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  • AU-4 AU-4 Information Requirements and Processes

    • AU-4.1 AU-4.1 Licensing

      • Application Form and Documents

        • AU-4.1.1

          Applicants for a license must fill in the Application Form 1 (Application for a License) online, available on the CBB website under E-services/online Forms. The applicant must upload scanned copies of supporting documents listed in Paragraph AU-4.1.4, unless otherwise directed by the CBB.

          Amended: July 2019
          Amended: April 2018
          January 2014

        • AU-4.1.2

          Articles 44 to 47 of the CBB Law govern the licensing process. This prescribes a single stage process, with the CBB required to take a decision within 60 calendar days of an application being deemed complete (i.e. containing all required information and documents). See below, for further details on the licensing process and timelines.

          January 2014

        • AU-4.1.3

          References to applicant mean the proposed licensee seeking authorisation. An applicant may appoint a representative — such as a law firm or professional consultancy — to prepare and submit the application. However, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification of any issues.

          January 2014

        • AU-4.1.4

          Unless otherwise directed by the CBB, the following documents must be provided together with the covering letter referred in Paragraph AU-4.1.1 in support of a license application:

          (a) A duly completed Form 2 (Application for Authorisation of Controller) for each controller of the proposed licensee;
          (b) A duly completed Form 3 (Application for Approved Person status), for each individual applying to undertake controlled functions of the proposed licensee;
          (c) A comprehensive business plan for the application, addressing the matters described in AU-4.1.6;
          (d) Where the applicant is an existing institution, a copy of the applicant's commercial registration;
          (e) Where the applicant is a corporate body, a certified copy of a Board resolution of the applicant along with minutes of the concerned meeting, confirming the board's decision to seek a CBB microfinance institution license;
          (f) Details of the proposed licensee's close links, if any, as defined under Chapter GR-5;
          (g) In the case of applicants that are part of a regulated group, a letter of non-objection to the proposed license application from the applicant's home supervisor, together with confirmation that the group is in good regulatory standing and is in compliance with applicable supervisory requirements, including those relating to capital adequacy requirements;
          (h) Copies of the audited financial statements of the applicant's major shareholder and/or group (as directed by the CBB), for the three years immediately prior to the date of application; and
          (i) A draft copy of the applicant's (and parent's where applicable) memorandum and articles of association, addressing the matters described in AU-4.1.6.
          January 2014

        • AU-4.1.5

          The CBB may require that an acceptably worded letter of guarantee be provided in support of the application for a license. Where the application for the license is for an incorporated entity, the CBB may seek a letter of guarantee from controllers. Where the application is for an overseas licensee, the CBB may seek a letter of guarantee from the parent company.

          January 2014

        • AU-4.1.6

          The business plan submitted in support of an application should include:

          (a) An outline of the history of the applicant and its shareholders;
          (b) The reasons for applying for a license, including the applicant's strategy and market objectives;
          (c) The proposed type of activities to be carried on by the applicant in/from the Kingdom of Bahrain;
          (d) The proposed Board and senior management of the applicant and the proposed organisational structure of the applicant;
          (e) An independent assessment of the risks that may be faced by the applicant, together with the proposed systems and controls framework to be put in place for addressing those risks and to be used for the main business functions; and
          (f) An opening balance sheet for the applicant, together with a three-year financial projection, with all assumptions clearly outlined, demonstrating that the applicant will be able to meet applicable leverage and liquidity requirements.
          January 2014

        • AU-4.1.7

          The applicant's (and where applicable, its parent's) memorandum and articles of association must explicitly provide for it to undertake the activities proposed in the application, and must preclude the applicant from undertaking other commercial activities, unless these arise out of its microfinance activities or are incidental to those.

          January 2014

        • AU-4.1.8

          All documentation provided to the CBB as part of an application for a license must be in either Arabic or English language. Any documentation in a language other than English or Arabic must be accompanied by a certified English or Arabic translation thereof.

          January 2014

        • AU-4.1.9

          Any material changes or proposed changes to the information provided to the CBB in support of an authorisation application that occurs prior to authorisation must be reported to the CBB.

          January 2014

        • AU-4.1.10

          Failure to inform the CBB of the changes specified in Paragraph AU-4.1.10 is likely to be viewed as a failure to provide full and open disclosure of information, and thus a failure to meet licensing condition in Paragraph AU-2.8.2.

