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  • Market Standards

    • OFS — Offering of Securities

      • OFS-A OFS-A Introduction

        • OFS-A.1 OFS-A.1 Purpose

          • Legal Basis

            • OFS-A.1.1

              Module OFS formulates the regulatory framework of the Central Bank of Bahrain ('CBB') to govern the issuing and offering of securities in/from the Kingdom of Bahrain. It incorporates the requirements of Articles 80-85, 96 and 166 of the CBB Law. These regulations are issued pursuant to the authority of CBB under Article 37 to establish and enforce rules, while meeting the specific requirements of Part 4 of the Central Bank of Bahrain and Financial Institutions Law of 2006 ('CBB Law').

              January 2014

            • OFS-A.1.2

              This Module contains the CBB's Directive (as amended from time to time) relating to the issuing and offering of securities and is issued under the powers available to the CBB under Article 38 of the CBB Law, together with the abovementioned provisions of the CBB Law. The Directive in this Module is applicable to all market participants and relevant persons, including but not limited to issuers of securities or any person acting on their behalf, licensed exchanges, licensed market operators, licensed clearing houses, depositories, market intermediaries, business trusts, listed companies, any person acting for or on behalf of listed companies, shareholders of listed companies, securities ownership transfer agents, lead managers, underwriters, professional advisors, listing agents, auditors, financial analysts and any other person who engages or encourages others to engage in any acts of commission or omission covered by the scope of this Module, irrespective of whether such person is a market participant or not. OFS-A.2.3

              This Module should be read in conjunction with Resolution No.(16) of 2013 with respect to Financial Services Marketed in the Kingdom of Bahrain and Resolution No (1) of 2007 (as amended from time to time) with respect to determining fees categories due for licensees and services provided by the CBB.

              Amended: January 2021
              January 2014

        • OFS-A.2 OFS-A.2 Division of Responsibilities

          • Responsibility of the CBB

            • OFS-A.2.1

              A clear division of responsibilities between the CBB as the securities regulator, the issuer of securities and the licensed exchanges or the licensed market operators as a self-regulatory organisation (SRO) is required:

              (a) To maximise the regulatory effectiveness;
              (b) To permit flexibility to the licensed exchanges or the licensed market operators in their functioning;
              (c) To achieve greater efficiency and transparency in the enforcement of the laws, rules and regulations; and
              (d) To minimise the regulatory cost.
              January 2014

            • OFS-A.2.2

              As a regulator, the CBB's role is as follows:

              (a) Regulatory supervision;
              (b) Maintaining and promoting fairness, efficiency and transparency within the capital market;
              (c) Enhancing the efficiency of the capital-raising process;
              (d) Ensuring full, timely and accurate disclosure of financial and other information material to investors;
              (e) Ensuring fair and equal treatment to all securities, subscribers, allottees, and holders;
              (f) Ensuring adherence to international accounting, reporting and auditing standards;
              (g) Ensuring that the issuer of securities, the licensed exchanges, licensed market operators, licensed clearing houses, depositories' institutions, and other capital market advisory services providers and members of SROs have appropriate systems and procedures for ensuring compliance with the CBB Law and disclosure requirements by listed companies and issuers; and
              (h) Facilitating the introduction of a broad range of capital market products and services.
              January 2014

          • Responsibility of SROs

            • OFS-A.2.3

              The licensed exchange or the licensed market operator established as an SRO must comply with the requirements laid down under the CBB Law, this Module and other applicable laws and regulations.

              January 2014

            • OFS-A.2.4

              As an SRO, the main objective of the exchange or the operator would be to:

              (a) Promote fairness and investor protection;
              (b) Ensure fair access to market facilities and information;
              (c) Provide timely and accessible relevant market data;
              (d) Ensure the efficient regulation of its members;
              (e) Ensure compliance with CBB Law, listing rules and disclosure requirements by listed companies and issuers;
              (f) Ensure immediate dissemination and publication of relevant information related to issuers;
              (g) Report any non-compliance to the regulator; and
              (h) Take disciplinary action against any contravention by listed companies.
              January 2014

          • Responsibility of Issuers and Advisors

            • OFS-A.2.5

              The issuer of securities in/from Bahrain or any person acting on its behalf must comply with the requirements laid down under the CBB Law, this Module and the other applicable laws, rules and regulations.

              January 2014

            • OFS-A.2.6

              The main responsibility for the issuer of securities or any other person acting on its behalf is to:

              (a) Adhere to the CBB Law, rules and regulations and any other applicable laws, rules and regulations;
              (b) Ensure and accept responsibility for the information contained in the prospectus or other offering documents and that these documents do not contain any false or misleading information or data and omissions likely to affect the importance and completeness of the prospectus, or offering documents;
              (c) Ensure fair and equal treatment of all subscribers, allottees and holders of each type of securities issued by it;
              (d) Use an effective and efficient mechanism for capital raising for financing their businesses or any expansions thereof;
              (e) Using the most professional capital market advisory services provider; and
              (f) Ensure adherence of all capital market advisory services providers involved to all requirements regarding protecting and maintaining the subscribers money, in accordance with the applicable laws, rules and regulations.
              January 2014

        • OFS-A.3 OFS-A.3 Module History

          • Evolution of Module

            • OFS-A.3.1

              This Module was first issued in January 2014 by the CBB. Any material changes that are subsequently made to this Module are annotated with the calendar quarter date in which the change is made; Chapter UG-3 provides further details on Rulebook maintenance and version control.

              January 2014

            • OFS-A.3.2

              The most recent changes made to this Module are detailed in the table below:

              Module Ref. Change Date Description of Changes
              OFS-1.6.11, OFS-1.10.5, OFS-3.5.26, OFS-4.1.1, OFS-4.3.2, OFS-4.4.1, OFS-4.4.4, OFS-7.1.2, OFS-7.1.3 04/2014 Added links to Glossary for the words 'days' and 'licensed exchange'.
              OFS-1.14 04/2014 Corrected reference to Glossary for the term 'overseas issuer(s)'.
              OFS-3.2.6 04/2016 Added reference to securities market regulation certification and other qualifications.
              OFS-3.3.8 04/2016 Corrected cross reference to CBB Law.
              OFS-1.4.1(e) 10/2017 Amended sub-paragraph based on changes made to the definitions section.
              OFS-7.5.1 01/2018 Amended Paragraph.
              OFS-2.6.7A 07/2018 Deleted Paragraph.
              OFS-3.2.19(c) 07/2018 Amended sub-paragraph.
              OFS-3.4.6(a) 07/2018 Amended sub-paragraph.
              OFS-3.5.7(c) 07/2018 Amended sub-paragraph.
              OFS-A.1.2 01/2021 Added reference to Resolution No (1) of 2007.
              OFS-8.2.3 01/2021 Amended the fee schedule as per Resolution No (2) of 2020.

          • Superseded Requirements

            • OFS-A.3.3

              This Module supersedes the following provisions contained in circulars or other regulatory instruments:

              Circular/other references Provision Subject
              BSE Resolution No. 4 of 1992 All Prospectus Requirements
              ODG/407/03 Disclosure Standards Chapter 1 Prospectus and ongoing disclosure requirements in relation to equity securities
              ODG/74/04 Guidelines for the Issuing, Offering and Listing of Debt securities All parts Issue, offer and listing of debt securities
              EDBS/KH/0688/2008 on Private Placement of Securities Issued by or Promoted by Banks Licensed in Bahrain. All parts Private placement requirements
              EDFIS/C/039/2017 Module Issuance of the Amended Offering of Securities Module — Volume 6
              Amended: October 2017

      • OFS-B OFS-B Scope of Application

        • OFS-B.1 OFS-B.1 Scope

          • OFS-B.1.1

            In accordance with Article 81 of the CBB Law, this Module applies to all types of securities issued and offered in/from Bahrain, whether offered publicly or privately.

            January 2014

          • OFS-B.1.2

            A person makes an offer "in the Kingdom of Bahrain" when;

            (a) It is made to another person in the Kingdom which upon acceptance would give rise to a contract for the issue, sale, allotment or allocation of those securities by him or another person with whom he has made arrangements for that issue, sale or allotment within Bahrain, regardless of whether such acceptance actually takes place; or
            (b) He invites personally or through an agent, another person in the Kingdom to make an offer which upon acceptance would give rise to the issue, sale or allotment of those securities within Bahrain.
            January 2014

          • OFS-B.1.3

            A person makes an offer "from the Kingdom of Bahrain" when;

            (a) It is made to another person outside the Kingdom which upon acceptance would give rise to a contract for the issue, sale, allotment or allocation of those securities by him or another person with whom he has made arrangements for that issue, sale or allotment within Bahrain, regardless of whether such acceptance actually takes place; or
            (b) He invites personally or through an agent, another person outside the Kingdom to make an offer which upon acceptance would give rise to the issue, sale or allotment of those securities within Bahrain.
            January 2014

      • OFS-1 OFS-1 Issuance of Securities

        • OFS-1.1 OFS-1.1 General Eligibility

          • OFS-1.1.1

            Article 81 of the CBB Law states that: "no person may issue any securities in the Kingdom unless the Central Bank of Bahrain's written approval is granted. The CBB shall specify the information and documents that are required for obtaining permission to issue securities."

            January 2014

          • OFS-1.1.2

            Before securities can be issued, a person must meet the criteria detailed in this Module for:

            (a) The various types of securities that can be issued; and
            (b) The specific requirements pertaining to issuer eligibility.
            January 2014

        • OFS-1.2 OFS-1.2 Types of Securities

          • OFS-1.2.1

            In accordance with Article 86 of the CBB Law of 2006, the following types of securities may be offered to the public:

            (a) Equity securities of joint stock companies incorporated in the Kingdom of Bahrain;
            (b) Equity securities of non-Bahraini companies that are approved by the CBB;
            (c) Bonds and debt securities approved for offering and listing by the CBB;
            (d) Shari'a compliant securities approved for offering and listing by the CBB;
            (e) Securities issued by corporations situated within the jurisdiction of any of the states who is a member of the Gulf Cooperation Council; and
            (f) Any other securities approved by the CBB including but not limited to futures and other derivatives on currencies and commodities.
            January 2014

          • OFS-1.2.2

            For the purpose of Rule OFS-1.2.1 (f) "any other securities" includes those defined as securities not already included in Rule OFS-1.2.1 (a), (b), (c), (d) and (e) as well as any other financial investment approved by the CBB as a security from time-to-time.

            January 2014

          • OFS-1.2.3

            For the purpose of this Module, equity securities include:

            (a) Voting and non-voting shares;
            (b) Participating and non-participating shares;
            (c) Preference shares, whether convertible or non-convertible, accumulated or non-accumulated and redeemable, or irredeemable; and
            (d) Any class of securities being part of the shareholders' equity fund being represented in the form of shares.
            January 2014

        • OFS-1.3 OFS-1.3 Types of Offer

          • OFS-1.3.1

            This Module applies to the following types of offer of securities:

            (a) Public offering (including Initial Public Offering (IPO));
            (b) Rights offering;
            (c) Private placement;
            (d) Employee share benefit scheme;
            (e) Capitalisation issue;
            (f) Consideration issue;
            (g) Exchange, swapping or substitution of securities;
            (h) Listing of closed or private companies;
            (i) Global Depository Receipts; or
            (j) Other offering approved by the CBB.
            January 2014

        • OFS-1.4 OFS-1.4 Exempt Offers

          • OFS-1.4.1

            The following offerings are exempt from this Module:

            (a) Securities approved or authorised as part of a collective investment undertaking and offered or marketed subject to CBB Rulebook Volume 7;
            (b) Securities offered, allotted, or to be allotted in connection with securities offered because of a take-over, merger, acquisition and share repurchase by means of an exchange offer; these are subject to Module TMA;
            (c) Equity securities offered, allotted or to be allotted free of charge to existing shareholders if dividends are paid out in the form of shares of the same class;
            (d) Securities utilised for lending and borrowing transactions concluded under the CBB Rules and the relevant licensed exchange's requirements for such transaction; and
            (e) An offering of ordinary shares by means of an equity crowdfunding offer by an equity crowdfunding issuer through a crowdfunding platform operated by a licensed crowdfunding platform operator and subject to the requirements of Module MAE of the CBB Rulebook Volume 6.
            Amended: October 2017
            January 2014

          • OFS-1.4.2

            An offer made outside Bahrain, but marketed from within Bahrain is subject to the filing requirement as laid out in this Module.

            January 2014

          • Structured Products

            • OFS-1.4.3

              Where structured products are offered outside but marketed inside the Kingdom of Bahrain, the following must be adhered to by the issuer and any advisor or agent acting on behalf of the issuer, in addition to the general requirements for exempt offers laid out below:

              (a) The marketing may only relate to offers to accredited investors who are existing account holders of the issuer or its agent (dealer);
              (b) The securities related to the structured product is in registered form;
              (c) The specific structured product disclaimer, as prescribed by the CBB, is contained in the base prospectus which is filed with the CBB; and
              (d) An approval of the issuer's home securities or financial market regulator (which must be a full member of IOSCO) for such structured product(s) being marketed in other jurisdictions must be obtained.
              January 2014

            • OFS-1.4.4

              The offering document of any securities to be offered exclusively outside Bahrain, and marketed through a roadshow, must contain the following prominent statement under the heading "Important Notice", of the prospectus (or such other offering documents) of such offer:

              "In relation to investors in the Kingdom of Bahrain, securities issued in connection with this prospectus and related offering documents must be in registered form and must only be marketed to existing account holders and accredited investors as defined by the CBB in the Kingdom of Bahrain where such investors make a minimum investment of at least US$ 100,000, or any equivalent amount in other currency or such other amount as the CBB may determine.

              This offer does not constitute an offer of securities in the Kingdom of Bahrain in terms of Article (81) of the Central Bank and Financial Institutions Law 2006 (decree Law No. 64 of 2006). This prospectus and related offering documents have not been and will not be registered as a prospectus with the Central Bank of Bahrain (CBB). Accordingly, no securities may be offered, sold or made the subject of an invitation for subscription or purchase nor will this prospectus or any other related document or material be used in connection with any offer, sale or invitation to subscribe or purchase securities, whether directly or indirectly, to persons in the Kingdom of Bahrain, other than as marketing to accredited investors for an offer outside Bahrain.

              The CBB has not reviewed, approved or registered the prospectus or related offering documents and it has not in any way considered the merits of the securities to be marketed for investment, whether in or outside the Kingdom of Bahrain. Therefore, the CBB assumes no responsibility for the accuracy and completeness of the statements and information contained in this document and expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the content of this document.

