Executive Summary

Retaining Authorised Status

Legal Basis

Licensing Conditions

Information Requirements and Processes

Evolution of Module

Superseded Requirements

AU-B.1.1

The content of this Module applies to all ancillary service provider licensees authorised in the Kingdom of Bahrain, thereafter referred to in this Module as licensees.

AU-B.1.2

Two types of authorisation are prescribed:

AU-B.1.3

The authorisation requirements in Chapter AU-1 have general applicability, in that they prevent any person from providing (or seeking to provide) regulated ancillary services within or from the Kingdom of Bahrain, unless they have been licensed as a an ancillary service provider by the CBB (see Rule AU-1.1.1).

AU-B.1.4

The remaining requirements in Chapters AU-1 to AU-3 (besides those mentioned in Section AU-B.1 above) apply to all those licensed by the CBB as an ancillary service provider licensee, or which are in the process of seeking such a license. They apply to persons incorporated in the Kingdom of Bahrain, unless otherwise specified.

AU-B.1.5

Chapter AU-2 applies to licensees (not just applicants), since licensing conditions have to be met on a continuous basis by licensees. Similarly, Chapter AU-3 applies to approved persons on a continuous basis; it also applies to licensees seeking an approved person authorisation. Chapter AU-4 contains requirements applicable to licensees, with respect to the starting up of their operations, as well as to licensees and approved persons, with respect to the amendment or cancellation of their authorised status. Finally, Section AU-5.2 imposes annual fees on licensees.

General Prohibitions

Licensing

AU-1.2.1

Regulated ancillary services are any of the following activities, carried on by way of business:

AU-1.2.2 AU-1.2.2

For the purposes of Paragraph AU-1.2.1, carrying on a regulated ancillary service by way of business means:

General Requirements

Basis for Approval

AU-2.1.1

The legal status of a licensee that is an ancillary service provider licensee must be a legal form approved by the CBB.

AU-2.2.1

Licensees must maintain their head office and management in the Kingdom.

AU-2.3.1

Licensees must satisfy the CBB that their controllers are suitable and pose no undue risks to the licensee. Licensees must also satisfy the CBB that their group structures do not prevent the effective supervision of the licensee by the CBB and otherwise pose no undue risks to the licensee.

AU-2.3.2

Chapter GR-7 contains the CBB's requirements and definitions regarding controllers.

AU-2.3.3

In summary, controllers are persons who directly or indirectly are significant shareholders in a licensee, or who are otherwise able to exert significant influence on the licensee. The CBB seeks to ensure that controllers pose no significant risks to the licensee. In general terms, controllers are assessed in terms of their financial standing, their judicial and regulatory record, and standards of business and (where relevant) personal probity.

AU-2.3.4

As regards group structures, the CBB seeks to ensure that these do not prevent adequate consolidated supervision being applied to financial entities within the group, and that other group entities do not pose any material financial, reputational or other risks to the licensee.

AU-2.3.5

In all cases, when judging applications from existing groups, the CBB will have regard to the reputation and financial standing of the group as a whole. Where relevant, the CBB will also take into account the extent and quality of supervision applied to overseas members of the group and take into account any information provided by other supervisors in relation to any member of the group.

AU-2.4.1

Those nominated to carry out controlled functions must satisfy the CBB's approved persons requirements. This rule is supported by Article 65 of the CBB Law.

AU-2.4.2

The definition of controlled functions is contained in Paragraph AU-1.3.2, whilst Chapter AU-3 sets out CBB's approved persons requirements.

AU-2.4.3

The licensee's staff, taken together, must collectively provide a sufficient range of skills and experience to manage the affairs of the licensee in a sound and prudent manner. Licensees must ensure their employees meet any training and competency requirements specified by the CBB.

Capital Funds

Third Party Administrators

Card Processing and Payment Service Providers

Credit Reference Bureau

Shari'a Advisory/Review Services

Crowdfunding Platform Operator

Account Information Services Provider

Payment Initiation Services Provider

Liquidity

AU-2.6.1

Licensees must maintain systems and controls that are, in the opinion of the CBB, adequate for the scale and complexity of their activities. These systems and controls must meet the minimum requirements contained in Modules HC and RM (to be issued at a later date).

AU-2.6.2

Licensees must maintain systems and controls that are, in the opinion of the CBB, adequate to address the risks of financial crime occurring in the licensee.

AU-2.7.1

Article 61 of the CBB Law requires that licensees appoint an external auditor, subject to the CBB's prior approval. The minimum requirements regarding auditors contained in Module AA (Auditors and Accounting Standards) must be met.

Books and Records

Provision of Information

General Conduct

Additional Conditions

AU-3.1.1

Licensees seeking an approved person authorisation for an individual, must satisfy the CBB that the individual concerned is 'fit and proper' to undertake the controlled function in question.

AU-3.1.2

The authorisation requirements for persons nominated to carry out controlled functions is contained in Section AU-1.3. The authorisation process is described in Section AU-3.2.

AU-3.1.3

Each applicant applying for approved person status and those individuals occupying approved person positions must comply with the following conditions:

AU-3.1.4

In assessing the conditions prescribed in Rule AU-3.1.3, the CBB will take into account the criteria contained in Paragraph AU-3.1-5. The CBB reviews each application on a case-by-case basis, taking into account all relevant circumstances. A person may be considered 'fit and proper' to undertake one type of controlled function but not another, depending on the function's job size and required levels of experience and expertise. Similarly, a person approved to undertake a controlled function in one licensee may not be considered to have sufficient expertise and experience to undertake nominally the same controlled function but in a much bigger licensee.

AU-3.1.5

In assessing a person's fitness and propriety, the CBB will also consider previous professional and personal conduct (in Bahrain or elsewhere) including, but not limited to, the following:

AU-3.1.6

With respect to Paragraph AU-3.1.5, the CBB will take into account the length of time since any such event occurred, as well as the seriousness of the matter in question.

AU-3.1.7

Approved persons undertaking a controlled function must act prudently, and with honesty, integrity, care, skill and due diligence in the performance of their duties. They must avoid conflicts of interest arising whilst undertaking a controlled function.

AU-3.1.8

In determining where there may be a conflict of interest arising, factors that may be considered will include whether:

AU-3.1.9

Further guidance on the process for assessing a person's 'fit and proper' status is given in Module EN (Enforcement): see Chapter EN-8.

AU-3.2.1

Licensees must obtain CBB 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.

AU-3.2.2

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 concerned supervisory point of contact at the CBB. In the case of the MLRO, Form 3 should be marked for the attention of the Director, Compliance Directorate.

