• GR-6.5 GR-6.5 Role of the Appointed Expert

    • Introduction

      • GR-6.5.1

        The content of this Chapter is applicable to all licensees and appointed experts.

        Added: April 2012

      • GR-6.5.2

        The purpose of the contents of this Chapter is to set out the roles and responsibilities of appointed experts when appointed pursuant to Article 114 or 121 of the CBB Law (see EN-2.1.1). These Articles empower the CBB to assign some of its officials or others to inspect or conduct investigations of licensees.

        Added: April 2012

      • GR-6.5.3

        The CBB uses its own inspectors to undertake on-site examinations of licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission reports on matters relating to the business of licensees in order to help it assess their compliance with CBB requirements. Inspections may be carried out either by the CBB's own officials, by duly qualified appointed experts appointed for the purpose by the CBB, or a combination of the two.

        Added: April 2012

      • GR-6.5.4

        The CBB will not, as a matter of general policy, publicise the appointment of an appointed expert, although it reserves the right to do so where this would help achieve its supervisory objectives.

        Amended: October 2014
        Added: April 2012

      • GR-6.5.5

        Unless the CBB otherwise permits, appointed experts should not be the same firm appointed as external auditor of the licensee.

        Added: April 2012

      • GR-6.5.6

        Appointed experts will be appointed in writing, through an appointment letter, by the CBB. In each case, the CBB will decide on the range, scope and frequency of work to be carried out by appointed experts.

        Added: April 2012

      • GR-6.5.7

        All proposals to appoint appointed experts require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with the appointed experts concerned. A separate letter is sent to the licensee, notifying them of the appointment. At the CBB's discretion, a trilateral meeting may be held at any point, involving the CBB and representatives of the licensee and the appointed experts, to discuss any aspect of the investigation.

        Added: April 2012

      • GR-6.5.8

        Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the licensee.

        Added: April 2012

      • GR-6.5.9

        Appointed experts will report directly to and be responsible to the CBB in this context and will specify in their report any limitations placed on them in completing their work (for example due to the licensee'sgroup structure). The report produced by the appointed experts is the property of the CBB (but is usually shared by the CBB with the firm concerned).

        Added: April 2012

      • GR-6.5.10

        Compliance by appointed experts with the contents of this Chapter will not, of itself, constitute a breach of any other duty owed by them to a particular investment firm licensee (i.e. create a conflict of interest).

        Added: April 2012

      • GR-6.5.11

        The CBB may appoint one or more of its officials to work on the appointed experts' team for a particular licensee.

        Added: April 2012

    • The Required Report

      • GR-6.5.12

        The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned appointed experts would normally be required to report on one or more of the following aspects of a licensee's business:

        (a) Accounting and other records;
        (b) Internal control systems;
        (c) Returns of information provided to the CBB;
        (d) Operations of certain departments; and/or
        (e) Other matters specified by the CBB.
        Added: April 2012

      • GR-6.5.13

        Appointed experts will be required to form an opinion on whether, during the period examined, the licensee is in compliance with the relevant provisions of the CBB Law and the CBB's relevant requirements, as well as other requirements of Bahrain Law and, where relevant, industry best practice locally and/or internationally.

        Added: April 2012

      • GR-6.5.14

        The appointed experts' report should follow the format set out in Appendix BR-10, in part B of the CBB Rulebook.

        Amended: July 2013
        Added: April 2012

      • GR-6.5.15

        Unless otherwise directed by the CBB or unless the circumstances described in Section GR-6.5.19 apply, the report must be discussed with the Board of directors and/or senior management in advance of it being sent to the CBB.

        Added: April 2012

      • GR-6.5.16

        Where the report is qualified by exception, the report must clearly set out the risks which the licensee runs by not correcting the weakness, with an indication of the severity of the weakness should it not be corrected. Appointed experts will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.

        Added: April 2012

      • GR-6.5.17

        If the appointed experts conclude, after discussing the matter with the licensee, that they will give a negative opinion (as opposed to one qualified by exception) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.

        Added: April 2012

      • GR-6.5.18

        The report must be completed, dated and submitted, together with any comments by directors or management (including any proposed timeframe within which the licensee has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.

        Added: April 2012

    • Other Notifications to the CBB

      • GR-6.5.19

        Appointed experts must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, including the criteria for licensing a licensee (see Module AU), are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concerned licensee, or that the interests of customers are at risk because of adverse changes in the financial position or in the management or other resources of a licensee. Notwithstanding the above, it is primarily the licensee's responsibility to report such matters to the CBB.

        Added: April 2012

      • GR-6.5.20

        The CBB recognises that appointed experts cannot be expected to be aware of all circumstances which, had they known of them, would have led them to make a communication to the CBB as outlined above. It is only when appointed experts, in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

        Added: April 2012

      • GR-6.5.21

        If appointed experts decide to communicate directly with the CBB in the circumstances set out in Paragraph GR-6.5.19, they may wish to consider whether the matter should be reported at an appropriate senior level in the licensee at the same time and whether an appropriate senior representative of the licensee should be invited to attend the meeting with the CBB.

        Added: April 2012

    • Permitted Disclosure by the CBB

      • GR-6.5.22

        Information which is confidential and has been obtained under, or for the purposes of, this chapter or the CBB Law may only be disclosed by the CBB in the circumstances permitted under the Law. This will allow the CBB to disclose information to appointed experts to fulfil their duties. It should be noted, however, that appointed experts must keep this information confidential and not divulge it to a third party except with the CBB's permission and/or unless required by Bahrain Law.

        Added: April 2012

    • Trilateral Meeting

      • GR-6.5.23

        The CBB may, at its discretion, call for a trilateral meeting(s) to be held between the CBB and representatives of the relevant licensee and the appointed experts. This meeting will provide an opportunity to discuss the appointed experts' examination of, and report on, the licensee.

        Added: April 2012