licensees. Conventional wholesale bank licensees may also transact in Bahraini Dinar for any amount, where required to fund their normal operating expenses; or when investing for their own account in securities listed on the Bahrain Stock Exchange.

        • LR-1.2.21

          Any transactions entered into prior to 1 July 2006 which may be in breach of the conditions specified in Rules LR-1.2.13, LR-1.2.16 and LR-1.2.19 must be notified to the BMA. These transactions will be allowed to mature.

        • LR-1.2.22

          Since the conventional wholesale bank licensee regime represents an easing of the restrictions on on-shore business that previously applied to offshore bank licensees (i.e. OBUs and IBLs), there should be few transactions of the type specified in Rule LR-1.2.21 — they are likely to exist only where individual ad-hoc exemptions may have been previously granted by the BMA, and these exemptions went further than those now being applied across the Board to all conventional wholesale bank licensees.

        • LR-1.2.23

          Conventional wholesale bank licensees wishing to undertake transactions of the type specified in Rules LR-1.2.13, LR-1.2.16 and LR-1.2.19 must seek prior written BMA approval.

        • LR-1.2.24

          The approval requirement in Rule LR-1.2.23 only has to be made once, prior to the licensee starting to undertake such transactions. Its purpose is to allow the BMA to monitor the initiation of such business by conventional wholesale bank licensees, and to check that adequate systems and controls have been in place, so that such transactions are likely to be well managed. In addition, it is to allow, where relevant, for the necessary arrangements to be made to ensure that conventional wholesale bank licensees comply with the BMA's reserve requirements (which apply to deposit liabilities denominated in Bahraini Dinars — see LR-2.5.10).

        • LR-1.2.25

          Conventional wholesale bank licensees that are unclear about the interpretation of the conditions specified in Rules LR-1.2.13, LR-1.2.16 or LR-1.2.19 must consult the BMA prior to undertaking the transaction concerned.

        • LR-1.2.26

          The BMA may publish additional interpretative guidance on the above conditions, in response to licensees' queries. The minimum thresholds specified under Rules LR-1.2.13 and LR-1.2.16 will be kept under review by the BMA and may be amended in response to market developments.

      • Shari'a compliant transactions

        • LR-1.2.27

          Conventional bank licensees may not hold themselves out as an Islamic bank. Conventional bank licensees may only enter into activities (c) to (e) listed in Rule LR-1.3.1, when dealing with governments, public sector entities and other licensed financial institutions. Conventional bank licensees may not undertake these activities with individual or corporate clients (whether resident or non-resident).

        • LR-1.2.28

          As an exception to the restriction in Rule LR-1.2.27, conventional bank licensees may invest for their own account in sukuks.

        • LR-1.2.29

          Conventional bank licensees may also freely deal in financial instruments or operate a Collective Investment Undertaking that happens to be Shari'a compliant (because of the nature of the financial instruments concerned).

    • LR-1.3 LR-1.3 Definition of Regulated Banking Services

      • LR-1.3.1

        Regulated banking services are any of the following activities, carried on by way of business:

        (a) Deposit-taking
        (b) Providing Credit
        (c) Accepting Shari'a money placements/deposits
        (d) Managing Shari'a profit/loss sharing investment accounts
        (e) Offering Shari'a Financing Contracts
        (f) Dealing in financial instruments as principal
        (g) Dealing in financial instruments as agent
        (h) Managing financial instruments
        (i) Safeguarding financial instruments
        (j) Operating a Collective Investment Undertaking
        (k) Arranging deals in financial instruments
        (l) Advising on financial instruments
        (m) Providing money exchange/remittance services
        (n) Issuing/administering means of payment.

      • LR-1.3.2

        Upon application, the BMA may exclude specific transactions from the definition of regulated banking services.

      • LR-1.3.3

        The BMA will normally only consider granting such an exemption when a Bahrain resident is unable to obtain a specific product in Bahrain and it would be unreasonable to require the overseas provider of that product to be licensed for that specific transaction, and the provider has no intention of regularly soliciting such business in Bahrain.

