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  • CIU-1 CIU-1 Bahrain Domiciled Retail CIUs

    • CIU-1.1 CIU-1.1 Authorisation

      • Authorisation Requirement

        • CIU-1.1.1

          Bahrain domiciled retail CIUs must be authorised by the CBB prior to being offered to investors.

        • CIU-1.1.2

          An application for authorisation may only be made by one of the following:

          (a) The operator of the CIU; or
          (b) The directors or trustees of the CIU (as appropriate).

        • CIU-1.1.3

          An applicant may appoint a representative — such as the CIU's proposed administrator/custodian, or a law firm or professional consultancy — to prepare and submit the application. However, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification of any issues.

        • CIU-1.1.4

          An application for authorisation under Rule CIU-1.1.1 involving an overseas operator will only be considered if:

          (a) The overseas operator is duly authorised to operate similar CIUs in its home jurisdiction and is supervised by an overseas financial services authority acceptable to the CBB; and
          (b) The overseas operator has identified an appropriate institution licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements contained in Rule CIU-1.4.9.

      • Authorisation Process

        • CIU-1.1.5

          An application for authorisation under Rule CIU-1.1.1 must be made using a Form CIU(A) (Application for Authorisation of a CIU), submitted under a formal cover letter signed by two authorised signatories of the applicant, together with all supporting documentation requested.

        • CIU-1.1.6

          The application for authorisation must identify an individual, for approval by CBB as an approved person, in their capacity as the person responsible for the CIU. This person must be:

          (a) An officer of a CBB licensee;
          (b) Resident in Bahrain; and
          (c) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.

        • CIU-1.1.7

          The CBB will acknowledge applications made under Rule CIU-1.1.5 within 7 calendar days of receipt and provide formal feedback on the application within 21 calendar days of receipt. This feedback will confirm whether the application is complete, or whether further information is required.

        • CIU-1.1.8

          Should the application be deemed complete, then a final decision on the application will be issued within 30 calendar days of its receipt by the CBB. Should further information be required, then the applicant has 90 calendar days from the date of the CBB's feedback in which to complete the application, failing which the application will be cancelled by the CBB and a new one will need to be submitted. If all outstanding information is submitted and the CBB confirms the application to be complete, then the CBB will take a final decision within 30 calendar days of the CBB's confirmation that the application is complete.

      • Granting or Refusal of Authorisation

        • CIU-1.1.9

          To be granted authorisation, an applicant must demonstrate compliance with the applicable requirements of this Module. Should an authorisation application be granted, the CBB will notify the applicant in writing of the fact. The authorisation may be subject to additional conditions being met.

        • CIU-1.1.10

          The CBB may refuse to grant authorisation if in its opinion:

          (a) The requirements of this Module are not met;
          (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
          (c) The CBB believes it necessary in order to safeguard the interests of potential investors.

        • CIU-1.1.11

          Where the CBB proposes to refuse an application for authorisation, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision, as per the appeal procedures specified in the notice.

      • Fees Payable to CBB

        • CIU-1.1.12

          Each application for authorisation made under Rule CIU-1.1.1 must be accompanied by a BD 100 processing fee. This fee is non-refundable.

        • CIU-1.1.13

          Each Bahrain domiciled retail CIU authorised by CBB is subject to an annual fee of BD 2,000. In the case of umbrella funds, each sub-fund is also charged BD 2,000 a year.

        • CIU-1.1.14

          Where the fee specified in Rule CIU-1.1.13 is paid, it exempts those Bahrain domiciled retail CIU wishing to list on the Bahrain Stock Exchange ('BSE') from having to pay the listing fee normally levied by the BSE.

      • Revocation of Authorisation

        • CIU-1.1.15

          The CBB may revoke authorisation of a Bahrain domiciled retail CIU if the CIU is not in operation within 6 months of the date of its authorisation.

        • CIU-1.1.16

          The CBB will normally only exempt a CIU from the above 6 months rule if exceptional unforeseen circumstances have intervened and delaying the start of the CIU's operations would not prejudice the interests of potential investors (for instance, due to a sudden downturn in markets).

