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  • CIU-2.1 CIU-2.1 Rule Variations

    • Restrictions

      • CIU-2.1.1

        Bahrain domiciled expert CIUs may only be offered to expert investors (as defined in Rule CIU-B.5.6), when offered within the Kingdom of Bahrain.

      • CIU-2.1.2

        Bahrain domiciled expert CIUs, if offered to non-resident investors, are also required to comply with any applicable local laws and regulations in the jurisdiction concerned. These may be more or less restrictive than the restriction contained in Rule CIU-2.1.1.

      • CIU-2.1.3

        A Bahrain domiciled expert CIU must be able to demonstrate that each of its participants falls within the definition of an expert investor. They should also be able to demonstrate that the additional risks potentially represented by an expert CIU have been clearly communicated and understood by their participants.

      • CIU-2.1.4

        To help demonstrate compliance with Rule CIU-2.1.3, Bahrain domiciled expert CIUs should be able to provide a written confirmation from each participant, stating that they satisfy the definition of an expert investor and confirming they understand the higher risks involved in an expert CIU. The CBB also expects supporting documentation to be kept, demonstrating that the minimum financial asset threshold specified in Rule CIU-B.5.6 has been satisfied, such as a copy of a bank or broker's statement. Where the investor’s initial investment matches or exceeds the financial asset threshold, this may by itself be taken as evidence that the client meets the minimum financial asset threshold.

        Amended: July 2007

    • Exemptions

      • CIU-2.1.5

        Bahrain domiciled expert CIUs must comply with all the requirements contained in Chapter CIU-1, subject to the exemptions specified below in Rule CIU-2.1.6. References to Bahrain domiciled retail CIU(s) in Chapter CIU-1 should be read as also applying to Bahrain domiciled expert CIUs.

      • CIU-2.1.6

        Expert CIUs may avail themselves of the following exemptions:

        (a) They may utilize higher aggregate and individual exposure limits, as specified in Appendix D;
        (b) They may invest in a wider range of asset classes, as specified in Appendix D;
        (c) They may borrow up to 30% of the CIU's assets, instead of the 20% limit applied to Bahrain domiciled retail CIUs (see Rule CIU-1.7.1); and
        (d) They may enter into stock lending arrangements of up to 30% of the CIU's net asset value, instead of the 20% limit applied to Bahrain domiciled retail CIUs.

      • CIU-2.1.7

        Bahrain domiciled expert CIUs are, in short, subject to mostly the same requirements applicable to Bahrain domiciled retail CIUs. In return to being limited to expert investors, however, they are subject to fewer investment restrictions and can utilize more liberal borrowing and stock-lending limits. The looser investment restrictions allow them, amongst other things, to invest in additional asset classes (such as real estate and commodities, unlisted securities, and to offer funds of hedge funds).