PD-A.1.1

The purpose of this Module is to set out the detailed qualitative and quantitative public disclosure requirements and disclosure to shareholders that banks should adhere to in order to enhance corporate governance and financial transparency through better practice in public disclosure. Such disclosures also help to protect customers and facilitate market discipline.

PD-A.1.2

This module provides support for certain other parts of the Rulebook, namely:

PD-A.1.3

This Module also provides support for certain aspects relating to disclosure requirements stipulated in the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006) and the Bahrain Commercial Companies Law (as amended).

PD-A.1.4

The Central Bank of Bahrain's ('CBB') disclosure requirements (in this Module) vary according to whether the concerned bank is a Bahraini Islamic bank licensee (PD-1 and PD-3) or is an overseas Islamic retail bank licensee (PD-2).

Legal Basis

PD-A.2.1

All Bahraini Islamic bank licensees must have a formal disclosure policy, inclusive of Shari'a issues, as part of their overall communications strategy approved by the Board of Directors (and supported by documented procedures) that addresses the disclosures that the bank makes and the internal controls over the disclosure process. In addition, all Bahraini Islamic bank licensees must carry out an annual review of the validity of their disclosures (in terms of scope and accuracy) as outlined in Sections BR-5.2 and AU-3.2.

PD-A.2.2

All Bahraini Islamic bank licensees are required to publish their annual audited and reviewed quarterly financial statements per the rules set out in this Module and the CBB Law, Bahrain Commercial Companies Law (as amended), the Rulebook of the licensed exchange and Volume 6 (Capital Markets), where applicable. Such financial statements must be prepared in accordance with the Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). When there are no specific accounting standards under AAOIFI, Islamic banks must use International Financial Reporting Standards (IFRS). Listed banks must refer to Paragraph PD-A.2.6.

PD-A.2.3

The CBB requires that each bank maintain an up-to-date checklist of all applicable AAOIFI standards and IFRS (where applicable) and also the disclosure requirements set out in this Module for full compliance purposes. Such checklists should be part of the bank's public disclosure procedures.

PD-A.2.4

The disclosure requirements specified in Chapters 1, 3 and 6 of this Module, which are in addition to those required by applicable accounting standards, must be reviewed by the bank's external auditor based upon agreed upon procedures (unless AAOIFI Standards or IFRS require that the concerned disclosures are audited). See also BR-1.1, BR-2.2 and AU-3.1 for more details.

PD-A.2.4A

The disclosure requirements mentioned in Paragraph PD-A.2.4 must be presented as an accompanying document or appendices to the Annual Report or in the Notes to the Financial Statements.

PD-A.2.5

The external auditor must also review other statements in the Annual Report (such as the Chairman's report) to ensure that such statements are consistent with the audited financial statements and the disclosures required by this Module. All qualitative or descriptive disclosures in the Annual Report must be based upon, and be reflective of, the facts and actual practice employed by the bank (and be subject to the above review by the bank's external auditor).

PD-A.2.6

If situations arise where disclosures required in this Module are in conflict with those required under AAOIFI Standards and IFRS and/or any listing requirements issued by the CBB or a licensed exchange, listed banks should first follow the CBB's requirements as contained in Volume 6 (Capital Markets). Unlisted banks should first follow AAOIFI standards. In such situations, banks should explain any material differences between the accounting or other disclosures and the disclosure required in this Module. This explanation does not have to take the form of a line by line reconciliation, but should provide stakeholders with sufficient detail to make an objective assessment of the bank's financial and operational health. Moreover, a formal notification to the CBB is required in such a situation.

PD-A.2.7

The bank should decide which disclosures are relevant for it based on the materiality concept and subject to the concurrence of the bank's external auditor. For the bank's guidance, information would be regarded as material if its omission or misstatement could change or influence the assessment or decision of a user relying on that information for the purpose of making economic decisions.

PD-A.2.8

Non-compliance with these disclosure requirements could lead to enforcement actions as outlined in Module EN (Enforcement).

PD-A.2.9

The disclosures referred to in this Module must be made at the top consolidated level of a banking group (i.e. at the level of the parent bank in Bahrain). Disclosures related to individual banks within a banking group will be required where listing requirements or differing accounting requirements necessitate such separate disclosure.

PD-A.2.10

With effect from 31^st December 2016, Bahraini Islamic bank licensees must follow a 3-step approach to provide a full reconciliation of all regulatory capital elements back to the published financial statements.

PD-A.2.10A

The 3-step approach is not based on a common template because the starting point for reconciliation, the bank's reported balance sheet, may vary slightly in composition from bank to bank. Full details of the reconciliation process and associated disclosures are provided in Appendix PD-2.

PD-A.2.11

With effect from 31^st December 2016, Bahraini Islamic bank licensees must use a common template to provide a description of the main features of regulatory capital instruments issued. Full details are provided in Appendix PD-3.

PD-A.2.12

With effect from 31^st December 2016, Bahraini Islamic bank licensees must disclose the full terms and conditions of all outstanding regulatory capital instruments on their website.

PD-A.2.13

With effect from 31^st December 2016, Bahraini Islamic bank licensees must use a modified version of the post 1 January 2019 template mentioned in Paragraph PD-A.2.15 until 31 December 2018. This template is established to disclose the components of capital that are benefiting from the transitional arrangements. The template and accompanying notes are provided in Appendix PD-4.

PD-A.2.14

[This Paragraph has been left blank].

PD-A.2.15

With effect from 1 January 2019, Bahraini Islamic bank licensees must use a common template (set out in Appendix PD-1) to report the breakdown of their regulatory capital when the transition period for the phasing-in of deductions ends. The template is designed to disclose all regulatory adjustments, including amounts falling below thresholds for deduction, and thus enhance consistency and comparability in the disclosure of the elements of capital between banks and across jurisdictions.

PD-A.3.1

Proprietary information encompasses information (for example on products or systems), that if shared with competitors would render a licensed bank's investment in these products/systems less valuable, and hence would undermine its competitive position. Information about customers is often confidential, in that it is provided under the terms of a legal agreement or counterparty relationship. This has an impact on what banks should reveal in terms of information about their customer base, as well as details on their internal arrangements, for instance methodologies used, parameter estimates, data etc.

PD-A.3.2

[This Paragraph was deleted in April 2016.]

PD-A.4.1

This module was first issued in January 2005 as part of the Islamic principles volume. All regulations in this volume have been effective since this date. 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.

PD-A.4.2

The most recent changes made to this Module are detailed in the table below:

Effective Date