        • CIU-1.1.17

          The CBB may also revoke authorisation of a Bahrain domiciled retail CIU if in its opinion:

          (a) Any of the applicable requirements contained in Module CIU are not met;
          (b) False or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
          (c) The CBB believes it necessary in order to safeguard the interests of potential investors or the CIU's participants.

        • CIU-1.1.18

          Where the CBB proposes to cancel a CIU's authorisation, it shall give the CIU concerned a written notice of its intention to do so and the reasons for such action. The CIU has 30 calendar days from the date of the written notice to appeal the decision, as per the appeal procedures specified in the notice.

      • CBB Powers

        • CIU-1.1.19

          Part 9 of the CBB Law provides the CBB with various investigative and administrative powers to help discharge its regulatory and supervisory functions. These include the right to appoint investigators (Article 121), to assist overseas authorities (Article 122), to demand information (Article 123), and to compel access to premises or information (Article 124).

        • CIU-1.1.20

          The CBB aims to achieve an open, constructive and cooperative relationship with those persons it regulates, but will resort to more formal enforcement powers where cooperation is not forthcoming.

    • CIU-1.2 CIU-1.2 The Instrument Constituting the CIU

      • CIU-1.2.1

        Every Bahrain domiciled retail CIU must have an instrument constituting the CIU, containing the information listed in Appendix A.

      • CIU-1.2.2

        The operator of a Bahrain domiciled retail CIU together with the directors of the CIU concerned (or trustees in the case of a trust arrangement) must ensure that the instrument constituting the CIU:

        (a) Does not contain information that is untrue, misleading, or unfairly prejudicial to the interests of the CIU participants;
        (b) Does not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the CIU operator, manager and other relevant persons to the CIU; and
        (c) Is not unfairly prejudicial to the interests of the CIU participants, either generally or to a particular class of CIU participant.

      • CIU-1.2.3

        The operator of a Bahrain domiciled retail CIU together with the directors of the CIU concerned (or trustees in the case of a trust arrangement) must maintain the instrument constituting the CIU and make any necessary revisions in accordance with applicable legislation as and when required.

      • CIU-1.2.4

        Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the instrument. An updated copy of the instrument must be made available to the CBB within 30 calendar days of the revision being agreed.

      • CIU-1.2.5

        The operator of a Bahrain domiciled retail CIU must make available for inspection, free of charge by any member of the public in an office in Bahrain, the following documents:

        (a) The instrument constituting the CIU;
        (b) The prospectus (both simplified and full);
        (c) All annual and half yearly reports issued to date by the CIU; and
        (d) Copies of all CBB approvals, where required.

    • CIU-1.3 CIU-1.3 Holdings

      • Rights

        • CIU-1.3.1

          If a Bahrain domiciled retail CIU has different classes of holdings, the instrument constituting the CIU must clearly set out the different features of each class of holding, including their respective rights; the allocation of expenses and fees; and how the proportion of the value of the assets of the CIU and the proportion of income available for allocation attributable to each such class is to be calculated.

        • CIU-1.3.2

          For the purposes of this Module, the interest of the CIU participants in a Bahrain domiciled retail CIU (by whatever name these interests are called), are deemed to consist of holdings (including fractions of a holding), each holding representing one undivided share of the entitlement in the CIU's assets.

        • CIU-1.3.3

          The instrument constituting the CIU may provide for different classes of holdings to be issued in an authorised CIU and, in the case of umbrella CIUs, may provide that different classes of holdings may be issued for each sub-CIU.

      • Issue, Purchase and Redemption

        • CIU-1.3.4

          Holdings may not be created or issued unless the equivalent of the net issue price is paid into the assets of the Bahrain domiciled retail CIU within the usual time limits. This shall not preclude the distribution of bonus holdings.

        • CIU-1.3.5

          CIU participants shall, in accordance with the CIU documents, either be:

          (a) Issued with registered certificates evidencing title to holdings, in a form and substance satisfactory to the CBB; or
          (b) Provided with written confirmation of entry in a register for such holdings which shall be kept current and up-to-date at all times and shall contain full details of the names and addresses of the CIU participants, the number of holdings held by them, and the date of acquisition of such holdings.

