Part B
Glossary of Terms
Glossary History
Version Date Description of Changes April 2006 Initial Launch July 2006 Page 19 ("R"): deletion of 'acting as a financial trust service provider' from the definition of 'regulated investment services'. July 2007 • Changes to definitions of: administrator(s); authorised person(s); collective investment undertaking(s); family; property.• New definitions included: closed-ended fund(s); custodian(s); Investment Business Code of Practice; Islamic investment firm; overseas Category 1 investment firm.July 2008 Added definition for accredited investor, dematerialised safe custody financial instruments and expert investor. October 2009 • Changes to definitions of: accredited investor; expert investor and subsidiary undertaking.• New definitions included: investigator; qualified by exception; managing director and retail client.• Deleted definitions of: appointed expert, market counterparty and professional client.July 2010 New definitions included: appointed expert, listed company, reporting accountant and trilateral meeting. January 2011 • Amended definition of: Chief Executive Officer.• New definition included: Dated subordinated debt, Executive director, Independent director, licensed exchange(s), market, minimum capital requirements, Non-executive director, original term, remuneration, senior manager/management.April 2011 • Amended definition of executive director and managing director.• New definitions include: branch(es), host regulator/supervisor.October 2011 • Added definition of: Conflict of interest.• Amended definition of appointed expert(s), family, qualified by exception and trilateral meeting.• Clarified definition of independent director.January 2012 • Amended definition of Collective investment undertaking(s) (CIU(s)) and independent director.October 2012 • Added definition for underwrite/underwriting.January 2013 • Added definition for financial services.• Amended definition for public offering.July 2013 • Added definition for Bahrain domiciled CIU.• Amended the definition of subsidiary undertaking.October 2013 Removed the term 'appointed representative(s)' October 2014 Amended cross reference for relevant authorities. October 2015 Added definition for ultimate parent undertaking. July 2016 Amended definition of Politically Exposed Persons (PEPs). October 2017 Added definition of Beneficial Owner. April 2019 Added definition of Digital Financial Advice. October 2019 Added definition of 'without delay'. July 2020 Amended definition of Independent Director. October 2020 Amended definition of Accredited Investor. October 2020 Added point (f) in definition of Independent Director. July 2022 Amended definition of accredited investor(s). October 2023 Added definitions of Family, Family Clients, Family Office Licensees, Investment Management and Wealth Management Advice. January 2024 Added definitions of Beneficiary, Beneficiary Financial Institution, Ordering Financial Institution and Originator. [ A ]
Accredited Investor
Accredited investors are defined as investors meeting the following criteria:(a) Individuals who have a minimum net worth (or joint net worth with their spouse) of USD 1,000,000, excluding that person’s principal place of residence;(b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 1,000,000; or(c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest in financial instruments (such as state pension funds).Individuals and commercial undertakings may elect in writing to be treated as accredited investors subject to meeting at least two of the following conditions:
(a) The investor has carried out trading/investing transactions, in significant size (i.e. value of transactions aggregating USD 200,000) over the last 12-month period;(b) The size of the investor's financial assets portfolio including cash deposits and financial instruments is USD 500,000 or more; and/or(c) The investor works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged (i.e. the position was professional in nature and held in a field that allowed the client to acquire knowledge of transactions or services that have comparable features and a comparable level of complexity to the transactions or services envisaged).Amended: July 2022
Amended: October 2020
Amended: Oct 09
Added: July 08Administrator(s)
Administrators are persons who undertake the administration offinancial instruments and other assets, for a third party. Administration may include the following activities:(a) Legal and fund management accounting services;(b) Client enquiries;(c) Valuation and pricing (including tax returns);(d) Regulatory compliance monitoring;(e) Maintenance of unit-holder register;(f) Distribution of income;(g) Issuance and redemption ofholdings in aCIU ;(h) Contract settlements (including certificate dispatch); and(i) Record-keeping.Amended: July 2007Ancillary services provider(s)
A person who is licensed by the CBB in relation to the carrying on of one or more ancillary services, such as administrators, or those providing compliance services, data-processing services, or a local service or management office, with respect to other CBB licensees. Such persons are not subject to Volume 4 of the CBB Rulebook, but are separately licensed and subject to the requirements contained in the relevant CBB's 'Standard Conditions and Licensing Criteria' (cf. AU-A.1.10).