          January 2014

      • Licensing Process and Timelines

        • AU-4.1.11

          As part of the application process, the CBB will provide a formal decision on a license application within 60 calendar days of all required documentation having been submitted in a form acceptable to the CBB, as specified in Article 44 (e) of the CBB Law. The applicant must submit within 6 months of the application date, all remaining requirements or otherwise has to submit a new application to the CBB. Applicants are encouraged to approach the CBB to discuss their application at an early stage, so that any specific questions can be dealt with prior to the finalisation of the application.

          January 2014

        • AU-4.1.12

          Before the final approval is granted to a licensee, confirmation from a retail bank addressed to the CBB that the licensee's capital (injected funds) – as specified in the business plan submitted under Rule AU-4.1.4 – has been paid in must be provided to the CBB.

          January 2014

      • Starting Operations

        • AU-4.1.13

          Within 6 months of the license being issued, the licensee must provide to the CBB:

          (a) A detailed action plan for establishing the operations and supporting infrastructure of the licensee, such as the completion of written policies and procedures, and recruitment of remaining employees (having regard to the time limit set by Article 48 (c) of the CBB Law);
          (b) The registered office address and details of premises to be used to carry out the business of the proposed licensee;
          (c) The address in the Kingdom of Bahrain where full business records will be kept;
          (d) The licensee's contact details including telephone and fax number, e-mail address and website;
          (e) A description of the business continuity plan;
          (f) A description of the IT system that will be used, including details of how IT systems and other records will be backed up;
          (g) A copy of the external auditor's acceptance to act as an external auditor for the applicant;
          (h) A copy of the Ministry of Industry & Commerce commercial registration certificate in Arabic and English languages;
          (i) A copy of the licensee's business card and any written communication (including stationery, website, e-mail, business documentation, etc.) including a statement that the microfinance institution is licensed by the CBB;
          (j) An updated organisation chart showing the reporting lines, committees (if any) and including the names of the persons undertaking the controlled functions;
          (k) A copy of the applicant's notarised memorandum and articles of association, addressing the matters described in Paragraph AU-4.1.7; and
          (l) Other information as may be specified by the CBB.
          January 2014

        • AU-4.1.14

          Applicants issued new licenses by the CBB must start operations within 6 months of the license being issued, as per Article 48 (c) of the CBB Law. Failure to comply with this rule may lead to enforcement action being taken against the licensee concerned, as specified in Article 128 of the CBB Law.

          January 2014

        • AU-4.1.15

          A licensee must at all times keep an approved copy of the license displayed in a visible place on the licensee's premises in the Kingdom, as per Article 47 (b) of the CBB Law.

          January 2014

        • AU-4.1.16

          Applicants who are refused a license have a right of appeal under the provisions contained in Article 46 of the CBB Law, which shall not be less than thirty days from the date of the decision. The CBB will decide on the appeal made by the applicant and notify him of its decision within thirty calendar days from the date of submission of the appeal.

          January 2014

        • AU-4.1.17

          Applicants may not publicise in any way the application for a licence for, or formation of, a microfinance institution before the formal decision referred to in Paragraph AU-4.1.11 is provided to the applicant or the concerned agent.

          January 2014

    • AU-4.2 AU-4.2 Approved Persons

      • AU-4.2.1

        Licensees must obtain the CBB's prior written approval before a person is formally appointed to a controlled function. The request for CBB approval must be made by submitting to the CBB a duly completed Form 3 (Application for Approved Person status) and Curriculum Vitae after verifying that all the information contained in the Form 3, including previous experience, is accurate. Form 3 is available under Volume 5 Part B Authorisation Forms of the CBB Rulebook.

        Amended: January 2016
        Amended: July 2015
        January 2014

      • AU-4.2.2

        When the request for approved person status forms part of a license application, the Form 3 must be marked for the attention of the Director, Licensing Directorate. When the submission to undertake a controlled function is in relation to an existing licensee, the Form 3, except if dealing with a MLRO, must be marked for the attention of the applicable Banking Supervision Director. In the case of the MLRO, Form 3 should be marked for the attention of the Director, Compliance Directorate.