        • CIU-1.3.6

          Holdings in a CIU (except for those in closed-end funds), must be redeemed, repurchased, reimbursed or repaid (as may be appropriate) at the request of the CIU participants and in accordance with the Bahrain domiciled retail CIU's documents.

        • CIU-1.3.7

          Holdings may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate), in accordance with the prospectus constituting the Bahrain domiciled retail CIU and at a price arrived at by dividing the net asset value of the CIU by the number of holdings outstanding, after taking into account any charges as agreed in advance with the CBB.

        • CIU-1.3.8

          The prospectus constituting the Bahrain domiciled retail CIU must clearly state the frequency and basis for calculation of the issue price, repurchase price and other appropriate prices of the holdings in the CIU.

    • CIU-1.4 CIU-1.4 Governance of the CIU

      • Governing Body Requirements

        • CIU-1.4.1

          The governing body of a Bahrain domiciled retail CIU (i.e. its directors or trustees, as appropriate) must comprise of persons with appropriate experience.

        • CIU-1.4.2

          Bahrain domiciled retail CIUs are in addition required to comply with any legal requirements imposed by virtue of the legal form used to create the CIU.

        • CIU-1.4.3

          The governing body of a Bahrain domiciled retail CIU (i.e. its directors or trustees, as appropriate) must meet at least once every financial year (or more frequently if required by law), to review the performance and operations of the CIU.

        • CIU-1.4.4

          If the CIU participants have a right to call for a general meeting of CIU participants, the instrument constituting the CIU must describe how the meeting may be convened.

        • CIU-1.4.5

          If a general meeting of CIU participants is called, the Bahrain domiciled retail CIU must ensure that:

          (a) Each CIU participant is given at least 14 calendar days written notice of the meeting;
          (b) The notice specifies the place, day and time of the meeting; and
          (c) The terms and resolutions to be proposed, as well as a copy of the notice, are sent to the CIU's administrator/custodian and to the CBB.

      • Governance Framework

        • CIU-1.4.6

          Bahrain domiciled retail CIUs must maintain an adequate framework for the governance and operation of the CIU. This framework must seek to ensure that the CIU is governed effectively and in the interests of the CIU's participants.

        • CIU-1.4.7

          The main aim of the framework should be to ensure that when faced with a conflict, the CIU respects all applicable rules and its contractual obligations from an objective perspective, withouth favouring CIU insiders (including relevant persons) at the expense of the interests of the CIU's participants.

        • CIU-1.4.8

          The CIU's directors (or trustees in the case of a trust) may not delegate their oversight responsibilities, although execution of operational functions may be outsourced to other entities.

      • Relevant Persons

        • CIU-1.4.9

          Bahrain domiciled retail CIUs must delegate the administration and safe-keeping of their assets to an administrator/custodian (with the two functions either undertaken by a single institution or two separate institutions). These functions must be undertaken by one or more CBB licensees acceptable to the CBB for the role. The administrator/custodian must:

          (a) Be independent of the CIU's operator;
          (b) Act solely in the interests of the CIU's participants;
          (c) Have sufficient financial and other resources in order to undertake properly its function as administrator /custodian of the CIU; and
          (d) Accept liability to the CIU and its participants, for any loss suffered by them as a result of its unjustifiable failure to perform its obligations adequately.

        • CIU-1.4.10

          In applying Rule CIU-1.4.9 above, the CBB will allow 'hub and spoke' arrangements, whereby actual operations of the administrator/custodian are undertaken outside of Bahrain, providing a suitably licensed office is maintained in Bahrain, through which the CBB can access the CIU's records, and providing the overseas operations are undertaken in reputable jurisdictions by regulated entities that belong to the same group as the Bahrain administrator/custodian. Also, Rule CIU-1.4.9 does not prevent the custodian from appointing sub-custodians, providing the custodian retains ultimate responsibility for the CIU's assets, and providing suitable outsourcing arrangements have been put in place (equivalent to the standards applied by the CBB — see for instance Chapter OM-2 in Volume 1 of the CBB Rulebook.

        • CIU-1.4.11

          The operator and manager (if different) of a Bahrain domiciled retail CIU must be acceptable to the CBB.

