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  • CIU-A CIU-A Introduction

    • CIU-A.1 CIU-A.1 Scope and Purpose

      • CIU-A.1.1

        Module CIU (Collective Investment Undertakings) sets out the Central Bank of Bahrain’s regulatory framework governing collective investment undertakings (‘CIUs’) that are domiciled in the Kingdom of Bahrain (‘Bahrain domiciled CIUs’). It also prescribes requirements relating to CIUs that are domiciled in an overseas jurisdiction (‘overseas domiciled CIUs’) and offered to investors within or from the Kingdom of Bahrain.

        Added: April 2022

      • CIU-A.1.2

        Module CIU constitutes the CBB’s Directive relating to CIUs and it is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 (‘CBB Law’). Module CIU is applicable to all CBB licensees and other relevant persons mentioned in the Module.

        Added: April 2022

      • CIU-A.1.3

        A CIU is defined as a scheme or arrangement, the sole object of which is the collective investment of funds raised from the public or through private placements in accordance with a defined investment policy, the purpose or effect of which is to enable the participants to receive profits or income out of the investments. The definition of CIUs includes closed-ended funds as well as open-ended funds.

        Added: April 2022

      • CIU-A.1.4

        The following are excluded from the scope of this Module:

        a) A contract of insurance, insurance linked investment products or investments managed as part of a takaful contract;
        b) Unrestricted investment accounts offered by Islamic bank licensees;
        c) Unilateral arrangements for a licensee to hold or manage assets on a discretionary or non-discretionary basis;
        d) Arrangements entirely between bodies corporate who are members of the same group, or entirely between family members or between the corporate body and its own shareholders;
        e) Pension, annuity and other employee benefit schemes organised and managed for the benefit of employees or for another corporate body;
        f) Structured products which do not represent collective pooling interests under a pre-defined investment policy;
        g) Cash savings schemes;
        h) Overseas domiciled exchange traded funds which are listed securities;
        i) Equity-based and financing-based crowdfunding offers;
        j) Securities issued by Special Purpose Vehicles in connection with direct participation of investors into private equity which is subject to requirements of OFS Module of the CBB Rulebook – Volume 6;
        k) Securities issuance by Special Purpose Vehicles as part of a securitisation of structure including sukuk; and
        l) The issue of securities and raising of capital by companies publicly or through private placements for the purpose of raising capital for financing the operations of the company which fall under the CBB Rulebook – Volume 6, Offering of Securities Module (Module OFS).
        Amended: October 2022
        Added: April 2022

      • CIU-A.1.5

        Bahrain domiciled CIUs may be established under the various legal forms which may include the following:

        (a) A CIU established by way of a contract (“contractual CIU”) between the operator and the investors; or
        (b) A trust established under the Legislative Decree No. 23 of 2016 in Respect of Trusts; or
        (c) A cell within a Protected Cells Company established pursuant to Legislative Decree No. 22 of 2016 in respect to Protected Cells Companies; or
        (d) Investment Limited Partnership established pursuant to Law No. 18 of 2016 in Respect to Investment Limited Partnerships; or
        (e) A Bahraini Shareholding Company (closed) established under the Bahrain Commercial Companies Law.
        Added: April 2022

      • CIU-A.1.6

        Module CIU distinguishes between CIUs that are classified as retail CIUs, which may be offered to all types of investors, and exempt CIUs, which may only be offered to accredited investors. Retail CIUs are subject to more restrictive investment rules, aimed at protecting the general retail investor. Private Investment Undertakings (PIUs) may only be offered ultra-high net-worth investors.

        Added: April 2022

      • CIU-A.1.7

        Module CIU distinguishes between authorisation and notification depending on the type of CIU as follows:

        Bahrain domiciled retail CIUs Authorisation
        Bahrain domiciled exempt CIUs Notification
        Overseas domiciled retail CIUs Authorisation
        Overseas domiciled exempt CIUs Notification
        Private Investment Undertakings (PIUs) Notification
        Added: April 2022

      • CIU-A.1.8

        For the purposes of Paragraph CIU-A.1.7, the authorisation process involves a review of the application and the related documentation by the CBB and an approval/rejection. Notification would involve submission of information/documents for the purpose of CBB’s monitoring.

