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  • CIU-8 CIU-8 Appendices

    • Appendix A — Instrument constituting the CIU

      The instrument constituting the CIU must contain the following minimum information:

      (a) Name and legal form of the CIU (i.e. company, trust or other contractual structure);
      (b) Name of operator;
      (c) The governing law;
      (d) Objective of the investment vehicle;
      (e) Classes of holdings and, if any rights of any class of holdings differ, a statement describing those differences in relation to the differing classes;
      (f) Rules regarding the organizational and operational framework of the CIU, including provisions on the manner in which meetings are to be conducted, and interests of participants protected;
      (g) The date on which the annual accounting period ends; and
      (h) A statement of terms and circumstances in which the CIU may be wound up, merged with other CIUs, suspended or otherwise terminated.

    • Appendix B — Prospectus

      The prospectus of the CIU must contain the following minimum information:

      (a) Constitution of the CIU:
      (i) Name
      (ii) Registered address
      (iii) Nature of corporate form
      (iv) If it is a company, particulars of its capital structure
      (v) Date of creation
      (vi) Place of creation
      (vii) Indication of duration if limited
      (b) Governing law of the CIU:
      (c) Details of any tax levied on the income and capital of the CIU, including tax deducted on distributions to participants (if applicable)
      (d) Investment objectives and restrictions:
      (i) Details of investment objectives and policy;
      (ii) A summary of the different asset classes that may be held, and the extent to which derivatives, borrowings and stock lending may be undertaken;
      (iii) A summary of the risk management policy, processes and limits structure to be applied; and
      (iv) An assessment of the risks that the CIU may incur, and its overall risk profile.
      (e) Operator and principals:
      (i) Names and registered addresses of the following parties (where applicable) and any additional information as stated:
      a. The Directors or trustees (as appropriate) of the CIU, including a summary of their professional experience and other positions held;
      b. The operator, manager, administrator and custodian, plus
      i. Nature of their corporate form;
      ii. If a subsidiary, the name of their ultimate holding company and the country or territory where the holding company is incorporated;
      iii. The address of their registered offices;
      iv. A description of their principal business activity;
      v. The nature of any licenses held, and their lead regulators; and
      vi. A summary of any material provisions, if applicable.
      c. The investment advisor (if applicable)
      i. Their function
      ii. Whether or not it is the holder of a license
      iii. If it is body corporate in a group of which the operator or administrator is a member
      iv. If the advisor's principal activity is not providing services as an investment advisor, what the principal activity is
      v. Main terms of any agreement or arrangement between the advisor and the operator
      d. The Kingdom of Bahrain representative
      e. The Kingdom of Bahrain distribution company, if different from d.
      f. The auditors
      g. The registrar
      (f) Characteristics of holdings:
      (i) Minimum investment and subsequent investment requirements (if any).
      (ii) A description of the different types of holdings, including their currency of denomination, their nominal value and any applicable requirements for minimum level of holdings.
      (iii) In relation to each available class of holding, the entitlement of the holder to participate in the assets of the CIU and its income.
      (iv) The voting rights that are exercisable at meetings of participants by the participants and, if different rights attach to different classes of holdings, what those rights are.
      (v) Form of certification.
      (g) Valuation:
      (i) How frequently and at what time of day in a specified country or territory the assets of the CIU will be valued for the purpose of determining prices at which units in the CIU may be sold or repurchased.
      (ii) The method of valuation of assets and liabilities of the CIU and the method of pricing and determination of investment returns of the CIU.
      (iii) The circumstances under which the method of valuation and pricing may change for a CIU.
      (h) Seed Capital:
      (i) The amount of any seed capital invested in the CIU (if any), who by, and the investor's proposed intention regarding retaining the seed capital in the CIU or redeeming it. Also, a statement must be included that any redemption of seed capital is subject to the CBB's prior approval.
      (i) Application and redemption procedures:
      (i) Names of any Bahraini daily newspapers in which prices will be published, and details of other sources where prices may be published (e.g. website), as applicable.
      (ii) Procedure for subscribing/redeeming holdings.
      (iii) The maximum interval between the request for redemption and the dispatch of the redemption proceeds
      (iv) A summary of the circumstances under which dealings in holdings may be deferred or suspended.
      (v) A statement that no money will be paid to any financial intermediary in the Kingdom of Bahrain who is not licensed or registered.
      (j) Distribution policy:
      (i) The distribution policy and the approximate dates on which dividends (if any) will be paid (if applicable).
      (k) Fees and charges:
      (i) The level of all fees and charges payable by a participant, including all charges levied on subscription, redemption and conversion.
      (ii) The level of all fees and charges payable by the CIU, including management fees, administration fees, custodian fees and start up expenses.
      (iii) The notice period for fee increases.
      (l) Reports and accounts:
      (i) The date of the CIU's financial year.
      (ii) Particulars of what reports will be sent to participants and when.
      (iii) When annual and half yearly reports will be published.
      (m) Warnings:
      (i) The following statement should be predominantly displayed in the offering document as follows:
      "Important — if you are in any doubt about the contents of this prospectus, you should seek independent professional financial advice. Remember that all investments carry varying levels of risk and that the value of your investment may go down as well as up. Investments in this collective investment undertaking are not considered deposits and are therefore not covered by the Kingdom of Bahrain's deposit protection scheme. The fact that this collective investment undertaking has been authorised by the Central Bank of Bahrain, does not mean that the CBB takes responsibility for the performance of these investments, nor for the correctness of any statements or representations made by the operator of this collective investment undertaking."
      (n) General information:
      (i) A list of the documents constituting the CIU and an address in the Kingdom of Bahrain where they can be inspected free of charge.
      (ii) The date of publication of the offering document.
      (iii) A statement that the directors or trustees (as appropriate) of the CIU, together with the CIU's operator, accept responsibility for the information contained in the offering document as being accurate at the date of publication.
      (iv) A statement that participants will be notified, at least 14 calendar days before the changes take effect, in the following circumstances:
      a. Any changes in the investment policy;
      b. Any changes in the operator, manager, administrator or custodian of the CIU;
      c. The merger, division or termination of the CIU; and
      d. Any major issues that may affect the participants of the CIU.
      (vi) Details of the documentation to be provided by participants in order to satisfy applicable AML/CFT requirements.
      (o) Termination of CIU:
      (i) A summary of circumstances in which the CIU can be terminated.