              No offer of securities will be made to the public in the Kingdom of Bahrain and this prospectus must be read by the addressee only and must not be issued, passed to, or made available to the public generally."

              January 2014

            • OFS-1.4.5

              Any offering document for marketing and/or a foreign private placement that does not include the statement, in Paragraph OFS-1.4.4 may not be circulated or used in the Kingdom of Bahrain.

              January 2014

          • Filing Requirements

            • OFS-1.4.6

              Where an offer of securities is not being made in or from the Kingdom of Bahrain, but such offer is to be marketed in Bahrain as part of a roadshow, the issuer and or his advisor or marketing agent is required to provide prior notification to the CBB of such roadshow and to file a copy of the prospectus with the Capital Markets Supervision Directorate (CMSD).

              January 2014

            • OFS-1.4.7

              The offering document for any securities not to be offered in or from Bahrain but to be marketed in Bahrain as part of a roadshow, must contain the following prominent statement on the cover page of the offering document:

              "A copy of this prospectus has been submitted and filed with the Central Bank of Bahrain. Filing of this prospectus with the Central Bank of Bahrain does not imply that any Bahraini legal or regulatory requirements have been complied with. The Central Bank of Bahrain has not in any way considered the merits of the Securities to be offered for investment whether in or outside of the Kingdom of Bahrain.

              Neither the Central Bank of Bahrain nor the licensed exchange assumes responsibility for the accuracy and completeness of the statements and information contained in this prospectus and each expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents of this prospectus.

              The Issuer together with any local agent or adviser accepts responsibility for the information contained in this prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information."

              January 2014

        • OFS-1.5 OFS-1.5 General Requirements for the Issuing of Securities

          • OFS-1.5.1

            The following general requirements for issuing of securities represent the minimum requirements applicable to all issuers and/or all types of offers. The CBB reserves the right to add to, amend or vary such requirements, depending on the nature of the issuer and/or the offering to be made. Specific exemptions may be granted to small and medium enterprises.

            January 2014

          • OFS-1.5.2

            The issuers of any securities in the Kingdom of Bahrain must meet the following general requirements:

            (a) Be incorporated or in the process of applying to be incorporated, in accordance with the applicable laws, rules and regulations;
            (b) Have produced or will produce audited financial statements in accordance with the International Financial Reporting Standards (IFRS), Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), or other accounting standards acceptable to the CBB. If the financial statements have not been prepared in accordance with IFRS, AAOIFI or other accounting standards acceptable to the CBB, the issuer must restate the financial statements in accordance with IFRS or AAOIFI, as the case may be;
            (c) Its annual financial statements must be audited in accordance with the international auditing standards issued by International Auditing Practices Committee of the International Federation of Accountants;
            (d) Its interim financial statements must be reviewed and be in accordance with OFS-1.5.2(b);
            (e) Provide to the CBB an appropriate confirmation and evidence and disclose in the offering document that there has been no material adverse change in the financial condition of the issuer (or the guarantor, in the case of a guaranteed issue) since the end of the period last reported on by the external auditor;
            (f) Appoint an eligible CBB Licensee as receiving bank and paying agent that is approved by the CBB;
            (g) Its appointed capital market advisory services providers (CMSPs) must meet the requirements of this Module and/or other requirements imposed in this respect by the CBB;
            (h) May not allocate or allot any securities without meeting the CBB's requirements for that type of securities offering with respect to the final allocation or allotment;
            (i) Must ensure that they adhere to the utilisation of proceeds statement in the prospectus and obtain the securities holders consent and CBB prior approval for any alteration thereto;
            (j) When considering the currency of issue, that it may issue securities denominated in Bahraini Dinars, currencies of the Gulf Cooperation Council (GCC) or United States Dollars (US$) and other international currencies on approval of the CBB;
            (k) Should ensure conflicts of interest do not arise during either the issuing of securities or through the offering and relevant appointments or transactions;
            (l) Must protect and act in the interests of securities holders;
            (m) Must provide equal treatment to all securities subscribers and/or holders for each issue of securities. No discrimination among subscribers and/or holders in any form or by any means may be made by the issuer. Special attention of the issuer in this context shall be drawn particularly to the subscription or offer price of the securities;
            (n) Must adhere to the issuing timetable contained in its offering documents, or as amended upon the CBB approval;
            (o) The issuer and appointed CMSPs must fulfil all obligations in their respective capacities in accordance with the signed written agreements concluded between them in respect of the issue and must provide a written declaration of due diligence in respect of their obligation within the offering document;
            (p) The founders, promoters, or the Board of Directors of the issuer must confirm in writing to the CBB that it is responsible for complying with the CBB Law, rules and regulations and any other applicable laws, rules and regulations in accordance with the CBB's standard statement;
            (q) The founders, promoters, or the Board of Directors of the issuer must not establish any restrictions on the rights of the securities holders not provided for in law, particularly regarding voting and granting of proxy to any eligible person(s) (no irrevocable proxies or any term of issue subject to a grant of proxy will be permitted);
            (r) Any special purpose vehicle acting as an issuer and used in the securitisations of assets located in the Kingdom of Bahrain must be incorporated as a company under the laws of the Kingdom of Bahrain;
            (s) All issues of securities must be in response to the receipt of consideration (cash or in kind). An issuer may not offer a substitution of one investment for another unless such subsitution is part of an approved corporate event conducted on a licensed exchange; and
            (t) The securities issued by the issuer must have a registered International Securities Identification Number (ISIN) issued by a national numbering agent.
            January 2014

          • OFS-1.5.3

            In addition to the requirements of Paragraph OFS-1.5.2, and in order to meet the general requirements the issuer must:

            (a) Submit to the CBB the draft or final, duly signed Memorandum and Articles of Association;
            (b) Submit all the relevant information in due time and form as required under this Module;
            (c) Submit to the CBB all attachments with its application including the required declarations, as stipulated under this Module;
            (d) Appoint its relevant advisors for the purposes of its application, as required under this Module and disclose these to the CBB;
            (e) Confirm that it will comply with all the "fit and proper" provisions contained in the relevant Bahraini Corporate Governance Code and Module HC (Corporate Governance) Volume 6, as applicable;
            (f) Confirm that it will adhere to its ongoing obligations and the disclosure requirements; and
            (g) Submit to the CBB at least 2 independent valuation reports in respect of the assets used as underlying assets for asset backed securities being issued or offered.
            January 2014

          • OFS-1.5.4

            The founders of the public shareholding company or listed company are not entitled to dispose of their shareholding for a period of 1 year, starting from the date of listing on a licensed exchange.

            January 2014

          • OFS-1.5.5

            Unless otherwise permitted by the CBB, securities issued after the effective date of this Module must be in dematerialised form and the issuer is required to designate the clearing house, or depository facilities in which such securities are deposited.

            January 2014

          • OFS-1.5.6

            All securities issued under this Module must be in registered form and no bearer securities may be issued without CBB permission.

            January 2014

          • OFS-1.5.7

            The issuer or any person acting on its behalf or providing any services to the issue is prohibited to use any part of the proceeds of the issue before the issuer is fully incorporated and the proceeds are placed with the Board of Directors.

            January 2014

          • OFS-1.5.8

            Issuers and market participants are required to adhere to the fees and charges imposed oulined in Chapter OFS-8, or as required by the CBB from time-to-time.

            January 2014

        • OFS-1.6 OFS-1.6 Eligibility to Issue and Offer Equity Securities

          • Issuing of Equity Securities to the Public

            • OFS-1.6.1

              Issuers of equity securities to the public must meet the following additional eligibility criteria in order to obtain approval from the CBB:

              (a) The issuer, under formation, must prior to submitting its application to the CBB, submit an application to the Ministry of Industry & Commerce for the purpose of obtaining its no objection for incorporation purposes;
              (b) Existing issuers intending to list on a main board of a licensed exchange, should have 100 or more shareholders who are not employees or associated persons. New issuers must have 100 or more shareholders after the completion of the initial public offering or public offering;
              (c) The issuer must issue to the above mentioned shareholders free float of at least 10% of the total issued outstanding shares. The CBB reserves its right to amend this amount taking into account the interest of the market;
              (d) Securities are readily transferable and not subject to any restrictions other than those restrictions stipulated on the Memorandum and Articles of Association or such other applicable laws, rules and regulations;
              (e) For equity securities issued at a premium, the issue shall be underwritten by an independent underwriter through the conclusion of a firm commitment and irrevocable underwriting agreement; and
              (f) Each type of securities issued shall be equal in respect of rights and obligations, particularly in respect of voting and receipt of dividends and/or profits.
              January 2014

            • OFS-1.6.2

              With respect to Subparagraph OFS-1.6.1(c), the CBB reserves its right to amend such percentage in accordance with the type and size of the issue.

              January 2014

            • OFS-1.6.3

              With respect to Subparagraph OFS-1.6.1(e), the CBB may exempt any issue from the underwriting requirements where the offering price is equal to or below the average market price for the last six months, or where it is issued at the flat par value.

              January 2014

            • OFS-1.6.4

              The ownership of equity securities of the issuer must not be restricted otherwise than in accordance with the issuer's Memorandum and Articles of Association, or the applicable laws, rules and regulations.

              January 2014

            • OFS-1.6.5

              The founders of the issuer must confirm and submit bank certificates to the CBB that their contribution in the share capital of the issuer is paid before the CBB grants its approval to issue its securities to the public.

              January 2014

            • OFS-1.6.6

              The issuer's preliminary contract must include the details as specified in this Module.

              January 2014

            • OFS-1.6.7

              Any newly established issuer must submit to the CBB a duly signed and irrevocable agreement entered into between financial institutions or other third party in respect of procuring partial finance of an issuer's project if such project is required to be financed by the total proceeds of the issue together with such finance.

              January 2014

            • OFS-1.6.8

              For listed or existing issuers, the issuance and offering of additional and/or new equity securities must obtain the approval of the General Assembly of its shareholders, in accordance with the issuer's Memorandum and Articles of Association or such other applicable laws, rules and regulations.

              January 2014

          • CBB's Right of Refusal or Restriction on Issue

            • OFS-1.6.9

              The CBB may reject the registration and issuance of any securities if it is found that the issuance thereof might cause damage, dilute or be contrary to the interests of the owners or holders of the issuer's securities or public investors in general.

              January 2014

            • OFS-1.6.10

              The CBB may refuse to grant its approval, postpone granting such approval, or fix the timeframe for the offering period, if the CBB deems that the market condition or circumstances justifies such action.

              January 2014

            • OFS-1.6.11

              The CBB will decide on the application within sixty calendar days from the date of its submission. Any rejection by the CBB will contain reasons for the decision. The applicant whose application has been rejected has the right to be heard by the CBB within thirty days from the date of notifying it of the rejection of its application. The CBB's decision is final.

              Amended: April 2014
              January 2014

            • OFS-1.6.12

              The founders do not have the right to re-apply for the issuance of securities before addressing the reasons for the rejection or the lapse of six months from the date of the CBB's rejection decision.

              January 2014

        • OFS-1.7 OFS-1.7 Eligibility to Issue and Offer Debt Securities

          • OFS-1.7.1

            Any issuer of debt securities and the guarantor, in the case of a guaranteed issue, must each be duly incorporated, or otherwise established, under the laws of the place where they are incorporated, or otherwise established, and must be in conformity with those laws and its Memorandum and Articles of Association, or equivalent documents.

            January 2014

          • OFS-1.7.2

            Issuers of debt securities must ensure that the issuance of debt securities is approved by the General Assembly, or any other equivalent body in accordance with the Memorandum and Articles of Association of the issuer and/or originator.

            January 2014

          • OFS-1.7.3

            Any change, alteration, or modification in the issued debt securities' rights, obligations, terms and conditions is subject to the approval of the debt securities holders meeting. The trustee is responsible for preparing and presenting at the debt securities holders' meeting a report through which the holders must be advised whether to accept or reject the proposed changes, alterations or modifications, or arrangements that will be made by the issuer in this respect.

            January 2014

          • OFS-1.7.4

            The debt securities must be in registered form, having equal par value in each issue. Debt securities of the same issue must confer upon their holders' equal rights towards the issuer and every condition to the contrary must be null and void.

            January 2014

          • OFS-1.7.5

            The debt securities must be freely transferable.

            January 2014

          • OFS-1.7.6

            A debt securities holder must have the right to receive an interest or income as per the terms of the security and also to receive the nominal value upon its maturity.

            January 2014

          • OFS-1.7.7

            If the issuer of debt securities is a listed company, any convertible debt securities issue must first be offered to the existing shareholders unless a whitewash resolution is passed by the shareholders' General Assembly.

            January 2014

          • OFS-1.7.8

            Debt securities to which options, warrants or similar rights to subscribe or purchase equity securities or debt securities are attached, must also comply with the requirements applicable to such options, warrants or similar rights.

            January 2014

          • OFS-1.7.9

            The issuer may issue discount debt securities that may be sold at its redemption value at the time of issuance.

            January 2014

          • OFS-1.7.10

            Public offers of debt securities must be offered to the market either through a lead manager, or an eligible primary dealer who is required to make the necessary arrangements to re-sell debt securities to the public. The eligible primary dealer must be a CBB licensee under Volumes 1 or 2 and be a member of a licensed exchange.

            January 2014

          • OFS-1.7.11

            The issuer, the originator and/or the guarantor, in the case of a guaranteed issue, must have produced audited financial statements in accordance with the International Financial Reporting Standards, or other accounting standards acceptable to the CBB covering at least the last 2 financial years preceding the application date.

            January 2014

          • OFS-1.7.12

            The financial statements must be audited to a standard comparable to that required by the International Auditing Practices Committee of the International Federation of Accountants.

            January 2014

          • OFS-1.7.13

            In the case of a new applicant, if the period since the last financial year of audited financial statements exceeds 15 months at the time of the offering, interim period financial statements, which may be unaudited but reviewed by an external auditor, as compared with the same period in the previous financial year, must also be provided.

          • OFS-1.7.14

            If the debt securities are guaranteed by tangible assets, properties, or any other assets, the issuer must provide asset valuation reports prepared by at least two independent valuers and submit these to the CBB and be disclosed in the offering documents, or made available for inspection by potential subscribers.

            January 2014

          • OFS-1.7.15

            The issuer of public offers of debt securities must provide the depository arrangements through which the issued debt securities can be maintained.

