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  • 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