Amended: July 2007Appointed Expert(s)
A duly qualified individual or firm appointed by the CBB to carry out inspections in accordance with Article 114 of the CBB Law or special investigations of licensees in accordance with Article 121 of the CBB Law. Appointed experts may be appointed in addition to the CBB's own officials. Examples of appointed experts include
reporting accountants , lawyers, privateinvestigators , expert witnesses and independent actuaries.Amended: January 2012
Amended: October 2011
Added: July 2010Appointed Representative(s)
[Deleted in October 2013].
Deleted: October 2013Approved Person(s)
Approved Persons are individuals holding certain specified positions inCBB licensees ; they must be approved by the CBB prior to taking on those positions and must demonstrate that they are fit and proper. The list of positions subject to the CBB'sApproved Persons regime vary according to the CBB license Category, but generally cover directors and senior management, as well as certain other positions.Approved Persons requirements are specified in the relevant Rulebook Volume for the license Category in question.Amended: July 2007Authorised person(s)
A person authorised either as a CBB
licensee or anApproved Person .Amended: July 2007[ B ]
Bahrain domiciled CIU(s) (as defined under Volume 7)
Bahrain domiciled CIUs are undertakings where:
(a) The legal form of the CIU is established under the laws of the Kingdom of Bahrain; and(b) The CIU documents and contractual agreements are governed by the Laws of the Kingdom of Bahrain.Added: July 2013Bahraini investment firm licensee
An investment firm that is incorporated in the Kingdom of Bahrain (and is therefore not an
overseas investment firm licensee ). The same naming convention applies to the various sub-categories of investment firm: e.g. a BahrainiCategory 1 investment firm is aCategory 1 investment firm that is incorporated in the Kingdom of Bahrain. See AU-A.1.5; andoverseas investment firm licensee below.Beneficial Owner
Refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. This definition should also apply to "Ultimate beneficial ownership".
Added: October 2017Beneficiary
(As used in Module FC): refers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire/crypto-asset transfer.
Beneficiary Financial Institution
Refers to the financial institution which receives the wire/crypto-asset transfer from the ordering financial institution directly or through an intermediary financial institution and makes the funds/crypto-assets available to the beneficiary.
Bonds
An instrument creating or acknowledging a present or future indebtedness (i.e. debentures, debenture stock, loan stock, bonds, certificates of deposit and any other instruments creating or acknowledging a present or future indebtedness), but excluding:
(a) An instrument creating or acknowledging indebtedness for, or for money borrowed to defray, the consideration payable under a contract for the supply of goods and services;(b) A cheque or other bill of exchange, a bankers draft or a letter of credit (but not a bill of exchange accepted by a banker);(c) A banknote, a statement showing a balance on a bank account, or a lease or other disposition of property; and(d) A contract of insurance.Amended: January 2011Branch(es)
A place of business which is a part of a firm and which has no separate legal personality.
Added: April 2011[ C ]
Category 1 investment firm
An investment firm licensee as defined in AU-1.1.13.
Category 2 investment firm
An investment firm licensee as defined in AU-1.1.15.
Category 3 investment firm
An investment firm licensee as defined in AU-1.1.17.
Chief Executive, Chief Executive Officer or CEO
Chief executive, chief executive officer or CEO. The board shall determine that person's actual title, which may be 'CEO', 'Chief Executive Officer', 'President', 'Managing Director', or another title.
Amended: January 2011
Amended: July 2007Client
A
client is a person with or for whom aninvestment firm licensee conducts or intends to conduct regulated investment services.Client Agreement
Terms of business, which the
client of theinvestment firm licensee has consented to in writing.Client Asset Protection Rules
Rules contained in Section CL-1.1.
Client Assets
Money or
financial instruments belonging toclients of aninvestment firm licensee that are held or controlled by theinvestment firm licensee in connection with the conduct ofregulated investment services .Client Bank Account
A bank account held by an
investment firm licensee , in order to hold client money: cf. CL-1.1.6.Amended: July 2007Client Money
Money (of any currency), which, in the course of carrying on regulated investment business, an
investment firm licensee holds in respect of any investment agreement entered into, or to be entered into, with or for aclient .Close Links
Defined in GR-6.2.1
Closed-ended fund(s)
Closed-ended funds areCIUs with a limited number ofholdings . Where the fund vehicle is a company,holdings can take the form of shares. Newholdings are rarely issued after the fund is launched and are not normally redeemable until the fund liquidates. Typically an investor can acquire or dispose ofholdings in aclosed-ended fund by buying or selling them on a secondary market, from a market intermediary or other investor, rather than by dealing with theCIU itself.Adopted: July 2007Code
The Investment Business Code of Practise contained in Chapter BC-2.