            January 2014

          • OFS-1.7.16

            The issuer must confirm to the CBB that it will maintain a paying agent at an address in the Kingdom of Bahrain until the date on which no debt securities are outstanding, unless the issuer performs that function himself.

            January 2014

          • OFS-1.7.17

            If debt securities are:

            (a) Redeemable by the issuer, either in whole or in part, by an issue of shares;
            (b) Convertible into shares, either in whole or in part, by the holder; or
            (c) Issued in conjunction with separate options to subscribe for shares;

            then, the terms of the issue of the securities must provide for all appropriate adjustments to the conversion rights in the event of any alteration to the capital of the issuer, and whether the holders of the debt securities and/or options have any participating rights in the event of a takeover offer for the issuer.

            January 2014

        • OFS-1.8 OFS-1.8 Eligibility to Issue Asset-backed Securities

          • OFS-1.8.1

            For the issue of asset-backed securities, which include mortgaged-backed securities (certificates), the issuer must be a single purpose entity (vehicle) (SPV).

            January 2014

          • OFS-1.8.2

            The requirement to be a SPV does not preclude the addition to the pool of further assets during the life of the securities. Furthermore, other classes of debt securities may be issued by the SPV, backed by separate pools of similar assets.

            January 2014

          • OFS-1.8.3

            The audited financial statements requirements for previous years' statements do not apply to issuers of asset-backed securities (SPVs), but are required for the issue's originator and/or guarantor, as the case may be.

            January 2014

          • OFS-1.8.4

            Where an issue of asset-backed securities is backed by equity securities:

            (a) Those securities must be listed on an exchange;
            (b) The equity securities must represent minority interests in and must not confer legal or management control of the companies issuing the equity securities; and
            (c) Where options or conversion rights relating to equity securities are used to back an issue, these requirements apply in respect of the securities resulting from the exercise of those options or rights.
            January 2014

          • OFS-1.8.5

            There must be, until the date on which no debt securities are outstanding, an eligible independent trustee representing the interests of the holders of the asset-backed securities and with the right of access to appropriate, timely information relating to the assets.

            January 2014

          • OFS-1.8.6

            If the issuer issues debt securities guaranteed by mortgages on its property or any other collaterals, the legal procedures for mortgages must be undertaken in favour of the debt-holders, or a trustee representing them before offering the debt securities for subscription. The issuer itself must undertake such procedures or they may be undertaken by the party presenting the guarantee, if it is presented by a party other than the issuer. The issuer must, within a period not exceeding one month from the closing date of subscription, take the necessary measures to enter the loan value, together with all related details in the register in which the mortgage has been entered.

            January 2014

        • OFS-1.9 OFS-1.9 Eligibility to Issue Shari'a Compliant (Islamic) Securities

          • OFS-1.9.1

            For the issue of Islamic debt securities or Sukuk, the issuer must be a single purpose entity (vehicle) (SPV).

            January 2014

          • OFS-1.9.2

            The issuer and/or originator must appoint either:

            (a) An independent Shari'a advisor or committee who has been approved by the CBB, in case of an issuer who does not have an existing Shari'a advisor or committee; or
            (b) An Islamic bank or a licensed institution approved by the CBB to carry out Islamic banking to advise on all aspects of the Islamic private debt securities.
            January 2014

          • OFS-1.9.3

            The CBB may, where it is of the view that the structure of the offering poses undue risks to the investor, reject the application to issue and offer such securities or require the issuer to satisfy the CBB that such risks have been addressed.

            January 2014

          • OFS-1.9.4

            The issuer of Islamic debt securities must comply with Shari'a principles and the Shari'a pronouncement report.

            January 2014

          • OFS-1.9.5

            The Shari'a advisor appointed in accordance with Rule OFS-1.9.2 must advise the issuer on all aspects of the Islamic securities, including documentation, structuring, investment, as well as other administrative and operational matters in relation to the Islamic securities, and ensure compliance with applicable Shari'a principles.

            January 2014

          • OFS-1.9.6

            The issuer is responsible for the compliance of the instrument with Shari'a principles. The Shari'a advisor's role does not release management from their responsibility in ensuring such compliance. The issuer must not restrict the activities of the Shari'a advisor in any way. In any case where restrictions are imposed these must be disclosed by the Shari'a advisor to the CBB, as well as disclosed in the offering document.

            January 2014

          • OFS-1.9.7

            For the purposes of Rule OFS-1.9.1, types of Islamic securities or Sukuk that may be issued include all Islamic Sukuk that are eligible to be issued under the CBB Volume 2 Rulebook, but are not limited to:

            (a) Ijara contract (similar in structure to a standard lease);
            (b) Salam contract (payment in advance of goods to be delivered at a date in the future);
            (c) Murabaha contract (asset financing);
            (d) Modarabah contracts;
            (e) Istisna'a contract;
            (f) Bai Bithaman Ajil contracts;
            (g) Intifaa; or
            (h) Any other Islamic contracts approved by a Shari'a Advisory Committee, or considered as an eligible issue under the CBB Volume 2 Rulebook.
            January 2014

          • OFS-1.9.8

            For the purpose of this Module, the Islamic or Shari'a compliance contracts or transactions must have the following meaning:

            (a) Ijara Sukuk is issued on stand alone assets identified on the balance sheet. For this purpose, the assets identified can be land which is to be leased, or equipment (e.g. aircraft, ships) to be leased. The rental rates of returns on these Sukuk can be both fixed and floating, depending on the particular originator;
            (b) Salam contracts are issued when payment is made in cash at the point of contract, but the delivery of the asset purchased is deferred to a pre-determined date;
            (c) Murabaha contracts are those that cover the sale and purchase transaction for the financing of an asset whereby the cost and profit margin (mark-up) are made known and agreed by all parties involved. The settlement for the purchase can be a deferred lump sum payment or an instalment basis of payments;
            (d) Modarabah contracts are used to finance a project or business venture whereby the investor (Rabb Al Maal) provides capital and a manager (Mudarib) manages the project or the business. A financial institution may act as the Mudarib for funds it mobilizes for investments in Shari'a compliant products. If the venture is profitable, the profit will be distributed based on a pre-agreed ratio and losses if any are to be borne solely by the provider of the capital (Rabb Al Maal);
            (e) Istisna'a contracts are used primarily in project finance. Such contracts are not tradable securities since the underlying asset does not yet exist. The proceeds of such an issue would typically be used to construct the base infrastructure through multiple Istisna'a agreements;
            (f) Mixed Ijara contracts are contracts where the underlying assets can comprise of Istisna'a or Murabaha receivables in addition to Ijara; and
            (g) Mixed Ijara Sukuk allows for a greater variety of funds to be used since previously inaccessible Murabaha and Istisna'a assets can be used in the portfolio.
            January 2014

          • OFS-1.9.9

            The listing and tradability of the various Islamic contracts is subject to the Shari'a rules and principles and Shari'a Pronouncement Report in respect of each contract.

            January 2014

        • OFS-1.10 OFS-1.10 Eligibility to Issue Convertible Debt Securities

          • OFS-1.10.1

            All convertible debt securities which are convertible into equity securities or outstanding securities of the issuer, or a company in the same group as the issuer for which an issuance or offering is to be sought, must comply both with the requirements applicable to the debt securities for which an issuance is sought, and with the requirements applicable to the underlying equity securities to which such convertible debt securities relate. In the event of any conflict or inconsistency between the various requirements, those applicable to such equity securities prevail.

            January 2014

          • OFS-1.10.2

            Where convertible debt securities are convertible into equity securities of a listed issuer, these convertible debt securities must also be listed on the same licensed exchange.

            January 2014

          • OFS-1.10.3

            Convertible debt securities which are convertible into assets, properties, or securities other than equity securities may be listed only if the CBB and the licensed exchange are satisfied that holders have the necessary information available to form an opinion concerning the value of the other property to which such convertible debt securities relate. This principle does not apply to an issue of convertible debt securities by a state or a supranational.

            January 2014

          • OFS-1.10.4

            Any alterations in the terms and conditions of convertible debt securities after issue must be approved by the debt securities holders and on obtaining such approval by the CBB, except where the alterations take effect automatically under the existing terms and conditions of such convertible debt securities.

            January 2014

          • OFS-1.10.5

            The issuer's shareholders must have priority right to subscribe for the convertible debt securities if they express their desire to do so within a period not exceeding 15 days from the date of calling them to exercise such right. The shareholder may use his priority to subscribe for such debt securities in excess of his share in the issuer's capital if the offered debt securities allow this.

            Amended: April 2014
            January 2014

          • OFS-1.10.6

            The issuer must not distribute bonus equity securities or profits from the reserve or issue new convertible debt securities, except after taking the necessary measures to safeguard the rights of the holders of the convertible debt securities who elect to convert them into equity securities, by granting them bonus shares or profits from the reserve or some of these debt securities as if they were shareholders.

            January 2014

          • OFS-1.10.7

            Any changes to the conversion rights attached to convertible securities must be brought to the attention of the CBB immediately and is subject to CBB approval.

            January 2014

        • OFS-1.11 OFS-1.11 Eligibility to Issue Warrants and Other Securities

          • Warrants

            • OFS-1.11.1

              Where the issuer directly issues warrants, he must satisfy the requirements relating to the underlying securities in accordance with this Module.

              January 2014

          • Structured Warrants

            • OFS-1.11.2

              Structured warrants or such similar instruments must be issued by a third-party issuer which is:

              (a) A Volume 1, or Volume 2 licensee authorised by its relevant supervisory directorate of the CBB to conduct such issue (offer); or
              (b) A foreign financial institution subject to appropriate supervision acceptable to the CBB.
              January 2014

            • OFS-1.11.3

              Structured warrants and other similar instruments may only be issued in relation to:

              (a) Securities that are listed on a licensed or regulated exchange;
              (b) Commodities or metals, provided that they are traded on a licensed or regulated exchange and regularly operating open market;
              (c) Currencies; or
              (d) Stock indices or basket of listed securities.
              January 2014

          • Placement and Holder Size

            • OFS-1.11.4

              At least 50% of an issue must be placed out to a minimum of 50 persons. This requirement does not apply if there is a designated market maker for the structured warrants or other instruments.

              January 2014

            • OFS-1.11.5

              The minimum board lot size, the issue size, issue price and any other details for structured warrants based on listed or quoted securities are subject to the licensed exchange business rules.

              January 2014

          • Tenure of Issue

            • OFS-1.11.6

              The tenure of the structured warrant must not exceed three years from the date of issue, or such longer time as the CBB may allow.

              January 2014

          • Exercise Settlement

            • OFS-1.11.7

              On exercise, structured warrants must cash settled unless the CBB has approved physical settlement where the underlying securities are cash or cash equivalent securities. The settlement method must be specified in the offering document. The issuer thereafter must not have an option to elect for settlement either in shares or cash upon exercise of the structured warrants.

              January 2014

            • OFS-1.11.8

              An issuer must decide on the method for determining the cash settlement price at the time of the launch of an issue, and this must be stipulated in the offering document and or term sheet. The settlement price must be either:

              (a) The average of the closing prices of the underlying securities (subject to any adjustment to reflect any capitalisation issue, rights issue, distribution or the like) for the five market days prior to, and including, the market day immediately before the relevant exercise/expiry date;
              (b) The closing price of the underlying securities on the market day immediately before the exercise/expiry date; and
              (c) For securities regarded as illiquid, a cash settlement price determination agreed between the issuer and the CBB for that particular security.
              January 2014

          • Conversion Ratio

            • OFS-1.11.9

              For the exercise of structured warrants based on individual securities, the conversion ratio must avoid using fractions of securities.

              January 2014

          • Adjustments

            • OFS-1.11.11

              The terms of the issue must provide for adjustment to the exercise price and, where appropriate, the number of securities which each structured warrant carries the right to sell or purchase, in the event of any capitalisation issue, rights issue, distribution or the like relating to the underlying securities.

              January 2014

          • Designated Market Maker

            • OFS-1.11.12

              If there is a designated market maker in respect of the issue, the CBB together with the licensed exchange must be satisfied that the designated market maker's obligations are being fulfilled.

              January 2014

          • Underlying Securities

            • OFS-1.11.13

              Necessary arrangements must be made for the underlying securities to be held by a trustee or custodian to meet the exercise of all obligations of the outstanding warrants.

              January 2014

            • OFS-1.11.14

              Where the warrants relate to securities issued by a third party, the declaration by the issuer should take the following form:

              "Subject as set out below, the issuer whose name appears on page [the issuer's Board of Directors and management] accepts responsibility for the information contained in this document. To the best of the knowledge and belief of the issuer (who has taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect such information.

              The information contained herein with regard to [name of issuer of underlying securities], its subsidiary undertakings and the [description of underlying securities], consists of extracts from or summaries of information contained in financial and other information released publicly by [name of issuer of underlying securities] and summaries of certain provisions of [jurisdiction of issuer of underlying securities] law. The issuer accepts responsibility for accurately reproducing such extracts or summaries. The issuer accepts no further or other responsibility in respect of such information."

              January 2014

            • OFS-1.11.15

              In the case of warrants related to anything other than securities, the declaration in Paragraph OFS-1.11.14 should be appropriately modified.

              January 2014

            • OFS-1.11.16

              Where the issue of warrants is guaranteed, the information requirements which apply to the issuer must also be applied to the guarantor, depending on whether the guarantor is listed or is the guarantor of other listed securities.

              January 2014

            • OFS-1.11.17

              The equivalent offering document must include details of conditions of and procedures for exchange, exercise or cash settlement and details of the situations in which they may be amended, including any provisions for the adjustment of the terms of the warrants.

              January 2014

        • OFS-1.12 OFS-1.12 Eligibility for States and Supranationals to Issue Securities

          • OFS-1.12.1

            For issues by states and supranationals, copies of all enabling governmental or legislative laws, authorisations, consents or orders must be submitted to the CBB.

            January 2014

          • OFS-1.12.2

            The requirements for submission of the following documents do not apply to the securities issued by states and supranationals:

            (a) Certificate of incorporation or equivalent document;
            (b) Memorandum and Articles of Association;
            (c) Annual financial statements;
            (d) The resolutions of the issuer at the general meeting authorising the issue of the security;
            (e) The resolution(s) of the board of directors; and
            (f) Notice(s) of shareholders meeting.
            January 2014

        • OFS-1.13 OFS-1.13 Eligibility for State Corporations to Issue Securities

          • OFS-1.13.1

            The accountants' report in relation to an issuing of debt securities issued by a state corporation incorporated or otherwise established in Bahrain is not required. In such case, the latest audited financial statements, which must relate to a financial period ended not more than 15 months before the date the document is issued, must be included in or appended to the issuing and offering document.

