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  • 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.