        • CIU-1.4.12

          In applying Rule CIU-1.4.11 above, the CBB will take into account an institution's financial soundness, relevant experience with respect to CIUs, and regulatory track record. See also Chapter CIU-5.

    • CIU-1.5 CIU-1.5 Prospectus Requirements

      • Prospectus

        • CIU-1.5.1

          Every Bahrain domiciled retail CIU authorised under Section CIU-1.1 must publish a prospectus containing (at a minimum) the information set out in Appendix B.

        • CIU-1.5.2

          The CIU's directors (or trustees in the case of a trust) must declare that the prospectus:

          a) Does not contain information that is untrue, misleading, or is unfairly prejudicial to the interests of the CIU participants generally or to the participants of other classes of instruments issued by the CIU; and
          b) Does not contain any provision that conflicts with any rule in this Rulebook, or other legal or regulatory requirements that apply to the CIU or other relevant persons connected to the CIU.

        • CIU-1.5.3

          The instrument constituting the Bahrain domiciled retail CIU (i.e. the CIU's rules or instruments of incorporation — see also Section CIU-1.2) must form an integral part of the prospectus and must be annexed to it. Alternatively, the prospectus must specify where the instrument constituting the Bahrain domiciled retail CIU may be obtained.

        • CIU-1.5.4

          The CIU must keep the prospectus up-to-date, such that the information it contains is materially current.

        • CIU-1.5.5

          Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the prospectus. An updated copy of the prospectus must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participants must be notified of the changes at least 14 calendar days before they take effect.

        • CIU-1.5.6

          For the purposes of above, material revisions include changes in the CIU's manager, administrator or custodian; a change to the investment strategy; or a change in fees.

        • CIU-1.5.7

          The CIU must provide a copy of its most recent prospectus free of charge to a potential investor.

        • CIU-1.5.8

          The CIU must upon request provide explanations and such other information supplementary to the prospectus as may reasonably be required by a potential investor.

      • Simplified Prospectus

        • CIU-1.5.9

          Where a simplified prospectus is published by a Bahrain domiciled retail CIU, it must include (as a minimum) the information specified in Appendix C. It must also include a statement specifying that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available free of charge to potential investors upon request.

        • CIU-1.5.10

          A simplified prospectus must contain a summary of the key features of the CIU, including its investment policy and fee structure. It must not be misleading.

        • CIU-1.5.11

          A simplified prospectus must be kept up to date, such that the information it contains is materially current and accurately represents the prospectus.

        • CIU-1.5.12

          There is no requirement for a simplified prospectus to be approved by the CBB, nor for any subsequent material changes to be approved or notified. However, the simplified prospectus must accurately reflect the prospectus, which is subject to approval and notification requirements (see Rule CIU-1.5.4 above).

    • CIU-1.6 CIU-1.6 Investments

      • Risk Management

        • CIU-1.6.1

          Bahrain domiciled retail CIUs must operate on the principle of risk spreading and must maintain and implement investment and risk management policies aimed at the prudent control of risks.

        • CIU-1.6.2

          The prospectus must summarise the policies and limits which the Bahrain domiciled retail CIU will apply, including (but not limited to):

          (a) The type of assets which the CIU may invest in;
          (b) The aggregate limits for each asset class;
          (c) Permitted individual exposures under each asset class; and
          (d) A description of remedial measures to be taken in the event of limit exceptions.

        • CIU-1.6.3

          If the investment and risk management policies specified in Rule CIU-1.6.2 are breached, the Bahrain domiciled retail CIU must take all necessary steps to remedy the situation immediately, taking into account the interests of the CIU's participants.

      • Investment Limits

        • CIU-1.6.4

          Subject to Rule CIU-1.6.6, Bahrain domiciled retail CIUs may only invest in the assets specified and in accordance with the limits prescribed in Appendix D.

        • CIU-1.6.5

          In the case of an umbrella fund (as defined in Rule CIU-B.3.5), the limits referred to in Rule CIU-1.6.4 are applicable to each sub-fund.

        • CIU-1.6.6

          The limits prescribed in Appendix D do not apply until the expiry of a period of six months after the date of initial offering of the CIU.

