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  • HC-A HC-A Introduction

    • HC-A.1 HC-A.1 Purpose

      • Executive Summary

        • HC-A.1.1

          This Module presents requirements that have to be met by conventional bank licensees with respect to:

          (a) Corporate governance principles issued by the Ministry of Industry and Commerce as "The Corporate Governance Code"; and
          (b) International best practice corporate governance standards set by bodies such as the Basel Committee for Banking Supervision; and
          (c) Related high-level controls and policies.
          Amended: April 2011
          October 2010

        • HC-A.1.2

          The Principles referred to in this Module are in line with the Principles relating to the Corporate Governance Code issued by the Ministry of Industry and Commerce.

          October 2010

        • HC-A.1.3

          The purpose of the Module is to establish best practice corporate principles in Bahrain, and to provide protection for investors and other conventional bank licensee's stakeholders through compliance with those principles.

          October 2010

        • HC-A.1.4

          Whilst the Module follows best practice, it is nevertheless considered as the minimum standard to be applied. This Module also includes additional rules and guidance issued by the CBB prior to the publication of the Code and previously contained in Module HC.

          October 2010

      • Structure of this Module

        • HC-A.1.5

          This Module follows the structure of the Corporate Governance Code and each Chapter deals with one of the eight Principles of corporate governance. The numbered directives included in the Code are Rules for purposes of this Module. Recommendations under the Code have been included as guidance. However, where the previous version of Module HC had a similar recommendation as a Rule, the Module retains this Paragraph as a Rule.

          October 2010

        • HC-A.1.6

          The Module also incorporates other high-level controls and policies that apply in particular to conventional bank licensees.

          October 2010

        • HC-A.1.7

          All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.

          October 2010

      • The Comply or Explain Principle

        • HC-A.1.8

          This Module is issued as a Directive (as amended from time to time) in accordance with Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). In common with other Rulebook Modules, this Module contains a mixture of Rules and Guidance (See Module UG-1.2 for detailed explanation of Rules and Guidance). All Rulebook content that is categorised as a Rule must be complied with by those to whom the content is addressed. Other parts of this Module are Guidance; nonetheless every conventional bank licensee to whom Module HC applies, is expected to comply with recommendations made as Guidance in Module HC or explain its noncompliance in the Annual Report in accordance with Subparagraph PD-1.3.8(x) and to the CBB (see Chapter HC-8).

          Amended: April 2012
          Amended: January 2011
          October 2010

      • Monitoring and Enforcement of Module HC

        • HC-A.1.9

          Disclosure and transparency are underlying principles of Module HC. Disclosure is crucial to allow outside monitoring to function effectively. This Module looks to a combined monitoring system relying on the board, the conventional bank licensee's shareholders and the CBB.

          October 2010

        • HC-A.1.10

          It is the board's responsibility to see to the accuracy and completeness of the conventional bank licensee's corporate governance guidelines and compliance with Module HC. Failure to comply with this Module is subject to enforcement measures as outlined in Module EN (Enforcement).

          October 2010

      • Legal Basis Legal Basis

        • HC-A.1.11

          This Module contains the CBB's Directive (as amended from time to time) relating to high-level controls and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to conventional bank licensees (including their approved persons).

          Amended: January 2011
          October 2010

        • HC-A.1.12

          For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

          October 2010

      • Effective Date

        • HC-A.1.13

          The previous version of Module HC is applicable until 31st December 2010. This updated Module issued in October 2010, is effective on 1st January 2011. All conventional bank licensees to which Module HC applies should be in full compliance by the financial year end 2011. At every conventional bank licensee's annual shareholder meeting held after 1st January 2011, corporate governance should be an item on the agenda for information and any questions from shareholders regarding the conventional bank licensee's governance. Where possible, the conventional bank licensee should also have corporate governance guidelines in place at that time and should have a "comply or explain" report as described in Paragraph HC-A.1.8.

          October 2010

    • HC-A.2 HC-A.2 Module History

      • HC-A.2.1

        This Module was first issued in June 2004 by the BMA and updated in October 2007 to reflect the switch to the CBB. Following the issuance of the Corporate Governance Code by the Ministry of Industry and Commerce in March 2010, the Module was amended in October 2010 to be in line with the new Corporate Governance Code and to include previous requirements that were in place in the originally issued Module HC. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

        October 2010

      • HC-A.2.2

        A list of recent changes made to this Module is detailed in the table below:

