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  • C4-1.2 C4-1.2 Licensing Process

    • Application and Documents

      • 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:

        (a) A comprehensive business plan for the application;
        (b) For overseas companies, the company’s current commercial registration or equivalent documentation;
        (c) Where the applicant is an existing Bahraini company, the applicant’s commercial registration certificate;
        (d) A certified copy of a Board resolution of the applicant, confirming its decision to seek a CBB category 4 investment firm license;
        (e) Details of the proposed licensee’s group structure, if any, and in the case of applicants that are part of a regulated group, a letter of non-objection to the proposed license application from the applicant’s lead supervisor;
        (f) In the case of branch applicants, a letter of non-objection to the proposed license application from the applicant’s home supervisor, together with confirmation that the applicant is in good regulatory standing; and
        (g) In the case of branch applicants, the audited financial statements of the applicant (head office) for the three years immediately prior to the date of application;
        (h) Applicant’s memorandum and articles of association (in draft form for applicants creating a new company).
        Added: January 2022

      • 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.

        Added: January 2022

      • C4-1.2.3

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

        (a) An outline of the history of the applicant and its shareholders;
        (b) The proposed type of activities to be carried on by the applicant in/from the Kingdom of Bahrain, including the applicant’s strategy and market objectives;
        (c) The proposed Board and senior management of the applicant and the proposed organisational structure of the applicant;
        (d) An independent assessment of the risks that may be faced by the applicant, together with the proposed systems and controls framework to be put in place for addressing those risks and to be used for the main business functions; and
        (e) A proforma opening balance sheet for the applicant, together with a three-year financial projection, with all assumptions clearly outlined, demonstrating that the applicant will be able to meet applicable capital adequacy requirements.
        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • C4-1.2.9

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

        (a) Granted the application without conditions;
        (b) Granted the application subject to conditions specified by the CBB; or
        (c) Refused the application, stating the grounds on which the application has been refused and the process for appealing against that decision.
        Added: January 2022

      • 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).

        Added: January 2022

      • C4-1.2.11

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

        (a) The requirements of the CBB Law or this Module are not met;
        (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
        (c) The CBB believes it necessary in order to safeguard the interests of potential customers.
        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

    • Starting Operations

      • C4-1.2.14

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

        (a) The registered office address and details of premises to be used to carry out the business of the proposed licensee;
        (b) The address in the Kingdom of Bahrain where full business records will be kept;
        (c) The licensee’s contact details including telephone and fax number, e-mail address and website;
        (d) A copy of its business continuity plan;
        (e) A copy of the auditor’s acceptance to act as auditor for the applicant;
        (f) A copy of the licensee’s professional indemnity insurance policy;
        (g) A copy of the applicant’s notarized memorandum and articles of association;
        (h) A copy of the Ministry of Industry and Commerce commercial registration certificate in Arabic and in English;
        (j) An updated organisation chart showing the reporting lines, committees (if any) and including the names of the persons undertaking the controlled functions; and
        (k) Any other information as may be specified by the CBB.
        Added: January 2022

      • 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.

        Added: January 2022

    • Amendment of Authorisation

      • 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:

        (a) A summary of the rationale for undertaking the proposed new service;
        (b) A description of how the new service will be managed and controlled; and
        (c) An analysis of the financial impact of the new service.
        Added: January 2022

    • Cancellation of Authorisation

      • 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:

        (a) Full details of the business to be terminated;
        (b) The rationale for the cessation;
        (c) How the licensee proposes to cease business;
        (d) Evidence that the proposed cessation has been duly authorised by the licensee (such as a certified copy of a Board resolution approving the cessation); and
        (e) If applicable, an assessment of the impact of the cessation on the licensee’s remaining business and customers, and any mitigating factors or measures.
        Added: January 2022

      • 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:

        (a) Cessation and subsequent liquidation of business; and
        (b) Appointment of a liquidator.
        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • C4-1.2.21

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

        (a) Liquidation report;
        (b) Final audited accounts;
        (c) Proof of cancellation of the name of the licensee from the Commercial Registry;
        (d) The original CBB license certificate;
        (e) Proof of payment of publication fees for the CBB to publish the cancellation of license;
        (f) Confirm that there are no outstanding liabilities, claims or legal proceedings; and
        (g) Request the CBB to cancel the license.
        Added: January 2022

      • 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.

        Added: January 2022

    • Cancellation of a License by the CBB

      • 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.

        Added: January 2022

    • Publication of the Decision to Grant, Cancel or Amend a License

      • 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.

        Added: January 2022

    • Business Transfers

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

      • C4-1.2.28

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

        (a) The transfer of business will not damage or otherwise prejudice the legitimate interests of the licensee’s customers;
        (b) The transferee is duly licensed to undertake the business which it is to receive; and
        (c) The CBB is satisfied that the transfer will not breach any applicable laws or regulations and would not create any supervisory concerns.
        Added: January 2022

      • 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.

        Added: January 2022

      • 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:

        (a) Full details of the business to be transferred;
        (b) The rationale for the proposed transfer;
        (d) If applicable, an assessment of the impact of the transfer on the transferor’s remaining business and customers, and any mitigating factors or measures; and
        (e) Evidence that the proposed transfer has been duly authorised by the transferor (such as a certified copy of a Board resolution approving the transfer).
        Added: January 2022

      • 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.

        Added: January 2022

      • 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.

        Added: January 2022

    • Branches, Subsidiaries and Representative Offices

      • 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:

        (a) Enter into a merger with another undertaking;
        (b) Enter into a proposed acquisition, disposal or establishment of a new subsidiary undertaking;
        (c) Open a new place of business as a subsidiary undertaking or a branch within the Kingdom of Bahrain or other jurisdiction; or
        (d) Open a representative office in another jurisdiction.
        Added: January 2022

      • 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:

        (a) Proposed name of subsidiary;
        (b) Country of incorporation;
        (c) Legal structure;
        (d) Proposed paid-up capital;
        (e) Proposed shareholding structure;
        (f) Purpose of establishing or acquiring the subsidiary;
        (g) Draft incorporation documents of the subsidiary;
        (h) Board Resolution approving the establishment or acquisition of the subsidiary;
        (i) Names of the board members of the proposed subsidiary and the relationship of the board member to the licensee;
        (j) Names of the authorised signatories of the proposed subsidiary;
        (k) An undertaking from the board of the licensee that the board will be held ultimately responsible for any misconduct or action committed by the proposed subsidiary; and
        (l) Any other information or documentation as required by the CBB.
        Added: January 2022

      • 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:

        (a) Name of the host supervisor;
        (b) Proposed license type of the branch;
        (c) Purpose of establishing the branch or representative office;
        (d) Board Resolution approving the establishment of the branch or representative office;
        (e) The minimum requirements of the host jurisdiction; and
        (f) Any other information or documentation as required by the CBB.
        Added: January 2022