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  • 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.