            January 2014

          • OFS-1.13.2

            The issuance of securities issued by a state corporation incorporated or otherwise established outside Bahrain, where the latest financial period reported on by the external auditor exceeds 15 months before the date of the issuing document, requires reviewed interim financial statements relating to a period ended not more than 9 months before the date of the issuing and offering document, and appropriate evidence must be given to the CBB that there has been no material adverse change in the financial condition of the issuer or the guarantor, in the case of a guaranteed issue since the end of the period last reported on by the external auditor.

            January 2014

          • OFS-1.13.3

            The requirement of submission of the following documents does not apply to the securities issued by a state corporation:

            (a) Certificate of incorporation or equivalent document of the issuer and guarantor, in the case of a guaranteed issue;
            (b) Certificate entitling the issuer and the guarantor, in the case of guaranteed issue, to commence business; and
            (c) Notice(s) of shareholders meeting.
            January 2014

        • OFS-1.14 OFS-1.14 Eligibility for Overseas Issuers to Issue Securities

          • OFS-1.14.1

            The issuance and offering requirements for local issuers apply equally to overseas issuers, subject to the additional requirements, modifications or exceptions below.

            Amended: April 2014
            January 2014

          • OFS-1.14.2

            The CBB reserves the right, in its absolute discretion, to refuse any issuing, offering or listing application of securities of an overseas issuer if:

            (a) It believes that it is not in the public interest to approve such application; or
            (b) The overseas issuer's securities, particularly equity securities, has not obtained the approval of its home market regulator or licensed exchange for offering or listing, as the case may be, and the CBB is not satisfied that the overseas issuer is incorporated or otherwise established in a jurisdiction where the standards of securities holders' protection are at least equivalent to those provided in Bahrain.
            Amended: April 2014
            January 2014

          • OFS-1.14.3

            In the case of registered securities, provision must be made for a depository or securities ownership transfer agent, to register holders to be maintained in Bahrain, or such other place as the CBB may accept, and for transfers to be registered locally.

            January 2014

          • OFS-1.14.4

            For purposes of Paragraph OFS-1.14.3, the CBB may consider an alternative proposal for registering transfers for holders in Bahrain, in exceptional circumstances.

            January 2014

          • OFS-1.14.5

            The following modifications apply:

            (a) The references in this Module to "Directors" must be read as references to members of the overseas issuer's governing body;
            (b) The issuing and offering documents must be signed by at least two members of the governing body of the overseas issuer or guarantor, in the case of a guaranteed issue, or by their agents authorised in writing rather than signed by or on behalf of every director or proposed director; and
            (c) The declaration to be submitted to the CBB may require adjustment by virtue of the laws to which the overseas issuer is subject and may be signed by a director's and secretary's agent, authorised in writing, rather than by a director and the secretary.
            Amended: April 2014
            January 2014

          • OFS-1.14.6

            The CBB may be prepared to accept modifications to the offering document and/or listing application as it considers appropriate in a particular case. In particular, in the case of an overseas issuer whose home market or primary listing is on another regulated exchange recognised by the CBB, particularly for those jurisdictions who are IOSCO members, and signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU), the CBB may accept an offering document or listing application which incorporates equivalent continuing obligations to those imposed by that other market or exchange.

            Amended: April 2014
            January 2014

          • OFS-1.14.7

            Conversely, the CBB may impose additional requirements in certain instances. In particular, if the overseas issuer's securities has or is to have a primary listing on the exchange, or obtained the approval of the securities regulator, the CBB may impose such additional requirements as it considers necessary to ensure that investors have the same protection as that afforded to them in Bahrain.

            Amended: April 2014
            January 2014

          • OFS-1.14.8

            Issuers must fulfil their obligations regarding the circulation and contents of annual and interim financial statements and accounts, to ensure simultaneous release of information to other exchanges and to the market in Bahrain.

            January 2014

          • OFS-1.14.9

            The external auditor must be independent, both of the overseas issuer and of any other company concerned.

            Amended: April 2014
            January 2014

          • OFS-1.14.10

            Financial statements in respect of overseas issuers are required to conform with accounting standards acceptable to the CBB which must meet at a minimum the IFRS, as promulgated from time-to-time by the International Accounting Standards Committee. The relevant standards will normally be those current in relation to the last financial year reported on and, wherever possible, appropriate adjustments must be made to show profits for all periods in accordance with such standards.

            Amended: April 2014
            January 2014

          • OFS-1.14.11

            Where the CBB allows reports to be drawn up otherwise than in conformity with accounting standards set by the International Accounting Standards Committee, the CBB may, having regard to the jurisdiction in which the overseas issuer is incorporated or otherwise established, require the report to contain a statement of the financial effect to the financial statements of the use of accounting standards other than IFRS.

            Amended: April 2014
            January 2014

          • OFS-1.14.12

            Where the figures in the report differ from those in the audited annual financial statements, a statement of adjustments must be incorporated in the offering documents and submitted to the CBB which enables the figures to be reconciled.

            January 2014

      • OFS-2 OFS-2 Offering of Securities

        • OFS-2.1 OFS-2.1 Permission Requirements

          • OFS-2.1.1

            Offers in relation to an overseas issuer may only be made through a person acting as a lead manager or placement agent who is licensed as and eligible to undertake such activity in terms of its relevant CBB Volume.

            January 2014

          • OFS-2.1.2

            The CBB may grant a waiver to an issuer on eligibility conditions if the interests of the investors, or the capital market in general will not be compromised.

            January 2014

        • OFS-2.2 OFS-2.2 Methods of Offering

          • OFS-2.2.1

            The following are non-exclusive examples of the types of offering that may take place in the Kingdom of Bahrain with specific eligibility and other approval requirements for each type to be found later in this Chapter:

            (a) Initial Public Offering: An offer for subscription to the public by or on behalf of a newly-established company, or an unlisted issuer of its own securities;
            (b) Initial Offer for Sale: An offer for sale to the public by or on behalf of existing companies or unlisted issuers or its securities holders or part of its securities holders, whose securities are already in issue or subscribed;
            (c) Subsequent Public Offer: An offer for subscription to the public by or on behalf of a listed issuer of its own securities other than by a rights issue, after obtaining the approval on waiving of the pre-emptive rights of the existing securities holders;
            (d) Rights Issue: A rights issue offer by way of exercising the pre-emptive rights by existing holders of securities which enables those holders to subscribe to those securities in proportion to their existing holding, or otherwise on the basis of allotment approved by those holders;
            (e) Private Placement: Private placement is an offer to accredited investors, as defined in this Module, selected or accepted by the issuer or the appointed lead manager for obtaining subscriptions for securities of an issue, or for obtaining subscription for sale of securities by an underwriter or lead manager;
            (f) Employee Share Benefit Plan: Offering of securities which is made by the issuer on the exercise of options granted to or for the benefit of management and/or employees, after obtaining the approval of securities holders and the CBB;
            (g) Capitalisation Issue: A capitalisation issue is an allotment of further securities to existing securities holders, credited as fully paid-up out of the issuer's reserves or profits, in proportion to their existing holdings, or otherwise not involving any monetary payments;
            (h) Consideration Issue: A consideration issue is an issue of securities as consideration, other than cash, in a transaction or in connection with a takeover or merger or the division of an issuer;
            (i) Swapping, Exchange or Substitution of Securities: Securities issued through an exchange or a substitution, swapping or conversion of securities into other classes of securities;
            (j) Initial Listings for Publicly Traded Companies: For non-Bahraini issuers whose securities are issued in other markets, or listed on another regulated exchange and who wish to list on a licensed exchange in Bahrain; or
            (k) Listing of Closed or Private Companies (including Small and Medium Enterprises SME's); and
            (l) Closed, private, family companies, or such other non-public companies that offer their securities to the public and list.
            January 2014

        • OFS-2.3 OFS-2.3 Public Offering

          • OFS-2.3.1

            All public offering applications must meet the eligibility criteria under Section OFS-1.5 and the eligibility criteria related to the type of security or issuer and follow the requirements outlined in Appendix OFS-1.

            January 2014

          • Corporate Governance

            • OFS-2.3.2

              Issuers of securities in a public offering must confirm to the CBB before the registration of the offering document that it is able to comply with the CBB Law, rules and regulations, as well as with all other applicable laws, rules and regulations.

              January 2014

            • OFS-2.3.3

              The issuer must meet the following requirements in order for a public offer to be approved by the CBB:

              (a) The issuer is a duly incorporated entity under the laws of the Kingdom of Bahrain, or in case of an overseas issuer, under the laws of its place of incorporation;
              (b) The issuer operates in conformity with its Memorandum and Articles of Association or equivalent constitutional documents;
              (c) The securities are freely transferable and free from any encumbrances;
              (d) The offered securities are to be listed on a licensed exchange in the Kingdom of Bahrain, and there are adequate assurances between the issuer and the licensed exchange that they will be admitted to such a platform;
              (e) The necessary custodial and/or central depository arrangements have been made including the deposit of securities with an entity eligible to provide depository services under Article 94 of the CBB Law;
              (f) The necessary clearing and settlement arrangements have been made that give effect to Article 108 of the CBB Law;
              (g) The issuer has made the appointment of the eligible advisors, as per this Module including the appointment of a listing agent to liaise with the licensed exchange and the CBB where the CBB deems necessary; and
              (h) The issuer meets such other requirement as determined by the CBB from time to time.
              Amended: October 2017
              January 2014

            • OFS-2.3.4

              The issuer must appoint a lead manager for any public offer.

              January 2014

            • OFS-2.3.5

              An issuer in an initial public offering of equity securities must ensure that the issue is underwritten, unless an exception is made by the CBB, in accordance with Paragraph OFS-2.3.6.

              Amended: October 2017
              January 2014

          • Underwriting

            • OFS-2.3.6

              The CBB may approve an issue without an underwriter where:

              (a) More than one institution who are not related parties provide the proposed offering price; or
              (b) The lead manager has established the issue price through a book building mechanism; and
              (c) The lead manager has signed a declaration of due diligence and has submitted a declaration confirming to the issuer and the CBB that the issue will be fully subscribed, which declaration must be included in the offering document.
              January 2014

            • OFS-2.3.7

              Where the issue is to be underwritten, full details of the underwriter and the underwriting arrangement must be disclosed in the prospectus and the full underwriting agreement as signed by the parties must be made available for inspection by the subscribers.

              January 2014

            • OFS-2.3.8

              Where the issue is not to be underwritten, the CBB retains its right to impose full or partial underwriting based upon pricing of the securities to be issued and market conditions.

              January 2014

            • OFS-2.3.9

              Where the issue is underwritten the:

              (a) Underwriter must not be a related party; and
              (b) Lead manager and/or underwriter must directly or through an authorised market maker, establish a price stabilisation mechanism for the securities for a period of at least six months starting from the first day of trading on a licensed exchange. The CBB may require a longer period of price stabilisation where it considers it necessary.
              January 2014

            • OFS-2.3.10

              Details of underwriting agreements must be disclosed in the offering document and the agreement must be capable of being enforced under any circumstance.

              January 2014

            • OFS-2.3.11

              In respect of public offers of debt securities, where the issue is to be underwritten or sold through primary dealer arrangements, full details of the underwriter, primary dealer, the underwriting arrangement and/or primary dealer arrangements must be disclosed in the prospectus and the underwriting agreement must made available for inspection by the subscribers.

              January 2014

          • Book Building

            • OFS-2.3.12

              The preliminary/red herring prospectus containing all the information except the information regarding the price at which the securities are offered, must be filed with the CBB prior to it being used in any manner by the issuer or its advisors.

              January 2014

            • OFS-2.3.13

              The lead manager and/or the underwriter to the issue must be nominated by the issuer as a book runner and his name must be disclosed in the prospectus.

              Amended: October 2017
              January 2014

            • OFS-2.3.14

              The preliminary/red herring prospectus to be circulated may indicate the price band within which the securities are being offered for subscription.

              January 2014

            • OFS-2.3.15

              The book runner, on receipt of the offers must maintain a record of the names and number of securities ordered and the price at which the investors are willing to subscribe to securities under the placement portion.

              January 2014

            • OFS-2.3.16

              On receipt of the information, the book runner and the issuer must determine the price at which the securities are to be offered to the public.

              January 2014

            • OFS-2.3.17

              The book runner and other appointed advisors associated with the book building process must maintain records of the book building process and the CBB has the right to inspect and obtain a copy of such records.

              January 2014

            • OFS-2.3.18

              Details of the outcome of the book building process must be disclosed in the prospectus or offer document and must include information such as the general range of the prices at which the institutional investors are willing to subscribe to under the placement portion, the total number of securities ordered and the total number of institutions involved. The CBB shall have the right to require the disclosure of any other additional information if it deems necessary.

              Added: October 2017

            • OFS-2.3.19

              The issuer, lead manager and/or underwriter must consider the outcome of the book building process and/or any other processes or arrangements employed, when establishing the final offer price at which the securities are to be offered to the public. A statement to the effect must be duly disclosed in the prospectus.

              Added: October 2017

        • OFS-2.4 OFS-2.4 Private Placement

          • OFS-2.4.1

            Offers made by private placement pursuant to a Private Placement Memorandum (PPM) are subject to the general eligibility criteria and requirements stipulated under this Module.

            January 2014

          • OFS-2.4.2

            A private offer must only be made to accredited investors and must be for a minimum investment of USD 100,000.00. A private offer, excluding those offers made by way of private equity, is limited to a take up by less than 100 accredited investors.

            January 2014

          • OFS-2.4.3

            Any subsequent issues or offering of securities by a publicly listed issuer, for its own securities, must first be offered to its existing shareholders (rights offering) and then to the public. Any listed issuer that would like to make a private placement must obtain CBB approval and the approval of the shareholders' General Assembly.

            January 2014

          • OFS-2.4.4

            Issuers must combine all offers of securities that are in substance part of a single offering. The CBB will consider if the offer occurs in the six-month period before or the six-month period after the completion of an offer, for the purpose of the above determination.

            January 2014

          • OFS-2.4.5

            In order for the CBB not to regard the offer as a public offer, the issuer must exercise reasonable care to ensure that the purchasers of securities are not acquiring them for resale, redistribution to other investors within a period not less than one year.

            January 2014

          • OFS-2.4.6

            The issuer, lead manager and any appointed advisor to the private placement offer must not disseminate or make available any information related to the private placement offer to the public prior to the subscription being closed and must not at any time disclose or make available any information that could be regarded as an inducement to deal in these securities.