    • Appendix C — Simplified Prospectus

      The simplified prospectus must contain at the very least the following information:

      (a) The nature of the CIU, including a brief description of the legal status of the CIU, the date it was established and how long it will continue;
      (b) The CIU objectives, investment strategy or management style or policy;
      (c) The significant benefits to which a client in the CIU will or may become entitled, including details about the circumstances and times at which these benefits will or may be provided, and the way these benefits will or may be provided;
      (d) The significant risks associated with investing in the CIU;
      (e) The costs, fees and other charges or expenses associated with an investment in or redemption of the CIU, including a brief description of how they are determined and whether they are payable directors by clients or the CIU;
      (f) Key details about the pricing of the CIU interest and how current pricing information may be obtained;
      (g) The date of issue and expiry (if applicable) of the simplified prospectus;
      (h) How a client can ask for a full prospectus or other detailed information about the CIU with an explanation that such information can be obtained free of charge;
      (i) Key details about the CIU operator (including contact information), manager, administrator, custodian, and auditor including their domicile, their key obligations to investors and their relationship to the CIU operator;
      (j) In summary form, selected financial information of the CIU — including historic;
      (k) Performance of the CIU over various time periods, compared to established and consistent benchmarks;
      (l) In summary form, the key operating rules of the CIU, including the key client rights, such as ability to purchase holdings, redemption right or cooling off rights; and
      (m) The statement:
      "Important — if you are in any doubt about the contents of this simplified prospectus, you should refer to the full prospectus, or else seek independent professional financial advice. Remember that all investments carry varying levels of risk and that the value of your investment may go down as well as up. Investments in this collective investment undertaking are not considered deposits and are therefore not covered by the Kingdom of Bahrain's deposit protection scheme. The fact that this collective investment undertaking has been authorized by the Central Bank of Bahrain, does not mean that the CBB takes responsibility for the performance of these investments, nor for the correctness of any statements or representations made by the operator of this collective investment undertaking."