      • LR-1.3.4

        For the purposes of Rule LR-1.3.1, carrying on a regulated banking service by way of business means:

        (a) undertaking the regulated banking service of (a), plus any of the activities (b) to (n), as defined in Section LR-1.3, for commercial gain;
        (b) holding oneself out as willing and able to engage in such activities; or
        (c) regularly soliciting other persons to engage in transactions constituting such activities.

      • LR-1.3.5

        Licensees should note that they may still undertake activities falling outside the definition of regulated banking services, such as investing in physical commodities — subject to Rule LR-1.1.11. The fact that an activity is not included in the definition of regulated banking services does not mean that it is prohibited. In transitioning to the new licensing framework, the BMA will be closely liaising with licensees to ensure that no disruption occurs to their legitimate business activities.

      • LR-1.3.6

        Licensees should note that the same legal entity cannot combine regulated banking services with other regulated services, such as regulated insurance services. However, different legal entities within the same group may of course each hold a different license (e.g. banking and insurance).

      • General exclusions

        • LR-1.3.7

          A person does not carry on an activity constituting a regulated banking service if the activity:

          (a) is carried on in the course of a business which does not ordinarily constitute the carrying on of financial services;
          (b) may reasonably be regarded as a necessary part of any other services provided in the course of that business; and
          (c) is not remunerated separately from the other services.

        • LR-1.3.8

          For example, the taking of a deposit in connection with the rental of a property would not be considered a regulated banking service, since it satisfies the criteria in Rule LR-1.3.7.

        • LR-1.3.9

          A person does not carry on an activity constituting a regulated banking service if the person is a body corporate and carries on that activity solely with or for other bodies corporate that are members of the same group.

        • LR-1.3.10

          A person does not carry on an activity constituting a regulated banking service if such person carries on an activity with or for another person, and they are both members of the same family.

        • LR-1.3.11

          A person does not carry on an activity constituting a regulated banking service if the sole or main purpose for which the person enters into the transaction is to limit any identifiable risks arising in the conduct of his business, providing the business conducted does not itself constitute a regulated activity.

        • LR-1.3.12

          For example, an industrial company entering into an interest rate swap to switch floating-rate borrowings for fixed rate borrowings, in order to manage interest rate risk, would not be considered to be dealing in financial instruments as principal, and would not therefore be required to be licensed as an investment firm.

        • LR-1.3.13

          A person does not carry on an activity constituting a regulated banking service if that person enters into that transaction solely as a nominee for another person, and acts under instruction from that other person.

        • LR-1.3.14

          A person does not carry on an activity constituting a regulated banking service if that person is a government body charged with the management of financial instruments on behalf of a government or public body.

        • LR-1.3.15

          A person does not carry on an activity constituting a regulated banking service if that person is an exempt person, as specified by Royal decree.

      • Deposit-taking

        • LR-1.3.16

          Deposit-taking is defined as receiving a sum of money paid on terms under which it will be repaid in full, with or without interest or a premium, and either on demand or in circumstances agreed by the parties involved. It excludes sums referable to the giving of security or as a fee paid in advance for goods or services. It also excludes money received by a person in consideration for debt instruments issued by the same person, or money received by a person entering into a loan or other financing agreement.

        • LR-1.3.17

          The above definition, therefore, includes savings, current, notice, fixed and time deposits.

      • Providing credit

        • LR-1.3.18

          Providing credit is defined as the provision of credit to a person in his capacity as borrower or potential borrower. This includes consumer and mortgage credit; and providing credit by way of finance leases, factoring, forfeiting, and reverse repo transactions. It also includes the issuance or endorsement of letters of credit; the issuance of letters of guarantee and other contingent credit activities (such as the underwriting of loans); the purchase on the secondary market of loans and other contracts of credit (that do not otherwise fall under the definition of financial instruments); and the provision of ancillary credit-related activities, such as advising on or arranging loans. It excludes money advanced to a person in consideration for debt instruments issued by the same person.

      • Accepting Shari'a money placements/deposits

        • LR-1.3.19

          Accepting Shari'a money placements is defined as the acceptance of sums of money for safe-keeping) in a Shar'ia compliant framework, under which it will be repaid, either on demand or in circumstances agreed by the parties involved, and which is not referable to the giving of security.