Collective investment undertaking(s) (CIU(s))
Collective investment undertakings ('CIUs') are undertakings:(a) The sole object of which is the collective investment of capital raised from the public infinancial instruments or other assets and which operates on the basis of risk-spreading; and(b) Theholdings of which are re-purchased or redeemed, directly or indirectly, out of those undertakings' assets.Amended: January 2012
Amended: July 2007Conflict of interest
A situation when a person or an entity has competing professional or personal obligations to other parties in a financial transaction (e.g. underwriting a securities transaction and simultaneously advising clients whether to buy the security or not) or in ongoing financial relationships (e.g. when a licensee has a director or one of its major borrowers on its board), or personal or financial interests that would make it difficult to fulfil his duties fairly.
Added: October 2011
Controlled function
A function carried on by an
approved person in relation to aninvestment firm licensee that requires prior CBB approval: cf. AU-1.2.2.Amended: July 2007Controller
A
controller is a natural or legal person who:(a) Holds 10% or more of the shares in the licensee ("L"), or is able to exercise (or control the exercise) of more than 10% of the voting power in L; or(b) Holds 10% or more of the shares in a parent undertaking ("P") of L, or is able to exercise (or control the exercise) of more than 10% of the voting power in P; or(c) Is able to exercise significant influence over the management of L or P.Amended: January 2011
Amended: July 2007Conventional bank licensee
A bank licensed by CBB under Volume 1 of the CBB Rulebook, and generally operating according to conventional finance principals (as opposed to operating in accordance with Islamic finance principles).
Amended: July 2007Custodian(s)
A custodian is a person mandated to hold and safeguard the
financial instruments and other assets of a person, such as acollective investment undertaking (CIU).Adopted: July 2007[ D ]
Dated subordinated debt
A subordinated debt instrument whose maturity date is fixed at the time the instrument is issued.
Added: January 2011Dematerialised safe custody financial instruments
Reference to dematerialised safe custody financial instruments refers to electronic holdings of securities. This is often seen in instances where "jumbo" certificates are issued, but individual tranches of the certificate are recorded only in an electronic fashion.
Added: July 08Designated Bank
A designated bank is one to which the
client of theinvestment firm licensee has consented in writing to hold his money. See Section CL-5.1.Digital Financial Advice
Digital Financial advice, also commonly known as robo-advice or automated advice is the advising on financial instruments as defined under AU-1.4.41 using algorithms and technology and with limited or no human financial advisor involvement.
Added: April 2019Director
A person who acts in the capacity of director of a firm (whether appointed or not, or whether titled director or not). In the case of a sole trader, unincorporated body or partnership, a person directing its affairs, or a partner (of a partnership). Directors are a controlled function: see AU-1.2.2.
Amended: July 2007[ E ]
Eligible Third Party
An eligible third party refers to:
(a) An exchange;(b) A clearing house; or(c) An intermediate broker.Amended: January 2011
Amended: July 2007Executive director
Means a director who is an officer or employee, or is otherwise involved in day-to-day management, of either:
(a) Theinvestment firm licensee ;(b) Another company which is acontroller of theinvestment firm licensee ;(c) Another company of which theinvestment firm licensee is acontroller ; or(d) Another company which is controlled by acontroller of theinvestment firm licensee .In this definition, the word "company" which is a controller of the investment firm excludes sovereigns such as government owned entities and government ministries.
Amended: April 2011
Added: January 2011Expert investor
Defined in Rule BC-2.2.9.
Expert investors are:(a) Individuals who have a minimum net worth (or joint net worth with their spouse) of USD 100,000, excluding that person's principal place of residence;(b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 100,000; or(c) Governments, supranational organisations, central banks or other national monetary authorities, local authorities and state organisations.Amended: Oct 09
Added: July 08[ F ]
Family
The term family refers to: father, mother, brother, sister, spouse, sons or daughters.
Amended: October 2011
Amended: July 2007Family (for the purpose of Family Office Services Module)
Family for the purposes of Family Offices Services Module means one or more individuals that are:
(a) Lineal descendants of a common ancestor;(b) Spouse of the common ancestor;(c) Spouses of the lineal descendants of a common ancestor;(d) Stepchildren and adopted children of the common ancestor; and(e) Stepchildren and adopted children of the lineal descendants of a common ancestor.Added: October 2023Family Office Licensees
Family office licensees are wealth management and advisory firms that offer customised services to wealthy families.