    • Appendix D — Admissible Assets and Limits (Retail CIU)

      Admissible assets Descriptions and Limits
      Cash and cash equivalents (including bank deposits and certificates of deposit — i.e. assets that may be realised in cash immediately).
      •   Not more than 20% of total value of the CIU's assets may be placed with a single party (or group of connected counterparties).
      Transferable securities including equity and debt securities.
      •   Not more than 10% of the total assets of the CIU may be placed with a single party. (Where a stock represents more than 10% of a market index, and the CIU's investment objective is to replicate that market index, then the CIU can hold up to the market weight of the stock in the index.)
      •   Not more than 20% of the total assets of the CIU may be placed with a single group of connected parties.
      •   Securities not regularly traded on a recognised exchange are limited to 10% of the total assets of the CIU.
      Government and public sector securities issued by GCC and OECD countries.
      •   Not more than 20% of total value of the CIU's assets may be with a single party.
      Authorised and regulated funds of the open ended type.
      •   Retail CIUs with a 'fund of funds' investment strategy may invest up to 100% of their assets in authorised/regulated open-ended funds, providing the investment objectives of these funds is consistent with the investment objective of the CIU, and providing its exposure to any single fund (or group of connected funds) does not exceed 10% of its assets.
      •   Other CIUs may only invest in authorized/regulated open ended funds, consistent with their investment objectives, up to 20% of the total value of the CIU's assets. The CIU's exposure to any single fund (or group of connected funds) must not exceed 10% of its assets.
      REITs listed on a recognised exchange
      •   Not more than 20% of total assets of the CIU may be invested in this asset class. Single exposure limit is 10% of the CIU's total assets.
      Physical commodities and commodity based investments traded on a recognised market.
      •   Not more than 20% of total assets of the CIU may be invested in this asset class. Single exposure limit is 10% of the CIU's total assets
      Approved financial derivatives and positions are (i) exchange traded options — long positions; (ii) long positions in forwards and futures; and (iii) sold positions in exchange traded options, forwards and financial futures if matching long positions exist or for hedging purposes. Underlying assets of the derivatives are:
      •   Any of the above, subject to limits specified above.
      •   With respect to interest rate or foreign exchange derivatives, the value of the underlying assets must be restricted to 20% of the total assets of the CIU.
      Cash and cash equivalents (including bank deposits and certificates of deposit — i.e. assets that may be realised in cash immediately).
      •   Not more than 20% of total value of the CIU's assets may be placed with a single party (or group of connected counterparties).
      Transferable securities including equity and debt securities
      •   Not more than 10% of the total assets of the CIU may be placed with a single party. (Where a stock represents more than 10% of a market index, and the CIU's investment objective is to replicate that market index, then the CIU can hold up to the market weight of the stock in the index.)
      •   Not more than 20% of the total assets of the CIU may be placed with a single group of connected parties.
      •   Securities not regularly traded on a recognised exchange are limited to 20% of the total assets of the CIU.
      Government and public sector securities issued by GCC and OECD countries.
      •   Not more than 20% of total value of the CIU's assets may be with a single party.
      Collective Investment Undertakings
      •   Expert funds with a 'fund of funds' investment strategy may invest up to 100% of their assets in other CIU (whether regulated or not), providing the investment objectives of these funds is consistent with the investment objective of the expert fund, and providing their exposure to any single fund (or group of connected funds) does not exceed 10% of their assets.
      •   Expert funds without a 'fund of funds' strategy may only invest in other CIUs, consistent with their investment objectives, up to 20% of the total value of their assets
      REITs and real estate holdings
      •   Allowed up to 100% of the CIU's assets. Single exposure limit is 10% of the CIU's total assets.
      Physical commodities and commodity based investments traded on a recognised market.
      •   Allowed up to 100% of the CIU's assets. Single exposure limit is 10% of the CIU's total assets.
      Approved financial derivatives and positions are: (i) exchange traded options — long positions; (ii) long positions in forwards and futures; and (iii) sold positions in exchange traded options, forwards and financial futures if matching long positions exist or for hedging purposes Underlying assets of the derivatives are:
      •   Any of the above, subject to limits specified above.
      •   With respect to interest rate or foreign exchange derivatives, the value of the underlying assets must be restricted to 20% of the total assets of the CIU.

    • Appendix E — Contents of Financial Reports

      •   Annual reports must contain all the information required in this Appendix as well as a report issued by the administrator.
      •   Half-year reports must contain at the very least the Statement of Assets and Liabilities and the Investment Portfolio Statement.
      •   All reports must contain the comparative figures for the previous period except for the Investment Portfolio Statement.
      •   All reports must be prepared in accordance with International Financial Reporting Standards.

