Mind and Management

Controllers

Board and Employees

Financial Resources

Systems and Controls

External Auditors

Books and Records

Provision of Information

General Conduct

License Fees

C4-1.2.1

Applicants for a license must fill in the application for authorisation online, available on the CBB website under E-services/online Forms. The applicant must also upload PDF copies/scanned copies of the following supporting documents:

C4-1.2.2

The CBB, at its complete discretion may ask for a guarantee from the applicant’s controlling or major shareholders on a case by case basis as it deems appropriate/necessary as part of the required documents to be submitted.

C4-1.2.3

The business plan submitted in support of an application must include:

C4-1.2.4

The applicant’s memorandum and articles of association must explicitly provide for it to undertake the activities proposed in the license application and must preclude the applicant from undertaking other regulated services, or commercial activities, unless these arise out of its investment activities or are incidental to those.

C4-1.2.5

All documentation provided to the CBB as part of an application for a license must be in either the Arabic or English languages. Any documentation in a language other than English or Arabic must be accompanied by a certified English or Arabic translation thereof.

C4-1.2.6

Any material changes or proposed changes to the information provided to the CBB in support of an authorisation application that occurs prior to authorisation must be reported to the CBB.

C4-1.2.7

Articles 44 to 47 of the CBB Law govern the licensing process. This prescribes a single stage process, with the CBB required to take a decision within 60 calendar days of an application being deemed complete (i.e. containing all required information and documents). All applicants are strongly encouraged to contact the CBB at an early stage to discuss their plans, for guidance on the CBB’s requirements.

C4-1.2.8

The CBB recognises that applicants may find it difficult to complete all the incorporation procedures in the absence of preliminary assurances regarding the likelihood of obtaining a license. Therefore, CBB may provide an initial ‘in principle’ confirmation that the applicant appears likely to meet the CBB’s licensing requirements, subject to the remaining information and documents being assessed as satisfactory. The ‘in principle’ confirmation will also list all outstanding documents required before an application can be considered complete and subject to formal consideration. An ‘in principle’ confirmation does not constitute a license approval, nor does it commit the CBB to issuing a license. The applicants can later complete their applications for final approval.

C4-1.2.9

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

C4-1.2.10

Should a license be granted, the CBB will notify the applicant in writing of the fact; the CBB will also publish its decision to grant a license in the Official Gazette and in two local newspapers (one published in Arabic, the other in English).

C4-1.2.11

The CBB may refuse to grant a license if in its opinion:

C4-1.2.12

Where the CBB proposes to refuse an application for a license, it will give the applicant a written notice to that effect. Applicants will be given a minimum of 30 calendar days from the date of the written notice to appeal the decision.

C4-1.2.13

Before the final approval is granted to a licensee, confirmation from a retail bank addressed to the CBB that the licensee’s capital as specified in the business plan has been paid in must be provided to the CBB.

C4-1.2.14

Within 6 months of the license being issued, the new licensee must provide to the CBB (if not previously submitted):

C4-1.2.15

New licensees must start their operations within 6 months of being granted a license by the CBB, failing which the CBB may cancel the license, as per the powers and procedures set out in Article 48 of the CBB Law.

C4-1.2.16

Category 4 investment firms wishing to vary the scope of their license must obtain the CBB’s written approval, before effecting any such change. Such changes include whenever a licensee wishes to add or cease undertaking a regulated service, or to vary a condition imposed on their license. Licensees requesting CBB approval to undertake a new regulated service must provide the following:

C4-1.2.17

In accordance with Article 50 of the CBB Law, category 4 investment firms wishing to cancel their license or cease activities must obtain the CBB’s written approval, before ceasing their activities. All such requests must be made in writing and include the following in support of the request:

C4-1.2.18

Category 4 investment firms, after receiving the CBB’s in-principle approval for cessation of business, must invite the CBB to the Extraordinary General Meeting (EGM) held to seek the shareholder’s approval on the following:

C4-1.2.19

Once the shareholders give their approval to cease business, the licensee must publish a notice of its intention to cease business in two local daily newspapers (one in Arabic, the other in English). Notices must also be displayed in the premises (including any branch offices) of the licensee concerned. These notices must be given not less than 30 calendar days before the cessation is to take effect and must include such information as the CBB may specify including a statement that written representations concerning the liquidation may be submitted to the CBB before a specified day, which shall not be later than thirty calendar days after the day of the first publication of the notice. Prior to publication, the draft notices will be reviewed by the CBB.