        • CIU-1.6.7

          Where the limits specified in Appendix D are breached, the Bahrain domiciled retail CIU must report the fact as soon as it becomes aware of the situation to the CBB.

        • CIU-1.6.8

          The CBB may authorise a CIU to widen its investment policy to allow investments in financial assets other than those specified in Appendix D, if it is satisfied that such assets are sufficiently liquid and the interests of the CIU participants are not prejudiced. The CBB may similarly also authorise limits beyond those specified in Appendix D, if it is satisfied that such relief is in the interests of the CIU participants. Where such approvals are given, the fact must be notified to CIU participants as an amendment to the prospectus (and simplified prospectus where applicable).

        • CIU-1.6.9

          If the name or particulars of a Bahrain domiciled retail CIU indicates a specific objective, asset class, geographic region or market, the CIU must invest at least 60% of its assets in investments that reflect the specific objective, asset class, region or market. The remaining balance of the CIU's assets may only be held in cash or cash equivalents.

      • Derivative Transactions

        • CIU-1.6.10

          Subject to the conditions below, a Bahrain domiciled retail CIU may enter into permitted financial derivative transactions provided that:

          (a) The underlying positions continue to satisfy Rule CIU-1.6.4 (and the limits specified in Appendix D);
          (b) The transactions are consistent with the stated investment objectives;
          (c) The counterparties are licensed financial institutions or recognised exchanges or clearing houses;
          (d) The instrument constituting the CIU and its prospectus clearly specify the use and rationale of such transactions (i.e. for hedging purposes or for achieving investment goals), as well as a clear description of the associated risks, including that of volatility in net asset values;
          (e) The derivative positions and balances are capable of independent and reliable daily valuations and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the initiative of the CIU;
          (f) The transactions are subject to sound and documented risk management policies and practices; and
          (g) The arrangement is consistent with good market practice.

      • Significant Influence

        • CIU-1.6.11

          Bahrain domiciled retail CIUs may not acquire securities issued by a relevant person, without prior written CBB approval.

        • CIU-1.6.12

          Exemption from Rule CIU-1.6.11 will normally only be given by CBB in cases where a Bahrain domiciled retail CIU is pursuing a market index strategy, such that it is obliged to invest in a relevant person's securities in order to replicate a market index.

      • Other Restrictions

        • CIU-1.6.13

          Bahrain domiciled retail CIUs may not:

          (a) Assume, guarantee, endorse or otherwise become directly or contingently liable for the obligations or indebtedness of any person, except in accordance with its prospectus or instrument constituting the CIU;
          (b) Acquire any asset which involves the assumption of any liability which is unlimited;
          (c) Invest in any security (of any class) in a company or other undertaking, if any director or officer of the CIU (or of any relevant person and its affiliates) individually owns more than ½ % of the total nominal amount of all the issued securities of that class, or collectively the directors or officers of the CIU (or of any relevant person and its affiliates) own more than 5% of those securities. This prohibition shall also apply where the ownership of the directors or officers specified above is in the parent, subsidiary or other associated undertaking of the company in which the CIU is to make the investment; and
          (d) Invest in other CIUs of the same operator.

    • CIU-1.7 CIU-1.7 Borrowing, Lending and Short Selling

      • Borrowing

        • CIU-1.7.1

          A Bahrain domiciled retail CIU may only borrow subject to the following conditions:

          (a) The borrowing is temporary and not persistent;
          (b) The borrowing is to be repayable out of the assets of the CIU;
          (c) The assets of the CIU are not hypothecated or mortgaged or otherwise encumbered, except for the purposes of stock lending;
          (d) The borrowing does not at any time exceed 20% of the CIU's assets; and
          (e) The circumstances and applicable conditions for such borrowings are disclosed in its prospectus.

        • CIU-1.7.2

          The CBB expects any borrowing to be exceptional and to assist with liquidity management, rather than to leverage returns. With regards to Rule CIU-1.7.1(a), the CBB will take into account both the duration of any period of borrowing and the number of occasions on which resort is had to borrowing in any given period. Thus, occasional, short-term borrowings might be viewed as permissible, whilst longer-term frequent borrowings, such that the CIU was commonly or permanently indebted, would generally not. In the case of investment companies, longer-term borrowings may be allowed where required to make possible the acquisition of immovable assets essential to the direct pursuit of its business.

