HC-2.1.1

The approved persons must have full loyalty to the insurance licensee.

HC-2.2.1

The Board and its members must act with honesty, integrity, due skill and care, and in the best interests of the licensee, its shareholders and policyholders.

HC-2.2.2

In assessing compliance with Paragraph HC-2.2.1, the CBB will take into account all actions of the Board and its members. The interest of the licensee includes the licensee's continued compliance with all relevant Rules and Regulations, and the interests of employees, customers and other stakeholders. The interest of shareholders includes the current and future value of the licensee, its status as a going concern, transparency and disclosure of information to the market. The interest of policyholders includes ensuring that the licensee fulfils its obligations under its policies and treats all policyholders fairly and pays equal regard to the interests of all policyholders and groups of policyholders.

HC-2.2.3

Each member of the board must understand that under the Company Law he is personally accountable to the insurance licensee and the shareholders if he violates his legal duty of loyalty to the insurance licensee, and that he can be personally sued by the insurance licensee or the shareholders for such violations.

HC-2.2.4

An insurance licensee's Board must establish and disseminate to all employees and appointed representatives of the licensee a corporate code of conduct.

HC-2.2.5

The requirements of Paragraph HC-2.2.4 do not apply to captive insurance firms, but should be considered as guidance.

HC-2.2.6

The code of conduct must establish standards by giving examples or expectations of:

HC-2.2.7

The Board must establish and disseminate to employees and appointed representatives policies and processes for the identification, reporting and prevention or management of potential conflicts of interest, including matters such as:

HC-2.2.8

Any transaction in which Board members or any member of management have potential conflicts of interest should either be proscribed or require formal documented approval by the Board, with measures taken to manage those conflicts (See also Paragraph HC-2.4.1).

HC-2.2.9

The Board must ensure that policies and procedures are in place to ensure that necessary customer confidentiality is maintained.

HC-2.2.10

The duty of loyalty includes a duty not to use property of the insurance licensee for his personal needs as though it was his own property, not to disclose confidential information of the insurance licensee or use it for his personal profit, not to take business opportunities of the insurance licensee for himself, not to compete in business with the insurance licensee, and to serve the insurance licensee's interest in any transactions with a company in which he has a personal interest, such as in related party transactions.

HC-2.2.11

For purposes of Paragraph HC-2.2.10, an approved person should be considered to have a "personal interest" in a transaction with a company if:

is a party to the transaction or has a material financial interest in the transaction. (Transactions and interests which are de minimis in value should not be included.)

HC-2.3.1

Each approved person must make every practicable effort to arrange his personal and business affairs to avoid a conflict of interest with the insurance licensee.

HC-2.3.2

Any Board member should absent himself from any discussion or decision-making that involves a subject where he is incapable of providing objective advice, or which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

HC-2.3.3

Bahraini insurance licensees must have in place a board approved policy on the employment of relatives of approved persons and a summary of such policy must be disclosed in the annual report of the Bahraini insurance licensee.

HC-2.3.4

Overseas insurance licensees must have in place a policy on the employment of relatives of approved persons pertaining to their Bahrain operations.

HC-2.4.1

On an annual basis, each approved person must inform the entire Board of conflicts of interest as they arise. Board members must abstain from voting on the matter in accordance with the relevant provisions of the Company Law. This disclosure must include all material facts in the case of a contract or transaction involving the approved person. The approved persons must understand that any approval of a conflicted transaction is effective only if all material facts are known to the authorising persons and the conflicted person did not participate in the decision.

HC-2.4.1A

The chief executive/general manager of the Bahraini insurance licensee must disclose to the board of directors on an annual basis those individuals who are occupying controlled functions and who are relatives of any approved persons within the Bahraini insurance licensee.

HC-2.4.1B

The chief executive/general manager of the overseas insurance licensees must disclose to a designated officer at its head office or regional manager on an annual basis those individuals who are occupying controlled functions and who are relatives of any approved persons within the overseas insurance licensee.

HC-2.4.2

The Board of the Bahraini insurance licensee should establish formal procedures for:

HC-2.5.1

The insurance licensee must disclose to its shareholders in the Annual Report any abstention from voting motivated by a conflict of interest and must disclose to its shareholders any authorisation of a conflict of interest contract or transaction in accordance with the Company Law.