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  • BR-2 BR-2 Notifications and Approvals

    • BR-2.1 BR-2.1 Introduction

      • BR-2.1.1

        All notifications and requests for approvals required in this Chapter are to be submitted by licensees in writing.

        January 2013

      • BR-2.1.2

        In this Chapter, the term 'in writing' includes electronic communications capable of being reproduced in paper form.

        January 2013

      • BR-2.1.3

        Licensees are required to provide the CBB with a range of information to enable it to monitor the licensee's compliance with Volume 5 of the CBB Rulebook. Some of this information is provided through regular reports, whereas others are in response to the occurrence of a particular event (such as a change in name or address). The following Sections list the commonly occurring reports for which a licensee will be required to notify the CBB or seek its approval.

        January 2013

    • BR-2.2 BR-2.2 Notification Requirements

      • Matters Having a Serious Supervisory Impact

        • BR-2.2.1

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

          (a) The 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 licensee's reputation;
          (c) Any matter which could affect the licensee's ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the licensee;
          (d) Any matter in respect of the licensee that could result in material financial consequences to the financial system or to other licensees;
          (e) A significant breach of any provision of the Rulebook (including a Principle);
          (f) A breach of any requirement imposed by law, regulation, directive or any other instruction issued by the CBB;
          (g) If a 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); or
          (h) If the licensee intends to suspend any or all the licensed regulated services or ceases business, setting out how it proposes to do so and, in particular, how it will treat any of its liabilities (ref GR-7.1.2).
          January 2013

        • 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 licensees to properly consider all potential events and consequences that may arise from them.

          January 2013

        • BR-2.2.3

          In determining whether an event that may occur in the near future should be notified to the CBB, a 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 controller that may directly or indirectly have an effect on the licensee.

          January 2013

      • Legal, Professional, Administrative or other Proceedings against a Licensee

        • BR-2.2.4

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

          January 2013

        • BR-2.2.5

          A licensee must notify the CBB of the bringing of a prosecution for, or conviction of, any offence under any relevant law against the licensee or any of its approved persons.

          January 2013

      • Fraud, Errors and other Irregularities

        • BR-2.2.6

          A licensee must notify 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 licensee's regulated activities; or
          (e) Significant conflicts of interest.
          January 2013

      • Meaning of the Term "significant"

        • BR-2.2.7

          For the purposes of this chapter, in determining whether a matter is significant, a 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 licensee; and
          (c) Whether the incident or a pattern of incidents reflects weaknesses in the licensee's internal controls.
          January 2013

        • BR-2.2.8

          In addition, if the 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 is indicative of weaknesses in the licensee's internal controls.

          January 2013

      • Insolvency, Bankruptcy and Winding Up

        • BR-2.2.9

          Except in instances where the CBB has initiated the following actions, a 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 licensee, a controller or close link of the licensee;
          (b) An application to dissolve a controller or close link of the licensee:
          (c) The presentation of a petition for the winding up of a controller or close link of the licensee;
          (d) The making of any proposals, or the making of, a composition or arrangement with any one or more of the 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 of the licensee;
          (f) The appointment of a receiver to the licensee or to a controller or close link of the licensee (whether an administrative receiver or a receiver appointed over particular property); or
          (g) An application against the licensee, a controller or close link of the licensee under Part 10 of the CBB Law or the Bankruptcy and Composition Law of 1987 or similar legislation in another jurisdiction.
          January 2013

      • External Auditor

        • BR-2.2.10

          A licensee must notify the CBB of the following:

          (a) Removal or resignation of its external auditor (ref. AA-1.2.1); or
          (b) A change in the partner in charge of conducting the external audit. (Ref. AA-1.3.3).
          January 2013

      • Approved Persons

        • BR-2.2.11

          A licensee must notify the CBB of the termination of employment of any approved persons, including reasons for their termination and arrangements for replacing them (ref. AU-4.3.8 and AU-4.5.7).