Added: October 2023Family Clients(for the purpose of Family Office Services Module)
Family clients include:
(a) A family member of a single family;(b) Trusts for which the family members are beneficiaries;(c) Any company, wholly owned (directly or indirectly) by, and operated for the sole benefit of, one or more family members;Family members are those defined under the family definition. All family clients must also fall within the definition of accredited investors.
Added: October 2023Financial instruments
Any of the following instruments, as further defined in Volume 4, Section AU-1.5, of the CBB Rulebook:
(a) Transferable securities;(b) Islamicfinancial instruments ;(c) Money market instruments;(d) Holdings incollective investment undertakings ;(e) Derivative contracts other than commodity derivatives;(f) Derivative contracts relating to commodities settled in cash;(g) Derivative contracts relating to commodities;(h) Credit derivatives;(i) Financial contracts for differences;(j) Other derivative contracts;(k) Interests in real estate property;(l) Certificates representing certain securities; and(m) Rights or Interests in Financial Instruments.Amended: January 2011
Amended: July 2007Financial Instruments Trader
A person who is engaged in buying or selling
financial instruments . This is a controlled function (cf. AU-1.2.2).Financial Services (as used in Module AU)
For the purpose of Module AU, financial services means:
(a) Any dealings in any instrument defined as a financial instrument in any Volume of the CBB Rulebook;(b) Any arrangement where money, goods or services are made available to a person in exchange for his promise to pay at a later date and that arrangement is of a type habitually provided by another person for commercial gain;(c) Any arrangement in which money is solicited from the public in return for a promise of financial gain on, or safekeeping of, that money; or(d) Any product or other financial services in the area of regulated services (regulated by the CBB) marketed in the Kingdom of Bahrain.Added: January 2013Futures
Rights under a contract for the sale of a commodity or property of any other description under which delivery is to be made at a future date and at a price agreed on when the contract is made.
[ G ]
General Manager
The General Manager (of a firm whether incorporated in Bahrain or not) means a person who (regardless of actual title) is responsible, alone or jointly, for the conduct of the whole of the firm, or in the case of an overseas
licensee , for all the activities of the branch. Equivalent toChief Executive in the case of firms incorporated in Bahrain (cf. Rule AU-1.2.9).[ H ]
Head of Function
A person who, under the immediate authority of the
chief executive orgeneral manager , exercises one or more major managerial functions or is responsible for maintaining accounts or other records of the firm (cf. Rule AU-1.2.10).Amended: July 2007Home Supervisor
The competent regulatory authority of the head office of a branch.
Amended: July 2007Host Regulator / Supervisor
The competent authority in which a branch of a foreign licensee is located or in which a subsidiary or joint venture of a foreign parent licensee is incorporated.
Added: April 2011[ I ]
Independent Director
Determination by the Board. Under Module HC an 'independent director' is a director whom the board has specifically determined has no material relationship which could affect his independence of judgment, taking into account all known facts. The board should consider that, although a particular director meets the formal requirements, he may not be independent owing to specific circumstances of the person or the
investment firm licensee , ownership structure of theinvestment firm licensee , or for any other reason. The board's determination should be a good faith finding after diligent review and full discussion.Formal Requirements. 'Independent director' means a
director of theinvestment firm licensee who, or whose family shareholders either separately or together with him or each other, does not have any material pecuniary relationships or transactions with theinvestment firm licensee (not counting director's remuneration for this purpose) and in particular who, during the one year preceding the time in question met all the following conditions:(a) Was not an employee of the company;(b) Did not:(i) Make to, or receive from, theinvestment firm licensee payments of more than 31,000 BD or equivalent (not counting director's remuneration);(ii) Own more than a 10% share or other ownership interest, directly or indirectly, in an entity that made to or received from theinvestment firm licensee payments of more than such amount;(iii) Act as a general partner, manager, director or officer of a partnership or company that made to or received from theinvestment firm licensee payments of more than such amount;(iv) Have any significant contractual or business relationship with theinvestment firm licensee which could be seen to materially interfere with the person's capacity to act in an independent manner,(c) Did not own directly or indirectly (including for this purpose ownership by any family member or related person) 5% or more of the shares of any type or class of theinvestment firm licensee ;(d) Was not engaged directly or indirectly as an auditor or professional advisor for theinvestment firm licensee ,(e) Was not an associate of a Director or a member of senior management of theinvestment firm licensee , and(f) Was not an associate of a Director, member of senior management or board member of theinvestment firm licensee’s controller.For purposes of this definition, the 'payments' referred to in paragraph (b)(i), (b)(ii) and (b) (iii) do not include monies received from dividends and investment accounts; reference to such payments only applies to contractual payments for services rendered to the licensee by the director or company concerned, or paid (or payable) by the concerned director or company to the licensee for services provided by the licensee.
