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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 2014

      • BR-2.1.2

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

        January 2014

      • 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 2014

    • 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 breach of any provision of the Rulebook (including a Principle);
          (f) A breach of any requirement imposed by the relevant law or by regulations or an order made under any relevant law 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-6.1.2).
          January 2014

        • 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 consider properly all potential consequences of events.

          January 2014

        • 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 indirectly have an effect on the licensee.

          January 2014

      • 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 2014

        • 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 that would prevent the licensee from meeting the Principles of Business (Module PB) or any of its approved persons from meeting the fit and proper requirements of Module AU.

          January 2014

      • Fraud, Errors and other Irregularities

        • BR-2.2.6

          A licensee must notify the CBB immediately if one of the following events arises:

          (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) Conflicts of interest.
          January 2014

      • Insolvency, Bankruptcy and Winding Up

        • BR-2.2.7

          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 or to strike the licensee off the register of microfinance institutions;
          (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 a controller or close link of the licensee (whether an administrative receiver or a receiver appointed over particular property); or
          (g) An application for an interim order against the licensee, a controller or close link of the licensee under the Bankruptcy and Composition Law, Decree Law No(11), 1987 or similar legislation in another jurisdiction.
          January 2014

      • External Auditor

        • BR-2.2.8

          A licensee must notify the CBB of the following and the reason for the change:

          (a) Removal or resignation of auditor (ref. AA-1.2.1); or
          (b) Change in audit partner (ref. AA-1.3.3).
          January 2014

      • Approved Persons

        • BR-2.2.9

          A licensee must notify the CBB of the termination of employment of approved persons, including particulars of reasons for the termination and arrangements with regard to replacement (ref. AU-4.3.8 and AU-4.4.8).

          January 2014

      • Authorised Signatories

        • BR-2.2.10

          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 it a list of specimen signatures of the officials authorised to sign on behalf of the concerned institution.

          January 2014

      • Current Management and Changes thereto

        • BR-2.2.11

          At the time of authorisation (when the license is granted) or whenever a change occurs, all licensees must keep the CBB informed, in writing, of the controlled functions held by approved persons. Such notification must include the following information:

          (a) Full name (and identity card for Bahrain resident management);
          (b) Contact details including address and emergency phone number;
          (c) Date of birth;
          (d) Place of birth (including town etc.);
          (e) Nationality;
          (f) Professional qualifications (by educational establishment and dates); and
          (g) Career details over the last ten years (with your institution or elsewhere).
          January 2014

      • Breach of Capital Adequacy Requirements

        • BR-2.2.12

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

          January 2014

        • BR-2.2.13

          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 2014

      • Outsourcing Arrangements

        • BR-2.2.14

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

          Amended: January 2023
          January 2014

      • Controllers

        • BR-2.2.15

          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 the earlier of:

          (a) When the change takes effect; and
          (b) When the controller becomes aware of the proposed change (ref. GR-4.1.7).
          January 2014

        • BR-2.2.16

          As specified in Article 52 of the CBB Law, a licensee must notify the CBB of the following events:

          (a) If effective control over a licensee takes place indirectly whether by way of inheritance or otherwise;
          (b) Gaining control directly as a result of any action leading to it; or
          (c) The intention to take any of the actions that would lead to control.
          January 2014

    • 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 should seek prior written approval from the CBB for opening a branch or a subsidiary.

          January 2014

        • 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 2014

      • 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 (which is the registered name if the licensee is a corporate body; or
          (b) The licensee's trade name.
          January 2014

        • 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 implement the change of name.

          January 2014

      • Change of Address

        • BR-2.3.5

          As specified in Article 51 of the CBB Law, a licensee must seek prior written 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 2014

        • 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 implement the change of address.

          January 2014

      • Change in Legal Status

        • BR-2.3.7

          A licensee must seek CBB prior written 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 2014

      • 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 written approval before making any modification to its issued or paid-up capital.

          January 2014

      • Controllers

        • BR-2.3.9

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

          (a) A person acquiring control or ceasing to have control;
          (b) An existing controller acquiring an additional type of control (such as ownership or significant influence) or ceasing to have a type of control;
          (c) An existing controller increasing the percentage of shares or voting power beyond 10%, 20% or 40%; and
          (d) An existing controller becoming or ceasing to be a parent undertaking.
          January 2014

      • Mergers, Acquisitions, Disposals and Establishment of New Subsidiaries

        • BR-2.3.10

          A licensee incorporated in Bahrain must seek CBB prior written 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.
          Amended: January 2020
          Added: January 2014

      • Write-offs

        • BR-2.3.11

          Licensees must 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 2014

      • Outsourcing Arrangements

        • BR-2.3.12

          [This Paragraph was deleted in January 2023].

          Deleted: January 2023
          January 2014

      • 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 2014

        • 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 United Nations Security Council Resolution (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 2014

        • 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 2014

        • 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 2014

      • External Auditor

        • BR-2.3.17

          A licensee must seek prior written 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 2014

      • 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, before announcing the proposed dividend by way of press announcement or any other means of communication, in accordance with Chapter GR-3.

          January 2014

      • 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-1.4 and AU-4.3.1).

          January 2014

        • 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 2014

        • 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-4.4.9).

          January 2014

      • Cessation of Business

        • BR-2.3.22

          In accordance with Paragraph GR-6.1.1 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 2014