            January 2014

          • OFS-2.4.7

            Any private placements marketed or promoted by licensees of the CBB must set fees within the actual cost and must be within reasonable and justifiable levels that do not materially compromise the interests of the issuer or the investor. The private placement fees or any other fees or charges related to the placement and any other related cost must be disclosed clearly in the PPM.

            January 2014

          • OFS-2.4.8

            The level of fees for issuers of differing sizes of issue is given below as a guidance:

            Size of Issue Maximum Fee Percentage
            Up to BD100,000,000 3%
            BD100,000,001 to BD500,000,000 2%
            BD500,000,001 and above 1%
            January 2014

        • OFS-2.5 OFS-2.5 Rights Offering

          • OFS-2.5.1

            Rights offerings of listed equity securities are subject to the eligibility criteria under this Module.

            January 2014

          • OFS-2.5.2

            The CBB may only grant its approval for a rights issue where the General Assembly of the issuer has issued a resolution approving such offer.

            January 2014

          • OFS-2.5.3

            An offering period of a rights offering must be approved by the CBB and must be close to the public announcement of financial statements so that shareholders and potential subscribers have the most recent financial information of the issuer.

            January 2014

          • OFS-2.5.4

            An application for approval of a rights issue must include the issue price and principal terms and conditions of the issue.

            January 2014

          • OFS-2.5.5

            If the rights offering is made at a high share premium or above the market price on a licensed exchange, such issue shall be subject to the underwriting requirement under Subparagraph OFS-1.6.1 (e).

            January 2014

          • OFS-2.5.6

            The content of the rights offering document must meet the minimum requirements provided in Appendix OFS-1, where relevant.

            January 2014

          • OFS-2.5.7

            To accommodate for the possibility of under subscription by the existing shareholders, issuers must prepare rights offering documents in line with public offering documents to avoid any delay regarding the approval of a further public offering where the rights issues are not fully underwritten or taken up.

            January 2014

          • OFS-2.5.8

            If the rights issue is not fully subscribed or fully underwritten and thereafter is made to the public, the prospectus requirements of Section OFS-5.1 apply in relation to the offering document.

            January 2014

          • OFS-2.5.9

            Any announcement made by the issuer or his advisors prior to receiving the approval of the CBB must clearly state that the rights issue is subject to the approval of the CBB.

            January 2014

          • OFS-2.5.10

            The issuer must disclose the price, terms and the purpose of the rights issue, as well as the financial circumstances that call for the rights issue.

            January 2014

          • OFS-2.5.11

            The offering period for a rights issue must be at least 15 calendar days.

            January 2014

          • OFS-2.5.12

            A rights issue which allows holders of securities to participate in proportion or pro rata to the amount of existing shares held, must allow for renunciation, in part or whole, in favour of a third party at the option of the entitled shareholders.

            January 2014

          • OFS-2.5.13

            The CBB will not allow any rights issue in which the rights cannot be renounced, in part or whole, in favour of a third party at the option of the entitled shareholders, unless the issuer made the necessary arrangements with a licensed exchange to trade the rights, subject to such renunciation.

            January 2014

          • OFS-2.5.14

            Subsequent to a rights issue, the issuer must submit to the CBB the results of the issue including an allotment report and, if any rights are not taken up or are sold, the details of the sale, including the date and price per share.

            January 2014

        • OFS-2.6 OFS-2.6 Employee Stock Option Plan

          • OFS-2.6.1

            Any employee stock option plan of a listed issuer utilising its equity securities requires CBB approval.

            January 2014

          • OFS-2.6.2

            The issuer may reserve up to 10% of its total issued securities, for its directors and employees through an employee stock option plan.

            January 2014

          • OFS-2.6.3

            The employee stock option plan must be approved by the shareholders at the General Assembly. The issuer must provide the shareholders' General Assembly with full details and information about the terms, conditions, eligibility criteria and timeframe and all information included under Rule OFS-2.6.4.

            January 2014

          • OFS-2.6.4

            The employee stock option plan must contain provisions relating to:

            (a) The persons to whom securities may be issued or sold under the plan ("participants");
            (b) The total number and/or amount of the securities to be issued or purchased on a licensed exchange;
            (c) Entitlement in terms of number and amount of securities for any one participant;
            (d) The amount payable on application or acceptance, and the basis for determining the subscription or sale or option price, and the period in or after which payments or calls or loans to provide the same, may be paid or called;
            (e) The time limit for the plan;
            (f) The period during which the participants must not dispose of the allotted securities, if applicable; and
            (g) The voting, dividend, transfer and other rights, including those arising from the liquidation of the company attached to the securities.
            January 2014

          • OFS-2.6.5

            Any announcement made prior to receiving the approval of the CBB must clearly state that the employee stock option plan is subject to the approval of the CBB.

            January 2014

          • OFS-2.6.6

            The resolution must approve a specific plan and refer to either the plan itself, or to a summary of its principal terms included in the circular, which must contain all the provisions set out in Rule OFS-2.6.4. Where directors of the issuer are trustees of the plan, or have a direct or indirect interest in the plan, the circular must disclose the interest.

            January 2014

          • OFS-2.6.7

            All listed companies' securities held on behalf of the employees under an employee stock option plan or employee share benefit plan, must be held in trust by a trustee subject to the prior written approval of the CBB. The securities account opened and maintained at a licensed central depository for this purpose must be clearly identified as a trust account for the employee stock option plan or employee share benefit plan accordingly. Where employees are eligible to trade in the securities of the issuer held on their behalf in an employee stock option plan, the directors, executive management and any other key persons must not be eligible to hold the position of trustee of such plan.

            Amended: October 2017
            January 2014

          • Transitional Arrangement

            [This Sub-Heading was deleted in July 2018].

            Deleted: July 2018

            • OFS-2.6.7A

              [This Paragraph was deleted in July 2018].

              Deleted: July 2018

          • OFS-2.6.8

            Unless the securities subject to the same plan are identical with other securities, they must be separately designated.

            January 2014

          • OFS-2.6.9

            The plan may provide for an adjustment of the subscription or option price, or the number or amount of securities subject that such variation provides a participant the same portion of the equity capital as that to which he was previously entitled.

            January 2014

          • OFS-2.6.10

            The issue of securities as consideration for an acquisition will not be regarded as a circumstance requiring adjustment.

            January 2014

          • OFS-2.6.11

            An adjustment other than on a capitalisation issue must be confirmed in writing by the company's auditor and in its opinion be fair and reasonable.

            January 2014

          • OFS-2.6.12

            The plan must provide, or the circular must state, that the provision relating to the matters contained in Rule OFS-2.6.4 cannot be altered to the advantage of participants, without the shareholders' prior approval at a General Assembly.

            January 2014

          • OFS-2.6.13

            The plan and any other subsequent renewal or amendments to the terms of the plan are subject to the prior approval of the CBB.

            January 2014

          • OFS-2.6.14

            The holders or the owners of securities issued or subsequently issued under any employee share benefit plan, whether the issuer or the directors of the issuer are trustee of the plan or not, are subject to the provisions related to prohibition of abuse of inside information and insider trading laws including but not limited to those set out in Module MAM of CBB Rulebook Volume 6.

            January 2014

      • OFS-3 OFS-3 Capital Market Advisory Services Provider

        • OFS-3.1 OFS-3.1 Capital Market Advisory Services Provider

          • OFS-3.1.1

            For the purpose of this Module, a Capital Market Advisory Services Provider (appointed advisor) means any person who provides or involves himself with any activity or services stipulated under Article 80 of the CBB Law.

            January 2014

          • Definition of Advisors

            • OFS-3.1.2

              For the purpose of this Module, in addition to any other designation by the CBB, a Capital Market Advisory Services Provider may be classified as follows:

              (a) Auditors;
              (aa) Financial Advisors;
              (b) Custodian;
              (c) Independent Reporting Accountant;
              (d) Independent Valuer;
              (e) Issue Agent;
              (f) Lead Manager;
              (g) Legal Advisor;
              (h) Paying Agent;
              (i) Receiving Bank;
              (j) Securities Depositor and ownership transfer agent;
              (k) Trustee;
              (l) Shari'a Advisor;
              (m) Promoter;
              (n) Listing Agent;
              (o) Underwriter; or
              (p) Any other person designated as a Capital Market Advisory Service Provider by the CBB from time to time.
              Amended: October 2017
              January 2014

        • OFS-3.2 OFS-3.2 General Eligibility

          • Incorporation, Licensing and Acceptance

            • OFS-3.2.1

              The appointed advisor must be either incorporated in the Kingdom of Bahrain and licensed by the CBB or authorised to provide this service by the CBB.

              January 2014

            • OFS-3.2.2

              The Memorandum and Articles of Association and/or the by-laws of the advisor must allow it to provide such service.

              January 2014

            • OFS-3.2.3

              Where applicable, the appointed advisor must be incorporated in, be a member, associate or registered with the relevant local, and/or international professional body of a jurisdiction which is a signatory to the IOSCO MMoU.

              January 2014

          • Ability to Provide the Service

            • OFS-3.2.4

              In addition to incorporation and licensing, the CBB will review the ability of the advisor to provide the service. The CBB will consider the following in such determination:

              (a) Historical records and prior performance;
              (b) Maintenance of systems and controls set-up by the advisor; and
              (c) Number of suitably experienced and qualified employees.

              Moreover, advisors' fees and charges should be fixed reasonably in order to ensure that the costs associated with raising capital or initial public offerings are competitive.

              Amended: October 2017
              January 2014

          • Controlled Functions

            • OFS-3.2.5

              All persons proposed to undertake any of the controlled functions must be subject to the provisions and requirements related to these functions, particularly in respect of anti-money laundering and financial crime, the compliance function and any person directly involved in the preparation of the prospectus or offering documents.

              January 2014

            • OFS-3.2.6

              All persons proposed to undertake any controlled functions and any other persons recruited or employed by the capital market advisory service provider must meet the relevant examination and qualification requirements of the CBB, including qualifications such as the Securities Market Regulation Certification Programme (Series 7), the General Securities Representative Qualification (Series 79), and/or any other relevant examinations and qualifications recognised by the CBB that are appropriate to capital market functions, as the case may be. However the CBB reserves the right to impose a higher level of qualifications as it deems necessary.

              Amended: April 2016
              January 2014

            • OFS-3.2.7

              Capital market advisory services providers must maintain and keep records of agreements, contracts, correspondence and other information to demonstrate their compliance with the requirements of this Module. These records must be kept for at least 10 years.

              January 2014

          • Appointment, Change, Termination

            • OFS-3.2.8

              Any appointment of an advisor must be made in the form of a written agreement, contract and/or official letter issued by the issuer or lead manager as applicable.

              January 2014

            • OFS-3.2.9

              The acceptance of the appointment by the advisor must be made in the form of an official written confirmation.

              January 2014

            • OFS-3.2.10

              The name of the appointed advisors must be prominently disclosed in the offering document and in all advertising materials.

              January 2014

            • OFS-3.2.11

              A person appointed to act as an appointed advisor shall not cease to act as such until another has taken office with CBB approval.

              January 2014

            • OFS-3.2.12

              An issuer must notify the CBB in writing immediately of the appointment or dismissal or replacement of an advisor that had been appointed. In the case of a dismissal, the reasons for dismissal must be provided.

              January 2014

          • Transparency and Disclosure

            • OFS-3.2.13

              Where a prospectus or offering document includes a statement purporting to be made by, or based on a statement made by an expert, the prospectus or offering document must not be issued unless:

              (a) The expert has, before the approval and registration of the prospectus or offering document, as the case may be, provided his written consent to the issue thereof; and
              (b) There appears in the prospectus or offering document, a statement that the expert has given such consent.
              January 2014

            • OFS-3.2.14

              The appointed advisor must provide a statement regarding its due diligence with regard to its appointed responsibility and this statement must be included in the prospectus or offering document.

              January 2014

            • OFS-3.2.15

              The appointed advisor must disclose in the prospectus and/or offering documents, whether it has any capital of the issuer under option, or agreed conditionally or unconditionally to be put under option, including:

              (a) The title and amount of securities covered by the options;
              (b) The exercise price;
              (c) The purchase price, if any; and
              (d) The expiration date of the options.
              January 2014

            • OFS-3.2.16

              Where options have been granted, or agreed to be granted to all the holders of shares or debt securities, or of any class thereof, or to any appointed advisor, or to employees under the employees' share benefit plan, a general disclosure of such fact may be made.

              January 2014

            • OFS-3.2.17

              The information provided in Rule OFS-3.2.15 must also be disclosed where there is authorised but unissued capital, or an undertaking to increase the capital in connection with warrants, convertible obligations or other outstanding equity-linked securities, or subscription rights granted or to be granted to any appointed advisor. Such information must indicate:

              (a) The amount of outstanding equity-linked securities and of such authorised capital or capital increase and where appropriate, the duration of the authorisation;
              (b) The categories of advisors having preferential subscription rights for such additional portions of capital;
              (c) The terms, arrangements and procedures for the share issue corresponding to such portions; and
              (d) That no subscription is made by the issuer in contravention of Subparagraph OFS-1.5.2(s).
              January 2014

            • OFS-3.2.18

              In regard to the implementation of the granting of capital in Paragraphs OFS-3.2.15 and OFS-3.2.17:

              (a) The General Assembly of the securities holders must approve a separate resolution of the rights or options through a majority of disinterested securities holders;
              (b) It must be implemented, exercised and/or allocated separately from the process of the related offering of securities, i.e. either before or after the offering period; and
              (c) For issuers under formation, the implementation, exercising and or allocation of the required securities must take place only after the publication of the issuer's incorporation order in the Official Gazette.
              January 2014

          • Independency and Avoidance of Conflict of Interest

            • OFS-3.2.19

              An appointed advisor must be independent of the issuer. An appointed advisor will not be considered independent by the CBB if:

              (a) He owns an interest of 5% or more of equity securities of the issuer or any other company within the issuer's group;
              (b) He has a business relationship with, or financial interest in the issuer or any other entity in the issuer's group that would give the appointed advisor, or the appointed advisor's group a material interest in the outcome of the transaction;
              (c) He provides and has provided in the previous 2 years any service, assurance, or guidance in any event to the issuer, other than the offering or listing in which he is appointed as an appointed advisor, or to another entity in the issuer's group; or
              (d) A director, partner or employee of the appointed advisor or another entity in the appointed advisor's group has a material interest in the issuer or any other entity in the issuer's group.
              Amended: July 2018
              January 2014

            • OFS-3.2.20

              When an appointed advisor undertakes business other than the capital market advisory services, or undertakes two or more of the capital market advisory services, the appointed advisor must ensure that the performance of such business is subject to the avoidance of any conflict of interest.