        Added: April 2022

    • CIU-A.2 CIU-A.2 Module History

      • CIU-A.2.1

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

        Summary of Changes

        Module Ref.Change DateDescription of Changes
        CIU-A.1.410/2022Amended Paragraph on exclusions from the scope of the Module.
        CIU-A.3.1(d)10/2022Added a new sub-paragraph on safeguards.
        CIU-A.3.1(h)10/2022Added a new sub-paragraph on CIUs offered in other jurisdictions.
        CIU-A.3.210/2022Amended Paragraph removing reference to ETFs.
        CIU-1.110/2022Moved Section to CIU-A.3.
        CIU-1.5.310/2022Amended Paragraph on appointment of an independent CBB licensed fund administrator.
        CIU-1.5.1910/2022Added a new Paragraph on Bahrain domiciled ETFs being subject to Bahrain domiciled retail CIUs requirements.
        CIU-2.1.310/2022Amended Paragraph on Bahrain domiciled PIUs application fee.
        CIU-2.1510/2022Amended Paragraph specifying type of PIUs.
        CIU-2.1.610/2022Amended Paragraph specifying type of PIUs.
        CIU-2.1.710/2022Added a new Paragraph on placement agents.
        CIU-3.1.110/2022Amended Paragraph on authorisation applications.
        CIU-3.1.610/2022Amended Paragraph on placement agent notification of ceasing to offer any overseas domiciled CIUs.
        CIU-3.1.710/2022Added a new Paragraph on placement agent policies and processes.
        CIU-4.1.110/2022Amended Paragraph on the mergers of Bahrain Domiciled CIUs.
        CIU-1.2.207/2023Amended Paragraph on Bahrain domiciled retail CIUs application.
        CIU-1.2.407/2023Amended Paragraph on Bahrain domiciled exempt CIUs application.
        CIU-2.1.307/2023Amended Paragraph on Operators of Bahrain domiciled PIUs application.
        CIU-3.1.107/2023Amended Paragraph on Overseas domiciled retail CIUs application.
        CIU-604/2025Added a new Section on GCC Fund Passporting Regime.

    • CIU-A.3 CIU-A.3 General Requirements

      • CIU-A.3.1

        The operators of CIUs, or where relevant, the placement agents offering CIUs in the Kingdom of Bahrain must ensure the following:

        (a) The CIU is offered by qualified individuals who possess the ability to explain the nature, structure, investment objectives and the risks associated with investing in the CIU to investors in a manner that is clear, fair and not misleading;
        (b) The investor’s profile and suitability assessments have been undertaken in determining if he is eligible to invest in the CIU being offered;
        (c) The investors submit a declaration stating that they have read the offering documents, understand the investment objectives and are familiar with associated risks;
        (d) Safeguards are established for the CIU participants with regards to governance, investment management, custody arrangements, administration and disclosures;
        (e) The investors have access to the periodic reports specified in the offering documents in a timely manner;
        (f) Any client complaints and/or enquiries from investors are addressed including the provision of information to investors as may reasonably be required in accordance with the terms of the offering memorandum; and
        (g) They comply at all times with the laws of the Kingdom of Bahrain and the regulations of the CBB, including those related to AML/CFT.
        (h) Licensees offering CIUs in other jurisdictions must ensure full compliance with all legal and regulatory requirements in such jurisdictions.
        Amended: October 2022
        Added: April 2022

      • CIU-A.3.2

        Real Estate Investment Trusts (REITs), Venture Capital CIUs, Hedge Funds and Money Market Funds must be in accordance with the relevant CIU’s investment objectives and they reflect the substance of the specialised nature of the CIU.

        Amended: October 2022
        Added: April 2022

      • CIU-A.3.3

        A relevant person of a Bahrain domiciled CIU shall be liable for losses suffered by a CIU participant because of that relevant person’s unjustifiable failure to perform its obligations required under the CBB Law or the CBB Rulebook. The CBB does not permit relevant persons to rely on disclaimers (written or otherwise) that have the effect of restricting their liability beyond an amount considered to be reasonable and customary in the fund management industry. Accordingly, relevant persons must ensure that the contractual arrangements reflect this.

        Added: April 2022