AU-3.2.3

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

AU-3.2.4

Licensees seeking to appoint members of the board of directors must seek CBB approval for all the candidates to be put forward for election/approval at a shareholders' 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.

AU-3.2.5

For existing licensees applying for the appointment of any controlled functions, the authorised representative should be a duly authorised representative of the licensee and must submit with Form 3: Application for Approved Person Status, internal documentary evidence supporting the appointment of the duly authorised representative of the licensee.

Assessment of Application

Appeal Process

Notification Requirements and Process

Change in Controlled Function

Applications Form and Documents

Licensing Process and Timelines

Granting or Refusal of a License

Starting Operations

AU-4.2.1

As per Article 48 of the CBB Law, licensees must seek prior CBB approval before undertaking new regulated ancillary services.

AU-4.2.2

Failure to secure CBB approval prior to undertaking a new regulated activity may lead to enforcement action being taken against the concerned person in accordance with Article 40 of the CBB Law.

AU-4.2.3

In addition to any other information requested by the CBB, and unless otherwise directed by the CBB, a licensee requesting CBB approval to undertake a new regulated ancillary service must provide the following information:

AU-4.2.4

The CBB may amend or revoke a licence in any of the following cases:

AU-4.2.5

The CBB's procedure for amending or revoking a license is outlined in detail in the Enforcement Module (EN).

AU-4.3.1

[This Paragraph was moved to AU-3.2.1 in October 2017].

AU-4.3.2

[This Paragraph was moved to AU-3.2.2 in October 2017].

AU-4.3.3

[This Paragraph was moved to AU-3.2.3 in October 2017].

AU-4.3.4

[This Paragraph was moved to AU-3.2.4 in October 2017].

AU-4.3.5

[This Paragraph was moved to AU-3.2.5 in October 2017].

[This heading was moved to AU-3.2 in October 2017]

[This heading was moved to AU-3.2 in October 2017]

[This heading was moved to AU-3.2 in October 2017]

[This heading was moved to AU-3.2 in October 2017]

Licenses

AU-4.5.1

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.

AU-4.5.2

For the purposes of Paragraph AU-4.5.1, the cost of publication must be borne by the Licensee.

AU-4.5.3

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

AU-4.6.1

This section sets out additional licensing requirements for crowdfunding platform operator, including conventional and Shari'a-compliant crowdfunding platform operators.

AU-4.6.2

The CBB may license a person as a crowdfunding platform operator provided that:

Business plan

Programme of Operations

Governance arrangements and internal control mechanisms

Business continuity arrangements

Internal Control Mechanisms to comply with AML/CFT obligations

Procedure for monitoring, handling, and following up on security incidents and security-related customer complaints

Process for filing, monitoring, tracking and restricting access to sensitive payment data

Security policy documentation

AU-5.1.1

Applicants seeking an ancillary service provider license from the CBB AU-5.1.1 must pay a non-refundable license application fee of BD 100 at the time of submitting their formal application to the CBB.

AU-5.1.2

There are no application fees for those seeking approved persons status.

AU-5.2.1

Licensees must pay the relevant annual license fee to the CBB on 1^st December of the preceding year for which the fee is due.

AU-5.2.2

The applicable fixed annual license fees are as follows:

AU-5.2.2A

Licensees providing multiple regulated ancillary services are required to pay the annual license fees applicable for each activity in accordance with Paragraph AU-5.2.2.

AU-5.2.3

For new licensees, their first annual license fee is the amount stated in Paragraph AU-5.2.2 and is payable when their license is issued by the CBB.

AU-5.2.4

Where a license is cancelled (whether at the initiative of the firm or the CBB), no refund is paid for any months remaining in the calendar year in question, should a fee have been paid for that year.

AU-5.2.5

All licensees are subject to direct debit for the payment of the annual fee and must complete and submit to the CBB a Direct Debit Authorisation Form by 15^th September available under Part B of Volume 5 (Specialised Licensees) CBB Rulebook on the CBB Website.

AU-5.2.6

Licensees failing to comply with this Section may be subject to financial penalties for date sensitive requirements as outlined in Section EN-5.3A or may have their licenses withdrawn by the CBB.

Executive Summary

The Comply or Explain Principle for Guidance Paragraphs

Monitoring and Enforcement of Module HC

Legal Basis

Effective Date

HC-A.2.1

This Module was first issued in April 2019. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

HC-A.2.2

A list of recent changes made to this Module is detailed in the table below:

Superseded Requirements

HC-B.1.1

The contents of Chapters HC-1 to HC-7 of this Module, unless otherwise stated, apply to card processing services, payment service providers and credit reference bureaus.

HC-B.1.2

The guidance in Chapter HC-8 of this Module apply to TPAs, Shari'a advisory/review services, Crowdfunding Platform Operators and other Ancillary Service Providers. The "comply or explain" principle (see Paragraph HC-A.1.3) applies to the contents of Chapter HC-8.

HC-1.1.1

All licensees must be headed by an effective, collegial and informed Board of Directors ('the Board').

HC-1.2.1

All directors must understand the Board's role and responsibilities under the Bahrain Commercial Companies Law (2001), as amended and any other laws or regulations that may govern their responsibilities from time to time. In particular:

HC-1.2.2

The Board's role and responsibilities include but are not limited to:

HC-1.2.3

With respect to Subparagraph HC-1.2.2(j), the Board should set a materiality threshold so that contractual obligations above this set threshold are regularly reported to the Board. In setting the materiality threshold, the Board will consider the financial impact the contractual obligation may have in relation to its capital.

HC-1.2.4

The members of the board of directors are responsible both individually and collectively for performing the responsibilities outlined in Paragraph HC-1.2.2 and must have sufficient expertise as a Board to understand the important issues relating to operation and control of the licensee. Although the Board may delegate certain functions to committees or management, it may not delegate its ultimate responsibility to ensure that an adequate, effective, comprehensive and transparent corporate governance framework is in place. This statement must be clearly communicated to Board members and senior management.

HC-1.2.5

When a member of the board of directors is inducted, the chairman of the Board, or the licensee's legal counsel or compliance officer, or other individual delegated by the chairman of the board, should review the Board's role and duties with that person, particularly covering legal and regulatory requirements and Module HC (see also HC-4.3.1).

HC-1.2.6

The licensee should have a written appointment agreement with each director which recites the directors' powers and duties and other matters relating to his appointment including his term, the time commitment envisaged, the committee assignment if any, his remuneration and expense reimbursement entitlement, and his access to independent professional advice when that is needed.

HC-1.2.7

The Board should adopt a formal Board charter or other statement specifying matters which are reserved to it, which should include but need not be limited to the specific requirements and responsibilities of board directors.