Dividends and investment accounts are to be considered under item (b)(iv) of the definition.
For the purpose of the definition of "independent director":
(a) Where the term "family" or "family member or related persons" is used reference is made to: spouse, father, mother, son(s) or daughter(s); and(b) Where the term "associate" is used reference is made to:(i) Spouse, father, mother, son(s) or daughter(s); or(ii) A person who is an employee or partner.Amended: October 2020
Amended: July 2020
Amended: January 2012
Amended: October 2011
Added: January 2011Initial Capital Requirement
Initial capital requirements, as defined in Rule CA-1.2.7, are:
(a) ForCategory 1 investment firms , BD 1,000,000;(b) ForCategory 2 investment firms , BD 1,000,000 if undertaking the activity of safeguarding financial instruments (i.e. custodian), BD 250,000 in all other cases; and(c) ForCategory 3 investment firms , BD 125,000.Amended: January 2011
Amended: July 2007Insurance licensee
A person licensed under Volume 3 of the CBB Rulebook.
Amended: July 2007Investigator
An Investigator is a person appointed by the CBB under the authority of Article 121 of the CBB Law to carry out an investigation of the business of a licensee or listed company.
Added: Oct 09Investment adviser
A person who performs the function of arranging deals (on behalf of a
client ) infinancial instruments , and/or advising aclient onfinancial instruments (cf. Rule AU-1.2.13).Investment analyst
An employee of an
investment firm licensee who preparesinvestment research .Investment Business Code of Practice ('the Code')
The Investment Business Code of Practice contained in Chapter BC-2.
Investment consultant
See definition of
investment adviser above.Investment firm license
A license issued by CBB under Volume 4 of the CBB Rulebook.
Amended: July 2007Investment firm licensee
A person licensed under Volume 4 of the CBB Rulebook to undertake regulated investment business services.
Amended: July 2007Investment Management
“Investment management” shall mean managing investments or assets in accordance with mandates given by the
client , managing a portfolio of assets on a discretionary client-by-client basis where such investments include financial instruments, crypto-assets and other assets, and would include the activity of formation, origination and management of special purpose vehicles, trusts, investment limited partnerships, protected cell companies, collective investment undertakings and or other local or overseas domiciled legal vehicles.Added: October 2023Investment research
A document (other than a recommendation made to an individual
client ), distributed outside aninvestment firm licensee , which contains one or more of the following:(a) The results of research into an individualfinancial instrument ;(b) Analysis of factors likely to influence the future performance of an individualfinancial instrument or its issuer; and(c) Advice or recommendations based on those results or that analysis.Amended: January 2011
Amended: July 2007Islamic bank licensee
A person licensed under Volume 2 of the CBB Rulebook to undertake regulated Islamic banking services.
Amended: July 2007Islamic investment firm(s)
An
investment firm licensee , all of whose operations are conducted in compliance with Shar'ia principles.Amended: July 2007[ J ]
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[ K ]
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[ L ]
Lead Supervisor
In the context of groups containing regulated financial companies, the principal regulator supervising those financial companies on a consolidated basis.
Adopted: July 2007Licensed exchange(s)
"Licensed exchange" means an exchange licensed in respect of the operation of its
market in and from the Kingdom of Bahrain.Added: January 2011Licensed Principal
An
investment firm licensee that appoints anappointed representative (cf. Chapter GR-8).Licensees
Any person licensed by the CBB under any of the Volumes of the CBB Rulebook.
Amended: July 2007Listed Company
Any company whose securities are listed on the Stock Exchange according to Article 86 of Legislative Decree No. 64 of 2006 with respect to the Central Bank of Bahrain and Financial Institutions Law.
