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 2013AU-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 2013AU-2.2.2
The CBB requires that all
approved persons occupyingcontrolled functions outlined in Paragraph AU-1.2.2, except for Subparagraphs (a) member of the board ofdirectors and (f) member of the Shari'a Supervisory Board, be resident in Bahrain.January 2013AU-2.2.3
For regional groups, the CBB may consider other arrangements, subject to such arrangements meeting the CBB's supervisory objectives.
January 2013AU-2.3 AU-2.3 Condition 3: Controllers
AU-2.3.1
Licensees must satisfy the CBB that theircontrollers are suitable and pose no undue risks to the licensee.Licensees must also satisfy the CBB that theirclose links do not prevent the effective supervision of thelicensee by the CBB and otherwise pose no undue risks to thelicensee .January 2013AU-2.3.2
Chapters GR-5 and GR-6 contain the CBB's requirements and definitions regarding
controllers andclose links. January 2013AU-2.3.3
In summary,
controllers are persons who directly or indirectly are significant shareholders in alicensee , or who are otherwise able to exert significant influence on thelicensee . The CBB seeks to ensure thatcontrollers pose no significant risks to thelicensee . 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 2013AU-2.3.4
A
licensee hasclose links with its subsidiaries, with its parent undertakings, and with subsidiaries of its parent undertakings. It also hasclose links with any entity in which thelicensee , 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 thelicensee .January 2013AU-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 2013AU-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'sapproved persons requirements. This rule is supported by Article 65 of the CBB Law.January 2013AU-2.4.2
The definition of
controlled functions is contained in Paragraph AU-1.5.2, whilst Chapter AU-3 sets out CBB'sapproved persons requirements.January 2013AU-2.4.3
The
licensee's staff, taken together, must collectively provide a sufficient range of skills and experience to manage the affairs of thelicensee in a sound and prudent manner.Licensees must ensure their employees meet any training and competency requirements specified by the CBB.January 2013AU-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 2013AU-2.5.2
Licensees must fully comply with the capital requirements contained in Module CA (Capital Adequacy).Amended: July 2022
January 2013Liquidity
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 2013AU-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 2013AU-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 2013AU-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 2013AU-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 Islamiclicensees .Amended: January 2014
January 2013Provision 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 2013General 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 ofcustomers contained in Modules BC and CM.January 2013Additional 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 2013AU-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 theregulated financing company services that thelicensee may undertake.Licensees must respect the scope of their license.January 2013AU-2.8.6
In addition, the CBB may impose additional restrictions or requirements, beyond those already 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