Additional Guidance

HC-1.3.1

The Memorandum and Articles of Association of licensees must adequately set out procedures for the appointment, removal and retirement of directors.

HC-1.3.2

The Board should have a minimum of 3 members and no more than 5 members, and should regularly review its size and composition to ensure that it is small enough for efficient decision-making yet large enough to have members who can contribute from different specialties and viewpoints. The Board should recommend changes in Board size to the shareholders when a needed change requires amendment of the licensee's Memorandum of Association.

HC-1.3.3

It is not expected that every Board member is proficient in all areas, but collectively the Board is expected to have the required expertise. The CBB expects Board members to undertake relevant training on a regular basis to help them fulfill their responsibilities as board members.

HC-1.3.4

Potential non-executive directors should be made aware of their duties before their nomination, particularly as to the time commitment required. Where applicable, the Nominating Committee should regularly review the time commitment required from each non-executive director and should require each non-executive director to inform the Committee before he accepts any Board appointments to another company. One person should not hold more than three directorships in public companies in Bahrain with the provision that no conflict of interest may exist, and the Board should not propose the election or reelection of any director who does.

HC-1.3.5

To fulfil its responsibilities outlined in Section HC-1.2, the Board of licensees must periodically assess its composition and size and, where appropriate, reconstitute itself and its committees by selecting new directors to replace long-standing members or those members whose contributions to the licensee or its committees is not adequate.

HC-1.3.6

To demonstrate compliance with Rule HC-1.3.5, the Board should be able to demonstrate that it regularly considers (e.g. every one or two years) the mix of executive, non-executive and independent non-executive Directors, and skills and experience, that it requires. See also Paragraph HC-1.3.2.

HC-1.3.7

A Board member must not serve in two or more competing licensees.

HC-1.3.8

The appointment of Board members is conditional on the approval of the CBB (See Section AU-1.2).

HC-1.4.1

The Board must be collegial and deliberative, to gain the benefit of each individual director's judgment and experience.

HC-1.4.2

The Board must meet frequently but in no event less than four times a year. All directors must attend the meetings whenever possible and the directors must maintain informal communication between meetings.

HC-1.4.3

Individual board members must attend at least 75% of all Board meetings in a given financial year to enable the Board to discharge its responsibilities effectively (see table below). Voting and attendance by proxies for board meetings are prohibited at all times.

HC-1.4.4

The absence of Board members at Board and committee meetings must be noted in the meeting minutes. In addition, Board attendance percentage must be reported during any general assembly meeting when Board members stand for re-election (e.g. Board member XYZ attended 95% of scheduled meetings this year).

HC-1.4.5

The chairman should take an active lead in promoting mutual trust, open discussion, constructive dissent and support for decisions after they have been made.

HC-1.4.6

In the event that a Board member has not attended at least 75% of Board meetings in any given financial year, the licensee must immediately notify the CBB indicating which member has failed to satisfy this requirement, his level of attendance and any mitigating circumstances affecting his non-attendance. The CBB shall then consider the matter and determine whether disciplinary action, including disqualification of that Board member pursuant to Article 65 of the CBB Law, is appropriate. Unless there are exceptional circumstances, it is likely that the CBB will take disciplinary action.

HC-1.4.7

To meet its obligations under Rule HC-1.4.3 above, the Board should meet preferably no less than four times per year. The CBB recommends that meetings should take place once every quarter to address the Board's responsibilities for management oversight and performance monitoring. Furthermore, Board rules should require members to step down if they are not actively participating in Board meetings. Board members are reminded that non-attendance at board meetings does not absolve them of their responsibilities as directors. It is important that each individual director should allocate adequate time and effort to discharge his responsibilities. All Directors are expected to contribute actively to the work of the Board in order to discharge their responsibilities and should make every effort to attend board meetings where major issues are to be discussed. Licensees are encouraged to amend their Articles of Association to provide for telephonic and videoconference meetings. Participation in board meetings by means of video or telephone conferencing is regarded as attendance and may be recorded as such.

HC-1.4.8

The chairman must ensure that all directors receive an agenda, minutes of prior meetings, and adequate background information in writing before each Board meeting and when necessary between meetings. All directors must receive the same Board information. At the same time, directors have a legal duty to inform themselves and they must ensure that they receive adequate and timely information and must study it carefully.

HC-1.4.9

The Board must maintain adequate records of its meetings, such that key decisions and how they are arrived at can be traced.

HC-1.5.1

The Board must ensure that it has at least one independent director, in order to provide sufficient independent scrutiny of management.

HC-1.5.2

Every director must bring independent judgment to bear in decision-making. No individual or group of directors must dominate the Board's decision-making and no one individual must have unfettered powers of decision.

HC-1.5.3

Executive directors must provide the Board with all relevant business and financial information within their cognizance, and must recognise that their role as a director is different from their role as an officer.

HC-1.5.4

Non-executive directors must be fully independent of management and must constructively scrutinise and challenge management including the management performance of executive directors.

HC-1.5.5

The chairman of the Board should be an independent director so that there will be an appropriate balance of power and greater capacity of the Board for independent decision making.

HC-1.5.6

The chairman and/or deputy chairman must not be the same person as the CEO.

HC-1.5.7

The Board should review the independence of each director at least annually in light of interests disclosed by them. Each independent director shall provide the Board with all necessary and updated information for this purpose.

HC-1.5.8

Where an independent director has served three consecutive terms on the board, such director will lose his/her independence status and must not be classified as an independent director if reappointed.

HC-1.5.9

Where a Chief Executive Officer of an ancillary service provider licensee, who is also a Board member, no longer occupies the CEO position, whether due to resignation, retirement or termination, his/her Board Membership must also be immediately terminated.

HC-1.6.1

The Board should ensure that individual directors have access to independent legal or other professional advice at the licensee's expense whenever they judge this necessary to discharge their responsibilities as directors and this must be in accordance with the licensee's policy approved by the Board.

HC-1.6.2

Whenever a director has serious concerns which cannot be resolved concerning the running of the licensee or a proposed action, he should consider seeking independent advice and should ensure that the concerns are recorded in the Board minutes and that any dissent from a Board action is noted or delivered in writing.

HC-1.6.3

Upon resignation, a non-executive director should provide a written statement to the chairman, for circulation to the Board, if he has any concerns such as those in Paragraph HC-1.6.3.

HC-1.7.1

The Board should encourage participation by management regarding matters the Board is considering, and also by management members who by reason of responsibilities or succession, the CEO believes should have exposure to the directors.

HC-1.8.1

While the evaluation is a responsibility of the entire board, it should be organised and assisted by an internal board committee and, when appropriate, with the help of external experts.

