AU-5.1 AU-5.1 Licensing
Application Form and Documents
AU-5.1.1
Applicants for a
license must fill in the Application Form 1 (Application for a License) online, available on the CBB website under E-services/online Forms. The applicant must upload scanned copies of supporting documents listed in Paragraph AU-5.1.5, unless otherwise directed by the CBB.Amended: July 2019
Amended: April 2018
Amended: July 2007AU-5.1.2
Articles 44 to 47 of the CBB Law govern the licensing process. This prescribes a single stage process, with the CBB required to take a decision within 60 calendar days of an application being deemed complete (i.e. containing all required information and documents). See below, for further details on the licensing process and time-lines.
Amended: July 2007AU-5.1.3
References to applicant mean the proposed
licensee seeking authorisation. An applicant may appoint a representative — such as a law firm or professional consultancy — to prepare and submit the application. However, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification of any issues.Amended: July 2007AU-5.1.4
This Paragraph was deleted in January 2016.]
AU-5.1.5
Unless otherwise directed by the CBB, the following documents must be provided in support of a Form 1:
(a) A duly completed Form 2 (Application for Authorisation of Controller) for each controller of the proposed licensee;(b) A duly completed Form 3 (Application for Approved Person status), for each individual proposed to undertakecontrolled functions (as defined in Rule AU-1.2.2) in the proposedlicensee ;(c) A comprehensive business plan for the application, addressing the matters described in AU-5.1.6;(d) For overseas companies, a copy of the company's current commercial registration or equivalent documentation;(e) Where the applicant is an existing Bahraini company, a copy of the applicant's commercial registration certificate;(f) A certified copy of a Board resolution of the applicant, confirming its decision to seek a CBBinvestment firm license ;(h) In the case of applicants that are part of a regulated group, a letter of non-objection to the proposed license application from the applicant'slead supervisor , together with confirmation that the group is in good regulatory standing and is in compliance with applicable supervisory requirements, including those relating to capital requirements;(i) In the case of branch applicants, a letter of non-objection to the proposed license application from the applicant's home supervisor, together with confirmation that the applicant is in good regulatory standing and the company concerned is in compliance with applicable supervisory requirements, including those relating to capital;(j) In the case of branch applicants, copies of the audited financial statements of the applicant (head office) for the three years immediately prior to the date of application;(k) In the case of applicants that are part of a group, copies of the audited financial statements of the applicant's group, for the three years immediately prior to the date of application;(l) In the case of applicants not falling under either (j) or (k) above, copies of the audited financial statements of the applicant's major shareholder (where they are a legal person), for the three years immediately prior to the date of application;(m) In the case of applicants seeking to raise part of their capital through a private placement, a draft of the relevant private placement memorandum, together with a formal, independent legal opinion confirming that the memorandum complies with all applicable capital markets laws and regulations;(n) A copy of the applicant's memorandum and articles of association (in draft form for applicants creating a new company) addressing the matters described in AU-5.1.8;(o) [Subparagraph deleted in January 2008]; and(p) [Subparagraph deleted in January 2008].Amended: April 2011
Amended: October 2009
Amended: January 2008
Amended: July 2007AU-5.1.5A
The CBB, in its complete discretion may ask for a guarantee from the applicant's controlling or major shareholders on a case by case basis as it deems appropriate/necessary as part of the required documents to be submitted as mentioned in Paragraph AU-5.1.5 above.
