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  • HC-2 HC-2 Approved Persons

    • HC-2.1 HC-2.1 BMA Notification and Approval

      • General Requirement

        • HC-2.1.1

          All persons wishing to undertake a controlled function in a conventional bank licensee must be approved by the BMA prior to their appointment (subject to the variations contained in Rule HC-2.1.3).

        • HC-2.1.2

          Controlled functions are those of:

          (a) Director;
          (b) Chief Executive Officer or General Manager;
          (c) Senior Manager;
          (d) Compliance officer;
          (e) Money Laundering Reporting Officer; and
          (f) Financial Instruments Trader.

        • HC-2.1.3

          Prior approval is required for controlled functions (a), (b), (c), (d) and (e). Controlled functions (d) and (e) may be combined, however (see also FC-4.1, regarding the MLRO function). Controlled function (f) does not require prior approval: instead, notification only is required, once the person concerned has accepted to undertake that function.

      • Basis for Approval

        • HC-2.1.4

          Approval under Rule HC-2.1.1 is only granted by the BMA, if it is satisfied that the person is fit and proper to hold the particular position in the licensee concerned. "Fit and proper" is determined by the BMA on a case-by-case basis. The definition of "fit and proper" and associated guidance is provided in Sections HC-2.2 and HC-2.3 respectively.

      • Definitions

        • HC-2.1.5

          Director is any person who occupies the position of a Director, as defined in Article 173 of the Commercial Companies Law (Legislative Decree No. 21 of 2001).

        • HC-2.1.6

          The fact that a person may have "Director" in their job title does not of itself make them a Director within the meaning of the definition noted in Rule HC-2.1.5. For example, a 'Director of Marketing', is not necessarily a member of the Board of Directors and therefore may not fall under the definition of Rule HC-2.1.5.

        • HC-2.1.7

          The Chief Executive Officer or General Manager means a person who is responsible for the conduct of the licensee (regardless of actual title). The Chief Executive Officer or General Manager must be resident in Bahrain. This person is responsible, alone or jointly, for the conduct of the whole of the firm, or, in the case of an overseas conventional bank licensee, for all of the activities of the branch (in which case, he may hold the title of "Branch Manager").

        • HC-2.1.8

          Senior Manager means a person who, under the immediate authority of a Director or the Chief Executive Officer/General Manager, exercises major managerial responsibilities, is responsible for a significant business or operating unit, or has major managerial responsibility for maintaining accounts or other records of the licensee.

        • HC-2.1.9

          Whether a person is a Senior Manager will depend on the facts in each case and is not determined by the presence or absence of the word in their job title. Examples of Senior Managers might include, depending on the scale, nature and complexity of the business, a deputy Chief Executive Officer; and heads of departments such as Risk Management, or Internal Audit; or the Chief Financial Officer.

        • HC-2.1.10

          Financial Instruments Trader means a person who is engaged in buying or selling financial instruments.

        • HC-2.1.11

          Where a firm is in doubt as to whether a function should be considered a controlled function it must discuss the case with the BMA.

      • Notification Requirements and Process

        • HC-2.1.12

          Conventional bank licensees must obtain BMA approval before a person is formally appointed to a controlled function; the request for BMA approval must be made by submitting to BMA a duly completed Form 3 (Application for Approved Person status). In the case of a financial instruments trader, notification only is required (see Rule HC-2.1.3): this notification must also be made by submitting a Form 3.

        • HC-2.1.13

          In the case of license applications, the Form 3 must be marked for the attention of the Director, Licensing and Policy Directorate. When made by a conventional bank licensee, the Form 3 must be marked for the attention of either the Director, Retail Banks Supervision or the Director, Wholesale Banks Supervision, as appropriate.

        • HC-2.1.14

          Licensees should give the BMA a reasonable amount of notice in order for an application for approval to be reviewed. The BMA aims to respond within 2 weeks of receipt of an application, although in some cases, where referral to an overseas supervisor is required, the response time is likely to be longer.

        • HC-2.1.15

          Licensees seeking to appoint Board Directors should seek BMA approval for all the candidates to be put forward for election at a shareholder meeting, in advance of the agenda being issued to shareholders. BMA approval of the candidates does not in any way limit shareholders' rights to refuse those put forward for election.

        • HC-2.1.16

          All refusals by the BMA to grant a person approved person status have to be reviewed and approved by an Executive Director of the BMA. A notice of intent is issued to the person concerned, setting out the basis for the decision. The person has 30 calendar days from the date of the notice in which to appeal the decision. The BMA then has 30 calendar days from the date of the representation in which to make a final determination. See also Chapter EN-5.

