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  • BR-2.2 BR-2.2 Notification Requirements

    • Matters Having a Serious Supervisory Impact

      • BR-2.2.1

        An investment firm licensee must notify the CBB if any of the following has occurred, may have occurred or may occur in the near future:

        (a) The investment firm licensee failing to satisfy one or more of the Principles of Business referred to in Module PB;
        (b) Any matter which could have a significant adverse impact on the investment firm licensee's reputation;
        (c) Any matter which could affect the investment firm licensee's ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the investment firm licensee; or
        (d) Any matter in respect of the investment firm licensee that could result in material financial consequences to the financial system or to other investment firm licensees.
        (e) Any breach of any provision of the Rulebook (including a Principle);
        (f) A breach of any requirement imposed by the relevant law or by regulations or an order made under any relevant law by the CBB; or
        (g) If an investment firm licensee becomes aware, or has information that reasonably suggests that it has or may have provided the CBB with information that was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material way, it must notify the CBB immediately (ref. BR-3.3.2).
        Amended: July 2010
        Amended: October 2009
        Adopted: July 2007

      • BR-2.2.2

        The circumstances that may give rise to any of the events in Paragraph BR-2.2.1 are wide-ranging and the probability of any matter resulting in such an outcome, and the severity of the outcome, may be difficult to determine. However, the CBB expects investment firm licensees to consider properly all potential consequences of events.

        Adopted: July 2007

      • BR-2.2.3

        In determining whether an event that may occur in the near future should be notified to the CBB, an investment firm licensee should consider both the probability of the event happening and the severity of the outcome should it happen. Matters having a supervisory impact could also include matters relating to a parent undertaking or controller that may indirectly have an effect on the investment firm licensee.

        Adopted: July 2007

      • BR-2.2.4 [Deleted]

        Deleted: October 2009

    • Legal, Professional, Administrative or other Proceedings Against an Investment Firm Licensee

      • BR-2.2.4

        An investment firm licensee must notify the CBB immediately of any legal, professional or administrative or other proceedings instituted against the investment firm licensee, controller or a close link including a parent undertaking of the investment firm licensee that is known to the investment firm licensee and is significant in relation to the investment firm licensee's financial resources or its reputation.

        Amended: October 2009
        Adopted: July 2007

      • BR-2.2.5

        An investment firm licensee must notify the CBB of the bringing of a prosecution for, or conviction of, any offence under any relevant law against the investment firm licensee that would prevent the investment firm licensee from meeting the Principles or Business (Module PB) or any of its Directors, officers or approved persons from meeting the fit and proper requirements of Module AU.

        Amended: October 2013
        Adopted: October 2009

    • Fraud, Errors and other Irregularities

      • BR-2.2.6

        An investment firm licensee must notify its supervisory point of contact, and in cases of fraud the Compliance Directorate at the CBB immediately if one of the following events arises and the event is significant:

        (a) It becomes aware that an employee may have committed a fraud against one of its customers;
        (b) It becomes aware that a person, whether or not employed by it, is acting with intent to commit fraud against it;
        (c) It identifies irregularities in its accounting or other records, whether or not there is evidence of fraud;
        (d) It suspects that one of its employees may be guilty of serious misconduct concerning his honesty or integrity and which is connected with the investment firm licensee's regulated or ancillary activities; or
        (e) Significant conflicts of interest.
        Amended: April 2016
        Amended: October 2009
        Adopted: July 2007

    • Meaning of the Term "significant"

      • BR-2.2.7

        For the purposes of this chapter, in determining whether a matter is significant, an investment firm licensee should have regard to:

        (a) The size of any monetary loss or potential monetary loss to itself or its customers (either in terms of a single incident or group of similar or related incidents);
        (b) The risk of reputational loss to the investment firm licensee; and
        (c) Whether the incident or a pattern of incidents reflects weaknesses in the investment firm licensee's internal controls.
        Adopted: July 2007

      • BR-2.2.8

        In addition, if the investment firm licensee may have suffered significant financial losses as a result of the incident, or may suffer reputational loss, the CBB will wish to consider this and whether the incident suggests weaknesses in the investment firm licensee's internal controls.

        Adopted: July 2007

    • Insolvency, Bankruptcy and Winding Up

      • BR-2.2.9

        Except in instances where the CBB has initiated the following actions, an investment firm licensee must notify the CBB immediately of any of the following events:

        (a) The calling of a meeting to consider a resolution for winding up the investment firm licensee, a controller or close link, including a parent undertaking of the investment firm licensee;
        (b) An application to dissolve a controller or close link, including a parent undertaking of the investment firm licensee or to strike the investment firm licensee off the Register of Investment Business Companies;
        (c) The presentation of a petition for the winding up of a controller or close link, including a parent undertaking of the investment firm licensee;
        (d) The making of any proposals, or the making of, a composition or arrangement with any one or more of the investment firm licensee's creditors, for material amounts of debt;
        (e) An application for the appointment of an administrator or trustee in bankruptcy to a controller or close link, including a parent undertaking of the investment firm licensee;
        (f) The appointment of a receiver to a controller or close link, including a parent undertaking of the investment firm licensee (whether an administrative receiver or a receiver appointed over particular property); or
        (g) An application for an interim order against the investment firm licensee, a controller or close link, including a parent undertaking of the investment firm licensee under the Bankruptcy and Composition Law of 1987 or similar legislation in another jurisdiction.
        Amended: January 2011
        Amended: October 2009
        Adopted: July 2007

    • Other Supervisors

      • BR-2.2.10

        An investment firm licensee must notify the CBB immediately if it becomes subject to or ceases to be subject to the supervision of any overseas supervisor (including a home supervisor).