          January 2013

      • Authorised Signatories

        • BR-2.2.12

          At the time of authorisation (when the license is granted) or whenever a change occurs, in order to maintain an up-to-date record of authorised signatories of respective financial institutions, the CBB requires all licensees to submit to the licensee's CBB supervisory point of contact a list of specimen signatures of the officials authorised to sign on behalf of the concerned institution, together with, where appropriate, details of what they are authorised to sign for.

          January 2013

      • Capital Adequacy Liquidity Requirements

        • BR-2.2.13

          In the event that a licensee fails to meet any of the requirements specified in Module CA (Capital Adequacy) or Module LM (Liquidity Risk Management), it must, on becoming aware that it has breached the requirements, immediately notify the CBB in writing (ref. CA-1.1.9 and LM-1.1.3).

          January 2013

        • BR-2.2.14

          As specified in Article 58 of the CBB Law, a 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.

          January 2013

      • Outsourcing Arrangements

        • BR-2.2.15

          Licensees must immediately inform their normal supervisory contact at the CBB of any material problems or changes encountered with an outsourcing provider.

          Amended: January 2023
          January 2013

      • Controllers

        • BR-2.2.16

          If, as a result of circumstances outside the licensee's knowledge and/or control, one of the changes to their controllers specified in Paragraph GR-4.1.1 is triggered prior to CBB approval being sought or obtained, the licensee must notify the CBB on the earlier of:

          (a) The moment the change takes effect; or
          (b) The moment the controller becomes aware of the proposed change (ref. GR-4.1.7).
          Amended: April 2016
          January 2013

        • BR-2.2.17

          A licensee must notify the CBB of any event as specified under Article 52 of the CBB Law.

          January 2013

      • Promotional Schemes

        • BR-2.2.18

          Licensees must notify the CBB, and send copies of the documentation relating to promotional schemes, at least ten business days prior to their launch, after ensuring that such promotional schemes are in line with the Rules under Section BC-1.

          January 2013

      • Introduction of New or Expanded Customer Products and Facilities

        • BR-2.2.19

          All licensees should notify the CBB of information relating to any new or expanded customer products and facilities in accordance with the requirements set out under Section BC-3.2.

          January 2013

      • Write-offs

        • BR-2.2.20

          All licensees must notify the CBB of any write-off of a credit facility of an amount in excess of BD100,000 or its equivalent in foreign currency.

          January 2013

    • BR-2.3 BR-2.3 Approval Requirements

      • Branches or Subsidiaries

        • BR-2.3.1

          In accordance with Rule AU-4.2.1, a licensee must seek prior written approval from the CBB for opening a branch or a subsidiary.

          January 2013

        • BR-2.3.2

          Licensees wishing to cancel an authorisation for a branch or subsidiary must obtain the CBB's written approval before ceasing the activities of the branch or subsidiary.

          January 2013

      • Change in Name

        • BR-2.3.3

          In accordance with Paragraph GR-2.1.1, a licensee must seek prior written approval from the CBB and give reasonable advance notice of a change in:

          (a) The licensee's name (being its registered name if the licensee is a body corporate); and/or
          (b) The licensee's trade name.
          January 2013

        • BR-2.3.4

          The request under Paragraph BR-2.3.3 must include the details of the proposed new name and the date on which the licensee intends to use the new name.

          January 2013

      • Change of Address

        • BR-2.3.5

          As specified in Article 51 of the CBB Law, a licensee must seek approval from the CBB and give reasonable advance notice of a change in the address of the licensee's principal place of business in Bahrain, and that of its branches.

          January 2013

        • BR-2.3.6

          The request under Paragraph BR-2.3.5 must include the details of the proposed new address and the date on which the licensee intends to use the new address.

          January 2013

      • Change in Legal Status

        • BR-2.3.7

          A licensee must seek CBB approval and give reasonable advance notice of a change in its legal status that may, in any way, affect its relationship with or limit its liability to its customers.

          January 2013

      • Change in Paid-up or Issued Capital

        • BR-2.3.8

          As specified in Article 57(3) of the CBB Law, a licensee must seek CBB prior approval before making any modification to its issued or paid-up capital.

