C4-5 C4-5 CBB Reporting
C4-5.1 C4-5.1 Prudential Reporting
C4-5.1.1
Category 4 investment firms must complete the relevant sections of the Quarterly Prudential Return (‘Form QPR’) and submit to the CBB a soft copy of the return within 30 calendar days of each quarter end. Locally incorporatedlicensees must complete the returns on a consolidated basis while overseaslicensees must complete the returns in respect of the business booked in Bahrain branch.Added: January 2022C4-5.1.2
For the purpose of reporting requirements under this Module, the quarter end of a
licensee is a 3 month period ending on 31 March, 30 June, 30 September or 31 December.Added: January 2022C4-5.1.3
Category 4 investment firms must submit to the CBB its final audited accounts within 3 months of thelicensee’s financial year-end. Such accounts should be submitted along with the Management Letter prepared by the Auditors for the financial year.Added: January 2022C4-5.1.4
Category 4 investment firms must complete the online non-financial information related to their institution by accessing the CBB’s institutional information system (IIS).Licensees must update the required information at least on a quarterly basis or when a significant change occurs in the non-financial information included in the IIS. If no information has changed during the quarter, thelicensees must still access the IIS quarterly and confirm the information contained in the IIS.Licensees must ensure that they access the IIS within 20 calendar days from the end of the related quarter and either confirm or update the information contained in the IIS.Added: January 2022C4-5.1.5
For the purpose of onsite inspection by the CBB,
category 4 investment firms must submit the requested documents and completed questionnaires to the Inspection Directorate at the CBB three working days ahead of inspection team entry date.Added: January 2022C4-5.1.6
Category 4 investment firms must review the contents of the draft Inspection Report and submit to the Inspection Directorate at the CBB a written assessment of the observations/issues raised within ten working days of receipt of such report. Evidentiary documents supporting management’s comments must also be included in the response package.Added: January 2022C4-5.1.7
Category 4 investment firms are required to review the contents of the final Inspection Report and submit within one month, of the report issue date, a final response to such report along with an action plan addressing the issues raised within the stipulated timeline.Added: January 2022C4-5.2 C4-5.2 Notification and Approval Requirements
Notification Requirements
C4-5.2.2 C4-5.2.2
Except in instances where the CBB has initiated the following actions,
category 4 investment firms must notify the CBB immediately of any of the following events:(a) The calling of a meeting to consider a resolution for winding up thelicensee , acontroller or aparent undertaking of the licensee;(b) An application to dissolve acontroller or aparent undertaking of thelicensee ;(c) The presentation of a petition for the winding up of acontroller or aparent undertaking of thelicensee ;(d) The making of any proposals, or the making of, a composition or arrangement with any one or more of thelicensee’s creditors, for material amounts of debt;(e) An application for the appointment of an administrator or trustee in bankruptcy to acontroller or aparent undertaking of thelicensee ;(f) The appointment of a receiver to acontroller or aparent undertaking of theinvestment firm licensee (whether an administrative receiver or a receiver appointed over particular property); or(g) An application for an interim order against thelicensee , acontroller or aparent undertaking of thelicensee under the Reorganization and Bankruptcy Law or similar legislation in another jurisdiction.Added: January 2022C4-5.2.1
Category 4 investment firms must notify the CBB if any of the following has occurred, may have occurred or may occur in the near future:(a) Any matter which could have a significant adverse impact on thelicensee ’s reputation;(b) Any matter which could affect thelicensee’s ability to continue to provide adequate services to itscustomers and which could result in serious detriment to acustomer ;(c) Any matter in respect of the licensee that could result in material financial consequences to the financial system or to otherlicensees ;(d) A breach of any provision of the CBB laws and regulations;(e) If thelicensee becomes aware, or has information that reasonably suggests that it has or may have provided the CBB with information that was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material way;(f) Any legal, professional, administrative or other proceedings instituted against thelicensee ,controller or aparent undertaking of thelicensee that is significant in relation to the licensee’s financial resources or its reputation;(g) The bringing of a prosecution for, or conviction of, any material offence under any relevant law against thelicensee or against any of itsapproved persons ; and(h) It becomes aware that an employee, or another person, may have committed a fraud, it suspects fraud and identifies irregularities in its accounting or other records, or that one of its employees may be guilty of serious misconduct concerning his honesty or integrity.Added: January 2022C4-5.2.3
Category 4 investment firms must notify the CBB immediately if it becomes subject to or ceases to be subject to the supervision of any overseas supervisor (including ahome supervisor ).Added: January 2022C4-5.2.4
Where conduct of business standards applied by overseas branches and subsidiaries of a
category 4 investment firm falls below the standards set out in this Module, thelicensee must notify the CBB of the fact.Added: January 2022Approval Requirements
C4-5.2.5
