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  • HC-A HC-A Introduction

    • HC-A.1 HC-A.1 Purpose

      • Executive Summary

        • HC-A.1.1

          This Module presents requirements that have to be met by investment firm licensees with respect to:

          (a) Corporate governance principles issued by the Ministry of Industry and Commerce as The Corporate Governance Code; and
          (b) Related high-level controls and policies.
          January 2011

        • HC-A.1.2

          The Principles referred to in this Module are in line with the Principles relating to the Corporate Governance Code issued by the Ministry of Industry and Commerce.

          January 2011

        • HC-A.1.3

          The purpose of the Module is to establish best practice corporate principles in Bahrain, and to provide protection for investors and other company stakeholders through compliance with those principles.

          January 2011

        • HC-A.1.4

          Whilst the Module follows best practice, it is nevertheless considered as the minimum standard to be applied. This Module also includes additional rules and guidance issued by the Central Bank of Bahrain ('the CBB') prior to the publication of the Code and previously contained in Module HC.

          January 2011

      • Structure of this Module

        • HC-A.1.5

          This Module follows the structure of the Corporate Governance Code and each Chapter deals with one the nine fundamental Principles of corporate governance. The numbered directives included in the Code are Rules for purposes of this Module. Recommendations under the Code have been included as guidance. However, where the previous version of Module HC had a similar recommendation as a Rule, the Module retains this Paragraph as a Rule.

          January 2011

        • HC-A.1.6

          The Module also incorporates other high-level controls and policies that apply in particular to investment firm licensees.

          January 2011

        • HC-A.1.7

          All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.

          January 2011

        • HC-A.1.8

          This Module contains a mixture of Rules and Guidance (See Module UG-1.2 for a detailed explanation of Rules and Guidance). All Rules in Module HC must be complied with by all investment firm licensees.

          Amended: July 2015
          January 2011

      • The Comply or Explain Principle for Guidance Paragraphs

        • HC-A.1.8A

          In addition, all investment firm licensees must comply with the Guidance in Module HC or explain their noncompliance by way of an annual report to their shareholders and to the CBB (see Chapter HC-8).

          Added: July 2015

      • Monitoring and Enforcement of Module HC

        • HC-A.1.9

          Disclosure and transparency are underlying principles of Module HC. Disclosure is crucial to allow outside monitoring to function effectively. This Module looks to a combined monitoring system relying on the Board, the investment firm licensee's shareholders and the CBB.

          January 2011

        • HC-A.1.10

          It is the Board's responsibility to see to the accuracy and completeness of the investment firm licensee's corporate governance guidelines and compliance with Module HC. Failure to comply with this Module is subject to enforcement measures as outlined in Module EN (Enforcement).

          January 2011

      • Legal Basis

        • HC-A.1.11

          This Module contains the CBB's Directive (as amended from time to time) relating to high-level controls and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to investment firm licensees (including their approved persons).

          Amended: July 2015
          January 2011

        • HC-A.1.12

          For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

          January 2011

      • Effective Date

        • HC-A.1.13

          This updated Module is effective on 1st January 2011. All investment firm licensees to which Module HC applies should be in full compliance by the financial year end 2011. At every investment firm licensee's annual shareholder meeting held after 1st January 2011, corporate governance should be an item on the agenda for information and any questions from shareholders regarding the investment firm licensee's governance. Where possible, the investment firm licensee should also have corporate governance guidelines in place at that time and should have a "comply or explain" report as described in Paragraph HC-A.1.8.