        Adopted: July 2007

      • BR-2.2.11

        The supervisory regime and any legislative or foreign provisions to which that investment firm licensee, including its branches, is subject, influence the CBB's approach to the supervision of the investment firm licensee.

        Adopted: July 2007

    • Carrying out Business in Another Jurisdiction

      • BR-2.2.12

        Where another jurisdiction's laws or regulations prevent a licensee (or any of its foreign branches or subsidiaries) from applying the same standards contained in Module FC (Financial Crime) or higher, the licensee must immediately inform the CBB in writing (ref. FC-B.2.2).

        Amended: October 2009
        Adopted: July 2007

      • BR-2.2.13

        Where conduct of business standards applied by overseas branches and subsidiaries of an investment firm licensee fall below the standards set out in Module BC (Business Conduct), the investment firm licensee must notify the CBB of the fact (ref. BC-B. 1.5).

        Amended: October 2009
        Adopted: July 2007

      • BR-2.2.14

        Where client asset rules applied by overseas branches and subsidiaries of an investment firm licensee fall below the standards set out in Module CL (Client Assets), the investment firm licensee must notify the CBB of the fact (ref. CL-B.2.2).

        Amended: October 2009
        Adopted: July 2007

    • External Auditor

      • BR-2.2.15

        An investment firm licensee must notify the CBB of the following:

        (a) Removal or resignation of auditor (ref. AA-1.2.1); or
        (b) Change in audit partner (ref. AA-1.3.2).
        Amended: October 2009
        Adopted: July 2007

    • Approved Persons

      • BR-2.2.16

        An investment firm licensee must notify the CBB of the termination of employment of approved persons, including particulars of reasons for the termination and arrangements with regard to replacement (ref. AU-5.2.8 and AU-5.5.5).

        Amended: January 2016
        Amended: October 2009
        Adopted: July 2007

    • Capital Adequacy

      • BR-2.2.17

        In the event that an investment firm licensee fails to meet any of the requirements specified in Module CA (Capital Adequacy), it must, on becoming aware that it has breached the requirements, immediately notify the CBB in writing (ref. CA-1.1.5).

        Amended: April 2017
        Adopted: October 2009

      • BR-2.2.18

        Category 1 investment firms and Category 2 investment firms must notify the CBB if:

        (a) The ratio of Regulatory Capital to their Regulatory Capital Requirement falls below 110%;
        (b) Any single probable contingency, financial commitment or large exposure exceeds 25% of their Regulatory Capital; and
        (c) Any instrument, transaction or situation does not appear to be catered for under Module CA (ref. CA-1.2.9).
        Amended: July 2012
        Adopted: October 2009

      • BR-2.2.19

        An investment firm licensee shall notify the CBB if it has counterparty exposures in repurchase and reverse repo transactions, including sale and buy back and securities lending (ref. CA-3.3.1). This requirement is applicable to Category 1 investment firms and Category 2 investment firm licensees only.

        Amended: July 2012
        Adopted: October 2009

      • BR-2.2.20

        An investment firm licensee shall notify the CBB if it has counterparty exposures in swaps, forward contracts, over the counter options, contracts for differences and off-exchange futures (ref. CA-3.3.1). This requirement is applicable to Category 1 investment firms and Category 2 investment firm licensees only.

        Amended: July 2012
        Adopted: October 2009

      • BR-2.2.21

        As specified in Article 58 of the CBB Law, an investment firm licensee must notify the CBB immediately of any matter that may affect its financial position, currently or in the future, or limit its ability to meet its obligations.

        Adopted: October 2009

    • Outsourcing Arrangements

      • BR-2.2.22

        Investment firm licensees must immediately inform their direct supervisory contact at the CBB of any material problems encountered with an outsourcing provider.

        Amended: January 2023
        Amended: January 2016
        Amended: January 2011
        Adopted: October 2009

    • Controllers

      • BR-2.2.23

        If, as a result of circumstances outside the Bahraini investment firm licensee's knowledge and/or control, one of the changes to their controllers specified in Paragraph GR-5.1.1 is triggered prior to CBB approval being sought or obtained, the Bahraini investment firm licensee must notify the CBB no later than 15 calendar days from the date on which those changes occurred (ref. GR-5.1.5).

        Amended: January 2017
        Amended: October 2015
        Adopted: October 2009

      • BR-2.2.23A

        Overseas investment firm licensees must notify the CBB of any new significant ownership in excess of 50% of the issued and paid up capital of the concerned licensee's direct parent undertaking as soon as the licensee becomes aware of the change (see Paragraph GR-5.5.1).

        Adopted: October 2015

      • BR-2.2.24

        As specified in Article 52 of the CBB Law, an investment firm licensee must notify the CBB of the following events:

        (a) If effective control over a licensee takes place indirectly whetherby way of inheritance or otherwise.
        (b) Gaining control directly as a result of any action leading to it.
        (c) The intention to take any of the actions that would lead to control.
        Adopted: October 2009

    • Registered Address

      • BR-2.2.25

        An investment firm licensee must notify the CBB of a change in the address of its registered office (or its head office in the case of a branch of an overseas investment firm licensee).

        Adopted: October 2009

    • Appointed Representatives

      • BR-2.2.26

        [This Paragraph was deleted in October 2013]

        Deleted: October 2013

    • Business Strategy

      • BR-2.2.27

        Bahraini investment firm licensees must notify the CBB when there is a major change to its strategy by introducing a new line of business within the scope of its existing licensed activities.

        Added: July 2023