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  • HC-A HC-A Introduction

    • HC-A.1 HC-A.1 Purpose

      • Executive Summary

        • HC-A.1.1

          This Module presents requirements that have to be met by insurance licensees with respect to:

          (a) Corporate governance principles issued by the Ministry of Industry and Commerce as The Corporate Governance Code;
          (b) International best practice corporate governance standards set by bodies such as the International Association of Insurance Supervisors; and
          (c) Related high-level controls and policies.
          January 2011

        • HC-A.1.2

          The Principles referred to in this Module are in line with the Principles relating to the Corporate Governance Code issued by the Ministry of Industry and Commerce.

          January 2011

        • HC-A.1.3

          The purpose of the Module is to establish best practice corporate principles in Bahrain, and to provide protection for investors and other company stakeholders through compliance with those principles.

          January 2011

        • HC-A.1.4

          Whilst the Module follows best practice, it is nevertheless considered as the minimum standard to be applied. This Module also includes additional rules and guidance issued by the CBB prior to the publication of the Code and previously contained in Module HC.

          January 2011

      • Structure of this Module

        • HC-A.1.5

          This Module follows the structure of the Corporate Governance Code and each Chapter deals with one of the nine fundamental Principles of corporate governance. In addition, a Chapter has been added to deal specifically with requirements imposed on insurance consultants, insurance managers and captive insurance firms. The numbered directives included in the Code are Rules for purposes of Chapters HC-1 to HC-9. Recommendations under the Code have been included as guidance. However, where the previous version of Module HC had a similar recommendation as a Rule, the Module retains this Paragraph as a Rule.

          January 2011

        • HC-A.1.6

          The Module also incorporates other high-level controls and policies that apply in particular to insurance licensees.

          January 2011

        • HC-A.1.7

          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'.

          January 2011

      • The Comply or Explain Principle

        • HC-A.1.8

          This Module is issued as a Directive (as amended from time to time) in accordance with Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). In common with other Rulebook Modules, this Module contains a mixture of Rules and Guidance (See Module UG-1.2 for detailed explanation of Rules and Guidance). All Rulebook content that is categorised as a Rule must be complied with by those to whom the content is addressed. Other parts of this Module are Guidance; nonetheless every insurance licensee to whom Module HC applies, is expected to comply with recommendations made as Guidance in Module HC or explain its noncompliance by way of an annual report to its shareholders and to the CBB (see Chapter HC-8).

          January 2011

      • Monitoring and Enforcement of Module HC

        • HC-A.1.9

          Disclosure and transparency are underlying principles of Module HC. Disclosure is crucial to allow outside monitoring to function effectively. This Module looks to a combined monitoring system relying on the Board, the insurance licensee's shareholders and the CBB.

          January 2011

        • HC-A.1.10

          It is the Board's responsibility to see to the accuracy and completeness of the insurance licensee's corporate governance guidelines and compliance with Module HC. Failure to comply with this Module is subject to enforcement measures as outlined in Module EN (Enforcement).

          January 2011

      • Legal Basis

        • HC-A.1.11

          This Module contains the CBB's Directive (as amended from time to time) relating to high-level controls and is issued under the powers available to the CBB under Article 38 of the CBB Law. The Directive in this Module is applicable to insurance licensees (including their approved persons).

          January 2011

        • HC-A.1.12

          For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

          January 2011

      • Effective Date

        • HC-A.1.13

          This updated Module issued is effective on 1st January 2011. All insurance licensees to which Module HC applies should be in full compliance by the financial year end 2011. At every insurance licensee's annual shareholder meeting held after 1st January 2011, corporate governance should be an item on the agenda for information and any questions from shareholders regarding the insurance licensee's governance. Where possible, the insurance licensee should also have corporate governance guidelines in place at that time and should have a "comply or explain" report as described in Paragraph HC-A.1.8.