      Statement of Assets and Liabilities:

      The following must be separately disclosed

      (a) Total value of investments
      (b) Bank balances
      (c) Dividends and other receivables
      (d) Amounts receivable on subscription
      (e) Bank loans and overdrafts or other forms of borrowings
      (f) Amounts payable on redemption
      (g) Distributions payable
      (h) Total value of all assets
      (i) Total value of all liabilities
      (j) Net asset value
      (k) Number of holdings in issue
      (l) Net asset value per holding

      Revenue Statement:

      (a) Total investment income net of withholding tax, broken down by category
      (b) Total other income, broken down by category
      (c) Equalisation on issue and cancellation of holdings
      (d) An itemized list of various costs debited to the CIU including:
      a. Fees paid to the operator
      b. Remuneration of the administrator, custodian and manager (as appropriate)
      c. Fees paid to the investment advisor (if any)
      d. Other amounts paid to any connected persons of the CIU
      e. Director's fee and remuneration
      f. Safe custody and bank charges
      g. Auditor's remuneration
      h. Interest on borrowings
      i. Legal and other professional expense
      j. Other
      (e) Amounts transferred to and from the capital account
      (f) Net income to be carried forward for distribution

      Distribution Statement:

      (a) Amount brought forward at the beginning of the period
      (b) Net income for the period
      (c) Interim distribution per holding and date of distribution
      (d) Final distribution per holding and date of distribution
      (e) Undistributed income carried forward

      Statement of Movements in Capital Account:

      (a) Value of the CIU as at the beginning of the period
      (b) Number of holdings issued and the amounts received upon such issuance
      (c) Number of holdings redeemed and the amount paid on redemption
      (d) Any items resulting in an increase/decrease in value of the CIU including:
      a. Surplus/loss on sale of investments
      b. Exchange gain/loss
      c. Unrealised appreciation/diminution in value of investments
      d. Net income for the period less distribution
      (e) Value of the CIU as at the end of the period

      Notes to the accounts:

      The following matters should be set out in the notes to the accounts:

      (a) Principal accounting, investment and risk management policies
      (b) Transactions with connected persons
      (c) Details of any soft commission arrangements relating to dealings in the assets of the CIU
      (d) Borrowings are secured or unsecured and the duration of the borrowings
      (e) Contingent liabilities and commitments
      (f) If the free negotiability of any asset is restricted by statutory or contractual requirements, this must be stated

      Contents of the Auditor's Report

      The report of the Auditor should state:

      (a) Whether, in the auditor's opinion, the accounts prepared for that period have been properly prepared in accordance with the relevant provisions of the rules in this Module;
      (b) Whether in the auditor's opinion, a true and fair view is given of the financial position of the CIU at the period-end, and of its financial performance and its cash flows for the period then ended, in accordance with International Financial Reporting Standards;
      (c) Whether, in the auditor's opinion, proper books and records have been kept by the CIU and the accounts prepared are in agreement with the CIU's books and records; and
      (d) Whether, in the auditor's opinion, the CIU has complied with all applicable laws and regulations.
      (e) If an auditor of a CIU:
      a. has reason to believe that the information provided to its participants or to the CBB does not truly describe the financial situation of the CIU, or
      b. has reason to believe that there has been some breach of the CIU documents, applicable laws and regulations or the CBB's directions, or
      c. has reason to believe that there exist circumstances which are likely to affect materially the ability of the CIU to fulfill its obligations to its participants or to meet any of its financial obligations under the CIU documents, applicable laws and regulations, or the CBB's directions, or
      d. has reason to believe that there are material defects in the financial systems, controls or accounting records of the CIU, or has reason to believe that there are material inaccuracies in, or omissions from, any returns of a financial nature made by the CIU and/or, as may be appropriate, any one or more of the relevant persons, to the CBB, or
      e. proposes to qualify any certificate which he is to provide in relation to the financial statements or returns of the CIU under Bahrain law and these rules
      he shall report the matter to the CBB in writing, with a copy to the CIU and its relevant persons, as appropriate, without delay.
      (f) The auditor of a CIU shall, if requested by the CBB, furnish to it, with a copy to the CIU and/or (as may be appropriate) the relevant persons, a report stating whether in his opinion and to the best of his knowledge the CIU has complied with the CIU documents, applicable laws and regulations, and/or any relevant directions of the CBB. The auditor may be requested by the CBB to supply it with information available to him as a result of his audit of the CIU.

      Investment Portfolio

      (a) Number or quantity of each investment together with the description and market value
      (b) The total investment stated at cost
      (c) The value of each investment as a percentage of the net asset value
      (d) Statement of movements in portfolio investments since the end of the preceding accounting period

      Performance Table

      (a) A comparative table covering the last 3 financial years and including, for each financial year, at the end of the financial year :
      a. The total net asset value; and
      b. The net asset value per holding.
      (b) A performance record over the last 10 financial years; or of the CIU has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing the highest issue price and the lowest redemption price of its holdings during each of those years.