HC-1.8.2

The Board or a committee may invite non-directors to participate in, but not vote at committee meetings so that the committee may gain the benefit of their advice and expertise in financial or other areas.

HC-1.8.3

Committees should act only within their mandates and therefore the Board must not allow any committee to dominate or effectively replace the whole Board in its decision-making responsibility.

HC-1.8.4

Committees may be combined provided that no conflict of interest might arise between the duties of such committees.

HC-1.8.5

Every committee should have a formal written charter similar in form to the model charter.

HC-2.1.1

The approved persons must have full loyalty to the licensee.

HC-2.2.1

The Board and its members must act with honesty, integrity, due skill and care, and in the best interests of the licensee, its shareholders and clients.

HC-2.2.2

In assessing compliance with Paragraph HC-2.2.1, the CBB will take into account all actions of the Board and its members. The interest of the licensee includes the licensee's continued compliance with all relevant rules and regulations, and the interests of employees, clients and other stakeholders. The interest of shareholders includes the current and future value of the licensee, its status as a going concern, transparency and disclosure of information to the market. The interest of clients includes ensuring that the licensee fulfils its obligations under its terms of business and treats all clients fairly and pays equal regard to the interests of all clients.

HC-2.2.3

Each member of the board must understand that under the Commercial Companies Law 2001, as amended, he is personally accountable to the licensee and the shareholders if he violates his legal duty of loyalty to the licensee, and that he can be personally sued by the licensee or the shareholders for such violations.

HC-2.2.4

A licensee's Board must establish and disseminate to all employees of the licensee a corporate code of conduct.

HC-2.2.5

The code of conduct must establish standards by giving examples or expectations as regards:

HC-2.2.6

The Board must establish and disseminate to employees policies and processes for the identification, reporting and prevention or management of potential conflicts of interest, including matters such as:

HC-2.2.7

Any transaction in which Board members or any member of management have potential conflicts of interest should either be proscribed or require formal documented approval by the Board, with measures taken to manage those conflicts (see also Paragraph HC-2.4.1).

HC-2.2.8

The Board must ensure that policies are in place to ensure that necessary customer confidentiality is maintained.

HC-2.2.9

The duty of loyalty includes a duty not to use property of the licensee for his personal needs as though it was his own property, not to disclose confidential information of the licensee or use it for his personal profit, not to take business opportunities of the licensee for himself, not to compete in business with the licensee, and to serve the licensee's interest in any transactions with the company in which he has a personal interest.

HC-2.2.10

For purposes of Paragraph HC-2.2.9, an approved person must be considered to have a "personal interest" in a transaction with the company if:

HC-2.3.1

Licensees must maintain an organisational structure that minimises the risk of conflicts of interest arising.

HC-2.3.2

For the purposes of Rule HC-2.3.1, the CBB would expect licensees to separate front and back office functions.

HC-2.3.3

Each approved person must make every practicable effort to arrange his personal and business affairs to avoid a conflict of interest with the licensee.

HC-2.3.4

Board members must absent themselves from any discussion or decision-making that involves a subject where they are incapable of providing objective advice, or which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

HC-2.4.1

Each approved person of licensees must inform the entire Board of conflicts of interest as they arise. Board members must abstain from voting on the matter in accordance with the relevant provisions of the Commercial Companies Law 2001, as amended. This disclosure must include all material facts in the case of a contract or transaction involving the approved person. The approved persons must understand that any approval of a conflict transaction is effective only if all material facts are known to the authorising persons and the conflicted person did not participate in the decision.

HC-2.4.2

Board members must declare annually in writing all of their interests (and those of their family) in other enterprises or activities (whether as a Director, shareholder, senior executive or other form of participation) to the Board (or appropriate Board sub-Committee).

HC-2.4.3

The Board should establish formal procedures for:

HC-2.5.1

The licensee must disclose to its shareholders through Annual General Meetings any abstention from voting motivated by a conflict of interest and must disclose to its shareholders any authorisation of a conflict of interest contract or transaction in accordance with the Commercial Companies Law 2001, as amended.

HC-3.1.1

The Board of all licensees must have rigorous controls for financial audit and reporting, internal control, and compliance with law.

HC-3.2.1

The Board of licensees should establish an audit committee commensurate with the size, complexity and nature of its business. The audit committee should consider having at least three directors.

HC-3.2.2

The majority of the directors should be independent including the Chairman.

HC-3.2.3

Where there is an audit committee, it must:

HC-3.2.4

The Board or Audit Committee must ensure that the external audit firm and its partners are truly independent of the licensee and have no financial or other relationship with the licensee. Audit findings must be used as an independent check on the information received from management about the licensees' operations and performance and the effectiveness of internal controls.

HC-3.3.1

The audit committee should adopt a written charter which shall, at a minimum, state the duties outlined in Paragraph HC-3.2.4.

HC-3.3.2

A majority of the audit committee should have the financial literacy and information technology qualifications.

HC-3.3.3

The Board should adopt a "whistleblower" program under which employees can confidentially raise concerns about possible improprieties in financial or legal matters. Under the program, concerns may be communicated directly to any audit committee member or, alternatively, to an identified officer or employee who will report directly to the Audit Committee on this point.

HC-3.4.1

The licensee's CEO and chief financial officer must state in writing to the audit committee and the Board as a whole the licensee's annual and, where applicable, interim financial statements present a true and fair view, in all material respects, of the licensee's financial condition and results of operations in accordance with applicable accounting standards.

HC-4.1.1

Licensees must have rigorous procedures for appointment, training and evaluation of the Board.

HC-4.2.1

Each proposal by the Board to the shareholders for election or reelection of a director must be accompanied by a recommendation from the Board, and the following specific information:

HC-4.2.2

The chairman of the Board should confirm to shareholders when proposing re-election of a director that, following a formal performance evaluation, the person's performance continues to be effective and continues to demonstrate commitment to the role. Any term beyond six years (e.g. two three-year terms) for a director should be subject to particularly rigorous review, and should take into account the need for progressive refreshing of the Board.

HC-4.3.1

The chairman of the Board of licensees must ensure that each new director receives a formal and tailored induction to ensure his contribution to the Board from the beginning of his term. The induction must include meetings with senior management, visits to company facilities, presentations regarding strategic plans, significant financial, accounting and risk management issues, compliance programs, its internal and external auditors and legal counsel.

HC-4.3.2

All continuing directors must be invited to attend orientation meetings and all directors must continually educate themselves as to the licensee's business and corporate governance.

HC-4.3.3

Management, in consultation with the chairman of the Board, should hold programs and presentations to directors respecting the licensees' business and industry, which may include periodic attendance at conferences and management meetings.