          January 2011

    • HC-A.2 HC-A.2 Module History

      • HC-A.2.1

        This Module was first issued in April 2005 by the BMA and updated in January 2007 to reflect the switch to the CBB. Following the issuance of the Corporate Governance Code by the Ministry of Industry and Commerce in March 2010, the Module was amended in January 2011 to be in line with the new Code and to include previous requirements that were in place in the originally issued Module HC. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

        January 2011

      • HC-A.2.2

        A list of recent changes made to this Module is detailed in the table below:

        Module Ref. Change Date Description of Changes
        HC-1 to HC-10 01/2011 Amendments due to introduction of new MOIC Corporate Governance Code.
        HC-1.3.7 04/2011 Clarified the rules regarding the limitation on Directorships held by board members.
        HC-1.4 04/2011 Amendment made to reflect new Rules on attendance of Directors at Board of Directors meetings.
        HC-6.6.3 04/2011 Guidance added dealing with the compliance function.
        Appendix A 04/2011 Clarified membership of audit committee to be in line with Rule HC-3.2.1.
        HC-B.2.2 01/2012 Clarified language related to corporate governance.
        HC-1.2.5 and HC-1.6.3 01/2012 Clarified that the Chairman of the Board may delegate specific duties dealt with in these Paragraphs.
        HC-1.4.4B 01/2012 Corrected typo.
        HC-1.5.7, HC-1.5.7A and HC-1.5.7B 01/2012 Clarified rule and guidance on the chairman of the Board.
        HC-1.10.1 01/2012 Deleted last sentence.
        HC-5.6.6 01/2012 Amended Paragraph.
        Appendix D 01/2012 Disclosure to shareholders amended.
        HC-7.2.5 and HC-10.7.6 10/2012 Clarified Guidance on election of board members.
        Appendices A, B and C 10/2012 Amended requirement for written report on performance evaluation for various Board committees.
        Appendix A 10/2012 Included reference to compliance under Committee Duties and Responsibilities.
        HC-2.2.3 and HC-2.4.1 01/2013 Clarified scope of application for Rules.
        HC-1.3.4 and HC-10.1.8 10/2014 Minor corrections to be consistent with wording used in other Volumes of the CBB Rulebook.
        HC-1.11.2, HC-2.2.5, HC-6.5.1 and HC-8.2.1 10/2014 Removed reference to single person company as HC-B.1.1 clearly states that the contents of this Module do not apply to insurance licensees with this legal status.
        HC-2.3.3 and HC-10.2.5A 04/2016 Added a requirement (or guidance, based on type of insurance license) for the licensee to have in place a board approved policy on the employment of relatives of approved persons.
        HC-2.4.1A and HC-10.2.6A 04/2016 Added the requirement (or guidance, based on type of insurance license) to disclose to the board on annual basis relatives of any approved persons occupying controlled functions.
        HC-2.3, HC-2.4 and HC-10.2 07/2016 Clarified application of Rules (or guidance, based on the type of insurance license) for overseas licensees.
        HC-B.1.3 10/2019 Added Insurance Aggregators.
        HC-10 10/2019 Added Insurance Aggregators to the Section.
        HC-1.2.2 & HC-1.11.5 01/2020 Amended Paragraphs on policy and procedures approval.
        HC-5.4.3 04/2020 Added a new Paragraph on KPIs compliance with AML/CFT requirements.
        HC-9.4 10/2020 Added a new Section on Terms of Appointment and Competence of the SSB.
        HC-1.5.8 04/2021 Amended Paragraph on independent directors.
        HC-1.5.10 04/2021 Added a new Paragraph on Directors Independence status.
        HC-1.5.11 04/2021 Added a new Paragraph on termination of Board membership of a retired, terminated CEO.
        HC-4.4.3 04/2021 Added a new Paragraph on notification on any change in board categorisation.

      • HC-A.2.3

        Guidance on the implementation and transition to Volume 3 (Insurance) is given in Module ES (Executive Summary).

        January 2011