      • Lending

        • CIU-1.7.3

          A Bahrain domiciled retail CIU may not lend its assets, except as otherwise provided for in Rule CIU-1.7.5 (in relation to stock lending) or for the purposes of meeting margin requirements where the CIU is using financial derivatives.

        • CIU-1.7.4

          For the purpose of Rule CIU-1.7.3, the placing of money on short-term deposit (i.e. for a term of less than one year) or in a current account is not considered lending.

        • CIU-1.7.5

          A Bahrain domiciled retail CIU may only enter into stock lending arrangements (including repurchase arrangements) in respect of any securities held by it, provided that:

          (a) The counterparty is a licensed financial institution;
          (b) The arrangement is consistent with good market practice;
          (c) Acceptable collateral with a value equal to the securities lent is obtained to secure the obligation;
          (d) The aggregate value of stocks lent does not at any time exceed 20% of the net asset value of the CIU's assets; and
          (e) The circumstances and applicable conditions for such borrowings are disclosed in its prospectus.

      • Short Selling

        • CIU-1.7.6

          A Bahrain domiciled retail CIU may not undertake uncovered sales of its assets ('short selling').

    • CIU-1.8 CIU-1.8 Fees and Dividends

      • Fees

        • CIU-1.8.1

          All costs and charges payable from the assets of a Bahrain domiciled retail CIU must be clearly stated in its prospectus. This must detail the estimated or actual amount of costs and charges payable; their nature and the basis for their calculation; together with maximum amounts payable expressed as percentages of the CIU's assets, on a per annum basis. The level of fees for investment management or advisory functions including administration, custody, transfer agency and registrar fees must also be disclosed.

        • CIU-1.8.2

          Where a performance fee is charged by way of deduction from the assets of a Bahrain domiciled retail CIU, the following must be stated:

          (a) The frequency with which the performance fee is charged to the CIU; and
          (b) The basis upon which the performance fee is calculated.

        • CIU-1.8.3

          If a performance fee is levied, the fee may only be payable:

          (a) No more frequently than annually; and
          (b) If the net asset value per holding exceeds the net asset value per holding on which the performance fee was last calculated and paid.

        • CIU-1.8.4

          Costs and charges which have not been disclosed in a Bahrain domiciled retail CIU's prospectus may not be paid from the CIU's assets.

      • Dividends

        • CIU-1.8.5

          All dividends on holdings must be approved in writing by the CBB prior to being announced or distributed to participants of a Bahrain domiciled retail CIU.

    • CIU-1.9 CIU-1.9 Valuation and Record-keeping

      • Valuation

        • CIU-1.9.1

          The administrator appointed by a Bahrain domiciled retail CIU (under Rule CIU-1.4.9 above) must ensure an independent, fair and regular valuation of all the CIU's assets, by appropriately qualified persons.

        • CIU-1.9.2

          The valuation principles to be applied must be laid down in the CIU's rules or instruments of incorporation (as appropriate), and details of these provided in the CIU's prospectus.

        • CIU-1.9.3

          The detailed methods and frequency of the valuation of assets must be documented in a valuation policy drawn up by the administrator and agreed with the CBB.

        • CIU-1.9.4

          The CBB would expect the valuation policy to reflect 'good practice' industry standards. Amongst other things, the CBB would expect wherever possible that valuations be based on multiple and independent price sources. Where unavoidable, valuations based on trader, broker or pricing model input should be sufficiently tested and controlled, and declared, such that conflicts of interest are minimised. Procedures should be developed to identify stale prices or illiquid assets. Valuations should normally be undertaken at least weekly, in the case of exchange traded financial instruments, and at least monthly in all other cases.

      • Record Keeping

        • CIU-1.9.5

          Bahrain domiciled retail CIUs must make and retain for 5 years such records that enable:

          (a) The CIU and its relevant persons, as appropriate, to comply with the rules in this Module; and
          (b) The CIU to demonstrate at any time that such compliance has been achieved.