      • Offering Shari'a Financing Contracts

        • LR-1.3.20

          Offering Shari'a financing contracts is defined as entering into, or making arrangement for another person to enter into, a contract to provide finance in accordance with Shari'a principles, such as murabaha, bay muajjal, bay salam, ijara wa iktina and istisna'a contracts.

      • Managing Shari'a profit sharing investment accounts

        • LR-1.3.21

          Managing a Shari'a profit sharing investment account is defined as managing an account, portfolio or fund, whereby a sum of money is placed with the service provider on terms that a return will be made according to an agreed Shari'a compliant profit-sharing arrangement, based either on a mudaraba or musharaka partnership.

      • Dealing in financial instruments as principal

        • LR-1.3.22

          Dealing in financial instruments as principal means buying, selling, subscribing for or underwriting any financial instrument on one's own account.

        • LR-1.3.23

          Rule LR-1.3.22 includes the underwriting of equity and other financial instruments. The underwriting of loans comes under the activity of providing credit (see Rule LR-1.3.18). It also includes the temporary sale of a financial instrument through a repo transaction.

        • LR-1.3.24

          A person does not carry on an activity specified in Rule LR-1.3.22 if the activity relates to the person issuing his own shares/debentures, warrants or bonds.

      • Dealing in financial instruments as agent

        • LR-1.3.25

          Dealing in financial instruments as agent means buying, selling, subscribing for or underwriting financial instruments on behalf of a client.

        • LR-1.3.26

          A licensee that carries on an activity of the kind specified by Rule LR-1.3.25 does not determine the terms of the transaction and does not use its own financial resources for the purpose of funding the transaction. Such a licensee may however receive or hold assets in connection with the transaction, in its capacity as agent of its client.

      • Managing Financial Instruments

        • LR-1.3.27

          Managing financial instruments means managing on a discretionary basis financial instruments on behalf of another person.

        • LR-1.3.28

          The activities included under the definition of Rule LR-1.3.27 include activities such as asset management.

      • Safeguarding Financial Instruments (i.e. Custodian)

        • LR-1.3.29

          Safeguarding financial instruments means the safeguarding of financial instruments for the account of clients.

        • LR-1.3.30

          A person does not carry on an activity specified in Rule LR-1.3.29 if the person receives documents relating to a financial instrument for the purpose of onward transmission to, from, or at the direction of the person to whom the financial instrument belongs; or else is simply providing a physical safekeeping service such as a deed box.

        • LR-1.3.31

          A person does not carry on an activity specified in Rule LR-1.3.29 if a third person, namely a qualifying custodian, accepts responsibility with regard to the financial instrument.

        • LR-1.3.32

          A "qualifying custodian" means a person who is:

          (a) a licensee who has permission to carry on an activity of the kind specified in Rule LR-1.3.29; or
          (b) an exempt person in relation to activities of that kind.

        • LR-1.3.33

          A person does not carry on an activity specified in Rule LR-1.3.29 if they are managing a central depository, which is part of an exchange recognised by the BMA.

        • LR-1.3.34

          The following are examples of activities, which when taken in isolation, are unlikely to be regarded as an activity of the kind specified under Rule LR-1.3.29:

          (a) providing information as to the number of units or the value of any assets safeguarded; and
          (b) converting currency.

        • LR-1.3.35

          A person undertaking an activity of the kind specified under Rule LR-1.3.29 may also be engaged in the administration of the financial instruments, including related services such as cash/collateral management.

      • Operating a Collective Investment Undertaking

        • LR-1.3.36

          Operating a Collective Investment Undertaking means operating, establishing or winding up a Collective Investment Undertaking.

        • LR-1.3.37

          For the purposes of LR-1.3.36, a Collective Investment Undertaking means any arrangements, authorised by or registered with the BMA, with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements to participate in or receive profits or income arising from the acquisition, holding or disposal of the property or sums paid out of such profits or income.

        • LR-1.3.38

          A person does not carry on an activity specified in Rule LR-1.3.36 if the activity relates to the person establishing or winding up a Collective Investment Undertaking, and that activity may be reasonably regarded as necessary in the course of providing legal services or providing accounting services.