HC-5.1.1

The licensee must remunerate approved persons fairly and responsibly.

HC-5.2.1

The Board of Directors must:

HC-5.2.2

Remuneration (including incentives, bonuses and other rewards) of approved persons must be sufficient enough to attract, retain and motivate persons of the quality needed to run the licensee successfully, but the licensee must avoid paying more than is necessary for that purpose.

HC-5.2.3

Where remuneration is structured so as to link rewards to corporate and individual performance, criteria should avoid excessive focus on short-term profitability measures, without due regard to the longer-term consequences of actions taken.

Alignment of All Staff Remuneration with Compliance with AML/CFT Requirements

HC-5.3.1

The review of Directors' remuneration must be a standing item on the licensee's Annual General Meeting agenda, and must be considered by shareholders at every Annual General Meeting. Directors' remuneration and bonuses to executive directors must be clearly disclosed in the annual financial statements.

HC-5.3.2

Directors' remuneration should also comply with all applicable laws, such as Legislative Decree No. 21 of 2001, with respect to promulgating the Commercial Companies Law.

HC-5.3.3

Remuneration of non-executive directors must not include performance-related elements such as grants of shares, share options or other deferred stock-related incentive schemes, bonuses, or pension benefits.

HC-5.4.1

Remuneration of senior management must be structured so that a portion of the total is linked to licensee and individual performance and aligns their interests with the interests of the shareholders.

HC-5.4.2

Such rewards may include grants of shares, share options and other deferred stock-related incentive schemes, bonuses, and pension benefits which are not based on salary.

HC-5.4.3

If a senior manager is also a director, his remuneration as a senior manager must take into account compensation received in his capacity as a director.

HC-5.4.4

All share incentive plans must be approved by the shareholders.

HC-5.4.5

All performance-based incentives should be awarded under written objective performance standards which have been approved by the Board and are designed to enhance shareholder and company value, and under which shares should not vest and options should not be exercisable within less than two years of the date of award of the incentive.

HC-5.4.6

All policies for performance-based incentives should be approved by the shareholders, but the approval should be only of the plan itself and not of the grant to specific individuals of benefits under the plan.

HC-6.1.1

The Board of licensees must establish a clear and efficient management structure.

HC-6.2.1

The Board must approve and review at least annually the licensees' management structure, responsibilities and authorities.

HC-6.2.2

The Board must appoint senior management whose authority must include management and operation of current activities of the licensees, reporting to and under the direction of the Board. The senior managers must include at a minimum:

HC-6.2.3

For purposes of HC-6.2.2 given the nature, scale and complexity of its business, licensees may appoint a part-time or a seconded internal auditor.

HC-6.3.1

Licensees must maintain clearly documented and communicated staff responsibilities and reporting lines.

HC-6.3.2

For the purposes of Rule HC-6.3.1, licensees should maintain and document their delegated authority structure as well as written terms of reference for staff positions.

HC-6.3.3

For the purpose of Paragraph HC-6.3.1, the responsibilities and reporting lines must among other matters include the following:

HC-6.3.4

The Board must also specify any limits which it wishes to set on the authority of the CEO or other senior managers, such as monetary maximums for transactions which they may authorize without separate Board approval.

HC-6.4.1

Licensees must consider establishing an internal audit function commensurate with the size, complexity and nature of its business to monitor the adequacy of their systems and controls.

HC-6.4.2

The internal audit function must be independent of the senior management, reporting either to the Board or its Audit committee. The internal audit function must not be combined with any other function.

HC-6.4.3

Where licensees outsource part or all of their internal audit function, the outsourcing arrangements must provide for an adequate level of scrutiny of the licensees. A licensee cannot outsource its internal audit function to its external auditor.

HC-6.4.4

Prior approval from the CBB is required for material outsourcing arrangements, including all outsourcing of internal audit. Note that in all such cases, the licensee retains ultimate responsibility for the adequacy of its outsourcing function, and is required to identify the person within the licensee responsible for internal audit: this person should be an approved person (see Section AU-1.2).

HC-6.4.5

Internal audit functions must have terms of reference that clearly indicate:

HC-6.4.6

Internal audit function must report directly to the Board/Audit committee. They must have unrestricted access to all the appropriate records of the licensees. They must have open and regular access to the Audit Committee, the Board, the Chief Executive, and the licensees' external auditor.

HC-6.5.1

Licensees must take reasonable care to establish and maintain effective systems and controls for compliance with applicable requirements in the Kingdom's legislation and those set by the CBB, and those established under any other statute or regulator to which they are subject.

HC-6.5.2

Depending on the nature, scale and complexity of its business, licensees should consider having a separate compliance function. A compliance function should:

HC-6.5.3

The compliance function/MLRO must not be combined with the internal audit function or any other operational function as such combination may lead to a conflict of interest.

HC-7.1.1

The licensees must communicate with shareholders, encourage their participation, and respect their rights.

HC-7.2.1

The Board must observe both the letter and the intent of the Company Law's requirements for shareholder meetings. Among other things:

HC-7.2.2

The licensee must require its external auditor to attend the annual shareholders' meeting and be available to answer shareholders' questions concerning the conduct and conclusions of the audit.

HC-8.1.1

Licensees should be headed by an effective, collegial and informed Board of Directors ('the Board').

Role and Responsibilities

Composition

Decision Making Process

Directors' Communication with Management

HC-8.2.1

The Board should establish formal procedures for:

Disclosure of Conflicts of Interests to Shareholders

HC-8.3.1

The Board should have rigorous controls for financial audit and reporting, internal control, and compliance with law.

CEO and CFO Certification of Financial Statements

HC-8.4.1

The licensee should have rigorous procedures for appointment, training and evaluation of the Board.

Induction and Training of Directors

HC-8.5.1

Licensees should remunerate approved persons fairly and responsibly.

HC-8.5.2

Remuneration of approved persons should be sufficient enough to attract, retain and motivate persons of the quality needed to run the operations of the licensee successfully, but the licensee should avoid paying more than is necessary for that purpose.

HC-8.6.1

The Board of the licensee should establish a clear and efficient management structure.

Establishment of Management Structure

Titles, Authorities, Duties and Reporting Responsibilities

Titles, Authorities, Duties and Reporting Responsibilities

HC-8.7.1

Licensees should communicate with shareholders, encourage their participation, and respect their rights.

Conduct of Shareholders' Meetings

Executive Summary

Legal Basis

Evolution of Module

GR-B.1.1

Unless otherwise indicated, the requirements in this Module apply to all ancillary service provider licensees, thereafter referred to in this Module as licensees.