Added: July 2010[ M ]
Managing Director
Defined in Rule AU-1.2.9B. A Managing Director is a Director on the Board of a
licensee who:(a) Should be fully responsible for the executive management and performance of thelicensee , within the framework of delegated authorities set by the Board;(b) Must devote full-time working hours to thelicensee ; and(c) Must not be employed at any other firm.Amended: April 2011
Amended: January 2011
Added: Oct 09Mandates
Defined in Rule CL-4.1.1.
Market
"Market" means a place at which, or a facility (whether electronic or otherwise) by means of which, offers or invitations to sell, purchase or exchange
securities or futures contracts (including options and derivatives) regularly made on a centralised basis, being offers or invitations that are intended or may reasonably be expected to result, whether directly or indirectly, in the acceptance or making, respectively, of offers to sell, purchase or exchangesecurities or futures contracts (whether through that place or facility or otherwise).Added: January 2011Market Counterparty
(Deleted)
Deleted: Oct 09Minimum capital requirements (as defined in Paragraph CA-1.2.7)
(a) Category 1 investment firms: BD 1,000,000;(b) Category 2 investment firms: BD 1,000,000 if undertaking the activity of safeguarding financial instruments (i.e. custodian), BD 250,000 in all other cases; and(c) Category 3 investment firms: BD 125,000.Added: January 2011
[ N ]
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Non-executive director
Means any director who is not an
executive director Added: January 2011[ O ]
Operator(s)
In the context of a
collective investment undertaking ('CIU'),operator means a person undertaking the functions of establishing, operating or winding-up aCIU .Adopted: July 2007Options
An option is a contract giving the buyer the right, but not the obligation, to buy or sell any of the following at a specific price on or before a certain date:
(a) Currency of the Kingdom of Bahrain or any other country or territory;(b) Palladium, platinum, gold or silver; or other commodity;(c) Option to acquire or dispose of a financial instrument of the kind specified by this definition by virtue of the above.Amended: January 2011
Ordering Financial Institution
Refers to the financial institution which initiates the wire/crypto-asset transfer and transfers the funds/crypto-assets upon receiving the request for a wire/crypto-asset transfer on behalf of the originator.
Original term
(in respect of redeemable instruments including dated subordinated debt and redeemable preference shares) - the period of time between the date of issue and the earliest date that those instruments will mature or can be redeemed.
Added: January 2011Originator
Refers to the account holder who allows the wire/crypto-asset transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire/crypto-asset transfer.
Overseas Category 1 investment firm
A
Category 1 investment firm , which is incorporated in an overseas jurisdiction and operates in the Kingdom of Bahrain through a branch licensed by the CBB.Overseas investment firm licensee
An
investment firm licensee incorporated in an overseas jurisdiction (and therefore is not aBahraini investment firm licensee ). The same naming convention applies to the various sub-categories of investment firm: e.g. a BahrainiCategory 1 investment firm is aCategory 1 investment firm that is incorporated in the Kingdom of Bahrain. See Paragraph AU-A.1.5; andBahraini investment firm licensee , above.[ P ]
Parent Undertaking
An undertaking or individual ('P'), which has the following relationship to another undertaking ('S'):
(i) P holds (alone or, under an agreement with other shareholders) a majority of the voting rights in S;(ii) P (alone or in conjunction with its other subsidiary undertakings), has the right to appoint or remove a majority of its board of directors;(iii) P has the right to exercise a dominant influence over S, either through provisions contained in S's memorandum or articles, or a control contract; or(iv) P is a parent undertaking of a parent undertaking of S.Amended: July 2007Personal account transaction
A transaction undertaken by an employee of an
investment firm licensee in afinancial instrument , for his own account.Politically Exposed Person ('PEP')
'Politically Exposed Persons' or 'PEPs' means individuals who are, or have been entrusted with prominent public functions in Bahrain or a foreign country, for example Heads of State or government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations or important political party officials or persons who are or have been entrusted with a prominent function by an international organisation. Business relationships with family members or close associates of PEPs involve reputational risks similar to PEPs themselves. The definition is not intended to cover middle-ranking or more junior officials in the foregoing categories. Bahraini PEPs would include all Ministers, all MPs, and all Ministry officials with the rank of Undersecretary or above.
Amended: July 2016Professional client
(Deleted)
Deleted: Oct 09Property
Property of any description (including assets, rights, interests, and/or money).
Amended: July 2007Public Offering
An offer of securities to the general public. See Rule BC-2.3.7.
