• AU-2 AU-2 Licensing Conditions

    • AU-2.1 AU-2.1 Condition 1: Legal Status

      • AU-2.1.1

        The legal status of a licensee must be a Bahraini joint stock company (BSC).

        January 2013

    • AU-2.2 AU-2.2 Condition 2: Mind and Management

      • AU-2.2.1

        Licensees with their Registered Office in the Kingdom of Bahrain must maintain their Head Office in the Kingdom.

        January 2013

      • AU-2.2.2

        The CBB requires that all approved persons occupying controlled functions outlined in Paragraph AU-1.2.2, except for Subparagraphs (a) member of the board of directors and (f) member of the Shari'a Supervisory Board, be resident in Bahrain.

        January 2013

      • AU-2.2.3

        For regional groups, the CBB may consider other arrangements, subject to such arrangements meeting the CBB's supervisory objectives.

        January 2013

    • AU-2.3 AU-2.3 Condition 3: Controllers

      • AU-2.3.1

        Licensees must satisfy the CBB that their controllers are suitable and pose no undue risks to the licensee. Licensees must also satisfy the CBB that their close links do not prevent the effective supervision of the licensee by the CBB and otherwise pose no undue risks to the licensee.

        January 2013

      • AU-2.3.2

        Chapters GR-5 and GR-6 contain the CBB's requirements and definitions regarding controllers and close links.

        January 2013

      • AU-2.3.3

        In summary, controllers are persons who directly or indirectly are significant shareholders in a licensee, or who are otherwise able to exert significant influence on the licensee. The CBB seeks to ensure that controllers pose no significant risks to the licensee. In general terms, controllers are assessed in terms of their financial standing, their judicial and regulatory record, and standards of business and (where relevant) personal probity.

        January 2013

      • AU-2.3.4

        A licensee has close links with its subsidiaries, with its parent undertakings, and with subsidiaries of its parent undertakings. It also has close links with any entity in which the licensee, its subsidiaries, its parent undertakings, and the subsidiaries of its parent undertakings has an equity interest of more than 20% (either in terms of capital or voting rights). The CBB seeks to ensure that these closely linked entities do not prevent adequate consolidated supervision being applied to financial entities within the group, and that other group entities do not pose any material financial, reputational or other risks to the licensee.

        January 2013

      • AU-2.3.5

        In all cases, when judging applications from existing groups, the CBB will have regard to the reputation and financial standing of the group as a whole. Where relevant, the CBB will also take into account the extent and quality of supervision applied to overseas members of the group and take into account any information provided by other supervisors in relation to any member of the group.

        January 2013

    • AU-2.4 AU-2.4 Condition 4: Board and Employees

      • AU-2.4.1

        Those nominated to carry out controlled functions must satisfy the CBB's approved persons requirements. This rule is supported by Article 65 of the CBB Law.

        January 2013

      • AU-2.4.2

        The definition of controlled functions is contained in Paragraph AU-1.5.2, whilst Chapter AU-3 sets out CBB's approved persons requirements.

        January 2013

      • AU-2.4.3

        The licensee's staff, taken together, must collectively provide a sufficient range of skills and experience to manage the affairs of the licensee in a sound and prudent manner. Licensees must ensure their employees meet any training and competency requirements specified by the CBB.

        January 2013

    • AU-2.5 AU-2.5 Condition 5: Financial Resources

      • Capital Funds

        • AU-2.5.1

          Licensees must maintain a level of financial resources, as agreed with the CBB, adequate for the level of business proposed.

          January 2013

        • AU-2.5.2

          In accordance with Module CA (Capital Adequacy) licensees must maintain a minimum level of paid-up capital of BD 5,000,000 (or its equivalent in foreign currency, where legally permitted and agreed with the CBB). A greater amount of capital may be required by the CBB on a case-by-case basis. Licensees must also maintain a minimum gearing ratio of 20%.

          January 2013

      • Liquidity

        • AU-2.5.3

          Licensees must maintain sufficient liquid assets to meet their obligations as they fall due in the normal course of their business, as required under Module LM. Licensees must agree a liquidity management policy with the CBB.

          January 2013

    • AU-2.6 AU-2.6 Condition 6: Systems and Controls

      • AU-2.6.1

        Licensees must maintain systems and controls that are, in the opinion of the CBB, adequate for the scale and complexity of their activities. These systems and controls must meet the minimum requirements contained in Modules HC, CM and OM.

        January 2013

      • AU-2.6.2

        Licensees must maintain systems and controls that are, in the opinion of the CBB, adequate to address the risks of financial crime occurring in the licensee. These systems and controls must meet the minimum requirements contained in Module FC, as specified for the license held.

        January 2013

    • AU-2.7 AU-2.7 Condition 7: External Auditors

      • AU-2.7.1

        Article 61 of the CBB Law requires that licensees appoint an external auditor, subject to CBB's prior approval. The minimum requirements regarding auditors contained in Module AA (Auditors and Accounting Standards) must be met.

        January 2013

    • AU-2.8 AU-2.8 Condition 8: Other Requirements

      • Books and Records

        • AU-2.8.1

          Article 59 of the CBB Law requires licensees to maintain comprehensive books of accounts and other records, and satisfy the minimum record-keeping requirements contained in Article 60 of the pre-mentioned Law and Module OM. Books of accounts must comply with the financial accounting standards issued by the International Financial Reporting Standards (IFRS)/International Accounting Standards (IAS) or the applicable AAOIFI standards for Islamic licensees.

          Amended: January 2014
          January 2013

      • Provision of Information

        • AU-2.8.2

          Articles 58, 111, 114 and 163 of the CBB Law require that licensees and their staff must act in an open and cooperative manner with the CBB. Licensees must meet the regulatory reporting and public disclosure requirements contained in Modules BR and PD respectively. As per Article 62 of the CBB Law, audited financial statements must be submitted to the CBB within 3 months of the licensee s financial year-end.

          January 2013

      • General Conduct

        • AU-2.8.3

          Licensees must conduct their activities in a professional and orderly manner, in keeping with good market practice. Licensees must comply with the general standards of business conduct contained in Module PB, as well as the standards relating to treatment of customers contained in Modules BC and CM.

          January 2013

      • Additional Conditions

        • AU-2.8.4

          Licensees must comply with any other specific requirements or restrictions imposed by the CBB on the scope of their license.

          January 2013

        • AU-2.8.5

          Licensees are subject to the provisions of the CBB Law. These include the right of the CBB to impose such terms and conditions, as it may deem necessary when issuing a license, as specified in Article 45 of the CBB Law. Thus, when granting a license, the CBB specifies the regulated financing company services that the licensee may undertake. Licensees must respect the scope of their license.

          January 2013

        • AU-2.8.6

          In addition, the CBB may impose additional restrictions or requirements, beyond those al specified in Volume 5, to address specific risks. For instance, a license may be granted subject to strict limitations on intra-group transactions.

          January 2013