Accredited Investor

Accredited investors are defined as investors meeting the following criteria:

Individuals and commercial undertakings may elect in writing to be treated as accredited investors subject to meeting at least two of the following conditions:

Administrator(s)

Administrators are persons who undertake the administration of financial instruments and other assets, for a third party. Administration may include the following activities:

Ancillary 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).

Appointed 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, private investigators, expert witnesses and independent actuaries.

Appointed Representative(s)

[Deleted in October 2013].

Approved Person(s)

Approved Persons are individuals holding certain specified positions in CBB 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's Approved 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.

Authorised person(s)

A person authorised either as a CBB licensee or an Approved Person.

Bahrain domiciled CIU(s) (as defined under Volume 7)

Bahrain domiciled CIUs are undertakings where:

Bahraini 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 Bahraini Category 1 investment firm is a Category 1 investment firm that is incorporated in the Kingdom of Bahrain. See AU-A.1.5; and overseas investment firm licensee below.

Beneficial Owner

Beneficiary

(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:

Branch(es)

A place of business which is a part of a firm and which has no separate legal personality.

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.

Client

A client is a person with or for whom an investment firm licensee conducts or intends to conduct regulated investment services.

Client Agreement

Terms of business, which the client of the investment 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 to clients of an investment firm licensee that are held or controlled by the investment firm licensee in connection with the conduct of regulated 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.

Client 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 a client.

Close Links

Defined in GR-6.2.1

Closed-ended fund(s)

Closed-ended funds are CIUs with a limited number of holdings. Where the fund vehicle is a company, holdings can take the form of shares. New holdings are rarely issued after the fund is launched and are not normally redeemable until the fund liquidates. Typically an investor can acquire or dispose of holdings in a closed-ended fund by buying or selling them on a secondary market, from a market intermediary or other investor, rather than by dealing with the CIU itself.

Code

The Investment Business Code of Practise contained in Chapter BC-2.

Collective investment undertaking(s) (CIU(s))

Collective investment undertakings ('CIUs') are undertakings:

Conflict 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.

Controlled function

A function carried on by an approved person in relation to an investment firm licensee that requires prior CBB approval: cf. AU-1.2.2.

Controller

A controller is a natural or legal person who:

Conventional 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).

Custodian(s)

A custodian is a person mandated to hold and safeguard the financial instruments and other assets of a person, such as a collective investment undertaking (CIU).

Dated subordinated debt

A subordinated debt instrument whose maturity date is fixed at the time the instrument is issued.

Dematerialised 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.

Designated Bank

A designated bank is one to which the client of the investment 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.

Director

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.

Eligible Third Party

An eligible third party refers to:

Executive director

Means a director who is an officer or employee, or is otherwise involved in day-to-day management, of either:

In this definition, the word "company" which is a controller of the investment firm excludes sovereigns such as government owned entities and government ministries.

Expert investor

Defined in Rule BC-2.2.9. Expert investors are:

Family

The term family refers to: father, mother, brother, sister, spouse, sons or daughters.

Family (for the purpose of Family Office Services Module)

Family for the purposes of Family Offices Services Module means one or more individuals that are:

Family Office Licensees

Family office licensees are wealth management and advisory firms that offer customised services to wealthy families.

Family Clients(for the purpose of Family Office Services Module)

Family clients include:

Family members are those defined under the family definition. All family clients must also fall within the definition of accredited investors.

Financial instruments

Any of the following instruments, as further defined in Volume 4, Section AU-1.5, of the CBB Rulebook:

Financial 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:

Futures

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.

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 to Chief Executive in the case of firms incorporated in Bahrain (cf. Rule AU-1.2.9).

Head of Function

A person who, under the immediate authority of the chief executive or general 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).

Home Supervisor

The competent regulatory authority of the head office of a branch.

Host 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.

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 the investment 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 the investment 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 the investment 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:

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":

Initial Capital Requirement

Initial capital requirements, as defined in Rule CA-1.2.7, are:

Insurance licensee

A person licensed under Volume 3 of the CBB Rulebook.

Investigator

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.

