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  • HC-3.1 HC-3.1 Organisation and Assessment of the Board

    • HC-3.1.1

      The Board of a Bahraini Islamic bank licensee must:

      (a) Adopt a formal Board charter specifying matters which are reserved for it, which must include, but are not limited to, the specific requirements and responsibilities of directors stipulated in this Module and the Commercial Companies Law;
      (b) Structure itself in terms of leadership, size and the use of committees so as to effectively carry out its oversight role and other responsibilities. This includes ensuring that the Board has the time and means to cover all necessary subjects in sufficient depth and have a robust discussion of key issues;
      (c) Maintain and periodically update its governance structure, organisational rules, by-laws and other similar documents setting out its organisation, rights, responsibilities and key activities; and
      (d) Carry out annual evaluation and assessments – alone or with the assistance of external experts – of the Board, its committees and individual Board members. This must include:
      i. Assessing how the Board operates in terms of the requirements of the CBB Rulebook and the Commercial Companies Law;
      ii. Evaluating the performance of each committee considering its specific purposes and responsibilities, which shall include review of the self-evaluations undertaken by each committee;
      iii. Reviewing each director's work, their attendance at Board and committee meetings, and their independence and constructive involvement in discussions and decision making;
      iv. Reviewing, based on the Nomination Committee’s advice and assessment, the Board’s current structure, size, composition as well as committees’ structures and composition in order to maintain an appropriate balance of skills, diversity and experience and for the purpose of planned and progressive refreshing of the Board; and
      v. Recommendations for new directors to replace long-standing members or those members whose contribution to the Board or its committees is not adequate.
      Added: April 2023

    • HC-3.1.2

      Where the Board has serious reservations about the performance or integrity of a Board member, or he ceases to be qualified, the Board must take appropriate action and inform the CBB accordingly.

      Added: April 2023

    • HC-3.1.3

      The Board must report to the shareholders, at each annual shareholder meeting, that evaluations have been done and report its findings.

      Added: April 2023

    • HC-3.1.4

      Executive directors must provide the Board with all relevant business and financial information within their knowledge and must recognise that their role as a director is different from their role as a member of management.

      Added: April 2023

    • HC-3.1.5

      Non-executive directors must be fully independent of management and must constructively scrutinise and challenge management and executive directors.

      Added: April 2023

    • HC-3.1.6

      The Board must maintain appropriate records of meeting minutes, including key points of discussions held, recommendations made, decisions taken and dissenting opinions (if any).

      Added: April 2023

    • HC-3.1.7

      The Board must meet at least four times a year to enable it to discharge its responsibilities effectively, and half of all Board meetings in any financial year must be held in the Kingdom of Bahrain.

      Added: April 2023

    • HC-3.1.8

      Individual Board members must attend at least 75% of all Board meetings in a given financial year, whether in-person or virtually (if needed) so as to enable the Board to discharge its responsibilities effectively (see table below). Voting and attendance proxies for Board meetings are prohibited.

      Meetings per year 75% Attendance requirement
      4 3
      5 4
      6 5
      7 5
      8 6
      9 7
      10 8
      Added: April 2023

    • HC-3.1.9

      The absence of Board members at Board and committee meetings must be noted in the relevant meeting minutes. In addition, Board attendance percentage must be reported during any general assembly meeting when Board members stand for re-election (e.g. Board member XYZ attended xx% of scheduled meetings this year).

      Added: April 2023

    • HC-3.1.10

      If a Board member has not attended at least 75% of Board meetings in any given financial year, the licensee must notify the CBB, within one month from its financial year-end, indicating which member has failed to satisfy this requirement, their level of attendance and the reason for non-attendance. The CBB shall then consider the matter and determine whether enforcement action pursuant to Article 65 of the CBB Law is appropriate.

      Added: April 2023

    • HC-3.1.11

      Board governance framework should require members to step down if they are not actively participating in Board meetings.

      Added: April 2023

    • HC-3.1.12

      Non-executive directors should have free access to the Bahraini Islamic bank licensee’s management beyond that provided in Board meetings. Such access should be through the chairperson of the Audit Committee or the CEO. The Board should make this policy known to management to alleviate any management concerns about a director’s authority in this regard.

      Added: April 2023