              January 2014

          • Confidentiality and Prohibition of Insider Trading

            • OFS-3.2.21

              Appointed advisors are subject to confidentiality requirements which must be explicitly stated in the respective agreements, contracts and/or letters.

              January 2014

            • OFS-3.2.22

              All advisors must abide by the rules relating to the Prohibition of Market Abuse and Manipulation contained in Module MAM of Volume 6 CBB Rulebook, as well as the relevant rules of the licensed exchange regarding the prevention of insider trading, in their capacity as a temporary insider.

              January 2014

          • Reporting and Notification to the CBB

            • OFS-3.2.23

              An appointed advisor is responsible, in addition to the reporting and disclosure requirements stipulated under this Module, for immediate notification to the CBB of any offence involving money laundering, fraud, theft, or other dishonest conduct related to the offer or listing, irrespective of whether such conduct is reported to the CBB by the issuer and/or the lead manager.

              January 2014

          • Declaration and Accountability

            • OFS-3.2.24

              An appointed advisor is required to provide the CBB with a declaration confirming his acceptance to the accountability and enforceability of the CBB Law, rules and regulations, and all other applicable laws, rules and regulations, and in particular to the CBB Law Articles 82, 84, 85, 106, 166, 167 and 168.

              January 2014

          • CBB Approval

            • OFS-3.2.25

              The CBB shall decide on the eligibility of the appointed advisor(s) on a case by case basis, taking into consideration, the nature and complexity of the offering, as well as, the nature of involvement and commitment of the appointed advisor(s).

              January 2014

        • OFS-3.3 OFS-3.3 Role and Responsibilities of the Appointed Advisors

          • OFS-3.3.1

            An appointed advisor is required to fufill the applicable role and responsibilities as laid out in this Section and contained in the agreement signed between the issuer and advisor.

            January 2014

          • Role and Responsibilities of the Lead Manager

            • OFS-3.3.2

              All issuers must engage a CBB licensee to act as a lead manager or to fulfil the obligations of a lead manager as defined in this Section.

              January 2014

            • OFS-3.3.3

              The lead manager is in addition to Paragraph OFS-3.2.24 required by the CBB to act with appropriate care and skill and perform the following:

              (a) Prepare and file the application for approval of a securities offering to the CBB;
              (b) Report to the CBB on the due diligence undertaken in respect of the issue and the issuer;
              (c) Make a declaration that is provided to the CBB and included in the offering document, that the offering document does not contain information that is false or misleading, in its opinion does not prejudice the interests of present or future investors and does not omit any material information;
              (d) Make a declaration that is provided to the CBB and included in the offering document that the offering document is in accordance with all the CBB Law, other rules and regulations and this Module;
              (e) The lead manager's declaration under (d) is only acceptable to the CBB, if it is attached with a duly signed and fully completed offering prospectus checklist prescribed under Appendix OFS-7; and
              (f) Where the issue is not underwritten, the lead manager must provide the CBB with the method of price determination and price stabilisation for a period of one year or such other period as the CBB may determine.
              January 2014

            • OFS-3.3.4

              For the purposes of Rule OFS-3.3.3, the outstanding underwriting commitments of a lead manager should not exceed reasonable limits including in relation to its capital and capital adequacy requirements.

              January 2014

            • OFS-3.3.5

              The lead manager is expected to also assist the issuer with the appointment of other advisors.

              January 2014

            • OFS-3.3.6

              Where the lead manager is also acting as a listing agent or sponsor in relation to a planned listing, the lead manager is also responsible for:

              (a) Advising the issuer on its suitability for listing;
              (b) Ensuring the applicant, as well as the listing documents, meet admission requirements;
              (c) Preparing the application and listing documents for listing;
              (d) If the securities listing application for obtaining the CBB approval is made separately from the application for the offering of securities, ensuring that in the case of the listing documents the requirements related to the declaration under Subparagraph OFS-3.3.3 (d) and prospectus checklist under Subparagraph OFS-3.3.3 (e) are also applied;
              (e) Ensuring that the issuer is sufficiently set up to comply with the continuing listing obligations under the licensed exchange's listing rules including meeting the corporate governance requirements;
              (f) Ensuring the CBB is informed of all matters which should be brought to its attention; and
              (g) Notifying the CBB of any amendments to the application or listing documents after submission.
              January 2014

            • OFS-3.3.7

              The lead manager must inform the CBB where:

              (a) It is no longer able to satisfy the criteria for approval;
              (b) Any of the approved executives of the lead manager are convicted of an offence involving fraud, theft or other dishonesty, or are the subject of a bankruptcy proceeding; or
              (c) It resigns as a lead manager, listing agent or sponsor. In this case, the lead manager must provide written notification to both the CBB and the relevant issuer.
              January 2014

          • E-Subscription

            • OFS-3.3.8

              In line with Articles 83 and 178 of the CBB Law and the dematerialisation of securities requirements under Paragraph OFS-1.5.5, issuers and lead managers must put in place appropriate technical infrastructure and other arrangements to encourage subscribers to use e-subscription facilities.

              Amended: April 2016
              January 2014

        • OFS-3.4 OFS-3.4 Role and Responsibilities of Auditor and Independent Reporting Accountant on Financial Projections

          • OFS-3.4.1

            Newly-established issuers or small and medium enterprises who cannot provide financial statements, or historical records must include projected financial statements in the prospectus or offering document.

            January 2014

          • OFS-3.4.2

            Other than for newly-established issuers, financial projections, forecasts, or estimates of future operating results are not required to be included in offering documents, unless otherwise stated in this Module or by the CBB. However, if the issuer decides to disclose such information, it has to justify its projections adequately. The issuer should provide an explanation as to how the projections were calculated, taking into account all assumptions and risks.

            January 2014

          • OFS-3.4.3

            Where the projections of financial statements, or forecasted financial information are disclosed in the prospectus or offering document, the projections must be reviewed and reported on by an independent reporting accountant or other expert and such report must be set out in the offering document, in accordance with the International Standards on Assurance Engagement (ISAE), or any other applicable international standards required from time-to-time and the declaration required under Paragraph OFS-3.2.24 must be in line with this standard.

            January 2014

          • OFS-3.4.4

            The issuer, lead manager and the independent reporting accountant must ensure that sufficient details on the bases and assumptions of the projections are disclosed to enable the investor to assess the reliability of the projections and the effect of any changes to the assumptions used. The bases and assumptions must:

            (a) Provide useful information to investors to assist them in forming a view as to the reasonableness and reliability of the projections;
            (b) Draw the investors' attention to, and where possible quantify, those uncertain factors which could materially affect the achievement of the projections;
            (c) Avoid generalisations and all-embracing assumptions (general asumptions, where applicable, could be made) and those relating to the general accuracy of the projections; and
            (d) Be clearly stated and reviewed for reasonableness by the directors who are responsible for the projections, bases and assumptions.
            January 2014

          • OFS-3.4.5

            The following requirements are applicable in respect of profit/cash flow projections:

            (a) The projections must be realistic and achievable to provide investors with information on the issuer's prospects;
            (b) The projections must be compiled with utmost care and objectivity; and
            (c) Where the projections are subject to high probability of variation, the issuer must provide a sensitivity analysis based on any one of the key variables such as sales price, volume of sales, production costs, production capacity, operating expenses and financing costs.
            January 2014

          • OFS-3.4.6

            In addition to the above, owing to the specific nature of profit/cash flow projections, the issuer must take note of the following:

            (a) A projection, being a representation of financial information based on a set of assumptions which are uncertain and hypothetical, must be qualified as to its achievability for those reasons;
            (b) The qualifications of projected financial information must draw attention to the fact that the presentation is based on hypothetical assumptions, and that actual events may differ from those assumed and may materially affect the financial information projected; and
            (c) Notwithstanding the uncertainties and hypothetical assumptions associated with projections, the projections must be prepared with care, skill and objectivity so as to represent the stated assumptions and not to purport unreasonable hypotheses and assumptions.
            Amended: July 2018
            January 2014

          • Eligibility

            • OFS-3.4.7

              The independent reporting accountant is required to adhere to the independence and other standards applicable to auditors, in addition to the general eligibility under Section OFS-3.2.

              January 2014

        • OFS-3.5 OFS-3.5 Role and Responsibilities of Trustees and Custodians

          • OFS-3.5.1

            Borrowing corporations and issuers of debt securities (hereinafter referred to as borrowing corporations) must appoint trustees to whom the ownership of the trust property must be transferred.

            January 2014

          • Eligibility

            • OFS-3.5.2

              A Bahrain domiciled trustee must be established and authorised in accordance with the Bahrain Trust Law of 2006. In the case of overseas domiciled trustees, they must be registered in their own jurisdiction and be acceptable to the CBB.

              January 2014

          • Appointment of Trustee

            • OFS-3.5.3

              Every issuer of debt securities must make provision in those debt securities, or in a trust deed relating to those debt securities, for the appointment of a trustee corporation as trustee for the holders of the debt securities within a maximum of one month from the allotment date.

              January 2014

          • Independence

            • OFS-3.5.4

              A trustee corporation must not be appointed, hold office or act as trustee for the holders of debt securities of a borrowing corporation if that trustee corporation is:

              (a) A shareholder who beneficially holds shares in the borrowing corporation;
              (b) Beneficially entitled to monies owned by the borrowing corporation to it;
              (c) A corporation that has entered into a guarantee in respect of the principal debt secured by those debt securities or in respect of interest thereon; or
              (d) A corporation that is related to:
              (i) Any corporation referred to in Subparagraphs (a), (b) or (c); or
              (ii) The borrowing corporation.
              January 2014

            • OFS-3.5.5

              The trustee must be independent of the issuer, or any of the issuer's related party, subsidiaries and/or associates, and must exercise the powers and duties as defined in the Trust Law of 2006 and the trust deed, without interference or guidance from the issuer.

              January 2014

            • OFS-3.5.6

              An issuer may remove a trustee after obtaining CBB approval if he exceeds the limits or is otherwise in contravention of the trust deed, or if he violates the provisions of the Trust Law of 2006.

              January 2014

          • Contents of a Trust Deed

            • OFS-3.5.7

              Where a corporation or any other entity makes an offer or invitation in respect of debt securities, the debt securities or the relevant trust deed must contain a limitation on the amount that the borrowing corporation may borrow, pursuant to those debt securities or that deed and must contain covenants by the borrowing corporation, or if the debt securities do not or the trust deed does not expressly contain those covenants, they or it are deemed to contain covenants by the borrowing corporation, to the following effect:

              (a) That the borrowing corporation will use its best endeavours to carry on and conduct its business in a proper and efficient manner;
              (b) That the trustee or any auditor or director appointed by the trustee shall:
              (i) Be entitled to require the borrowing corporation to make available for its or his inspection the whole of the accounting or other records of the borrowing corporation; and
              (ii) Give to it or him such information as it or he requires with respect to all matters relating to the accounting or other records of the borrowing corporation; and
              (c) That the borrowing corporation must, on the application of persons holding at least 10% in nominal value of the issued debt securities give notice:
              (i) To each of the holders of those debt securities at his address as specified in the register of debt securities;
              (ii) By an advertisement in at least two local daily newspapers, one each published in the Arabic and English languages addressed to all holders of those debt securities; and
              (iii) Call a meeting of the holders of those debt securities to consider the accounts and balance sheet which were last submitted to the trustee for the holders of the debt securities by the borrowing corporation, and to give to the trustee directions in relation to the exercise of the trustee's powers. Such meeting is to be held at a time and place specified in the notice and advertisement under the chairmanship of a person nominated by the trustee, or such other person as appointed on behalf of the holders of those debt securities present at the meeting.
              Amended: July 2018
              January 2014

            • OFS-3.5.8

              Trust deeds for convertible securities must not include any provisions for:

              (a) The extension or shortening of tenure of the convertibles; and
              (b) Changes to the number of shares received for the conversion of each convertible security, or changes to the pricing mechanism for the conversion of the convertible security, except where these changes are adjustments pursuant to capitalisation issues, rights issues, or consolidation or sub-division of shares or capital reduction exercises.
              January 2014

            • OFS-3.5.9

              Any changes in the terms of convertible securities must be clearly determined and disclosed in the trust deed and offering document/listing document/circular, or any other documents issued in relation to the proposal.

              January 2014

            • OFS-3.5.10

              Once determined, the terms and conditions of the convertible securities may not be altered unless approved by the holders of the securities and the CBB.

              January 2014

          • Retirement of Trustees

            • OFS-3.5.11

              A trustee for the holders of debt securities must not cease to be the trustee until a corporation qualified for appointment as trustee for the holders of debt securities has been appointed and has taken office as such. The holders of the securities and the CBB must be informed immediately of this event.

              January 2014

            • OFS-3.5.12

              Where provision has been made in the debt securities or in the relevant trust deed for the appointment of a successor to a trustee for the holders of the debt securities upon retirement or otherwise, the successor may be appointed in accordance with such provision.

              January 2014

            • OFS-3.5.13

              Where no provision has been made in the debt securities or in the relevant trust deed for the appointment of a successor to a retiring trustee, the borrowing corporation may appoint a successor which is qualified for appointment.

              January 2014

            • OFS-3.5.14

              Notwithstanding anything in any debt securities or trust deed, a borrowing corporation may, with the consent of an existing trustee for the holders of the debt securities, appoint as successor to the existing trustee any corporation which is qualified for such appointment.

              January 2014

            • OFS-3.5.15

              Where the trustee for the holders of the debt securities has ceased to exist or to be qualified, or fails or refuses to act or is disqualified, the court may, on the application of the borrowing corporation or the CBB, appoint any corporation qualified to be the trustee for the holders of the debt securities in place of the trustee which has ceased to exist or to be qualified, which has failed or refused to act as trustee, or which is disqualified.

              January 2014

            • OFS-3.5.16

              Where a successor is appointed to be a trustee in place of any trustee, the successor must immediately after the appointment submit to the holders of the securities and the CBB notice of such appointment.