GR-C.1.1

Ancillary service provider licensees must ensure that all regulated financial services are provided without any discrimination based on gender, nationality, origin, language, faith, religion, physical ability or social standing.

GR-1.1.1

Licensees must ensure that any information in their control or custody is not used or disclosed unless:

GR-1.1.2

Ancillary service providers must take appropriate steps to ensure the security of any information handled for its customers or held on behalf of other CBB licensees.

GR-2.1.1

In accordance with Article 59 of the CBB Law, all licensees must maintain books and records (whether in electronic or hard copy form) sufficient to produce financial statements and show a complete record of the business undertaken by a licensee. These records must be retained for at least ten years according to Article 60 of the CBB Law.

GR-2.1.2

Paragraph GR-2.1.1 includes accounts, books, files and other records related to client information (e.g. trial balance, general ledger, reconciliations, list of counterparties, etc.). It also includes records that substantiate the value of the assets and liabilities.

GR-2.1.3

Separately, Bahrain Law currently requires other transaction records to be retained for at least five years (see Ministerial Order No. 23 of 2002, Article 5(2), made pursuant to the Amiri Decree Law No. 4 of 2001).

GR-2.1.4

Unless otherwise agreed to by the CBB in writing, records must be kept in either English or Arabic. Any records kept in languages other than English or Arabic must be accompanied by a certified English or Arabic translation. Records must be kept current. The records must be sufficient to allow an audit of the licensee's business or an on-site examination of the licensee by the CBB.

GR-2.1.5

Translations produced in compliance with Rule GR-2.1.4 may be undertaken in-house, by an employee or contractor of the licensee, provided they are certified by an appropriate officer of the licensee.

GR-2.1.6

Records must be accessible at any time from within the Kingdom of Bahrain, or as otherwise agreed with the CBB in writing.

GR-2.1.7

Where older records have been archived, the CBB may accept that records be accessible within a reasonably short time frame (e.g. within 5 business days), instead of immediately. The CBB may also agree similar arrangements where elements of record retention and management have been centralised in another group company, whether inside or outside of Bahrain.

GR-2.1.8

Paragraphs GR-2.1.1 to GR-2.1.7 apply to licensees, with respect to all business activities.

GR-2.2.1

Licensees must keep completed transaction records for as long as they are relevant for the purposes for which they were made (with a minimum period in all cases of five years from the date when the transaction was terminated). Records of terminated transactions must be kept whether in hard copy or electronic format as per the Legislative Decree No. (54) of 2018 with respect to Electronic Transactions “The Electronic Communications and Transactions Law” and its amendments.

GR-2.2.2

[This Paragraph has been deleted in July 2017].

GR-2.2.3

Rule GR-2.2.1 applies only to transactions relating to business booked in Bahrain by the licensee.

Corporate Records

Customer Records

GR-3.1.1

Any written communication, including stationery, business cards or other business documentation published by the licensee, or used by its employees must include a statement that the licensee is regulated by the Central Bank of Bahrain, the type of license and the legal status.

GR-4.1.1

A TPA's compensation may be determined:

GR-4.2.1

TPAs are allowed to enter into agreement with more than one:

GR-4.2.2

TPAs must not charge any kind of fees to the claimants/policyholders.

GR-4.2.3

TPAs must not market or sell insurance nor own any part of a healthcare facility or company.

GR-4.2.4

Where a TPA owns any part of a healthcare facility or company at the time this Module is issued, it will be permitted to retain its ownership in the company.

GR-4.2.5

TPAs must act in the insurance firm's and/or self-funded scheme's (limited to outside Bahrain) best interests at all times and must fulfill their needs to the best of their ability.

GR-4.2.6

TPAs must improve the skills of their employees and increase their knowledge through continuing education and training.

GR-4.2.7

TPAs must disclose to the existing and prospective insurance firm and/or self-funded scheme (limited to outside Bahrain) any and all information that may affect the TPA's ability to provide services and/or advice to the clients.

GR-4.2.8

TPAs must ensure that all client funds collected and/or held by the TPA are used for the express purpose for which the funds are collected and/or held as understood by the insurance firm and/or self-funded scheme (limited to outside Bahrain).

GR-4.2.9

TPAs must fully disclose to each insurance firm and/or self-funded scheme (limited to outside Bahrain) the terms of engagement and the services to be rendered to that client.

GR-4.3.1

All funds remitted to a TPA by an insurance firm and/or self-funded scheme (limited to outside Bahrain) must be held by the TPA in a separate account maintained in the name of the insurance firm and/or self-funded scheme (limited to outside Bahrain) or in a separate account maintained jointly in the names of the insurance firm and/or self-funded scheme (limited to outside Bahrain) and the TPA.

GR-4.3.2

When funds are collected by a TPA from a healthcare provider on behalf of an insurance firm and/or self-funded scheme (limited to outside Bahrain), such funds must be promptly deposited in a separate account maintained in the name of the insurance firm and/or self-funded scheme (limited to outside Bahrain) or an account maintained jointly in the names of the insurance firm and/or self-funded scheme (limited to outside Bahrain) and the TPA, or remitted to the insurance firm and/or self-funded scheme (limited to outside Bahrain), as provided for in the agreement.

GR-4.3.3

When an account is held jointly in the names of the insurance firm and/or self-funded scheme (limited to outside Bahrain) and the TPA, the TPA must provide the insurance firm and/or self-funded scheme (limited to outside Bahrain) on a monthly basis a record of all transactions in the joint account.

GR-4.3.4

Funds must not be commingled with any other funds of the TPA nor other insurance firm and/or self-funded scheme (limited to outside Bahrain) of the TPA. Records of a TPA must clearly show funds received and paid out allocated per insurance firm and/or self-funded scheme (limited to outside Bahrain) and must be made available to the insurance firm and/or self-funded scheme (limited to outside Bahrain) upon request.

GR-4.3.5

An insurance firm and/or self-funded scheme (limited to outside Bahrain) shall have the responsibility to make available to the TPA funds necessary to enable the TPA to pay claims in a timely manner, as provided in the agreement.

GR-4.3.6

TPAs must process and settle claims of the policyholder/claimant within 15 calendar days from the receipt of all necessary documents.

GR-4.3.7

TPAs must process and settle claims from healthcare service providers within 30 calendar days from the receipt of all necessary documents from the healthcare service providers.

GR-4.3.8

TPAs must comply with Paragraphs GR-4.3.6 and GR-4.3.7 by 30^th September 2016 at the latest.

GR-4.4.1

A TPA must not conduct any business with an insurance firm and/or self-funded scheme (limited to outside Bahrain) in the absence of a written agreement between the TPA and the insurance firm and/or self-funded scheme (limited to outside Bahrain). The agreement must be retained as part of the official records of the TPA for the duration of the agreement.