Investment adviser

A person who performs the function of arranging deals (on behalf of a client) in financial instruments, and/or advising a client on financial instruments (cf. Rule AU-1.2.13).

Investment analyst

An employee of an investment firm licensee who prepares investment 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.

Investment firm licensee

A person licensed under Volume 4 of the CBB Rulebook to undertake regulated investment business services.

Investment 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.

Investment research

A document (other than a recommendation made to an individual client), distributed outside an investment firm licensee, which contains one or more of the following:

Islamic bank licensee

A person licensed under Volume 2 of the CBB Rulebook to undertake regulated Islamic banking services.

Islamic investment firm(s)

An investment firm licensee, all of whose operations are conducted in compliance with Shar'ia principles.

Lead Supervisor

In the context of groups containing regulated financial companies, the principal regulator supervising those financial companies on a consolidated basis.

Licensed exchange(s)

"Licensed exchange" means an exchange licensed in respect of the operation of its market in and from the Kingdom of Bahrain.

Licensed Principal

An investment firm licensee that appoints an appointed representative (cf. Chapter GR-8).

Licensees

Any person licensed by the CBB under any of the Volumes of the CBB Rulebook.

Listed 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.

Managing Director

Defined in Rule AU-1.2.9B. A Managing Director is a Director on the Board of a licensee who:

Mandates

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 exchange securities or futures contracts (whether through that place or facility or otherwise).

Market Counterparty

(Deleted)

Minimum capital requirements (as defined in Paragraph CA-1.2.7)

Non-executive director

Means any director who is not an executive director

Operator(s)

In the context of a collective investment undertaking ('CIU'), operator means a person undertaking the functions of establishing, operating or winding-up a CIU.

Options

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:

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.

Originator

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 a Bahraini investment firm licensee). The same naming convention applies to the various sub-categories of investment firm: e.g. a Bahraini Category 1 investment firm is a Category 1 investment firm that is incorporated in the Kingdom of Bahrain. See Paragraph AU-A.1.5; and Bahraini investment firm licensee, above.

Parent Undertaking

An undertaking or individual ('P'), which has the following relationship to another undertaking ('S'):

Personal account transaction

A transaction undertaken by an employee of an investment firm licensee in a financial instrument, for his own account.

Politically Exposed Person ('PEP')

Foreign PEPs are individuals who are or have been entrusted with prominent public functions by a foreign country, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.

Domestic PEPs are individuals who are or have been entrusted domestically with prominent public functions, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.

Persons who are or have been entrusted with a prominent function by an international organisation refers to members of senior management, i.e. directors, deputy directors and members of the board or equivalent functions.

The definition of PEPs is not intended to cover middle ranking or more junior individuals in the foregoing categories.

Professional client

(Deleted)

Property

Property of any description (including assets, rights, interests, and/or money).

Public Offering

An offer of securities to the general public. See Rule BC-2.3.7.

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.

Qualifying Custodian

Defined in Rule AU-1.4.35.

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:

Regulated 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 and Category 2 investment firms, and in Rule CA-1.2.3 for Category 3 investment firms.

Relevant Authorities

For the purposes of Module FC, relevant authority refers to the authorities listed in Rule FC-4.3.2.

Relevant 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:

Remuneration

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.

Reporting 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 or listed company.

Representative office

A person who is licensed by the CBB to undertake only representative office functions:

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).

Retail Client

Defined in Rule BC-2.2.8. A retail client means a client who is not classified as an expert investor or an accredited investor under Rules BC-2.2.9 and BC-2.2.1

Risk-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).

Senior Manager/Management

Refers to individuals occupying the position of CEO or head of function.

Shareholders

Shares

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 for regulated 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.

Subsidiary 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.

Swaps

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.

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 a client.

Third Party Related Distribution Rules

Rules specified in Chapter CL-5.

Trilateral Meeting

A meeting between a licensee, an appointed expert and the CBB.

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.

Underwrite/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.

Unsolicited Real Time Promotion

A real time promotion in breach of Rule BC-2.3.12.

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.

Without 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.