              January 2014

          • Roles and Responsibilities of the Trustees

            • OFS-3.5.17

              A trustee for the holders of debt securities must:

              (a) Exercise reasonable diligence to ascertain whether or not the assets of the borrowing corporation and of each of its guarantor corporations which are or may be available, whether by way of collateral or security or otherwise, are sufficient or are likely to be or become sufficient to discharge the principal debt as and when it becomes due;
              (b) Satisfy itself that each prospectus relating to the debt securities does not contain any matter which is inconsistent with the terms of the debt securities or with the relevant trust deed;
              (c) Ensure that the borrowing corporation complies with the CBB Law, rules and regulations and any other laws, rules and regulations related to the debt securities as applicable;
              (d) Exercise reasonable diligence to ascertain whether or not the borrowing corporation and each of its guarantor corporations have committed any breach of the covenants, terms and provisions of the debt securities or the trust deed;
              (e) Except where it is satisfied that the breach will not materially prejudice the collateral or the security, if any, for the debt securities or the interests of the holders of the debt securities, take all steps and take all such actions as it is empowered to do to cause the borrowing corporation and any of its guarantor corporations to remedy any breach of those covenants, terms and provisions;
              (f) Where the borrowing corporation or any of its guarantor corporations fails when so required by the trustee to remedy any breach of the covenants, terms and provisions of the debt securities or the trust deed, place the matter before a meeting of holders of the debt securities and submit such proposals for the protection of their interest as the trustee considers necessary or appropriate and obtain the directions of the holders in relation thereto; and
              (g) Where the borrowing corporation submits to those holders a compromise or arrangement, give to them a statement explaining the effect of the compromise or arrangement and, if it or he thinks fit, recommend to them an appropriate course of action to be taken by them in relation thereto.
              January 2014

            • OFS-3.5.18

              Where a trustee for the holders of the debt securities after due enquiry, at any time is of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available, whether by way of collateral or security or otherwise, are insufficient, or likely to become insufficient, to discharge the principal debt as and when it becomes due, it must apply to the CBB for an order under Paragraph OFS-3.5.19.

              January 2014

            • OFS-3.5.19

              The CBB, on receiving an application under Paragraph OFS-3.5.18 may:

              (a) After giving the borrowing corporation an opportunity to make representations in relation to the application, and by order in writing served on the corporation at its registered office in Bahrain, impose such restrictions on the activities of the borrowing corporation, including restrictions on advertising for deposits or loans and on borrowing by the corporation as proposed by the trustee and/or issuer or the CBB considers necessary for the protection of the interests of the holders of the debt securities; or
              (b) If the CBB so requires, direct the trustee to apply to the court for an order; and the trustee shall act in accordance with the court order.
              January 2014

            • OFS-3.5.20

              Where:

              (a) After due enquiry, the trustee is at any time of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available, whether by way of collateral or security or otherwise, are insufficient or likely to become insufficient to discharge the principal debt as and when it becomes due; or
              (b) The borrowing corporation has contravened an order made by the CBB under Paragraph OFS-3.5.19.

              the trustee may apply to the court for an order.

              January 2014

          • Powers of the Trustee to Apply to Court

            • OFS-3.5.21

              A trustee for the holders of debt securities may apply to the court:

              (a) For directions in relation to any matter arising in connection with the performance of the functions of the trustee; or
              (b) To determine any question in relation to the interests of the holders of debt securities.
              January 2014

            • OFS-3.5.22

              Prior to making any application to the CBB or to the court, a trustee must consider the nature and kind of collateral or security given when the offer or invitation in respect of the debt securities was made to the public, and if no security was given must consider the position of the holders of the debt securities as unsecured creditors of the borrowing corporation.

              January 2014

            • OFS-3.5.23

              A trustee may rely upon any certificate or report given or statement made by any legal advisor, auditor or officer of the borrowing corporation or guarantor corporation, if it reasonably believes that such legal advisor, auditor or officer was competent to give or make the certificate, report or statement.

              January 2014

          • Obligations of the Issuer or Borrowing Corporation

            • OFS-3.5.24

              The directors of the borrowing corporation must:

              (a) At the end of a period not exceeding 3 months (being a day after the date of the issue of the relevant prospectus); and
              (b) At the end of each succeeding period thereafter, being a period of 3 months or such shorter time as the trustee may, in any special circumstances allow,

              prepare a report that relates to that period and complies with the requirements of Paragraph OFS-3.5.25, and within one month after the end of each such period submit a report relating to that period to the trustee with a copy being submitted to the CBB.

              January 2014

            • OFS-3.5.25

              The report referred to in Paragraph OFS-3.5.24, must be signed by not less than two of the directors on behalf of all of them and must set out in detail any matters adversely affecting the collateral or security, or the interests of the holders of the debt securities and, without affecting the generality of Paragraph OFS-3.5.24, state:

              (a) Whether or not the limitations on the amount that the corporation may borrow have been exceeded;
              (b) Whether or not the borrowing corporation and each of its guarantor corporations have observed and performed all the covenants and provisions binding upon them respectively by or pursuant to the debt securities or any trust deed;
              (c) Whether or not any event has happened which has caused or could cause the debt securities or any provision of the relevant trust deed to become enforceable and, if so, particulars of that event;
              (d) Whether or not any circumstances affecting the borrowing corporation, originator, group companies or its guarantor corporation(s) or any of them have occurred which materially affect any collateral or security or charge included in or created by the debt securities or any trust deed and, if so, particulars of those circumstances;
              (e) Whether or not there has been any major change in the nature of the business of the borrowing corporation or any of its group companies, originator or any of its guarantor corporation(s) since the debt securities were first issued which has not previously been reported upon as required by Section OFS-3.5 and, if so, particulars of that change; and
              (f) Where the borrowing corporation has deposited money with or lent money to or assumed any liability of a corporation which is related to the borrowing corporation, particulars of:
              (i) The total amounts so deposited or lent and the extent of any liability so assumed during the period covered by the report; and
              (ii) The total amounts owing to the borrowing corporation in respect of money so deposited or lent and the extent of any liability so assumed as at the end of the period covered by the report, distinguishing between deposits, loans and assumptions of liabilities which are secured and those which are unsecured, but not including any deposit with or loan to or any liability assumed on behalf of a corporation if that corporation has guaranteed the repayment of the debt securities of the borrowing corporation, and has secured the guarantee by a charge over its assets in favour of the trustee for the holders of the debt securities of the borrowing corporation.
              January 2014

            • OFS-3.5.26

              The trustee must demand that the borrowing corporation and each of its guarantor corporation(s) which has guaranteed the repayment of the monies raised by the issue of debt securities to:

              (a) Furnish in writing to the trustee, within 30 days after the creation of a charge, with the particulars of any charge created by the corporation or the guarantor corporation, as the case requires; and
              (b) When the amount to be advanced on the collateral or the security of the charge is indeterminate, furnish the trustee in writing within 10 days after the advance, particulars of the amount or amounts actually advanced.
              Amended: April 2014
              January 2014

            • OFS-3.5.27

              Where any such advance referred to in Subparagraph OFS-3.5.26(b) is merged in a current account with bankers or trade creditors, it shall be sufficient for particulars of the net amount outstanding in respect of any such advance to be furnished every 3 months.

              January 2014

            • OFS-3.5.28

              The trustees must submit to the CBB a report addressing the requirements stipulated under Paragraph OFS-3.5.17 on a regular basis but not later than each occurrence of the payment of periodic interest or income or when the trustee deems necessary to keep the CBB informed about the compliance with those requirements.

              January 2014

            • OFS-3.5.29

              The directors of every borrowing corporation and of every guarantor corporation must cause to be made out and submitted to the CBB and trustee:

              (a) A profit and loss account for the first 3 months of every financial year of the corporation and a balance sheet as at the end of that period, not less than 3 months after the expiration of the period of 6 months; and
              (b) A profit and loss account for every financial year of the corporation and a balance sheet as at the end of that period, not later than 3 months after the end of that financial year.
              January 2014

            • OFS-3.5.30

              Where:

              (a) The directors of a borrowing corporation do not submit to the trustee the report as required by Paragraph OFS-3.5.25; or
              (b) The directors of a borrowing corporation or the directors of a guarantor corporation do not submit with the trustee the balance sheets and profit and loss accounts as required by Paragraph OFS-3.5.29, within the time prescribed;

              the trustee must immediately notify the CBB of this fact.

              January 2014

          • Obligations of Guarantor

            • OFS-3.5.31

              For the purpose of the preparation of a report that, by this Module, is required to be signed by or on behalf of the directors, or persons approved by the CBB of a borrowing corporation or any of them, that borrowing corporation may, by notice in writing, require any of its guarantor corporations to furnish it with any information relating to that guarantor corporation which is, by this Module, required to be contained in that report.

              January 2014

            • OFS-3.5.32

              The guarantor corporation must furnish the borrowing corporation with that information required under Paragraph OFS-3.5.31 before the specified date, being a date not earlier than one month after the notice is given.

              January 2014

        • OFS-3.6 OFS-3.6 Role and Responsibilities of the Underwriter

          • Eligibility

            • OFS-3.6.1

              Any person acting as an underwriter to any offering, must be licensed or otherwise authorised by the CBB to undertake such activity.

              January 2014

            • OFS-3.6.2

              For the purpose of this Module, the definition, role and requirements related to the underwriter also apply to co-underwriters.

              January 2014

            • OFS-3.6.3

              The CBB may investigate the financial suitability of a proposed underwriter and may reject the appointment of the underwriter and/or the application for offering if it is not satisfied as to the underwriter's ability to meet its commitment under the proposed underwriting agreement and its potential impact in its capital adequacy.

              January 2014

          • Firm Commitment Underwriting

            • OFS-3.6.4

              Where an underwriter has been appointed and the securities are not fully subscribed during the offering period, the underwriter must purchase the balance of the securities through a firm commitment underwriting arrangement.

              January 2014

            • OFS-3.6.5

              The firm commitment underwriting arrangement must be detailed in an underwriting agreement, which must be submitted to the CBB as part of the offering of securities application.

              January 2014

            • OFS-3.6.6

              For the purpose of this Module, the total of all the underwriting undertakings of the underwriter, the company that controls it, its subsidiary, a subsidiary of the company that controls it and a company affiliated with it, are calculated as one underwriting undertaking.

              January 2014

            • OFS-3.6.7

              The underwriter may appoint or form an underwriting group for any underwritten issue.

              January 2014

            • OFS-3.6.8

              The underwriter must comply with the CBB Law, rules and regulations, including Volume 6 of the CBB Rulebook, and the issuer's Memorandum and Articles of Association, particularly in respect of the eligibility of the expected subscribers to acquire the issuer's securities and related disclosure requirements.

              Amended: October 2017
              January 2014

            • OFS-3.6.9

              After the approval of the offering documents (including the underwriting agreement) neither the issuer nor any advisor or person acting on its behalf, nor the underwriter or any person acting on its behalf, has the right to change any provision or commitments stipulated in the underwriting agreement.

              January 2014

            • OFS-3.6.10

              All commitments, terms and conditions stipulated in the underwriting agreement must be enforced and implemented without any change or alterations, including the relevant timeframes.

              January 2014

            • OFS-3.6.11

              The CBB may consider amendments to an underwriting agreement where the stability of the financial sector and/or capital market will be adversely affected by the agreement's current provisions. In this regard, the CBB must be provided with a supporting application signed by both the issuer and the underwriter, before considering such amendment.

              January 2014

          • Firm Commitment Underwriting

            • OFS-3.6.12

              A firm commitment underwriting arrangement is required for all public offerings. However, the CBB may accept other underwriting arrangements other than firm commitment underwriting, in the following cases:

              (a) Offering of securities below the average market price during the last six months; or
              (b) Offering of securities at the flat par value.
              January 2014

            • OFS-3.6.13

              A firm commitment underwriting arrangement may also be done through a bought-out deal wherein the underwritten issue is bought entirely by the underwriter to resell to investors.

              January 2014

            • OFS-3.6.14

              In case of issues which are exempted from firm commitment underwriting arrangements (non-public offers), the CBB may accept partial underwriting commitment arrangements, or best-efforts underwriting.

              January 2014

          • Disclosure

            • OFS-3.6.15

              The name of the underwriter and the terms of the underwriting agreement must be prominently disclosed in the offering document and in the application for approval.

              January 2014

            • OFS-3.6.16

              A summary of the underwriting agreement or arrangements must be provided in the prospectus or offering document, including but not limited to the cost of underwriting and other related fees and charges.

              January 2014

            • OFS-3.6.17

              The underwriter is required to provide sufficient and adequate information to the CBB and disclose the same in the prospectus or offering documents as to the method, bases, mechanism, assumptions, and all other related information used to reach the offering price.

              January 2014

            • OFS-3.6.18

              In cases where the offering price is determined by the underwriter jointly with any other advisor or third party, the name and role of such advisor or person must be provided to the CBB and disclosed in the prospectus or offering document.

              January 2014

            • OFS-3.6.19

              The underwriting agreement must be provided as a document available for inspection to the subscriber.

              January 2014

            • OFS-3.6.20

              For purposes of Paragraph OFS-3.6.17 and item 25.1(b) under Section 17 of Appendix OFS-1, relating to the pricing of securities and bases or methods for determining the issue or offer price and for prospectus disclosure purposes, the bases used for determining the pricing of securities must be elaborated on and general statements must be avoided.

              Added: October 2017

            • OFS-3.6.21

              For purposes of Paragraph OFS-3.6.20, factors that are commonly cited in pricing determination which should be elaborated may include, but are not limited to, prevailing market performance and condition (e.g. price earnings ratio, dividend yield, etc.), financial and operating performance (e.g. earnings per share, etc.), consolidated net tangible assets per share and/or net assets per share (or liabilities as to the case may be), earnings potential, assessment of management, market valuation of companies in related businesses, intellectual property and technology, etc. Where appropriate, cross-references should be made to the relevant and specific sections of the prospectus.

              Added: October 2017

        • OFS-3.7 OFS-3.7 Role and Responsibilities of the Paying Agent

          • OFS-3.7.1

            The paying agent must be licensed by the CBB to undertake this activity.

            January 2014

          • OFS-3.7.2

            For an issue of debt securities, the issuer must appoint and maintain a paying agent, or where appropriate, a central depository in Bahrain until all outstanding obligations relating to those securities have been met, unless the issuer itself performs these functions.

            January 2014

          • OFS-3.7.3

            The paying agent must provide facilities for obtaining new debt securities, in accordance with the terms and conditions of the debt securities, to replace those debt securities which have been damaged, lost, stolen, or destroyed, and for all other purposes provided for in the terms and conditions of the debt securities, trust deed and/or offering documents.

            January 2014

          • OFS-3.7.4

            The paying agent must undertake responsibility for timely disbursement of funds made available by the issuer or the trustee, as the case may be, to investors in accordance with the terms of the security and the timelines stipulated by the CBB.