GR-4.4.2

The agreement referred to in Paragraph GR-4.4.1 must include at a minimum:

GR-4.5.1

TPAs are prohibited from collecting premiums/contributions from policyholders. Premiums/contributions must be paid directly by the policyholders to insurance firms.

GR-5.1.1

Credit reference bureaus must comply with the Code of Practice (Appendix CM-3 under Volumes 1 and 2 of the CBB Rulebook).

GR-5A.1.1

[This Paragraph was deleted in April 2022].

GR-5A.1.2

[This Paragraph was deleted in April 2022].

GR-5A.1.3

[This Paragraph was deleted in April 2022].

GR-5A.1.4

[This Paragraph was deleted in April 2022].

GR-5A.1.5

[This Paragraph was deleted in April 2022].

GR-5A.1.6

[This Paragraph was deleted in April 2022].

GR-5A.1.7

[This Paragraph was deleted in April 2022].

GR-5A.1.8

[This Paragraph was deleted in April 2022].

GR-5A.1.9

[This Paragraph was deleted in April 2022].

GR-5A.1.10

[This Paragraph was deleted in April 2022].

GR-5A.1.11

[This Paragraph was deleted in April 2022].

GR-5A.1.11A

[This Paragraph was deleted in April 2022].

GR-5A.1.12

[This Paragraph was deleted in April 2022].

GR-5A.1.13

[This Paragraph was deleted in April 2022].

GR-5A.1.14

[This Paragraph was deleted in April 2022].

GR-5A.1.15

[This Paragraph was deleted in April 2022].

GR-5A.1.16

[This Paragraph was deleted in April 2022].

GR-5A.1.17

[This Paragraph was deleted in April 2022].

GR-5A.1.18

[This Paragraph was deleted in April 2022].

GR-5A.1.19

[This Paragraph was deleted in April 2022].

GR-5A.1.20

[This Paragraph was deleted in April 2022].

GR-5A.1.21

[This Paragraph was deleted in April 2022].

GR-5A.1.22

[This Paragraph was deleted in April 2022].

GR-5A.1.23

[This Paragraph was deleted in April 2022].

GR-5A.1.24

[This Paragraph was deleted in April 2022].

GR-5A.1.25

[This Paragraph was deleted in April 2022].

GR-5A.1.26

[This Paragraph was deleted in April 2022].

GR-5A.1.27

[This Paragraph was deleted in April 2022].

GR-5A.1.28

[This Paragraph was deleted in April 2022].

GR-5A.1.29

[This Paragraph was deleted in April 2022].

GR-5A.2.1

[This Paragraph was deleted in April 2022].

GR-5A.2.2

[This Paragraph was deleted in April 2022].

GR-5A.2.3

[This Paragraph was deleted in April 2022].

GR-5A.2.4

[This Paragraph was deleted in April 2022].

GR-5A.2.5

[This Paragraph was deleted in April 2022].

GR-5A.2.6

[This Paragraph was deleted in April 2022].

GR-5A.2.7

[This Paragraph was deleted in April 2022].

General Requirement

Record Keeping

CDM/ Kiosk Alarms

Closed-circuit Television (CCTV)

CCTV Network Systems

CDMs/Kiosks Lighting

Fire Alarm

Cash Replenishment

CDMs/Kiosks Service and Maintenance

Europay, MasterCard and Visa (EMV) Compliance

GR-5B.2.1

Entry to sensitive areas by the PSP staff or other authorized parties into the CDM/Kiosk environment/surroundings must be controlled, monitored and recorded. The names of the persons accessing the area; the date; and the time of access to and exit from the area must be recorded. CCTV cameras must be installed, and used to record all activities within the CDM/Kiosk environment.

GR-5B.2.2

The applicable standards relating to Payment Card Industry (PCI), PIN Transaction Security (PTS), and Point of Interaction (POI) requirements must, in all instances, be fully complied with.

GR-5B-2.3

PSPs must ensure that the integration of Secure Card Readers, (SCRs) and, if applicable, any mechanism protecting the SCRs are properly implemented and fully comply with the guidelines provided by the device vendor. SCRs must be approved by and fully comply with all Payment Card Industry standards at all times.

GR-5B-2.4

PSPs must ensure that all CDMs/Kiosks are equipped with mechanisms which prevent skimming attacks. There must be no known or demonstrable way to disable or defeat the above-mentioned mechanisms, or to install an external or internal skimming device.

GR-6.1.1

Licensees must obtain a letter of no-objection from the CBB to any dividend proposed, before announcing the proposed dividend by way of press announcement or any other means of communication and prior to submitting a proposal for a distribution of profits to a shareholder vote.

GR-6.1.2

The CBB will grant a no-objection letter where it is satisfied that the level of dividend proposed is unlikely to leave the licensee vulnerable — for the foreseeable future — to breaching the CBB's capital requirements, taking into account (as appropriate) the licensee's liquidity.

GR-6.1.3

To facilitate the prior approval required under Paragraph GR-6.1.1, licensees must provide the CBB with:

GR-7.1.1

Licensees must obtain prior written approval from the CBB for any changes to their controllers (as defined in Section GR-7.2):

GR-7.1.2

Condition 3 of the CBB's licensing conditions specifies, among other things, that licensees must satisfy the CBB that their controllers are suitable and pose no undue risks to the licensee (See Paragraph AU-2.3.1). There are also certain procedures which are set out in Articles 52 to 56 of the CBB Law on controllers.

GR-7.1.3

Applicants for a license must provide details of their controllers, by submitting a duly completed Form 2 (Application for Authorisation of Controller). (See sub-Paragraph AU-4.1.4(a)).

GR-7.1.4

Where a controller is a legal person, the controller must notify the CBB of any change in its shareholding at the earlier of:

GR-7.1.5

For approval under Paragraph GR-7.1.1 to be granted, the CBB must be satisfied that the proposed controller or increase in control poses no undue risks to the licensee or the financial system. The CBB may impose any restrictions that it considers necessary to be observed where approval is given for a new or a change in controller. A duly completed Form 2 (Controllers) must be submitted as part of the request for a change in controllers. An approval of controller will specify the applicable period for effecting the proposed acquisition of shares.

GR-7.1.6

If, as a result of circumstances outside the licensee's knowledge and/or control, a change in controller is triggered prior to CBB approval being sought or obtained, the licensee must notify the CBB no later than 15 calendar days on which those changes have occurred.

GR-7.1.7

The approval provisions outlined above do not apply to existing holdings or existing voting control by controllers already approved by the CBB. The approval provisions apply to new/prospective controllers or to increases in existing holdings/voting control.