        Amended: April 2018
        January 2014

      • AU-4.2.3

        When submitting Form 3, licensees must ensure that the Form 3 is:

        (a) Submitted to the CBB with a covering letter signed by an authorised representative of the licensee, seeking approval for the proposed controlled function;
        (b) Submitted in original form;
        (c) Submitted with a certified copy of the applicant's passport, original or certified copies of educational and professional qualification certificates (and translation if not in Arabic or English) and the Curriculum Vitae; and
        (d) Is signed by an authorised representative of the licensee and all pages stamped with the licensee's seal.
        Amended: July 2015
        January 2014

      • AU-4.2.4

        For existing licensees applying for the appointment of a Director or the Chief Executive/General Manager, the authorised representative should be the Chairman of the Board or a Director signing on behalf of the Board. For all other controlled functions, the authorised representative should be a Director or the Chief Executive/General Manager.

        Amended: July 2015
        January 2014

      • AU-4.2.5

        [This Paragraph was deleted in July 2015.]

        Deleted: July 2015

      • AU-4.2.6

        Licensees seeking to appoint Board Directors must seek CBB approval for all the candidates to be put forward for election/approval at a shareholder meeting, in advance of the agenda being issued to shareholders. CBB approval of the candidates does not in any way limit shareholders' rights to refuse those put forward for election/approval.

        January 2014

      • Assessment of Application

        • AU-4.2.6A

          The CBB shall review and assess the application for approved person status to ensure that it satisfies all the conditions required in Paragraph AU-3.1.3 and the criteria outlined in Paragraph AU-3.1.5.

          Amended: January 2016
          Added: July 2015

        • AU-4.2.6B

          For purposes of Paragraph AU-4.2.6A, licensees should give the CBB a reasonable amount of notice in order for an application to be reviewed. The CBB shall respond within 15 business days from the date of meeting all regulatory requirements, including but not limited to receiving the application complete with all the required information and documents, as well as verifying references.

          Amended: January 2016
          Added: July 2015

        • AU-4.2.6C

          The CBB reserves the right to refuse an application for approved person status if it does not satisfy the conditions provided for in Paragraph AU-3.1.3 and the criteria outlined in Paragraph AU-3.1.5. A notice of such refusal is issued by registered mail to the licensee concerned, setting out the basis for the decision.

          Amended: January 2016
          Added: July 2015

        • AU-4.2.7

          [This Paragraph was deleted in January 2016.]

          Deleted: January 2016
          Amended: July 2015
          January 2014

      • Appeal Process

        • AU-4.2.7A

          Licensees or the nominated approved persons may, within 30 calendar days of the notification, appeal against the CBB's decision to refuse the application for approved person status. The CBB shall decide on the appeal and notify the licensee of its decision within 30 calendar days from submitting the appeal.

          Added: July 2015

        • AU-4.2.7B

          Where notification of the CBB's decision to grant a person approved person status is not issued within 15 business days from the date of meeting all regulatory requirements, including but not limited to, receiving the application complete with all the required information and documents, licensees or the nominated approved persons may appeal to the Executive Director, Banking Supervision of the CBB provided that the appeal is justified with supporting documents. The CBB shall decide on the appeal and notify the licensee of its decision within 30 calendar days from the date of submitting the appeal.

          Amended: January 2016
          Added: July 2015

      • Notification Requirements and Process

        • AU-4.2.8

          Licensees must immediately notify the CBB when an approved person ceases to hold a controlled function together with an explanation as to the reasons why (see Paragraphs AU-4.3.8 and AU-4.3.9). In such cases, their approved person status is automatically withdrawn by the CBB.

          January 2014

        • AU-4.2.9

          Licensees must immediately notify the CBB in case of any material change to the information provided in a Form 3 submitted for an approved person.

          January 2014

        • AU-4.2.10

          Licensees must immediately notify the CBB when they become aware of any of the events listed in Paragraph EN-8.2.3, affecting one of their approved persons.

          January 2014

        • AU-4.2.10A

          Licensees must immediately notify the CBB should they become aware of information that could reasonably be viewed as calling into question an approved person’s compliance with CBB’s ‘fit and proper’ requirement (see AU3.1).

          Added: January 2021

      • Change in Controlled Function

        • AU-4.2.11

          Licensees must seek prior CBB approval before an approved person may move from one controlled function to another within the same licensee.

          January 2014

        • AU-4.2.12

          In such instances, a new Form 3 (Application for Approved Person status) should be completed and submitted to the CBB. Note that a person may be considered 'fit and proper' for one controlled function, but not for another, if for instance the new role requires a different set of skills and experience. Where an approved person is moving to a controlled function in another licensee, the first licensee should notify the CBB of that person's departure (see Rule AU-4.2.8), and the new licensee should submit a request for approval under Rule AU-1.4.1.