        • CIU-1.9.6

          The obligation under Rule CIU-1.9.5 is additional to any record-keeping requirements that may apply as a result of applicable laws (such as the commercial companies law), and any regulatory requirements that may apply to relevant persons that are licensed institutions (such as the CBB's record-keeping requirements applicable to CBB licensees).

        • CIU-1.9.7

          Bahrain domiciled retail CIUs must arrange for a register of holdings in the CIU to be maintained, containing the names of CIU participants and their holdings, as well as the sale, issue, repurchase, redemption and cancellation of holdings. The register must be kept up to date.

        • CIU-1.9.8

          Rule CIU-1.9.7 may normally be satisfied by an independent registrar being appointed to maintain such a register on behalf of the Bahrain domiciled retail CIU.

        • CIU-1.9.9

          Bahrain domiciled retail CIUs must arrange for the CIU's operator or any other institution offering its holdings to investors to comply with applicable anti-money laundering and combating the financing of terrorism ('AML/CFT') requirements. It is the responsibility of the Bahrain domiciled retail CIU to ensure that copies of required AML/CFT identification documentation are retained as part of the register specified in Rule CIU-1.9.7. Alternatively, they may be kept by the institution(s) offering the CIU's holdings, provided the documentation may be accessed by the Bahrain domiciled retail CIU and the CBB on request.

    • CIU-1.10 CIU-1.10 Reporting and Auditors

      • Publication Requirements

        • CIU-1.10.1

          Bahrain domiciled retail CIUs must publish semi annual and annual financial statements in respect of each financial year. These statements must be prepared in accordance with International Financial Reporting Standards.

        • CIU-1.10.2

          Publication on the CIU's or operator's website would satisfy the requirement in Rule CIU-1.10.1 that the report be published.

        • CIU-1.10.3

          The annual financial statement must be published and distributed to CIU participants within 4 months of the end of the CIU's financial year. The semi annual financial statement must be published and distributed to CIU participants within 2 months of the period end. Both the annual and semi-annual reports must contain at least the minimum information specified in Appendix E.

        • CIU-1.10.4

          The annual financial statement must be subject to independent audit by a qualified auditor located in Bahrain and acceptable to the CBB. The semi-annual financial statement must be subject to an independent review by the same qualified auditor.

        • CIU-1.10.5

          Bahrain domiciled retail CIUs must publish the issue, sale, repurchase or redemption price of its holdings each time it issues, sells, repurchases or redeems its holdings, and at least twice a month.

        • CIU-1.10.6

          Publication on the CIU's or operator's website, or in a local newspaper, would satisfy the publication requirement in Rule CIU-1.10.5.

      • Reporting to the CBB

        • CIU-1.10.7

          Bahrain domiciled retail CIUs must file the annual and semi annual reports required under Rule CIU-1.10.1 with the CBB within the time periods specified in Rule CIU-1.10.3.

        • CIU-1.10.8

          Bahrain domiciled retail CIUs must file with the CBB Form CIU (QS), the CIU Quarterly Statistical Return, within the deadline specified on the return.

        • CIU-1.10.9

          Bahrain domiciled retail CIUs must notify the CBB of any AGMs or EGMs they intend to hold, with at least 14 calendar days' notice. The CBB may attend such meetings at its discretion.

        • CIU-1.10.10

          Bahrain domiciled retail CIUs must provide the CBB, upon request, any additional information relevant to the CIU's financial reports and accounts.

        • CIU-1.10.11

          Bahrain domiciled retail CIUs must, in their terms of engagement with their external auditor, administrator/custodian, provide for them to report to the CBB in writing without delay, if they become aware of any of the following:

          (a) The information provided to the CIU's participants or the CBB does not truly reflect the financial situation of the CIU;
          (b) There has been a material breach of the requirements of this Module, the CIU documents, or any directions issued by the CBB;
          (c) There exist circumstances that may materially affect the ability of the CIU to fulfill its obligations to the CIU participants;
          (d) There are material defects in the financial systems, controls or accounting records of the CIU;
          (e) There are material inaccuracies in any reporting provided to the CBB; or
          (f) In the case of the external auditor, they are likely to qualify any opinion they are to provide in relation to the financial statements of the CIU.