        Module Ref. Change Date Description of Changes
        HC-1 to HC-8 10/2010 Amendments due to introduction of new MOIC Corporate Governance Code.
        HC-1.3 10/2010 Prohibition of proxies and requirement to attend 75% of board meetings in a financial year.
        HC-A.1.8 and HC-A.1.11 01/2011 Clarified legal basis.
        HC-2.2.4, 2.2.5 and 3.2.1 01/2011 Corrected cross references.
        HC-2.3.2 01/2011 Corrected cross reference; reference changed to connected persons.
        Appendix C 01/2011 Corrected cross reference.
        Appendix A 04/2011 Clarified membership of audit committee to be in line with Rule HC-3.2.1.
        HC-6.2.1 10/2011 Clarified management structure.
        HC-B.2.2 01/2012 Clarified language related to corporate governance.
        HC-1.2.8 and HC-1.5.3 01/2012 Clarified that the Chairman of the Board may delegate specific duties dealt with in these Paragraphs.
        HC-1.3.12 01/2012 Amended Rule on Directorships.
        HC-1.9.1 01/2012 Deleted last sentence to be in line with other Volumes of the CBB Rulebook.
        HC-3.2.1(a) and HC-5.6.6 01/2012 Amended to be in line with other Volumes of the CBB Rulebook.
        HC-6.3.1 01/2012 Clarified Rule by following corporate governance code wording.
        Appendix A 01/2012 Amended criteria for audit committee member.
        HC-A.1.8 04/2012 Clarified the reporting of noncompliance with Module HC in the Annual Report.
        HC-7.2.5 04/2012 Clarified Guidance on election of board members.
        Appendices A, B and C 04/2012 Amended requirement for written report on performance evaluation for various Board committees.
        Appendix A 04/2012 Included reference to compliance under Committee Duties and Responsibilities.
        HC-2.2.6A and HC-2.2.6B 07/2012 Added Rule and guidance dealing with benefits received from approved persons from projects and investments.
        Appendices A, B and C 07/2012 Clarified requirement for written report on performance evaluation for various Board committees.
        HC-1.3.7A 10/2012 Added requirement on minimum number of Board meetings to take place in the Kingdom of Bahrain to be consistent with other Volumes of the CBB Rulebook.
        HC-2.2.6A 10/2012 Clarified Rule dealing with benefits received from approved persons from projects and investments.
        Appendix A 10/2012 Corrected minor typo.
        HC-2.2.2 and HC-2.4.1 01/2013 Clarified scope of application for Rules.
        HC-2.2.6A, HC-5 and Appendix C 01/2014 Amendments due to new rules on sound remuneration practices.
        HC-1.2.6 04/2014 Clarified CBB's requirements for proposed changes to strategy and/or corporate plans.
        HC-5.2, HC-5.4 and HC-5.5 07/2014 Updated Rules on remuneration.
        HC-1.2.11 10/2014 Corrected cross reference.
        HC-1.3.10 10/2014 Corrected typo.
        HC-6.4.3 10/2014 Clarified self assessment of compliance function.
        HC-5.4.2 01/2015 Clarified application of remuneration rules for Bahrain operations.
        HC-5.4.5 01/2015 Paragraph deleted.
        HC-5.5.2 04/2015 Clarified cap on board of directors' remuneration as per Article 188 of the Company Law.
        HC-5.4.3A 07/2015 Amended to allow for CBB-approved consultancy firm to prepare report on the bank's compliance with the remuneration Rules outlined in Chapter HC-5.
        HC-2.3.3 04/2016 Added a requirement for the conventional bank licensee to have in place a board approved policy on the employment of relatives of approved persons.
        HC-2.4.1A 04/2016 Added the requirement to disclose to the board on annual basis relatives of any approved persons occupying controlled functions.
        HC-7.2 04/2016 Added requirements dealing with shareholders' meetings.
        HC-2.3 and HC-2.4 07/2016 Clarified application of rules to overseas conventional bank licensees.
        HC-5.4.30(a) and HC-5.4.30A 10/2016 Amended Standard for all Remuneration
        HC-5.2.1 01/2017 Amendment in sub-paragraph (b)
        HC-7.2.4 04/2017 Amendment in paragraph on website requirement.
        HC-8.2.1 04/2017 Amendment in sub-paragraph (b) on website requirement.
        HC-7.2.3A 07/2017 Amended paragraph to be in line with Article (199) of the Commercial Companies law.
        HC-2.4.1A 10/2017 Amended paragraph.
        HC-6.5 04/2018 Added new Section on Internal Audit.
        HC-1.8.1 07/2018 Amended paragraph to be consistent with HC-6.6.
        HC-6.6 07/2018 Added new Section on Risk Management.
        HC-6.5.5 10/2018 Amended Paragraph.
        HC-6.4 01/2019 Amended Section and added new requirements on Compliance.
        HC-6.6.2A 10/2019 Added a new Paragraph on branches of foreign bank licensees.
        HC-6.6.6 10/2019 Deleted Paragraph.
        HC-6.6.7 10/2019 Amended Paragraph on branches of foreign bank licensees.
        HC-1.4.11 01/2020 Added a new Paragraph on independent directors.
        HC-1.4.12 01/2020 Added a new Paragraph on termination of Board membership of a retired, terminated CEO.
        HC-6.4.7 & HC-6.4.10 01/2020 Amended Paragraphs on policy and procedures approval.
        HC-5.4.9A 04/2020 Added a new Paragraph on KPIs compliance with AML/CFT requirements.
        HC-6.2.1 04/2020 Amended Paragraph on reporting line.
        HC-6.6.33 01/2022 Amended Paragraph.
        HC-6.6.34 01/2022 Amended Paragraph.
        HC-6.6.35 01/2022 Added a new Paragraph on the independent third-party review.
        HC-6.6.36 01/2022 Added a new Paragraph on the independent review reports.