          January 2013

      • Controllers

        • BR-2.3.9

          In accordance with Section GR-4.1, licensees must seek CBB prior approval and give reasonable advance notice of any of the following events:

          (a) A person acquiring control or ceasing to have control of the licensee;
          (b) An existing controller acquiring an additional type of control (such as ownership or significant influence) or ceasing to have a type of control of the licensee;
          (c) An existing controller increasing the percentage of shares or voting power beyond 10%, 20% or 40% of the licensee; and
          (d) An existing controller becoming or ceasing to be a parent undertaking of the licensee.
          Amended: April 2013
          January 2013

      • Mergers, Acquisitions, Disposals and Establishment of New Subsidiaries

        • BR-2.3.10

          A licensee incorporated in Bahrain must seek CBB prior approval and give reasonable advance notice of its intention to enter into a:

          (a) Merger with another undertaking; or
          (b) Proposed acquisition, disposal or establishment of a new subsidiary undertaking; or
          (c) Modify its memorandum or articles of association.
          Amended: January 2020
          Amended: April 2013
          Added: January 2013

      • Write-offs

        • BR-2.3.11

          Licensees should obtain the CBB's prior written approval before writing off any of the following exposures:

          (a) To any present or former director of the licensee;
          (b) Which are guaranteed by a director of the licensee;
          (c) To any business entity for which the licensee or any of its directors is an agent;
          (d) To any officer or employee of the licensee, or any other person who receives remuneration from the licensee;
          (e) To any business entity in which the licensee (or any of its directors, officers or other persons receiving remuneration from the licensee) has a material interest as a shareholder (i.e. 5% or more), or as a director, manager, agent or guarantor; and
          (f) To any person who is a director, manager or officer of another licensee of the CBB.
          January 2013

      • Outsourcing Arrangements

        • BR-2.3.12

          [This Paragraph was deleted in January 2023].

          Deleted: January 2023
          Amended: January 2016
          January 2013

      • Matters Having a Supervisory Impact

        • BR-2.3.13

          A licensee must seek prior approval from the CBB for any material changes or proposed changes to the information provided to the CBB in support of an authorisation application that occurs after authorisation has been granted.

          January 2013

        • BR-2.3.14

          Any licensee that wishes, intends or has been requested to do anything that might contravene, in its reasonable opinion, the provisions of UNSCR 1373 (and in particular Article 1, Paragraphs c) and d) of UNSCR 1373) must seek, in writing, the prior written opinion of the CBB on the matter (ref. FC-8.2.2).

          January 2013

        • BR-2.3.15

          As specified in Article 57 of the CBB Law, a licensee wishing to modify its Memorandum or Articles of Association, must obtain prior written approval from the CBB.

          January 2013

        • BR-2.3.16

          As specified in Article 57 of the CBB Law, a licensee wishing to transfer all or a major part of its assets or liabilities inside or outside the Kingdom, must obtain prior written approval from the CBB.

          January 2013

      • External Auditor

        • BR-2.3.17

          A licensee must seek prior approval from the CBB for the appointment or re-appointment of its external auditor (ref. AU-2.7.1 and AA-1.1.1)

          January 2013

      • Dividend Distribution

        • BR-2.3.18

          Licensees, must obtain the CBB's prior written approval to any dividend proposed to be distributed to the shareholders, in accordance with Chapter GR-4.

          January 2013

      • Approved Persons

        • BR-2.3.19

          A licensee must seek prior approval from the CBB for the appointment of persons undertaking a controlled function (ref. Article 65 of the CBB Law, AU-1.2 and AU-4.3.1).

          January 2013

        • BR-2.3.20

          Licensees must seek prior CBB approval before an approved person may move from one controlled function to another within the same licensee (ref. AU-4.3.11).

          January 2013

        • BR-2.3.21

          If a controlled function falls vacant, a licensee making immediate interim arrangements for the controlled function affected, must obtain approval from the CBB (ref. AU-4.4.5).

          January 2013

      • Cessation of Business

        • BR-2.3.22

          In accordance with Paragraph GR-7.1.1 and Article 50 of the CBB Law, licensees must seek the CBB's prior approval should they wish to cease to provide or suspend any or all of the licensed regulated services of their operations and/or liquidate their business.

          January 2013