UG-1 UG-1 Rulebook Status and Application
UG-1.1 UG-1.1 Legal Basis
UG-1.1.1
Volume 3 (Insurance) of the CBB Rulebook is issued by the CBB pursuant to the Central Bank of Bahrain and Financial Institutions Law 2006 (‘CBB Law’). The CBB Law provides for two formal rulemaking instruments: Regulations (made pursuant to Article 37) and Directives (made pursuant to Article 38). Other articles in the CBB Law also prescribe various specific requirements (for example, requirements relating to licensing (Artilces 44 to 49), or the notification and approval of controllers of licensees (Articles 52 to 56)).
Amended: January 2007UG-1.1.2
The Purpose Section of each Module specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module’s requirements.
Amended: January 2007UG-1.1.3
The requirements for
representative offices will be covered as part of Volume 5 (Specialised activities) of the Rulebook and will be issued at a later date.Amended: January 2007
Amended: October 2007CBB's Rulemaking Instruments
UG-1.1.4
Regulations are made pursuant to Article 37 of the CBB Law. These instruments have general application throughout the Kingdom and bind all persons ordinarily affected by Bahraini legislative measures (i.e. residents and/or Bahraini persons wherever situated).
Added: January 2007UG-1.1.5
Because Regulations have wide general application, they are subject to two important safeguards: (i) the CBB is under a duty to consult with interested parties and to review their comments; and (ii) the finalised Regulations only become effective after they are published in the Official Gazette.
Added: January 2007UG-1.1.6
Directives are made pursuant to Article 38 of the CBB Law. These instruments do not have general application in the Kingdom, but are rather addressed to specific
licensees (or categories oflicensees ),approved persons orregistered persons . Directives are binding to whom they are addressed.Added: January 2007UG-1.1.7
Unlike Regulations, there is no duty on the CBB to either consult with addressees or publicise a Directive by publishing it in the Official Gazette (save that an addressee must obviously have actual or constructive notice of a Directive). However, as a matter of general policy, the CBB also consults on Rulebook content issued by way of a Directive.
Added: January 2007UG-1.1.8
All of the content of the CBB Rulebook has the legal status of at least a Directive, issued pursuant to Article 38 of the CBB Law. Certain of the requirements contained in the CBB Rulebook may also have the status of a Regulation, in which case they are also separately issued pursuant to Article 37 of the CBB Law and published in the Official Gazette. When this is the case, then the Rulebook crossrefers to the Regulation in question and specifies the requirements concerned.
Adopted: July 2007UG-1.1.9
In keeping with the nature of these regulatory requirements, Regulations are used to supplement the CBB Rulebook, either where explicitly required under the CBB Law, or where a particular requirement needs to have general applicability, in addition to being applied to licensees,
approved persons , or registered persons.Adopted: July 2007
Amended: October 2007UG-1.2 UG-1.2 Status of Provisions
UG-1.2.1
The contents of the CBB Rulebook are categorised either as Rules or as Guidance. Rules have a binding effect. If a licensee breaches a Rule to which it is subject, it is liable to enforcement action by the CBB and, in certain cases, criminal proceedings by the Office of the Public Prosecutor.
Amended: October 2012
Amended: January 2007UG-1.2.2
Guidance is not binding; rather, it is material that helps inform a particular Rule or sets of Rules, or provides other general information. Where relevant, compliance with Guidance will generally lead the CBB to assess that the rule(s) to which the Guidance relates has been complied with. Conversely, failure to comply with Guidance will generally be viewed by the CBB as tending to suggest breach of a Rule.
Amended: October 2012
Amended: January 2007UG-1.2.3
The status of each Paragraph within the Rulebook is identified by its text format, as follows:
• Rules are in bold, font size 12. The Paragraph reference number is also highlighted in a coloured box.• Guidance is in normal type, font size 11.
Amended: January 2007UG-1.2.4
Where there are differences of interpretation over the meaning of a Rule or Guidance, the CBB reserves the right to apply its own interpretation.
Amended: January 2007UG-1.2.5 [Deleted]
Deleted: January 2007UG-1.2.6 [Deleted]
Deleted: January 2007UG-1.2.7 [Deleted]
Deleted: January 2007UG-1.2.5
Rule UG-1.2.4 does not prejudice the rights of an authorised person to make a judicial appeal, should it believe that the CBB is acting unreasonably or beyond its legal powers.
Amended: January 2007UG-1.2.6
All Rulebook content has the formal status of at least a Directive. Some Rulebook content may also have the status of Regulations. Rulebook content that is categorised as a Rule is therefore legally mandatory and must be complied with by those to whom the content is addressed.
Added: January 2007UG-1.2.7
[This Paragraph was deleted in October 2012].
Deleted: October 2012
Added: January 2007UG-1.2.8
The CBB’s enforcement processes are set out in Module EN.
Added: January 2007UG-1.3 UG-1.3 Application
UG-1.3.1
Volume 3 of the CBB Rulebook for the most part applies to all
insurance licensees ; to individuals undertaking key functions in those licensees (so-called “approved persons”); and to certain support services (actuaries andloss adjusters ). (Representative offices are subject to the relevant requirements in Volume 5 of the CBB Rulebook). Further information and relevant definitions are provided in Module AU (Authorisation). Most of the content of Volume 3 only has the formal status of a Directive.Amended: January 2007
Amended: October 2007UG-1.3.2 [Deleted]
Deleted: January 2007UG-1.3.2
A few Rules and Guidance have general applicability (and thus also have the formal status of a Regulation); for instance, no one may carry on an insurance business within or from Bahrain without the appropriate license, and
controllers ofinsurance licensees are also subject to various requirements.Amended: January 2007
Amended: October 2007UG-1.3.3
Each Module in Volume 3 (except those listed under the 'Introduction' and 'Sector Guides' headings) contains a Scope of Application Chapter, setting out which Rules and Guidance apply to which particular type of
insurance licensee or person, for the Module concerned. In addition, each Rule, (or Section containing a series of Rules) is drafted such that its application is clearly highlighted for the user. Finally, each Module, in its Purpose Section, specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module’s requirements.Amended: January 2007UG-1.3.4
All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.
Added: October 2016UG-1.4 UG-1.4 Effective Date
UG-1.4.1
Volume 3 (Insurance) of the CBB Rulebook was first issued in April 2005. Its contents have immediate effect, subject to transition arrangements that may be specified.
Amended: January 2007UG-1.4.2
Module ES (Executive Summary) contains details of the implementation and transition arrangements for Volume 3 (Insurance).