          January 2011

    • HC-A.2 HC-A.2 Module History

      • HC-A.2.1

        This Module was first issued in July 2007. Following the issuance of the Corporate Governance Code by the Ministry of Industry and Commerce in March 2010, the Module was amended in January 2011 to be in line with the new Code and to include previous requirements that were in place in the originally issued Module HC. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

        Amended: July 2015
        January 2011

      • HC-A.2.2

        A list of recent changes made to this Module is detailed in the table below:

        Module Ref. Change Date Description of Changes
        HC-1 to HC-9 01/2011 Amendments due to introduction of new MOIC Corporate Governance Code.
        HC-1.4 04/2011 Amendment made to reflect new Rules on attendance of Directors at Board of Directors meetings.
        HC-6.3.4 04/2011 Added description of compliance officer's duties.
        HC-6.5.3 04/2011 Guidance added dealing with the compliance function.
        HC-B.2.2 01/2012 Clarified language related to corporate governance.
        HC-1.2.5 and HC-1.6.3 01/2012 Clarified that the chairman of the Board may delegate specific duties dealt with in these Paragraphs.
        HC-1.5.7 and HC-1.5.7A 01/2012 Clarified rule and guidance on the chairman of the Board.
        HC-1.10.1 01/2012 Deleted last sentence.
        HC-5.5.6 01/2012 Amended Paragraph.
        Appendix B 01/2012 Disclosure to shareholders amended.
        HC-1.9.5 07/2012 Clarified guidance.
        Appendix A 07/2012 Clarified requirement for written report on performance evaluation for Audit Committee.
        HC-7.2.5 and HC-10.7.6 10/2012 Clarified guidance on election of board members.
        Appendix A 10/2012 Included reference to compliance under Committee Duties and Responsibilities.
        HC-2.2.3 and HC-2.4.1 01/2013 Clarified scope of application for Rules.
        HC-3.2.1 01/2013 Clarified guidance on appointment of internal auditor.
        HC-1.3.7 04/2013 Clarified Rule on limits on number of directorships.
        HC-2.2.4 and HC-2.2.6 10/2013 Removed reference to appointed representatives.
        HC-1.3.2 and HC-10.1.8 10/2014 Corrected typo to be consistent with other Volumes of the CBB Rulebook.
        HC-9.2.1 10/2014 Clarified language for Category 1 and 2 Islamic investment firms.
        HC-10.9.2 10/2014 Amended guidance for Category 3 Islamic investment firms to appoint a minimum of one Shari'a advisor or scholar instead of having a Shari'a Supervisory Board.
        HC-A.1.8 07/2015 Clarified the application of the comply or explain principle.
        HC-6.4.2 07/2015 Changed Guidance to Rule so that the internal audit function must be independent and cannot be combined with any other function.
        HC-2.3.5 and HC-10.2.5A 04/2016 Added a requirement (or guidance, based on the category of license) for the investment firm licensee to have in place a board approved policy on the employment of relatives of approved persons.
        HC-2.4.2A and HC-10.2.6A 04/2016 Added the requirement (or guidance, based on the category of license) to disclose to the board on annual basis relatives of any approved persons occupying controlled functions.
        HC-2.3, HC-2.4 and HC-10.2 07/2016 Clarified application of Rules (or guidance, based on the category of license) for overseas licensees.
        HC-7.2.1(j) and HC-10.7.2(j) 10/2017 Added requirement on the invitation of a CBB representative for any shareholders' meetings.
        HC-1.2.2 & HC-1.11.5 01/2020 Amended Paragraphs on policy and procedures approval.
        HC-5.3.3 04/2020 Added a new Paragraph on KPIs compliance with AML/CFT requirements.
        HC-1.5.8 04/2021 Amended Paragraph on independent directors.
        HC-1.5.10 04/2021 Added a new Paragraph on Directors Independence status.
        HC-1.5.11 04/2021 Added a new Paragraph on termination of Board membership of a retired, terminated CEO.
        HC-4.2.3 04/2021 Added a new Paragraph on notification on any change in board categorisation.
        HC-1.11.2 – HC-1.11.4 01/2022 Deleted Paragraphs.
        HC-1.11.6 01/2022 Deleted Paragraph.

      • HC-A.2.3

        Guidance on the implementation and transition to Volume 4 (Investment Business) is given in Module ES (Executive Summary).

        January 2011