          January 2014

    • AU-4.3 AU-4.3 Cancellation of Authorisation

      • Licenses

        • Voluntary Surrender of a License or Closure of a Branch

          • AU-4.3.1

            In accordance with Article 50 of the CBB Law, all requests for the voluntary surrender of a license or closure of a branch are subject to CBB's prior written approval, before ceasing such activities. Such requests must be made in writing to the relevant Banking Supervision Director, setting out in full the reasons for the request and how the voluntary surrender of the license or branch closure is to be carried out.

            January 2014

          • AU-4.3.2

            Licensees must satisfy the CBB that their customers' interests are to be safeguarded during and after the proposed voluntary surrender or closure of the branch. The requirements contained in Chapter GR-6 regarding cessation of business must be satisfied.

            January 2014

          • AU-4.3.3

            The CBB will only approve a voluntary surrender where it has no outstanding regulatory concerns and any relevant customers' interests would not be prejudiced. A voluntary surrender will not be accepted where it is aimed at pre-empting supervisory actions by the CBB. Also, a voluntary surrender will only take effect once the licensee, in the opinion of the CBB, has discharged all its regulatory responsibilities to customers.

            January 2014

        • Cancellation

          • AU-4.3.4

            As provided for under Article 48 of the CBB Law, the CBB may amend or revoke a licence in any of the following cases:

            (a) If the licensee fails to satisfy any of the license conditions;
            (b) If the licensee violates the terms of these Rules or any of the CBB's directives;
            (c) If the licensee fails to start business within six months from the date of the licence;
            (d) If the licensee ceases to carry out the licensed activity in the Kingdom; or
            (e) The legitimate interests of the customers or creditors of a licensee required such amendment or cancellation.
            January 2014

          • AU-4.3.5

            Cancellation of a license requires the CBB to issue a formal notice of cancellation to the person concerned. The notice of cancellation describes the CBB's rationale for the proposed cancellation, as specified in Article 48 (d) of the CBB Law.

            January 2014

          • AU-4.3.6

            The CBB generally views cancellation of a license as appropriate only in the most serious of circumstances, and generally tries to address supervisory concerns through other means beforehand. Further guidance is contained in Module EN (Enforcement), regarding CBB's approach to enforcement and on the process for issuing a notice of cancellation and the recipient's right to appeal the notice.

            January 2014

          • AU-4.3.7

            Normally, where cancellation of a license has been confirmed by the CBB, the CBB will only effect the cancellation once a licensee has discharged all its regulatory responsibilities to customers. Until such time, the CBB will retain all its regulatory powers with regards to the licensee, and will direct the licensee such that no new regulated microfinance services may be undertaken whilst the licensee discharges its obligations to customers.

            January 2014

        • Cancellation of Approved Person Status

          • AU-4.3.8

            In accordance with Paragraph BR-2.2.11, licensees must promptly notify the CBB in writing when a person undertaking a controlled function will no longer be carrying out that function. If a controlled function falls vacant, the licensee must appoint a permanent replacement (after obtaining CBB approval), within 120 calendar days of the vacancy occurring. Pending the appointment of a permanent replacement, the licensee must make immediate interim arrangements to ensure continuity of the duties and responsibilities of the controlled function affected. These interim arrangements must be approved by the CBB.

            January 2014

          • AU-4.3.9

            The explanation given for any such changes should simply identify if the planned move was prompted by any concerns over the person concerned, or is due to a routine staff change, retirement or similar reason.

            January 2014

          • AU-4.3.10

            The CBB may also move to declare someone as not 'fit and proper', in response to significant compliance failures or other improper behaviour by that person: see Chapter EN-8 regarding the cancellation of 'fit and proper' approval.

            January 2014

    • AU-4.4 AU-4.4 Publication of the Decision to Grant, Cancel or Amend a License

      • AU-4.4.1

        In accordance with Articles 47 and 49 of the CBB Law, the CBB will publish its decision to grant, cancel or amend a license in the Official Gazette and in two local newspapers, one in Arabic and the other in English.

        Amended: October 2019
        Added: July 2017

      • AU-4.4.2

        For the purposes of Paragraph AU-4.4.1, the cost of publication must be borne by the Licensee.

        Added: July 2017

      • AU-4.4.3

        The CBB may also publish its decision on such cancellation or amendment using any other means it considers appropriate, including electronic means.

        Added: July 2017