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  • HC-2 Board Formation

    • HC-2.1 Board Composition

      • HC-2.1.1

        The Board must comprise of individuals with a balance of skills, diversity and expertise, who individually and collectively possess the necessary qualifications commensurate with the size, complexity and risk profile of the licensee.

        Added: July 2023

      • HC-2.1.2

        The Board must have a sufficient number of independent directors. In case of a Bahraini investment firm licensees with a controller, at least one-third of the Board must be independent.

        Added: July 2023

      • HC-2.1.3

        If the Bahraini investment firm licensee has a controller or a group of controllers acting in concert, such person(s) must recognise their specific responsibility to the minority shareholders as Board members have responsibilities to the licensee’s overall interests, regardless of who appoints them.

        Added: July 2023

      • HC-2.1.4

        The CBB may call upon each independent director at its discretion to have a general discussion on the affairs of the Bahraini investment firm licensee.

        Added: July 2023

    • HC-2.2 Board Member Selection

      • HC-2.2.1

        The Board must have a clear and rigorous process for identifying, assessing and selecting Board candidates. The Board, and not management, must nominate the candidates for shareholders’ approval.

        Added: July 2023

      • HC-2.2.2

        Board candidates must:

        (a) Possess the knowledge, skills, experience and, particularly in the case of non-executive directors, independence of mind necessary to discharge their responsibilities on the Board in light of the licensee’s business and risk profile;
        (b) Have a record of integrity and good repute;
        (c) Have sufficient time to fully carry out their responsibilities;

        (d) Not have any conflicts of interest that may impede their ability to perform their duties independently and objectively and subject them to undue influence from:

        i. Other approved persons, controllers or other connected parties;
        ii. Past or present positions held; or
        iii. Personal, professional or other economic relationships with other approved persons (or with other entities within the group); and
        (e) Not have more than two directorships of financial institutions inside Bahrain. However, two directorships of investment firm licensees would not be permitted. Investment firm licensees may approach the CBB for exemption from this limit where the directorships concern financial institutions within the same group.
        Added: July 2023

      • HC-2.2.3

        Board candidates should not hold more than three directorships in public companies in Bahrain. In case such directorships exist, there must be no conflict of interest, and the Board must not propose the election or re-election of any director where such conflict of interest exists

        Added: July 2023

      • HC-2.2.4

        Nominated directors of a Bahraini investment firm licensee must possess the requisite experience and competencies specified in Module TC (Training and Competency).

        Added: July 2023

      • HC-2.2.5

        A CEO of a Bahraini investment firm licensee who has resigned or retired, may serve as a Board member of the same licensee but not as an independent director.

        Added: July 2023

      • HC-2.2.6

        Each proposal by the Board to the shareholders for election or re-election of a director must be accompanied by a recommendation from the Board and the following specific information:

        (a) The term to be served, which may not exceed three years;
        (b) Biographical details and professional qualifications;
        (c) In the case of an independent director, a statement that the Board has determined that the applicable rules and criteria for independent director have been met;
        (d) Any other directorships held;
        (e) Particulars of other positions which involve significant time commitments; and
        (f) Details of relationships (if any) between:
        i. the candidate and the licensee, and
        ii. the candidate and other approved persons of the licensee.
        Added: July 2023

      • HC-2.2.7

        Newly appointed directors must be made aware of their duties before their nomination, particularly as to the time commitment required.

        Added: July 2023

    • HC-2.3 Board Members’ Appointment and Induction

      • Board Members’ Appointment

        • HC-2.3.1

          The chairperson of the Board must confirm to shareholders when proposing re-election of a director that, following a formal performance evaluation, the person’s performance continues to be effective and they continue to demonstrate commitment to the role.

          Added: July 2023

        • HC-2.3.2

          Where an independent director has served three consecutive terms on the Board, such director will lose his independence status and must not be classified as an independent director if reappointed.

          Added: July 2023

        • HC-2.3.3

          Bahraini investment firm licensees must have a written appointment agreement with each director which recites the directors’ powers, duties and responsibilities, accountability, term, the time commitment envisaged, the committee assignment (if any), remuneration, expense reimbursement entitlement and their access to independent legal or other professional advice at the expense of the licensee when needed to discharge their responsibilities as directors.

          Added: July 2023

      • Board Members’ Induction

        • HC-2.3.4

          The Board must ensure that:

          (a) Sufficient time, budget and other resources are allocated annually for the Board members’ induction programmes;
          (b) Each new director receives a formal and tailored induction and has access to ongoing training on relevant issues which may involve internal or external resources to ensure their effective contribution to the Board from the beginning of their term; and
          (c) The induction programmes include meetings with senior management, visits to the investment firm licensee’s facilities, presentations regarding strategic plans, significant financial, accounting and risk management issues, compliance programs, and meetings with internal and external auditors and legal counsel.
          Added: July 2023

        • HC-2.3.5

          Board members must understand their oversight and corporate governance role and be able to exercise sound, objective judgment about the affairs of the investment firm licensee.

          Added: July 2023

        • HC-2.3.6

          All continuing directors must be invited to attend orientation meetings and all directors must continually educate themselves as to the licensee’s business and corporate governance.

          Added: July 2023