      • Auditors

        • CIU-1.10.12

          Bahrain domiciled retail CIUs must appoint an external auditor resident in Bahrain, and acceptable to the CBB.

    • CIU-1.11 CIU-1.11 Advertising

      • CIU-1.11.1

        Advertisements in respect of Bahrain domiciled retail CIUs must be:

        (a) Fair and not misleading;
        (b) Clear and self-explanatory (describing the nature or type of CIU to which the advertisement relates);
        (c) State any assumptions on which claims in advertisements are based;
        (d) Include risk warnings, including the potential for loss, that are prominently presented and not obscured or disguised;
        (e) Not describe CIUs as "guaranteed" unless there is a legally enforceable capital guarantee; and
        (f) Not include any comparisons which may be misleading considering the circumstances of the CIU.

      • CIU-1.11.2

        Where an advertisement contains any forecast or projection, it must make clear the basis upon which that forecast or projection is made.

      • CIU-1.11.3

        The advertisements must include a statement informing the client that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available free of charge.

    • CIU-1.12 CIU-1.12 Mergers and Transfers, Suspension and Winding-Up

      • Mergers and Transfers

        • CIU-1.12.1

          A Bahrain domiciled retail CIU must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another CIU. The Bahrain domiciled retail CIU concerned must set out in writing the reasons for the proposed merger or transfer, the alternatives available to CIU participants (including redemption and if possible a right to redeem or switch without charge into another authorised CIU), the estimated costs of the merger or transfer, and information on who is expected to bear these.

        • CIU-1.12.2

          In all cases, a merger or transfer of a Bahrain domiciled retail CIU must be in accordance with the instrument constituting the CIU and all applicable laws.

      • Suspension

        • CIU-1.12.3

          A Bahrain domiciled retail CIU may only suspend the issue and cancel the sale and redemption of its holdings with the prior written approval of the CBB. Such approval will only be given in exceptional circumstances and when in the interest of the CIU's participants.

        • CIU-1.12.4

          Resumption of dealing in holdings may only take place with the prior written approval of the CBB. Once dealing is restarted, the CIU must confirm this to the CBB.

        • CIU-1.12.5

          The circumstances in which dealing in holdings may be suspended must be specified in the CIU's prospectus.

      • Winding-Up

        • CIU-1.12.6

          A Bahrain domiciled retail CIU may only initiate winding-up procedures with the prior written approval of the CBB, and subject to the terms of the instrument constituting the CIU and any applicable laws.

        • CIU-1.12.7

          CBB approval in response to a request to wind-up a retail CIU will normally be given in the following circumstances:

          (a) The purpose of the CIU cannot be accomplished;
          (b) The constitutional documents of the CIU provide for a termination;
          (c) The NAV of the CIU has fallen below US$ 5 million (or some other threshold agreed by CBB); or
          (d) A resolution of a duly convened meeting of the CIU participants has been passed to wind-up the CIU.

        • CIU-1.12.8

          A CIU may also be wound up under a directive of the CBB or other competent authority, such as a court that has issued an order to liquidate the CIU. See also Rules CIU-1.1.17 and CIU-1.1.18 regarding the revocation of authorisation by the CBB.

        • CIU-1.12.9

          Bahrain domiciled CIUs must give at least one months' written notice to CIU participants of their intention to wind-up the CIU, together with an explanation for wishing to do so, and the options available to CIU participants (such options to include, if possible, a right to switch without charge into another CIU). A copy of this notice must be provided to the CBB at the time it is issued to CIU participants.

        • CIU-1.12.10

          Winding-up of a Bahrain domiciled retail CIU must comply with all applicable laws and directions issued by the CBB. In all cases, the CBB requires independent verification by auditors that the CIU's assets have been distributed to CIU participants in accordance with the instrument constituting the CIU, or switched into another CIU.

        • CIU-1.12.11

          Once the CIU's assets have been distributed to the CIU's participants, or switched into another CIU, the Bahrain domiciled retail CIU must confirm the fact to the CBB and request that it be taken off the register of authorised CIUs.