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  • HC-3.4 Audit Committee

    • HC-3.4.1

      The audit committee of the Bahraini investment firm licensee must have at least three directors of which the majority must be independent and have no conflict of interest with any other duties they have.

      Added: July 2023

    • HC-3.4.2

      The Chairperson of the audit committee must:

      (a) Be independent; and
      (b) Not be the chairperson of the board, unless he is considered independent.
      Added: July 2023

    • HC-3.4.3

      The CEO and other senior management of the Bahraini investment firm licensee must not be members of the audit committee.

      Added: July 2023

    • HC-3.4.4

      The audit committee members must have sufficient experience in audit practices, financial reporting and accounting.

      Added: July 2023

    • HC-3.4.5

      The audit committee must meet:

      (a) At least four times a year.
      (b) At least twice a year with the external auditor.
      (c) At least once a year in the absence of the CEO and any executive management, but in presence of the Head of Compliance, Internal Auditor and CRO.
      Added: July 2023

    • HC-3.4.6

      The audit committee must, at minimum:

      (a) Ensure that the licensee has effective and adequate policies covering all its business activities, internal audit, financial reporting, compliance, risk management, prevention of frauds and cyber security breaches, etc.;
      (b) Oversee the financial reporting process;
      (c) Oversee and interact with the licensee’s internal and external auditors;
      (d) Review the integrity of the licensee’s financial statements;
      (e) Recommend to the Board, based on a Board approved objective criteria, the appointment, remuneration, dismissal and rotation of external auditors;
      (f) Review and approve the internal and external audit and compliance scope;
      (g) Receive internal and external audit and compliance reports and ensure that senior management is taking necessary corrective actions in a timely manner to address any control weaknesses, non-compliance with policies, laws and regulations, and other problems identified by auditors, the head of compliance and other control functions;
      (h) Assess once a year the extent to which the licensee is managing its compliance risk effectively;
      (i) Ensure that the agenda for their meetings includes compliance and internal audit issues at least every quarter;
      (j) Recommend the appointment and dismissal of the heads of internal audit and compliance functions. The licensee must also discuss the reasons for their dismissal with the CBB.
      (k) Make a determination, at least once a year, of the external auditor’s independence;
      (l) Review and supervise the implementation and enforcement of the licensee's code of conduct, unless such mandate is delegated to another committee such as the Governance Committee; and
      (m) Ensure that senior management establishes and maintains an adequate and effective internal control systems, procedures and processes for the business of the licensee.
      Added: July 2023

    • HC-3.4.7

      In case the licensee has a different board committee overseeing and monitoring compliance issues, then all of the above compliance-related requirements in Paragraph HC-3.4.6 can be handled by such committee instead.

      Added: July 2023