Amended: January 2011
Amended: July 2010
Added: January 2008AU-5.1.6
The business plan submitted in support of an application must include:
(a) An outline of the history of the applicant and its shareholders;(b) The reasons for applying for a license, including the applicant's strategy and market objectives;/div>(c) The proposed type of activities to be carried on by the applicant in/from the Kingdom of Bahrain;(d) The proposed Board and senior management of the applicant and the proposed organisational structure of the applicant;(e) An independent assessment of the risks that may be faced by the applicant, together with the proposed systems and controls framework to be put in place for addressing those risks and to be used for the main business functions; and(f) An opening balance sheet for the applicant, together with a three-year financial projection, with all assumptions clearly outlined, demonstrating that the applicant will be able to meet applicable capital adequacy requirements.Amended: July 2010
Amended: July 2007AU-5.1.7
In the case of applicants seeking to raise capital (refer to AU-5.1.5(m)), the CBB's review is aimed at checking that the proposed private placement complies with applicable capital markets laws and regulations, and that the information contained in the private placement memorandum ('PPM') is consistent with the information provided in the license application. The CBB's review does not in any way constitute an approval or endorsement as to any claims made in the PPM regarding the future value of the company concerned. Note also that the CBB will not license applicants without a core group of sponsoring shareholders (who can demonstrate a strong business track record with relevant expertise), and where failure of the private placement to raise its targeted amount would leave the institution unable to comply with the CBB's minimum capital requirements. The CBB will normally expect core shareholders to account for at least 40% of the applicant's initial proposed total capital.
Amended: July 2007AU-5.1.7A
The PPM must comply with the requirements contained under Module OFS (Offering of Securities) of Volume 6 of the CBB Rulebook and is subject to the CBB's Capital Market Supervision Directorate's prior approval.
Added: October 2014AU-5.1.8
The applicant's memorandum and articles of association must explicitly provide for it to undertake the activities proposed in the license application, and must preclude the applicant from undertaking other regulated services, or commercial activities, unless these arise out of its investment activities or are incidental to those.
Amended: July 2007AU-5.1.9
All documentation provided to the CBB as part of an application for a license must be in either the Arabic or English languages. Any documentation in a language other than English or Arabic must be accompanied by a certified English or Arabic translation thereof.
Amended: July 2007AU-5.1.10
Any material changes or proposed changes to the information provided to the CBB in support of an authorisation application that occurs prior to authorisation must be reported to the CBB.
Amended: July 2007Licensing Process and Timelines
AU-5.1.12
By law, the 60 day time limit referred to in Paragraph AU-5.1.2 only applies once the application is complete and all required information (which may include any clarifications requested by the CBB) and documents have been provided. This means that all the items specified in Rule AU-5.1.5 have to be provided, before the CBB may issue a license.
Amended: July 2007AU-5.1.12A
The CBB recognises, however, that applicants may find it difficult to secure suitable senior management (refer AU-5.1.5(b) above) in the absence of preliminary assurances regarding the likelihood of obtaining a license.
Amended: July 2010
Adopted: July 2007AU-5.1.12B
Therefore, applicants may first submit an unsigned Form 1 in draft, together with as many as possible of the items specified in Rule AU-5.1.5. This draft application should contain at least items AU-5.1.5(a); AU-5.1.5(b), with respect to proposed
Directors (but not necessarily senior management); AU-5.1.5(c); AU-5.1.5(d); and AU-5.1.5(g) to AU-5.1.5(m) inclusive.Amended: July 2010
Adopted: July 2007AU-5.1.12C
On the basis of the information specified in Paragraph AU-5.1.12B, the CBB may provide an initial 'in principle' confirmation that the applicant appears likely to meet the CBB's licensing requirements, subject to the remaining information and documents being assessed as satisfactory. The 'in principle' confirmation will also list all outstanding documents required before an application can be considered complete and subject to formal consideration.
Adopted: July 2007AU-5.1.12D
An 'in principle' confirmation does not constitute a license approval, nor does it commit the CBB to issuing a license. However, it provides sufficient assurance for an applicant to complete certain practical steps, such as securing suitable executive staff that satisfy CBB's 'fit and proper' requirements. Once this has been done, the applicant may finalise its application, by submitting the remaining documents required under Rule AU-5.1.1 and, once assessed as complete by the CBB, a signed and dated final version of Form 1. However, a Bahraini company proposing to undertake financial services activities would not be eligible to obtain a Commercial Registration from the Ministry of Industry and Commerce unless it receives the final approval from the CBB.
