CIU-B.3 CIU-B.3 Collective Investment Undertakings ('CIUs')
CIU-B.3.1
Collective investment undertakings ('CIUs') are undertakings:(i) The sole object of which is the collective investment of capital raised from the public infinancial instruments or other assets and which operates on the basis of risk-spreading; and(ii) Theholdings of which are re-purchased or redeemed, directly or indirectly, out of those undertakings' assets.CIU-B.3.2
In the case of
CIUs whoseholdings are listed and traded on a stock exchange (such as aclosed-ended fund ), actions taken by theCIU to align the stock exchange value of itsholdings and its net asset value is taken as equivalent to the repurchase or redemption specified in Rule CIU-B.3.1(ii). The definition thus recognises bothopen-ended funds andclosed-ended funds : unit trusts, investment trusts, mutual funds, SICAV and collective investment schemes are all examples ofCIUs . As further specified in Section CIU-B.4,CIUs may be constituted under contract law (as common funds managed by management companies); trust law (as unit trusts); or under statute (as investment companies).CIU-B.3.3
Closed-ended funds areCIUs with a limited number ofholdings . Where the fund vehicle is a company,holdings can take the form of shares. Newholdings are rarely issued after the fund is launched and are not normally redeemable until the fund liquidates. Typically an investor can acquire or dispose ofholdings in aclosed-ended fund by buying or selling them on a secondary market, from a market intermediary or other investor, rather than by dealing with theCIU itself.CIU-B.3.4
The following arrangements do not fall within the definition given in Rule CIU-B.3.1 above:
(a) A contract of insurance, insurance linked investment products or investments managed as part of a takaful contract of insurance;(b) Unrestricted or restricted investment accounts offered byIslamic bank licensees ;(c) Unilateral arrangements to hold or manage assets on a discretionary basis;(d) Arrangements entirely between bodies corporate who are members of the same group, or entirely between family members;(e) Pension, annuity and other employee benefit products, organised and managed for the benefit of employees or for another corporate body, which are governed by separate laws of the Kingdom of Bahrain (e.g. GOSI);(f) Structured products;(g) Cash savings schemes; and(h) Special Purpose Vehicles used to issue debt securities.CIU-B.3.5
Where a person is in any doubt as to whether a particular product or structure falls within the definition of a
CIU given in Rule CIU-B.3.1 above, they must refer the matter to the CBB.CIU-B.3.6
Where a
CIU is structured as a series of separate offerings, such as an umbrella fund with a series of sub-funds, whereby each is a separate offering and financially independent of others established within the same legal vehicle, each sub-fund shall be treated as a separateCIU .CIU-B.3.7
The consequence of Rule CIU-B.3.5 above is that each sub-fund, or separate offering, requires a separate authorisation or registration (as the case may be), and the
operator of theCIU in question — together with the directors or trustees of theCIU (as appropriate) — are required to ensure that each sub-fund or separate offering complies with the applicable rules prescribed in this Module.
