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  • CFP-1.1 CFP-1.1 Platform Offers & Disclosures

    • CFP-1.1.1

      Crowdfunding platform operators must prominently display on their website the following:

      (a) A general risk warning;
      (b) Details of how and by whom the operator is remunerated for the service it provides, including fees and charges it imposes on lenders/investors and borrowers/issuers;
      (c) For financing-based crowdfunding: the actual default rates as a percentage of loans entered into on the platform and the number and aggregate value of loans in default; and
      (d) For equity-based crowdfunding: the actual failure rate of issuers who use the platform.
      (e) The offering statement for each crowdfunding offer which must disclose any conflicts of interest (as required by Chapter 2); and
      (f) Information on rights of clients relating to participation in crowdfunding offer, including right to withdraw commitments, lodging complaints and any voting rights.
      Added: April 2022

    • CFP-1.1.2

      A crowdfunding offer is open from the time when it is first published on the platform and must be closed on the closing date or at the earliest of the following:

      (a) Three months after the offer is made, unless a specific approval has obtained from the CBB;
      (b) When the offer is fully subscribed (unless over-subscription is allowed); and
      (c) When the borrower/issuer making the offer withdraws the offer;
      Added: April 2022

    • CFP-1.1.3

      A crowdfunding offer must be withdrawn by the crowdfunding platform operator if it has material concerns regarding the crowdfunding borrower/issuer or it becomes aware of any information that indicates the offer is misleading, fraudulent, deceptive.

      Added: April 2022

    • CFP-1.1.4

      A crowdfunding borrower/issuer is subject to the following limits in respect of crowdfunding:

      (a) Financing-based crowdfunding offers must be less than or equal to BD 500,000 in aggregate, per borrower, within a 12-month period, except where the funding raised is to be used for a Government of Bahrain led initiative/project. Additionally, the tenor of loans must not exceed 5 years; and
      (b) Equity-based crowdfunding offers must be less than or equal to BD 250,000, per issuer, (or BD 500,000 in respect of equity crowdfunding issuers who qualify as entities engaged in real estate projects) within a 12-month period.
      Added: April 2022

    • CFP-1.1.5

      The minimum subscription to be received in a crowdfunding offer must not be less than 80% of the crowdfunding offer size.

      Added: April 2022

    • CFP-1.1.6

      Crowdfunding platform operators must provide users the following information upon on-boarding:

      (a) The process for the offering of loans or equity through the platform and the risks associated with lending or investing in crowdfunding offers;
      (b) The limits on raising funds applicable on borrowers/issuers;
      (c) The right of retail clients to withdraw their commitments within 5 working days from the time the commitment is made;
      (d) The existence or non-existence of a secondary market;
      (e) The due-diligence process of the platform for hosting a borrower/issuer; and
      (f) Whether there will be an ongoing relationship between the platform and the borrower/issuer following the closing of an offer.
      Added: April 2022

    • CFP-1.1.7

      Crowdfunding platform operators must additionally display on their website key information on how their platform operates, including:

      (a) The eligibility criteria for borrowers/lenders and issuers/investors that use the platform;
      (b) Arrangements and safeguards for client money held or controlled by the operator, including details of any legal arrangements (such as nominee accounts) that may be used to hold client money;
      (c) What will happen if loans sought by a borrower or funds sought by an issuer either fail to meet, or exceed, the target level;
      (d) Steps the operator will take and the rights of the relevant parties if there is a material change in a borrower’s or an issuer’s circumstances;
      (e) How the operator will deal with overdue payments or a default by a borrower or failure of an issuer; and
      (f) Which jurisdiction’s laws will govern the financing agreement.
      Added: April 2022

    • CFP-1.1.8

      Crowdfunding platform operators must provide on their platform a user-friendly facility to allow investors/lenders to make their bid to crowdfunding offers. Such bids may only be made during the period a crowdfunding offer is available for investment/lending. Licensees must also provide on their platform a facility for communication among the investors/lenders, borrowers/issuers and the crowdfunding platform operator (e.g. an online forum).

      Added: April 2022

    • CFP-1.1.9

      Crowdfunding platform operators must allot/allocate shares, in accordance with the allotment basis stipulated in the equity crowdfunding offering statement, within 7 working days from closing date.

      Added: April 2022

    • CFP-1.1.10

      Crowdfunding platform operators must not advertise a specific crowdfunding offer hosted on its platform or make any public statements that are reasonably likely to induce people to fund a particular crowdfunding offer. This requirement does not prevent an operator from generally promoting its platform to potential clients, provided it does not advertise a specific offer.

      Added: April 2022

    • CFP-1.1.11

      Crowdfunding platform operators must have in place effective and transparent procedures for the prompt, fair and consistent handling of complaints received from clients in accordance with Section GR-10 of GR Module and publish the procedures on their websites.

      Added: April 2022

    • CFP-1.1.12

      For the purposes of this module, commercial entities incorporated in the Kingdom of Bahrain or incorporated in an overseas jurisdiction that is not a UN sanctioned, non-cooperative or high-risk jurisdiction are eligible to be hosted on crowdfunding platform operator, except the following:

      (a) Financial institutions;
      (b) Public-listed companies; and
      (c) Holding company structures and non-operative special purposes vehicles (SPVs).
      Added: April 2022

    • Offers to Retail Clients

      • CFP-1.1.13

        Crowdfunding platform operators, upon onboarding retail clients, must undertake a suitability and appropriateness assessment to gauge the client’s knowledge, experience, financial situation (including the client’s ability to bear losses) and the client’s understanding of risks associated with crowdfunding by seeking information from the lender/investor.

        Added: April 2022

      • CFP-1.1.14

        Crowdfunding platform operators must ensure that each retail client completes a self-declaration form before the client is allowed to use the platform which must include the following acknowledgements:

        (a) that the client understands the risks involved in crowdfunding;
        (b) that the client will only commit money that the client can afford to lose;
        (c) that the client understands the potential to lose part or all of his investment made on the platform;
        (d) that the client may face difficulties in exiting his investments made on the platform; and
        (e) that the client is aware that the crowdfunding offer has neither been reviewed nor approved by the CBB.
        Added: April 2022

      • CFP-1.1.15

        Crowdfunding platform operators must provide retail clients unconditional right to withdraw their commitment to lend or invest in a crowdfunding offer within 5 working days from the time the commitment is made. No fee or penalty must be charged to such persons if a commitment is withdrawn.

        Added: April 2022