C4-1.2.20

Upon completion of the period specified in Paragraph C4-1.2.19, category 4 investment firms must request the CBB’s final approval on the cessation and provide the proposed cut-off date. Licensees must also confirm in their request that either no objections to the cessation were received and/or any objections received have been adequately dealt with. The CBB will then grant the final approval to proceed with liquidation.

C4-1.2.21

Upon completion of the liquidation process, the liquidator must provide the CBB with the following:

C4-1.2.22

The category 4 investment firm must continue to comply with all applicable CBB requirements until such time as it is formally notified by the CBB that its obligations have been discharged and a final written notice of license cancellation is issued.

C4-1.2.23

As provided for under Article 48 (c) of the CBB Law, the CBB may itself move to cancel a license, for instance if a licensee fails to satisfy any of its existing license conditions or protecting the legitimate interests of customers or creditors of the licensee requires a cancellation. The CBB generally views the cancellation of a license as appropriate only in the most serious of circumstances, and generally tries to address supervisory concerns through other means beforehand. See also Chapter EN-7, regarding the cancellation or amendment of licenses, including the procedures used in such instances and the licensee’s right to appeal the formal notice of cancellation issued by the CBB.

C4-1.2.24

In accordance with Articles 47 and 49 of the CBB Law, the CBB will publish its decision to grant, cancel or amend a license in the Official Gazette and in two local newspapers, one in Arabic and the other in English, the cost of which is borne by the licensee. The CBB may also publish its decision on such cancellation or amendment using any other means it considers appropriate, including electronic means.

C4-1.2.25

Category 4 investment firms must seek prior written approval from the CBB before transferring any of its business to a third party.

C4-1.2.26

Paragraph C4-1.2.25 is intended to apply to circumstances where a category 4 investment firm wishes to sell all or part of its business to a third party. It does not apply where a category 4 investment firm is simply allocating client assets to a third party, on instruction from the client concerned or managing client assets through another asset manager.

C4-1.2.27

In the case of a Bahraini category 4 investment firm, business transfer requirements apply both to its business booked in Bahrain and in the firm’s overseas branches. In the case of an overseas category 4 investment firm, the requirements only to business booked in the firm’s Bahrain branch.

C4-1.2.28

In all cases, CBB approval to transfer business will only be given where:

C4-1.2.29

In assessing the criteria outlined in Paragraph C4-1.2.28, the CBB will, amongst other factors, take into account the financial strength of the transferee; its capacity to manage the business being transferred; its track record in complying with applicable regulatory requirements; and (where applicable) its track record in treating customers fairly. The CBB will also take into account the impact of the transfer on the transferor, and any consequences this may have for the transferor’s remaining customers.

C4-1.2.30

Category 4 investment firms seeking to obtain the CBB’s permission to transfer business must provide the following information in their request:

C4-1.2.31

Licensees intending to apply to transfer business are advised to contact the CBB at the earliest possible opportunity, prior to submitting a formal application, in order that the CBB may determine the nature and level of documentation to be provided and the need for an auditor or other expert opinion to be provided to support the application.

C4-1.2.32

At its discretion, the CBB may require that a notice of proposed transfer of business be published in the Official Gazette, and/or in at least two local daily newspapers (one in Arabic, the other in English), in order to give affected customers, the right to comment on the proposed transfer. Where such a requirement has been imposed, the CBB’s decision on the application will also be published in the Official Gazette and in at least two local daily newspapers. In all such cases, the costs of publication must be met by the transferor.

C4-1.2.33

As specified in Articles 51 and 57 of the CBB Law, a Bahraini category 4 investment firm must seek CBB approval and provide adequate information for its intention to:

C4-1.2.34

Bahraini category 4 investment firms wishing to establish or acquire a subsidiary undertaking must submit the following information to the CBB as part of the approval process:

C4-1.2.35

Bahraini category 4 investment firm wishing to establish a branch or a representative office in a jurisdiction other than the Kingdom of Bahrain, must submit the following information to the CBB as part of the approval process:

C4-1.3.1

Category 4 investment firms must obtain the CBB’s prior written approval for any person wishing to undertake a controlled function in the licensee.