Amended: January 2013
Amended: July 2007[ Q ]
Qualified by Exception
A report issued by an appointed expert that is qualified and indicates that certain areas or issues remain unresolved or are unverifiable due to certain limitations imposed on the appointed experts' work. The report will clearly indicate the type and reason for exception and the action taken by the appointed experts had the mentioned limitation not been placed on their work.
Amended: October 2011
Added: October 2009Qualifying Custodian
Defined in Rule AU-1.4.35.
[ R ]
Real Time Promotion
Defined in Paragraph BC-2.3.13.
Registered administrator
Persons registered by BMA, and thus allowed to carry on the business of an administrator. See Section AU-1.3.
Registered persons
Refer to
registered administrators .Regulated banking services
Any of the regulated activities permitted to be undertaken by a
conventional bank licensee .Regulated investment services
Any of the following, as further defined in Section AU-1.4:
(a) Dealing infinancial instruments as principal;(b) Dealing infinancial instruments as agent;(c) Arranging deals infinancial instruments ;(d) Managingfinancial instruments ;(e) Safeguardingfinancial instruments (i.e. custodian);(f) Advising onfinancial instruments ; and(g) Operating acollective investment undertaking (i.e. anoperator ).Amended: January 2011
Amended: July 2007Regulated Islamic banking services
Any of the regulated activities permitted to be undertaken by an
Islamic bank licensee .Regulatory Capital
Capital elements that satisfy the regulatory criteria for admissibility, in the context of calculating compliance with
Regulatory Capital Requirements . Defined in Chapter CA-2.Regulatory Capital Requirement
Defined in Rule CA-1.2.2 for
Category 1 andCategory 2 investment firms , and in Rule CA-1.2.3 forCategory 3 investment firms .Relevant Authorities
For the purposes of Module FC, relevant authority refers to the authorities listed in Rule FC-4.3.2.
Amended: October 2014Relevant Operating Expenses
For the purposes of calculating a
licensee's annual CBB license fee,relevant operating expenses are defined as the total operating expenses of the licensee concerned, as recorded in the most recent audited financial statements available, excluding the following items:(a) Training costs;(b) Charitable donations;(c) CBB fees paid; and(d) Non-executiveDirectors' remuneration.Adopted: July 2007Remuneration
Means all types of compensation including but not limited to salary, fee and non-cash benefits such as grants of stock, stock options or pension benefits.
Added: January 2011Reporting Accountant
A Reporting Accountant is a person appointed by the CBB under the authority of Article 114 of the CBB Law, as an Inspector of the business of a
licensee orlisted company .Added: July 2010Representative office
A person who is licensed by the CBB to undertake only representative office functions:
(i) Gather financial, economic and commercial information;(ii) Carry out general promotional activities; and/or(iii) Provide general assistance of a non specific nature to resident and non residentclients of the overseas entity/group the office is representing.Such persons are not subject to Volume 4 of the CBB Rulebook, but are separately licensed and subject to the requirements contained in the relevant CBB's 'Standard Conditions and Licensing Criteria' (cf. AU-A.1.12).
Amended: July 2007Retail Client
Defined in Rule BC-2.2.8. A retail client means a client who is not classified as an
expert investor or anaccredited investor under Rules BC-2.2.9 and BC-2.2.1Amended: Oct 09Risk-based Capital Requirement(s)
Defined in Rule CA-1.2.8. The Risk-based Capital Requirement is the sum of a firm's Expenditure Requirement, Position Risk Requirement (PRR), Counterparty Risk Requirement (CRR), and Foreign Exchange Risk Requirement (FER).
Amended: July 2007[ S ]
Senior Manager/Management
Refers to individuals occupying the position of CEO or head of function.
Added: January 2011Shareholders
(a) In relation to a share which is represented by a bearer certificate, the person who holds the certificate; or(b) In relation to a share that is not represented by a bearer certificate, the person whose name is entered on the register in relation to the share.Amended: January 2011
Amended: July 2007Shares
A share or stock in the share capital of an enterprise, whether incorporated or unincorporated, but excluding units in
collective investment undertakings .Soft dollar agreement
An agreement in any form under which an
investment firm licensee receives goods or services in return forregulated investment services put through or in the way of another person.Specialised Licensee
A person licensed under Volume 5 of the CBB Rulebook (when issued). Until such time, a CBB licensee not licensed under any of Volume 1, 2, 3, 4 or 6 of the CBB Rulebook.