Category 4 investment firms must obtain prior written approval from the CBB for the following(a) A change in its registered/trade name. The request must include the proposed new name and the date it intends to implement the change;(b) A change in the address of thelicensee’s principal place of business in Bahrain. The request must include the proposed new address and the date it intends to implement the change;(c) A change in its legal status that may, in any way, affect its relationship with or limit its liability to its customers;(d) A change in its authorised or issued capital. If thelicensee is granted approval to increase its paid-up capital, confirmation from the external auditor stating that the amount has been deposited in the licensee’s bank account or otherwise reflected in the licensee’s accounts will subsequently be required; and(e) A change in its Memorandum or Articles of Association.Added: January 2022C4-5.3 C4-5.3 Information Gathering by the CBB
C4-5.3.1
Category 4 investment firms must provide all information that the CBB may reasonably request in order to discharge its regulatory obligations. This includes providing all relevant information and assistance to the CBB inspectors and appointed experts on demand.Added: January 2022C4-5.3.2
Article 163 of the CBB Law provides for criminal sanctions where false or misleading statements are made to the CBB or any person /appointed expert appointed by the CBB to conduct an inspection or investigation on the business of the
licensee .Added: January 2022C4-5.3.3
The CBB may ask a
category 4 investment firm to provide it with information at the request of or on behalf of other supervisors to enable them to discharge their functions properly. Those supervisors may include overseas supervisors or government agencies in Bahrain. The CBB may also, without notifying thelicensee , pass on to those supervisors or agencies information that it already has in its possession.Added: January 2022C4-5.3.4
Category 4 investment firms must permit representatives of the CBB, or persons appointed for the purpose by the CBB to have access, with or without notice, during reasonable business hours to any of its business premises in relation to the discharge of the CBB’s functions under the law.Added: January 2022C4-5.3.5
Category 4 investment firms must take reasonable steps to ensure that all information they give to the CBB is:(a) Factually accurate or, in the case of estimates and judgements, fairly and properly based after appropriate enquiries have been made by thelicensee ; and(b) Complete, in that it should include everything which the CBB would reasonably and ordinarily expect to have.Added: January 2022C4-5.3.6
The CBB uses various methods of information gathering on its own initiative which require the cooperation of the
category 4 investment firm: (a) Representatives of the CBB may make onsite visits at the premises of thelicensee . These visits may be made on a regular basis, or on a sample basis, for special purposes, or when the CBB has a particular reason for visiting alicensee ;(b) Appointees of the CBB may also make onsite visits at the premises of thelicensee . Appointees of the CBB may include persons who are not CBB staff, but who have been appointed to undertake particular monitoring activities for the CBB, such as in the case ofAppointed Experts .(c) The CBB may request theinvestment firm licensee to attend meetings at the CBB’s premises or elsewhere;(d) The CBB may seek information or request documents by telephone, by emails, at meetings or in writing;Added: January 2022Appointed Experts
C4-5.3.7
The CBB uses its own inspectors to undertake on-site examinations of
licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission reports on matters relating to the business oflicensees in order to help it assess their compliance with CBB requirements. Inspections may be carried out either by the CBB’s own officials, by duly qualifiedappointed experts appointed for the purpose by the CBB, or a combination of the two.Added: January 2022C4-5.3.8
Appointed experts will be appointed in writing, through an appointment letter, by the CBB. In each case, the CBB will decide on the range, scope and frequency of work to be carried out byappointed experts .Added: January 2022C4-5.3.9
Appointed experts will report directly to and be responsible to the CBB in this context and will specify in their report any limitations placed on them in completing their work (for example due to thelicensee’s group structure). The report produced by theappointed experts is the property of the CBB (but is usually shared by the CBB with thelicensee concerned).Added: January 2022C4-5.3.10
The
appointed experts ’ report should follow the format set out in Appendix BR-1, in part B of the CBB Rulebook.Added: January 2022C4-5.3.11
Where the report is
qualified by exception , the report must clearly set out the risks which thelicensee runs by not correcting the weakness, with an indication of the severity of the weakness should it not be corrected.Appointed experts will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.Added: January 2022C4-5.3.12
If the
appointed experts conclude, after discussing the matter with thelicensee , that they will give a negative opinion (as opposed to onequalified by exception ) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.Added: January 2022C4-5.3.13
The report must be completed, dated and submitted, together with any comments by directors or management (including any proposed timeframe within which the
licensee has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.Added: January 2022C4-5.3.14
Appointed experts must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concernedlicensee , or that the interests of customers are at risk because of adverse changes in the financial position or in the management or other resources of alicensee . Notwithstanding the above, it is primarily thelicensee’s responsibility to report such matters to the CBB.Added: January 2022C4-5.3.15
Appointed experts must keep information obtained during their arrangement confidential and not divulge it to a third party except with the CBB’s permission and/or unless required by Bahrain Law.Added: January 2022C4-5.3.16
The CBB may, at its discretion, call for a
trilateral meeting (s) to be held between the CBB and representatives of the relevantcategory 4 investment firm licensee and theappointed experts . This meeting will provide an opportunity to discuss theappointed experts ’ examination of and report on thelicensee .Added: January 2022