GR-7.1.8

Licensees are required to notify the CBB as soon as they become aware of events that are likely to lead to changes in their controllers.

GR-7.1.9

The criteria by which the CBB assesses the suitability of controllers are set out in Section GR-7.3. The CBB aims to respond to requests for approval within 30 calendar days and is obliged to reply within 3 months to a request for approval. The CBB may contact references and supervisory bodies in connection with any information provided to support an application for controller. The CBB may also ask for further information, in addition to that provided in Form 2, if required to satisfy itself as to the suitability of the applicant.

GR-7.1.10

Licensees must submit, within 3 months of their financial year-end, a report on their controllers (See Subparagraph BR-1.1.3(d)). This report must identify all controllers of the licensee, as defined in Section GR-7.2, the extent of their shareholding interests and any change in their legal status or any adverse information on the controllers.

GR-7.1.1A

Licensees must not incur or otherwise have an exposure (either directly or indirectly) to their controllers, including subsidiaries and associated companies of such controllers.

GR-7.1.1B

For the purpose of Paragraph GR-7.1.1A, licensees that already have an exposure to controllers must have an action plan agreed with the CBB's supervisory point of contact to address such exposures within a timeline agreed with the CBB.

GR-7.2.1

A controller of a licensee is a natural or legal person who either alone, or with his associates:

GR-7.2.2

For the purposes of Paragraph GR-7.2.1, "associate" includes:

GR-7.2.3

Associate also includes any other person or undertaking with which the controller has entered into an agreement or arrangement as to the acquisition, holding or disposal of shares or other interests in the licensee, or under which they undertake to act together in exercising their voting power in relation to the licensee.

GR-7.3.1

All new controllers or prospective controllers (as defined in Section GR-7.2) of a licensee must obtain the prior written approval of the CBB. Any increases to existing controllers' holdings or voting control must also have prior written approval from the CBB and are subject to the conditions outlined in this Section. Such changes in existing controllers (as defined in the Section GR-7.2) or new/prospective controllers of a licensee must satisfy the CBB of their suitability and appropriateness. The CBB will issue an approval notice or notice of refusal of a controller according to the approval process outlined in Section GR-7.4.

GR-7.3.2

All controllers or prospective controllers (whether natural or legal persons) of all licensees are subject to the approval of the CBB. Persons who intend to take ownership stakes of 10% or above of the voting capital of a licensee are subject to enhanced scrutiny, given the CBB's position as home supervisor of such licensees. The level of scrutiny and the criteria for approval become more onerous as the level of proposed ownership increases.

GR-7.3.3

In assessing the suitability and the appropriateness of new/prospective controllers (and existing controllers proposing to increase their shareholdings) who are natural persons, the CBB has regard to their professional and personal conduct, including, but not limited to, the following:

GR-7.3.4

In assessing the suitability and appropriateness of legal persons as controllers (wishing to increase their shareholding) or new/potential controllers, the CBB has regard to their financial standing, judicial and regulatory record, and standards of business practice and reputation, including, but not limited to, the following:

GR-7.4.1

Within 3 months of receipt of an approval request under Paragraph GR-7.1.1, the CBB will issue an approval notice (with or without restrictions) or a written notice of refusal if it is not satisfied that the person concerned is suitable to increase his shareholding in, or become a controller of the licensee. The notice of refusal or notice of approval with conditions will specify the reasons for the objection or restriction and specify the applicant's right of appeal in either case. Where an approval notice is given, it will specify the period for which it is valid and any conditions that attach. These conditions will include the maximum permitted limit of holding or voting control exercisable by the controller.

GR-7.4.2

Notices of refusal have to be approved by an Executive Director of the CBB. The applicant has 30 calendar days from the date of the notice in which to make written representation as to why his application should not be refused. The CBB then has 30 calendar days from the date of receipt of those representations to reconsider the evidence submitted and make a final determination, pursuant to Article 53 of the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006) ("CBB Law") and Module EN (Enforcement).

GR-7.4.3

Pursuant to Article 56 of the CBB Law, where a person has become a controller by virtue of his shareholding in contravention of Paragraph GR-7.1.1, or a notice of refusal has been served to him under Paragraph GR-7.4.1 and the period of appeal has expired, the CBB may, by notice in writing served on the person concerned, direct that his shareholding shall be transferred or until further notice, no voting right shall be exercisable in respect of those shares.

GR-7.4.4

Article 56 of the CBB Law empowers the CBB to take appropriate precautionary measures, or sell such shares mentioned in Paragraph GR-7.4.3, if the licensee fails to carry out the order referred to in the preceding Paragraph.

GR-8.1.1

Condition 3 of the CBB's licensing conditions specifies, amongst other things, that licensees must satisfy the CBB that their close links do not prevent the effective supervision of the licensee and otherwise pose no undue risks to the licensee. (See Paragraph AU-2.3.1).

GR-8.1.2

Applicants for a license must provide details of their close links, as provided for under Form 1 (Application for a License). (See Paragraph AU-4.1.1).

GR-8.1.3

Licensees must submit to the CBB, within 3 months of their financial year-end, a report on their close links (See Subparagraph BR-1.1.3(b)). The report must identify all undertakings closely linked to the licensee, as defined in Section GR-8.2.

GR-8.1.4

Licensees may satisfy the requirement in Paragraph GR-8.1.3 by submitting a corporate structure chart, identifying all undertakings closely linked to the licensee.

GR-8.1.5

Licensees must provide information on undertakings with which they are closely linked, as requested by the CBB.

GR-8.2.1

A licensee ('L') has close links with another undertaking ('U'), if:

GR-8.3.1

In assessing whether a licensee's close links may prevent the effective supervision of the licensee, or otherwise poses no undue risks to the licensee, the CBB takes into account the following:

GR-9.1.1

As specified in Article 50 of the CBB Law, a licensee wishing to cease to provide or suspend any or all of the licensed regulated services of its operations and/or liquidate its business must obtain the CBB's prior approval.

GR-9.1.2

Licensees must notify the CBB in writing at least six months in advance of their intended suspension of any or all the licensed regulated services or cessation of business, setting out how they propose to do so and, in particular, how they will treat any of their liabilities.

GR-9.1.3

If the licensee wishes to liquidate its business, the CBB will revise its license to restrict the firm from entering into new business. The licensee must continue to comply with all applicable CBB requirements until such time as it is formally notified by the CBB that its obligations have been discharged and that it may surrender its license.

GR-9.1.4

A licensee in liquidation must continue to meet its contractual and regulatory obligations to its clients and creditors.