C4-1.3.2

Controlled functions are those of:

C4-1.3.3

Prior approval is required for all controlled functions mentioned in Paragraph C4-1.3.2. Minimum controlled functions required to be appointed and their combinations are subject to the requirements contained Chapter C4-2 of this Module.

C4-1.3.4

Director is any person who is a member of the licensee’s Board of Directors, and is individually, and collectively with other Directors responsible for directing the affairs and overseeing the activities of the licensee.

C4-1.3.5

The Chief Executive, General Manager, Managing Partner or Co-CEO means a person who is responsible for the conduct of the licensee (regardless of actual title) and its executive management and performance, within the framework of delegated authorities set by the Board.

C4-1.3.6

Compliance officer or head of compliance function is responsible to ensure that the licensee is in compliance with the applicable legal and regulatory requirements of the CBB and any other relevant regulator/authority.

C4-1.3.7

The controlled functions of Money Laundering Reporting Officer/Deputy Money Laundering Reporting Officer are defined under Chapter FC-3.

C4-1.3.8

Head of function means a person who exercises major managerial responsibilities, is responsible for a significant business or operating unit, or has senior managerial responsibility for maintaining accounts or other records of the licensee.

C4-1.3.9

An investment consultant or investment adviser refers to the function of advising a client or potential client with respect to buying, selling, subscribing for or underwriting a particular financial instrument or exercising any right conferred by such a financial instrument.

C4-1.3.10

Category 4 investment firms seeking an approved person authorisation for an individual, must satisfy the CBB that the individual concerned is ‘fit and proper’ to undertake the controlled function in question. Each applicant applying for approved person status and those individuals occupying approved person positions must comply with the following conditions:

C4-1.3.11

For the purposes of sub-paragraph C4-1.3.17(g), category 4 investment firms should satisfy the CBB that the controllers, managing partners and the CEO collectively have adequate experience in the related fields, including venture capital, angel investing and entrepreneurship / start-ups for operators of venture capital CIUs.

C4-1.3.12

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.

C4-1.3.13

Category 4 investment firms must obtain CBB’s prior written approval before a person is formally appointed to a controlled function. The request for CBB approval must be made by submitting to the CBB the approved persons’ section of the application for authorisation and Curriculum Vitae after verifying that all the information provided is accurate. The following additional documents must be attached with the application:

C4-1.3.14

The CBB approval for the Board of director candidates of category 4 investment firms must be obtained prior to issuance of the notice/agenda of the shareholder’s meeting in which the candidates are put forward for election/approval. CBB approval of the candidates does not in any way limit the shareholders’ rights to refuse those put forward for election/approval.

C4-1.3.15

The CBB will review and assess the application for approved person status to ensure that it satisfies CBB’s ‘fit and proper’ requirements and respond within 15 business days from the date of receiving the application complete with all the required information and documents. The CBB reserves the right to refuse an application for approved person status if it does not satisfy the CBB’s requirements.

C4-1.3.16

Category 4 investment firms or the nominated approved persons may, within 30 calendar days of the notification, appeal against the CBB’s decision to refuse the application for approved person status. The CBB shall decide on the appeal and notify the licensee of its decision within 30 calendar days from submitting the appeal.

C4-1.3.17

Category 4 investment firms must immediately notify the CBB when:

C4-1.3.18

If a controlled function falls vacant, the category 4 investment firm must appoint a permanent replacement (after obtaining CBB approval), within 120 calendar days of the vacancy occurring. Pending the appointment of a permanent replacement, the licensee must make immediate interim arrangements to ensure continuity of the duties and responsibilities of the controlled function affected, provided that such arrangements do not pose a conflict of duties. These interim arrangements must be approved by the CBB.

C4-1.3.19

Category 4 investment firms must assess individuals as competent when they have demonstrated the ability to apply the knowledge and skills required to perform a specific controlled function without supervision.

C4-1.3.20

Category 4 investment firms must annually determine the training needs of individuals undertaking controlled functions. It must develop a training plan to address these needs and ensure that training is planned, appropriately structured and evaluated. The training plan of category 4 investment firms must include a programme for continuous professional development training (“CPD”) for their staff.

C4-1.3.21

Category 4 investment firms should make and retain updated records of: