UG-1 UG-1 Rulebook Status and Application
UG-1.1 UG-1.1 Legal Basis
General
UG-1.1.1
Volume 2 (Islamic banks) of the CBB Rulebook is issued by the CBB pursuant to the Central Bank of Bahrain and Financial Institutions Law 2006 ('the CBB Law'). The CBB Law provides for two formal rulemaking instruments: Regulations (made pursuant to Article 37) and Directives (made pursuant to Article 38). Other articles in the CBB Law also prescribe various specific requirements (for example, requirements relating to licensing (Articles 44 to 49), or the notification and approval of controllers of licensees (Articles 52 to 56)).
October 07UG-1.1.2
The Purpose Section of each Module specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module's requirements.
October 07UG-1.1.3
Islamic bank licensees that are members of the Bahrain Stock Exchange are reminded that they are also subject to the membership and operating rules of that exchange. These rules are issued by the Bahrain Stock Exchange under powers given the Exchange under the Bahrain Stock Exchange Law, Decree No. 4 of 1987 (as amended by Decree No. 21 of 2002). These rules are additional to the requirements contained in Volume 2 (Islamic banks).October 07CBB's Rulemaking Instruments
UG-1.1.4
Regulations are made pursuant to Article 37 of the CBB Law. These instruments have general application throughout the Kingdom and bind all persons ordinarily affected by Bahraini legislative measures (i.e. residents and/or Bahraini persons wherever situated).
October 07UG-1.1.5
Because Regulations have wide general application, they are subject to two important safeguards: (i) the CBB is under a duty to consult with interested parties and to review and consider their comments; and (ii) the finalised Regulations only become effective after they are published in the Official Gazette.
October 07UG-1.1.6
Where Regulations are used to support Rulebook requirements, their contents are included in the CBB Rulebook, as well as published in the Official Gazette. They only have legal effect, however, when published in the Official Gazette.
October 07UG-1.1.7
Directives are made pursuant to Article 38 of the CBB Law. These instruments do not have general application in the Kingdom, but are rather addressed to specific licensees (or categories of licensees), approved persons or registered persons. Directives are binding on those to whom they are addressed.
October 07UG-1.1.8
Unlike Regulations, there is no duty on the CBB to either consult with addressees or publicise a Directive by publishing it in the Official Gazette (save that an addressee must obviously have actual or constructive notice of a Directive). However, as a matter of general policy, the CBB also consults on Rulebook content issued by way of a Directive.
October 07UG-1.2 UG-1.2 Status of Provisions
UG-1.2.1
The contents of the Rulebook have the formal status either of Rules or Guidance.
October 07UG-1.2.2
Rules have a binding effect and breaches of Rules constitute breaches of the CBB Law. If a licensee breaches a Rule to which it is subject, it is liable to enforcement action by CBB and, in certain cases, criminal proceedings by the Office of the Public Prosecutor.
Amended: July 2012
October 07UG-1.2.3
Guidance is not binding. It is material that helps inform a particular Rule or set of Rules, or provides other general information. Where relevant, compliance with Guidance will generally lead the CBB to assess that the business has complied with the rule(s) to which the Guidance relates. Conversely, failure to comply with Guidance will generally be viewed by the CBB as tending to suggest breach of a Rule.
October 07UG-1.2.4
The status of each Paragraph within the Rulebook can be identified by its text format, as follows:
(a) Rules are in bold, font size 12. The Paragraph reference number is also highlighted in a coloured box.(b) Guidance is in normal type, font size 11.October 07UG-1.2.5
The CBB's interpretation of all Rules and Guidance in this Volume is final.
Amended: January 2011
October 2007UG-1.2.6
Paragraph UG-1.2.5 does not prejudice the rights of an authorised person to make a judicial appeal, should it believe that the CBB is acting unreasonably or beyond its legal powers.
October 07UG-1.2.7
All Rulebook content has the formal status of at least a Directive. Some Rulebook content may also have the status of Regulations. Rulebook content that is categorised as a Rule is therefore legally mandatory and must be complied with by those to whom the content is addressed.
October 07UG-1.2.8
[This paragraph was deleted in July 2012].
Deleted: July 2012UG-1.2.9
The CBB's enforcement powers and processes are set out in Module EN.
October 07UG-1.3 UG-1.3 Application
UG-1.3.1
Volume 2 of the CBB Rulebook for the most part applies only to
Islamic bank licensees and to individuals undertaking key functions in those licensees (so-called "approved persons "), except for representative offices of banks which are subject to the relevant requirements in Volume 5 (specialised activities) and conventional banks which are covered in Volume 1.October 07UG-1.3.2
A few Rules and Guidance have general applicability (and thus also have the formal status of a Regulation): for instance no one may carry on Islamic banking business within or from Bahrain without the appropriate license, and
controllers of licensees are also subject to various requirements.Amended: January 2011
October 2007UG-1.3.3
Each Module in Volume 2 contains a Scope of Application Chapter, setting out which Rules and Guidance apply to which particular type of
Islamic bank licensee or person, for the Module concerned. In addition, each Rule (or Section containing a series of Rules) is drafted such that its application is clearly highlighted for the user. Finally, each Module, in its Purpose Section, specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question (i.e. Directive and/or Regulation), and the legal basis underpinning the Module's requirements.October 07UG-1.3.4
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'.
Added: October 2016UG-1.4 UG-1.4 Effective date
UG-1.4.1
Volume 2 (Islamic Banks) of the CBB Rulebook was first issued in January 2005. It replaces all regulations previously issued with respect to
Islamic banks .Amended: January 2011
October 2007