        • HC-2.1.17

          Conventional bank licensees must immediately notify BMA when an approved person ceases to hold the controlled function for which they have been approved, for whatever reason.

        • HC-2.1.18

          Thus, licensees are required to notify BMA should an approved person transfer to another function within the licensee, or to another group entity; or else resign, be suspended or dismissed. BMA may require further clarification as to the reasons for the person's transfer or departure. BMA will automatically withdraw the individual's approved person status: should the person wish to undertake another controlled function, whether within the same licensee or in another licensee, then a new application should be resubmitted.

        • HC-2.1.19

          Conventional bank licensees must immediately notify the BMA should they become aware of information that could reasonably be viewed as calling into question an approved person's compliance with the BMA's "fit and proper" requirement (see HC-2.2).

    • HC-2.2 HC-2.2 "Fit and proper" requirement

      • HC-2.2.1

        Licensees seeking an approved person authorisation for an individual, must satisfy the BMA that the individual concerned is "fit and proper" to undertake the controlled function in question.

      • HC-2.2.2

        To be considered "fit and proper", those nominated must demonstrate:

        (a) personal integrity, honesty and good reputation;
        (b) professional competence, experience and expertise, sufficient for the controlled function for which authorisation is being applied for, and given the scale, complexity and nature of the conventional bank licensee concerned; and
        (c) financial soundness.

      • HC-2.2.3

        In assessing the conditions prescribed in Rule HC-2.2.2, the BMA will take into account the criteria contained in Section HC-2.3. The BMA reviews each application on a case-by-case basis, taking into account all relevant circumstances. A person may be considered "fit and proper" to undertake one type of controlled function but not another, depending on the function's job size and required levels of experience and expertise. Similarly, a person approved to undertake a controlled function in one conventional bank licensee may not be considered to have sufficient expertise and experience to undertake nominally the same controlled function but in a much bigger licensee.

      • HC-2.2.4

        Approved persons undertaking a controlled function must act prudently, and with honesty, integrity, care, skill and due diligence in the performance of their duties. They must avoid conflicts of interest arising whilst undertaking a controlled function.

      • HC-2.2.5

        In determining whether a conflict of interest may arise, factors that may be considered include whether:

        (a) a person has breached any fiduciary obligations to the company or terms of employment;
        (b) a person has undertaken actions that would be difficult to defend, when looked at objectively, as being in the interest of the licensee; and
        (c) a person has failed to declare a personal interest that has a material impact in terms of the person's relationship with the licensee.

    • HC-2.3 HC-2.3 Interpretative Guidance on "Fit and Proper" Requirement

      • HC-2.3.1

        In assessing a person's fitness and propriety, the BMA will consider previous professional and personal conduct (in Bahrain or elsewhere) including, but not limited to, the following:

        (a) the propriety of a person's conduct, whether or not such conduct resulted in a criminal offence being committed, the contravention of a law or regulation, or the institution of legal or disciplinary proceedings;
        (b) a conviction or finding of guilt in respect of any offence, other than a minor traffic offence, by any court or competent jurisdiction;
        (c) any adverse finding in a civil action by any court or competent jurisdiction, relating to fraud, misfeasance or other misconduct in connection with the formation or management of a corporation or partnership;
        (d) whether the person has been the subject of any disciplinary proceeding by any government authority, regulatory agency or professional body or association;
        (e) the contravention of any financial services legislation or regulation;
        (f) whether the person has ever been refused a license, authorisation, registration or other authority;
        (g) dismissal or a request to resign from any office or employment;
        (h) disqualification by a court, regulator or other competent body, as a Director or as a manager of a corporation;
        (i) whether the person has been a Director, partner or manager of a corporation or partnership which has gone into liquidation or administration or where one or more partners have been declared bankrupt whilst the person was connected with that partnership;
        (j) the extent to which the person has been truthful and open with supervisors;
        (k) the extent to which the person has appropriate professional and other qualifications for the controlled function in question;
        (l) the extent to which the person has sufficient experience, or is otherwise able to perform the functions of the controlled function in question;
        (m) whether the person has ever been adjudged bankrupt, entered into any arrangement with creditors in relation to the inability to pay due debts, or failed to satisfy a judgment debt under a court order.

      • HC-2.3.2

        With respect to HC-2.3.1(b), (c), (d) and (e), the BMA will take into account the length of time since any such event occurred, as well as the seriousness of the matter in question.

      • HC-2.3.3

        Further guidance on the process for assessing a person's "fit and proper" status is given in Module EN (Enforcement): see Chapter EN-8.

    • HC-2.4 [This section deleted 07/2006]

      [This Section was deleted in 07/2006: it has been left blank.]