        • LR-1.3.39

          Collective investment undertakings of the kind specified in Rule LR-1.3.36 may be open-ended (i.e. with shares continuously issued and redeemed to meet investor demand) or close-ended (where there is a single issue of shares and investors can only realise their investments on the winding-up of the fund).

      • Arranging deals in financial instruments

        • LR-1.3.40

          Arranging deals in financial instruments means making arrangements with a view to another person, whether as principal or agent, buying, selling, subscribing for or underwriting deals in financial instruments.

        • LR-1.3.41

          A person does not carry on an activity specified in Rule LR-1.3.40 if the arrangement does not bring about the transaction to which the arrangement relates.

        • LR-1.3.42

          A person does not carry on an activity specified in Rule LR-1.3.40 if a person's activities are limited solely to introducing clients to licensees.

        • LR-1.3.43

          The exclusion in Rule LR-1.3.42 does not apply if the agent receives from any person, other than the client, any pecuniary reward or other advantage, which he does not account to the client, arising out of his entering into the transaction. Thus, if A receives a commission from B for arranging credit or deals in investment for C, the exclusion in Rule LR-1.3.42 does not apply.

        • LR-1.3.44

          A person does not carry on an activity specified in Rule LR-1.3.40 merely by providing the means of communication between two parties to a transaction.

        • LR-1.3.45

          A person does not carry on an activity specified in Rule LR-1.3.40 if they operate an exchange, duly recognised and authorised by the BMA.

        • LR-1.3.46

          Negotiating terms for an investment on behalf of a client is an example of an activity which may be regarded as an activity of the kind specified in Rule LR-1.3.40.

        • LR-1.3.47

          The following are examples of activities, which when taken in isolation, are unlikely to be regarded as an activity of the kind specified in Rule LR-1.3.40:

          (a) appointing professional advisers;
          (b) preparing a prospectus/business plan;
          (c) identifying potential sources of funding;
          (d) assisting investors/subscribers/borrowers to complete and submit application forms; or
          (e) receiving application forms for processing/checking and/or onward transmission.

      • Advising on deals in financial instruments

        • LR-1.3.48

          Advising on financial instruments means giving advice to an investor or potential investor (or a person in his capacity as an agent for an investor or potential investor) on the merits of buying, selling, subscribing for or underwriting a particular financial instrument or exercising any right conferred by such a financial instrument.

        • LR-1.3.49

          The following are examples of activities, which may be regarded as an activity as defined by Rule LR-1.3.48:

          (a) a person may offer to tell a client when shares reach a certain value on the basis that when the price reaches that value it would be a good time to buy or sell them;
          (b) recommendation on the size or timing of transactions; and
          (c) advice on the suitability of the financial instrument, or on the characteristics or performance of the financial instrument concerned.

        • LR-1.3.50

          A person does not carry on an activity specified in Rule LR-1.3.48 by giving advice in any newspaper, journal, magazine, broadcast services or similar service in any medium if the principal purpose of the publication or service, taken as a whole, is neither:

          (a) that of giving advice of the kind mentioned in Rule LR-1.3.48; nor
          (b) that of leading or enabling persons to buy, sell, subscribe for or underwrite a financial instrument.

        • LR-1.3.51

          The following are examples of activities, which when taken in isolation, are unlikely to be regarded as an activity as defined by Rule LR-1.3.48:

          (a) explaining the structure, or the terms and conditions of a financial instrument;
          (b) valuing financial instruments for which there is no ready market;
          (c) circulating company news or announcements;
          (d) comparing the benefits and risks of one financial instrument to another; and
          (e) advising on the likely meaning of uncertain provisions in an agreement relating to, or the terms of, a financial instrument or on the effect of contractual terms and their commercial consequences or on terms that are commonly accepted in the market.

      • Providing money exchange / remittance services

        • LR-1.3.52

          Means providing exchange facilities between currencies, and the provision of wire transfer or other remittance services.

      • Issuing / administering means of payment

        • LR-1.3.53

          Means the selling or issuing of payment instruments, or the selling or issuing of stored value (e.g. credit cards, travellers' cheques, electronic purses).