HC-A.1 HC-A.1 Purpose
Executive Summary
HC-A.1.1
This Module presents requirements that have to be met by
microfinance institution licensees with respect to:(a) Corporate governance principles issued by the Ministry of Industry and Commerce as "The Corporate Governance Code";(b) International best practice corporate governance standards set by bodies such as the Basel Committee on Banking Supervision; and(c) Related high-level controls and policies.January 2014HC-A.1.2
The Principles referred to in this Module are in line with the Principles relating to the Corporate Governance Code issued by the Ministry of Industry and Commerce.
January 2014HC-A.1.3
The purpose of the Module is to establish best practice corporate governance principles in Bahrain, and to provide protection for
customers and othermicrofinance institution licensee's stakeholders through compliance with those principles.January 2014HC-A.1.4
Whilst the Module follows best practice, it is nevertheless considered as the minimum standard to be applied.
January 2014Structure of this Module
HC-A.1.5
This Module follows the structure of the Corporate Governance Code and each Chapter deals with one of the nine Principles of corporate governance. The numbered directives included in the Code are Rules for purposes of this Module. Recommendations under the Code have been included as guidance.
January 2014HC-A.1.6
The Module also incorporates other high-level controls and policies that apply in particular to
microfinance institution licensees .January 2014HC-A.1.7
All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.
January 2014The Comply or Explain Principle
HC-A.1.8
This Module is issued as a Directive (as amended from time to time) in accordance with Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). In common with other Rulebook Modules, this Module contains a mixture of Rules and Guidance (See Module UG-1.2 for detailed explanation of Rules and Guidance). All Rulebook content that is categorised as a Rule must be complied with by those to whom the content is addressed. Other parts of this Module are Guidance; nonetheless every
microfinance institution licensee to whom Module HC applies, is expected to comply with recommendations made as Guidance in Module HC or explain its noncompliance by way of an annual report to its shareholders and to the CBB (see Chapter HC-8).January 2014Monitoring and Enforcement of Module HC
HC-A.1.9
Disclosure and transparency are underlying principles of Module HC. Disclosure is crucial to allow outside monitoring to function effectively. This Module looks to a combined monitoring system relying on the board, the
microfinance institution licensee's shareholders and the CBB.January 2014HC-A.1.10
It is the board's responsibility to see to the accuracy and completeness of the
microfinance institution licensee's corporate governance guidelines and compliance with Module HC. Failure to comply with this Module is subject to enforcement measures as outlined in Module EN (Enforcement).January 2014Legal Basis
HC-A.1.11
This Module contains the CBB's Directive (as amended from time to time) relating to high-level controls and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 (‛CBB Law'). The Directive in this Module is applicable to
microfinance institution licensees (including theirapproved persons ).January 2014HC-A.1.12
For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.
January 2014Effective Date
HC-A.1.13
All
microfinance institution licensees to which Module HC applies must be in full compliance by the financial year end 2014. At everymicrofinance institution licensee's annualshareholder meeting held after December 2013, corporate governance must be an item on the agenda for information and any questions fromshareholders regarding themicrofinance institution licensee's governance. Themicrofinance institution licensee must also have corporate governance guidelines in place at that time and must have a "comply or explain" report as described in Paragraph HC-A.1.8.January 2014