CIU-A.1 CIU-A.1 Purpose
Executive Summary
CIU-A.1.1
Module CIU (Collective Investment Undertakings) sets out the Central Bank of Bahrain's regulatory framework governing
collective investment undertakings ('CIUs') . The Module sets out requirements relevant to allCIUs that are domiciled in the Kingdom of Bahrain ('Bahrain domiciled CIUs '). It also prescribes requirements relating toCIUs that are domiciled in an overseas jurisdiction ('overseas domiciled CIUs ') and offered to investors in the Kingdom of Bahrain.CIU-A.1.2
In summary,
CIUs are defined in Section CIU-B.3 as undertakings the sole object of which is the collective investment of capital raised from the public and which operates on the basis of risk-spreading; and theholdings of which are re-purchased or redeemed out of those undertakings' assets. The definition ofCIUs further specifies the various legal forms that aCIU may take.CIU-A.1.3
The definition of
CIUs includesclosed-ended funds as well asopen-ended funds , and includes funds formed under statute (as investment companies), as well as contract law and trust law (respectively, as common funds and as unit trusts).CIU-A.1.4
Module CIU distinguishes between
CIUs that are classed asretail CIUs , which may be offered to all types of investors, andexpert CIUs , which may only be offered toexpert investors (as defined in this Module).Retail CIUs are subject to more restrictive investment rules, aimed at protecting the general retail investor.CIU-A.1.5
Module CIU also defines a category of
exempt CIU .CIUs that fall under this category are mostly exempt from the requirements contained in this Module; however, they may only be offered to a very restricted investor base ('accredited investors ').CIU-A.1.6
Bahrain domiciled retail CIUs andBahrain domiciled expert CIUs must be authorised by the CBB prior to being offered to investors (whether resident in the Kingdom of Bahrain or outside).Bahrain domiciled exempt CIUs need only register with the CBB before being offered to investors.CIU-A.1.7
Overseas domiciled retail CIUs andoverseas domiciled expert CIUs also require CBB authorisation before being offered to investors in the Kingdom of Bahrain. However, thoseCIUs domiciled in a recognised jurisdiction are only required to register with the CBB, rather than seek authorisation, on the basis that they have already been adequately vetted in their home jurisdiction.Overseas domiciled exempt CIUs are only required to register with the CBB, regardless of their home jurisdiction.CIU-A.1.8
Module CIU replaces previous circulars and other regulatory instruments relating to
CIUs , issued over a number of years (see Rule CIU-A.2.3). It updates these previous requirements, which were effectively geared towards the retail investor, and provides for a greater range ofCIUs to be offered, through its provisions regardingexpert CIUs andexempt CIUs .Legal Basis
CIU-A.1.9
Module CIU constitutes the CBB's Directive relating to
CIUs , 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'). Module CIU is applicable to allCBB licensees that arerelevant persons , as defined in Section CIU-B.2.CIU-A.1.10
The contents of this Module are also included in Regulations, to be issued by the CBB, by virtue of which they are applicable to all those who are
relevant persons but are notCBB licensees .CIU-A.1.11
Thus, persons that are not
CBB licensees (because they are not undertaking regulated services within Bahrain), yet are stillrelevant persons (because their activities relate to aCIU falling within the scope of this Module), are also subject to the requirements of this Module, with respect to theCIU(s) concerned.CIU-A.1.12
For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.
