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  • HC-1.2 HC-1.2 Composition[versions up to January 2011]

    • HC-1.2.1 [versions up to January 2011]

      Captive insurance firms are exempt from the requirements of this section, except for Paragraphs HC-1.2.2 and HC-1.2.13, which apply to all Bahraini insurance licensees (except for unincorporated entities and single person companies).

      Amended: January 2007

    • HC-1.2.2 [versions up to January 2011]

      The Memorandum and Articles of Association of licensees must adequately set out procedures for the appointment, removal and retirement of Directors.

    • HC-1.2.3 [versions up to January 2011]

      For insurance firms, the Board must comprise at least five Directors. For Bahraini insurance licensees, other than insurance firms, the Board must comprise at least three Directors. For all Bahraini insurance licensees, at least half the Board's members, including the Board's chairman, must be non-executive Directors.

      Amended: January 2007
      Amended: October 2007

    • HC-1.2.4 [versions up to January 2011]

      A non-executive Director is a Director who is not involved in the day-to-day management of the licensee and is not an employee of the licensee. The Chairman of the Board cannot, therefore, also perform the role of Chief Executive.

      Amended: January 2007
      Amended: October 2007

    • HC-1.2.5 [versions up to January 2011]

      For licensees that do not meet the requirements of Paragraph HC-1.2.4, the CBB may grant, upon application by the licensee, a transition period allowing the licensee to maintain the current structure for a limited period (Refer to ES-2.2.2).

      Amended: January 2007

    • HC-1.2.6 [versions up to January 2011]

      The CBB requires Boards of insurance firms to include at least two independent non-executive members. For Bahraini insurance licensees, other than insurance firms, Boards must include at least one independent non-executive member.

      Amended: January 2007

    • HC-1.2.7 [versions up to January 2011]

      The Board's non-executive Directors must comprise a sufficient number of independent Directors to apply independent judgement to, amongst other things, tasks where there is a potential for conflict of interest or there is a need for impartiality.

      Amended: January 2007
      Amended: October 2007

    • HC-1.2.8 [versions up to January 2011]

      In the case of a Bahraini insurance licensee, which is part of an overseas group, where there is sufficient independent scrutiny of the operations of the firm on a group wide basis, the CBB will consider exempting the licensee from the requirements of Paragraph HC-1.2.6.

      Amended: January 2007

    • HC-1.2.9 [versions up to January 2011]

      The Board must outline in its annual report its criteria and materiality thresholds for the definition of 'independence'. The Directors must be identified in the annual report as executive, non-executive, or independent non-executive.

    • HC-1.2.10 [versions up to January 2011]

      In assessing independence, the CBB will take into account whether the person concerned is (or has been):

      (a) A controller or representative of the controller of the licensee (see Chapter GR-5 for the definition of controller);
      (b) A business partner or first-degree relative of an employee or of a Board member of the licensee concerned, or of a member of the group of which the licensee is a member;
      (c) A professional adviser to the licensee or the group of which it is a member; and
      (d) Free of any significant contractual or business relationship with the licensee, or of any of the members of a group of which it is a member.
      Amended: January 2007

    • HC-1.2.11 [versions up to January 2011]

      In assessing the number of independent non-executive Directors, the CBB will seek to ensure that independent judgement is applied to matters such as Board remuneration and audit issues.

      Amended: January 2007

    • HC-1.2.12 [versions up to January 2011]

      The appointment of Board members is conditional on the approval of the CBB. (See Section AU-1.2).

      Amended: January 2007

    • HC-1.2.13 [versions up to January 2011]

      The Board must ensure that collectively it has sufficient expertise to understand the important issues relating to the operation and control of its company.

    • HC-1.2.14 [versions up to January 2011]

      It is not expected that every Board member is proficient in all areas, but collectively the Board is expected to have the required expertise. There should also be agreed-upon procedures by the Board for Directors to take independent advice if necessary at the licensee's expense. The CBB also expects Board members to undertake relevant training on a regular basis to help them fulfill their responsibilities as Directors.

      Amended: January 2007

    • HC-1.2.15 [versions up to January 2011]

      The Board must periodically assess its composition and size and, where appropriate, reconstitute itself and its committees by selecting new Directors to replace long-standing members or those whose contributions to the licensee or its committees is not adequate.

      Amended: July 2008

    • HC-1.2.16 [versions up to January 2011]

      A Board member may have a maximum of two Directorships of financial institutions inside Bahrain. However, two Directorships of licensees within the same category of licensees would not be permitted. Insurance firms may approach the Central Bank for exemption from this limit where the Directorships concern financial institutions within the same group.

      Added: July 2008