Amended: July 2010
Amended: April 2008
Adopted: July 2007AU-5.1.12E
Regardless of whether an applicant submits a draft application or not, all potential applicants are strongly encouraged to contact the CBB at an early stage to discuss their plans, for guidance on the CBB's license categories and associated requirements. The Licensing Directorate would normally expect to hold at least one pre-application meeting with an applicant, prior to receiving an application (either in draft or in final).
Amended: April 2018
Adopted: July 2007AU-5.1.12F
Potential applicants should initiate pre-application meetings in writing, setting out a short summary of their proposed business and any issues or questions that they may have already identified, once they have a clear business proposition in mind and have undertaken their preliminary research. The Central Bank can then guide the applicant on the specific areas in the Rulebook that will apply to them and the relevant requirements that they must address in their application.
Adopted: July 2007AU-5.1.12G
At no point should an applicant hold themselves out as having been licensed by the CBB, prior to receiving formal written notification of the fact in accordance with Rule AU-5.1.12H below. Failure to do so may constitute grounds for refusing an application and result in a contravention of Articles 40 and 41 of the CBB Law (which carries a maximum penalty of BD 1 million).
Adopted: July 2007Granting or Refusal of License
AU-5.1.12H
To be granted a license, an applicant must demonstrate compliance with the applicable requirements of the CBB Law and this Module. Should a license be granted, the CBB will notify the applicant in writing of the fact; the CBB will also publish its decision to grant a license in the Official Gazette and in two local newspapers (one published in Arabic, the other in English). The license may be subject to such terms and conditions as the CBB deems necessary for the additional conditions being met.
Amended: October 2019
Adopted: July 2007AU-5.1.12I
The CBB may refuse to grant a license if in its opinion:
(a) The requirements of the CBB Law or this Module are not met;(b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or(c) The CBB believes it necessary in order to safeguard the interests of potential customers.Amended: October 2019
Adopted: July 2007AU-5.1.12J
Where the CBB proposes to refuse an application for a license, it will give the applicant a written notice to that effect. Applicants will be given a minimum of 30 calendar days from the date of the written notice to appeal the decision, as per the appeal procedures specified in the notice; these procedures will comply with the provisions contained in Article 46 of the CBB Law.
Amended: October 2019
Adopted: July 2007AU-5.1.12K
Before the final approval is granted to a
licensee , confirmation from a retail bank addressed to the CBB that thelicensee's capital (injected funds) — as specified in the business plan submitted under Rule AU-5.1.5) — has been paid in must be provided to the CBB.Added: July 2010Starting Operations
AU-5.1.13
Within 6 months of the license being issued, the new
licensee must provide to the CBB (if not previously submitted):(a) The registered office address and details of premises to be used to carry out the business of the proposedlicensee ;(b) The address in the Kingdom of Bahrain where full business records will be kept;(c) Thelicensee's contact details including telephone and fax number, e-mail address and website;(d) A copy of its business continuity plan;(e) A description of the IT system that will be used, including details of how IT systems and other records will be backed up;(f) A copy of the auditor's acceptance to act as auditor for the applicant;(g) [Sub paragraph deleted July 2010];(h) A copy of thelicensee's professional indemnity insurance policy or confirmation that a deposit to an amount specified by the CBB has been placed in escrow in an account at a bank licensed in the Kingdom of Bahrain (see Section GR-9.1); and(i) A copy of the applicant's notarised memorandum and articles of association, addressing the matters described in Paragraph AU-5.1.8;(j) A copy of the Ministry of Industry and Commerce commercial registration certificate in Arabic and in English;(k) An updated organisation chart showing the reporting lines, committees (if any) and including the names of the persons undertaking thecontrolled functions .(l) A copy of thelicensee's business card and any written communication (including stationery, website, e-mail, business documentation, etc.) including a statement that the investment firm is licensed by the CBB; and(m) Any other information as may be specified by the CBB.Amended: January 2011
Amended: July 2010
Amended: January 2008
Amended: July 2007AU-5.1.14
New licensees must start their operations within 6 months of being granted a license by the CBB, failing which the CBB may cancel the license, as per the powers and procedures set out in Article 48 of the CBB Law.
Amended: July 2007