Amended: July 2007Subsidiary or Subsidiary undertaking
A company or other enterprise controlled by another company or enterprise (the parent or the holding company), including any other legal entity or other forms such as contractual or management agreements, where the licensee exercises a majority shareholding or has majority voting control by virtue of direct ownership or by proxy/nominee arrangements or such other control mechanism as determined by the CBB.
Amended: July 2013
Amended: Oct 09Swaps
A financial contractual agreement between two parties to exchange (swap) a set of payments that one party owns for a set of payments owned by the other party.
[ T ]
Terms of business
A statement in a durable medium of terms and conditions on which a firm will conduct
regulated investment services with or for aclient .Third Party Related Distribution Rules
Rules specified in Chapter CL-5.
Trilateral Meeting
A meeting between a
licensee , anappointed expert and the CBB.Amended: October 2011
Added: July 2010[ U ]
Ultimate Parent Undertaking
The highest parent investment firm undertaking of the investment firm licensee or the holding company whose predominant investment are shares of the investment firm(s) (wherever established) that is not itself the subsidiary of another undertaking.
Added: October 2015Underwrite/Underwriting
Is when a licensee(s) bears the risk of commitment to market or place all or part of the issue of a financial instrument issued by an unconnected party (the issuer), to investors, in return for a fee and within a pre-agreed upon timeframe. Underwriting includes a binding commitment by the licensee(s) to purchase the portion of the issue which remains unsubscribed for.
Added: October 2012Unsolicited Real Time Promotion
A
real time promotion in breach of Rule BC-2.3.12.[ V ]
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[ W ]
Warrant
Warrants are instruments that confer an entitlement to subscribe for shares, debenture and government and public securities. The rights conferred must be rights to 'subscribe' for the relevant investments. This means that they are rights to acquire the investments directly from the issuer of the investments and by way of the issue of new investments.
Wealth Management Advice
“Wealth management advice” shall mean advice in wealth management organisation, wealth management planning, administrative or financial wealth management, or coordination of the service providers in wealth management, monitoring or assessment of performances.
Added: October 2023Without delay
The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly.
Added: October 2019[ X ]
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[ Y ]
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[ Z ]
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CBB Authorisation Forms
Form 1 Form 1 Application for a License
Please download the Form in PDF format.
[Deleted]
Deleted: July 2007[Deleted]
Deleted: July 2007Form 2 Application for Authorisation of Controller
Please download the Form in PDF format.
Form 3 Application for Approved Person status
Please download the Form in PDF format.
Form 4 Application for Registration
Please download the Form in PDF format.
Form 4 C4 Investment Firms Authorisation
Please download the Form in PDF format.
CBB Reporting Forms
QPR: Quarterly Prudential Return
Please download the Form in MS Excel format.
AGR: Annual Group Return
This form is currently under development.
STR: Suspicious Transaction Report
Please download the Form in PDF format.
ALF: Annual License Fee
Please download the Form in PDF format.
Direct Debit Authorisation Form
Please download the Form in PDF format.
RM-1 Cyber-Security Incident Report
Please download the Form in PDF format.
Supplementary Information
CA CA: Capital Adequacy
CA-1: Bahrain Public Sector Entities, International Organisations & Multilateral Development Banks
Click here to download the Appendix in PDF format.
CL: CL: Client Assets
CL-(i): Agreed Upon Procedures
Click here to download the Appendix in PDF format.
BR: BR: CBB Reporting
BR-1: Appointed Experts Report
Click here to download in PDF format.
BR-2 Requirements for Report on Private Placements
Click here to download in PDF format.
FC: Financial Crime
FC-(i): Amiri Decree Law No. 4 (2001)
Click here to download the Law in PDF format.
FC-(i)(a) Decree Law No. 54 (2006)
Click here to download the Law in PDF format.
FC-(i)(b): Decree Law No. 58 (2006)
Click here to download the Law in PDF format.
FC-(ii): UN Security Council Resolution 1373 (2001)
Click here to download the Law in PDF format.
FC-(iii): UN Security Council Resolution 1267 (1999)
Click here to download the Law in PDF format.
FC-(iv): Example of Suspicious Transaction
Click here to download the Examples in PDF format.
FC-(v): Guidance Notes
Click here to download the Guidance Notes in PDF format.
FC- (vi) Agreed Upon Procedures
Click here to download the Procedures in PDF format.
BC: BC: Business Conduct
BC-1 Brokerage Fees Scale
Click here to download in PDF format.
PD: Public Disclosure
Appendix PD-1 Instructions for Publication of Press Releases
Please download the Appendix in PDF format.