            January 2014

          • OFS-3.7.5

            The paying agent must notify the CBB immediately when the issuer, originator and/or guarantor delays in meeting any required payments, whether in whole or in part.

            January 2014

          • OFS-3.7.6

            The paying agent or any other party must not issue a new certificate mentioned under Rule OFS-3.7.3, without mandating the certificate holder to publish in a local newspaper and the market that such certificate has been damaged, lost, stolen, or destroyed. A new certificate may only be issued 15 calendar days from the date of the above mentioned publication date.

            January 2014

        • OFS-3.8 OFS-3.8 Role and Responsibilities of the Shari'a Advisor

          • OFS-3.8.1

            The Shari'a advisor must review the key aspects of the issue of Islamic securities, including documentation, structuring, investment, as well as any operational matters in relation to the Islamic securities and ensure compliance with applicable Shari'a principles.

            January 2014

          • OFS-3.8.2

            The Shari'a advisor must produce and sign a Shari'a pronouncement report or declaration that the issue is in compliance with the principles of Shari'a and include the report in the offering documentation which is submitted to the CBB.

            January 2014

          • OFS-3.8.3

            The Shari'a advisor must be of good reputation and character and must possess the necessary qualifications and expertise in relevant Islamic jurisprudence. He must possess a minimum of three years experience in Islamic finance.

            January 2014

          • OFS-3.8.4

            The Shari'a advisor must be independent of the issuer. The issuer must not restrict the activities of the Shari'a advisor in any way. In a case where restrictions are imposed, these must be disclosed by the Shari'a advisor to the CBB.

            January 2014

        • OFS-3.9 OFS-3.9 Role and Responsibilities of the Legal Advisor

          • OFS-3.9.1

            A legal advisor must be appointed for every offering of securities and its name must be included in the offering document and in any advertisement or announcement.

            January 2014

          • OFS-3.9.2

            The lead manager may appoint a legal advisor to assist in carrying out legal due diligence, the results of which must be included in the declaration by the lead manager (See Appendix OFS-8).

            January 2014

        • OFS-3.10 OFS-3.10 Role and Responsibilities of the Receiving Bank

          • OFS-3.10.1

            A receiving bank must be licensed or otherwise authorised by the CBB.

            January 2014

          • OFS-3.10.2

            For any offering made in or from Bahrain (overseas issuers), co-receiving banks may be exempted from the requirements under Rule OFS-3.10.1.

            January 2014

          • OFS-3.10.3

            The issuer, lead manager, and the receiving bank must designate a separate bank account for each issue of securities. The name(s) of the designated bank(s) must be provided in detail in the offering document.

            January 2014

          • OFS-3.10.4

            The receiving bank must notify the CBB immediately upon its appointment and must receive the CBB's approval before entering into an agreement or contract with the issuer or lead manager.

            January 2014

          • OFS-3.10.5

            The receiving bank must not activate the designated bank account or receive any payment from the subscribers other than during the date, time and working hours stipulated in the prospectus or offering document. Where there is a change, amendment or alteration to the date, time or working hours, a copy of the CBB's prior approval issued separately to this extent must be received in advance by the receiving bank before implementing such change or alteration.

            January 2014

          • OFS-3.10.6

            The receiving bank must not activate the subscription bank account, or accept any subscription form or payment, or continue to accept receiving such forms and payment without ensuring that for each application and payment a final printed copy of the offering document was made available to the subscriber.

            January 2014

          • OFS-3.10.7

            The receiving bank is responsible for the accuracy and completeness of all information provided in the subscription form in accordance with the Know Your Client requirements under Module AML or other relevant standard and has the authority to reject any form which is not complete or which contains inaccurate information. The receiving bank in cooperation and coordination with the issuer or lead manager is responsible for the avoidance of any duplicate applications for the same beneficiary (subscriber).

            January 2014

          • OFS-3.10.8

            The receiving bank must adhere to the laws, rules and regulations related to anti-money laundering and financial crime.

            January 2014

          • OFS-3.10.9

            The receiving bank must not transfer the issue's total proceeds in whole or part to the Board of Directors of the issuer, without receiving the CBB's approval on the allotment and the receiving bank is required to notify and provide the CBB with a bank certificate or transfer notice upon the transfer of such proceeds.

            January 2014

          • OFS-3.10.10

            The receiving bank must not charge the subscriber for any additional costs, fees, or charges other than those costs, fees, or charges stipulated in the offering document. Such costs, fees, or charges must be provided and displayed for the subscribers in a clear and readable place in the offering document.

            January 2014

          • OFS-3.10.11

            The receiving bank must be responsible for meeting the refunding and dispatching deadline with respect to the subscription money and shall ensure that all required arrangements are in place before entering into an agreement or contract with the issuer or lead manager.

            January 2014

          • OFS-3.10.12

            Where the refunding and dispatching deadline could not be met due to negligence or without prior approval of the CBB, the receiving bank, jointly with the issuer and lead manager, is liable to pay to the subscriber interest or penalty on the subscription money equal to BIBOR for any day or part thereof after the deadline.

            January 2014

          • OFS-3.10.13

            Receiving banks should lay down technical infrastructure and other arrangements for promoting the electronic subscription and receipt of moneys (e-subscription) in Bahrain.

            January 2014

        • OFS-3.11 OFS-3.11 Role and Responsibilities of the Securities Ownership Transfer Agent

          • OFS-3.11.1

            If the issued securities are not dematerialised, all issuers of securities must appoint a securities ownership transfer agent to perform the required function of the issuer in respect of the creation, maintenance and update of the securities register in terms of this Module.

            January 2014

          • OFS-3.11.2

            The securities ownership transfer agent must comply with the CBB Law, rules and regulations including those relating to Anti-Money Laundering and Financial Crime and must be subject to an audit according to control and inspection procedures stipulated by the CBB. In addition, the securities ownership transfer agent must provide the issuer with a declaration that the shareholder list is up to date and is accurate.

          • OFS-3.11.3

            All securities ownership transfer agents must provide the CBB on request as well as on a quarterly basis, a summary of the list of securities holders they maintain in the form required by the CBB.

          • OFS-3.11.4

            Securities ownership transfer agents shall be responsible for any loss or damage to the securities holder due to any inaccurate information or entries made in the securities holders register.

        • OFS-3.12 OFS-3.12 Role and Responsibilities of Other Experts or Advisors

          • OFS-3.12.1

            Where an offer of securities is made in or accompanied by a prospectus or offering document which includes a statement purporting to be made by, or based on a statement made by an expert, the prospectus or offering document must not be issued unless:

            (a) The expert has given and has not before the registration of the prospectus or offering document, as the case may be, withdrawn his written consent to the issue thereof with the statement included in the form and context in which it is included; and
            (b) There appears in the prospectus or offering document, as the case may be, a statement that the expert has given and has not withdrawn his consent.

          • OFS-3.12.2

            Every person making the offer must cause a true copy of every written consent referred to under Paragraph OFS-3.12.1 to be deposited within a maximum 7 calendar days after the registration of the offering document at the registered office of the issuer in Bahrain or, if the issuer has no registered office in Bahrain, at the address in Bahrain specified in the offering document for that purpose.

          • OFS-3.12.3

            The CBB may require a declaration from any appointed expert as per their role and responsibility in the preparation of any offering document as per Article 85 of the CBB Law.

      • OFS-4 OFS-4 Submission of Offering Application with CBB

        • OFS-4.1 OFS-4.1 Application Requirements

          • OFS-4.1.1

            An application for the offering of securities must be made in accordance with Paragraph OFS-4.1.2, accompanied by the required information, documentation and the fee to the CBB for approval at least 30 days prior to commencement of the intended offering period.

            Amended: April 2014
            January 2014

          • OFS-4.1.2

            The application must be submitted under cover of a letter signed by two authorised signatories of the applicant, together with all supporting documentation as outlined in Section OFS-4.2. The authorised signatories are persons authorised as such by the Board of Directors of the issuer.

            January 2014

          • OFS-4.1.3

            The CBB requires the submitted application and supporting documents to be comprehensive, accurate and complete in all respects. If the CBB has any further concerns, or is dissatisfied with the application it will not be able to grant approval on a timely basis, and the abovementioned timeframe of the CBB approval will start only upon receipt of all information and documentation related to the offer. The CBB will not grant its approval unless and until all such information and documentation required is submitted to the CBB.

            January 2014

        • OFS-4.2 OFS-4.2 Information and Documentation Requirements

          • OFS-4.2.1

            Any application under Section OFS-4.1 must include the following minimum information:

            (a) A copy of the issuer's Board of Directors proposal in respect of the issue to its General Assembly;
            (b) A copy of the General Assembly resolution through which the issuing and offering of securities is approved;
            (c) A copy of the duly signed Board of Directors' responsibility statement, signed by all directors in the standard statement stipulated by this Module (Appendix OFS-9);
            (d) A copy of the duly signed declaration by the lead manager, based on a due diligence exercise of all relevant conditions, facts and arrangements, as appropriate (Appendix OFS-8);
            (e) A copy of the duly signed declaration by the legal advisor for the offer, based on a due diligence exercise of all relevant legal conditions, facts and arrangements, as appropriate (Appendix OFS-10);
            (f) A final ratified Memorandum and Articles of Association, or relevant constitutional documents for existing issuers, or a draft copy thereof for issuers under formation;
            (g) A draft of the offering document prepared in line with the CBB requirements as stipulated under this Module;
            (h) A copy of all arrangements, contracts and/or letters signed with the issuer and or lead manager with all appointed advisors;
            (i) Duly completed term sheet on the offering, as stipulated by the CBB from time to time in this Module;
            (j) The expected offering timetable;
            (k) A bona fide copy of either the issuer's external auditor unqualified report on the annual audited financial statements, or interim period reviewed financial statements prepared by the issuer's external auditor;
            (l) A copy of the audited financial statements, including the balance sheet, income statement, cash flow statement and change in shareholders' fund, for the period required under this Module for each type of offer, and the interim period reviewed financial statements for the period required under this Module;
            (m) A copy of the duly signed report prepared by an independent accountant on any estimates, projections of the financial statements, or future operating results of the issuer, if applicable;
            (n) A copy of at least two independent valuer's reports if the proposed offering of securities is guaranteed, is made up of physical assets or property or backed by any assets, property, or any form of collateral;
            (o) A copy of all documents available for inspection by the potential subscribers and/or allottees;
            (p) Information on the legal structure of the company and company registration; and
            (q) Any other information as required by the CBB.
            January 2014

          • Lead Manager Declaration

            • OFS-4.2.2

              The declaration by the lead manager (Appendix OFS-8) required under Paragraph OFS-4.2.1 must consider and contain the following:

              (a) A confirmation that all compliance requirements, including those specified in the CBB Rulebook Volume 6 are met;
              (b) A due diligence of the commercial and business prospects based on the analysis of past and current circumstances, both in relation to the issuer and in relation to the external market or industry in which it operates;
              (c) An analysis of the macroeconomic factors affecting the issuer or the underlying securities being offered;
              (d) Due consideration for the reasonableness of the issuer's business strategy and related business plan and budgets where appropriate;
              (e) In the case of asset-backed securities, warrants and Islamic securities, the quality of the underlying assets and anticipated future cash flows and relevant risk factors; and
              (f) The price stabilisation method, limits and determination of issue price where the issue is not underwritten.
              January 2014

          • Issue of No Objection by the CBB

            • OFS-4.2.3

              The CBB will notify an applicant of its decision in writing within 15 business days of the receipt of the offering of securities application, complete in all respects and complying with the provisions of this Module. If permission is granted, it may be conditional or unconditional.

              January 2014

            • OFS-4.2.4

              The CBB may refuse an application on any ground, including but not limited to the following conditions:

              (a) The requirements of the CBB Law and Rulebook Volume 6 are not met comprehensively;
              (b) The issuer, the lead manager or other appointed advisors do not meet the requirements of this Module;
              (c) False or misleading information has been provided to the CBB or to another regulator of the issuer or in the offering documents;
              (d) Information otherwise specified by the CBB has not been provided;
              (e) If the offer is associated with a listing on a licensed exchange, the CBB may consider that admission to listing of the securities may be detrimental to the fair, orderly and efficient operation of the Bahraini securities market or to the reputation of CBB;
              (f) A security is already admitted to listing on another market and the issuer is in breach of listing rules or other relevant regulations; or
              (g) The CBB believes it is necessary to refuse permission in order to safeguard the interests of potential investors.
              January 2014

            • OFS-4.2.5

              A notification under Paragraph OFS-4.2.4 will set out:

              (a) Grounds for proposed refusal, and
              (b) The rights of the applicant to appeal the CBB's decision.
              January 2014

            • OFS-4.2.6

              The applicant is allowed to make representation to the CBB within 30 calendar days of the receipt of a notification under Paragraph OFS-4.2.5. The applicant can undertake this through the lead manager to clarify any grounds set out in the notification. The CBB will consider any such representations before issuing a final decision.

              January 2014

            • OFS-4.2.7

              The CBB will make a decision which is final within 30 calendar days of receiving the representation under Paragraph OFS-4.2.6.

              January 2014

        • OFS-4.3 OFS-4.3 Additional Requirements and Exceptions

          • OFS-4.3.1

            In addition to the requirements under Section OFS-4.2, the following specific requirements or exemptions are applicable.

            January 2014

          • Public Offering

            • OFS-4.3.2

              For public offerings, the following additional requirements and documentation are required:

              (a) A draft of the summary prospectus to be published in two daily local newspapers, one in Arabic and the other in English, at least 5 days before the start of the offering period;
              (b) If the offer is subject to the listing requirements, the issuer or lead manager must provide information on the listing arrangements and information on the designated listing agent if different from the lead manager;
              (c) If, in addition to listing on a licensed exchange, the offer will be listed on an exchange outside the Kingdom of Bahrain, a copy of the approval of the relevant regulator within that jurisdiction;
              (d) If the offer will be made in countries other than the Kingdom of Bahrain, a copy of such other country's regulatory approval for such offer;
              (e) If the securities under the proposed offer are already listed on an exchange, details of the current listing requirements and performance of the securities;
              (f) If the securities under the proposed offer have been placed through private placement prior to the date of submission of application, full details about such placement;
              (g) Draft or proof print of any application form to subscribe or purchase the securities;
              (h) A copy of the draft or any temporary document of title proposed to be issued; and
              (i) For initial public offerings, initial offer for sale of securities and foreign listings, the issuer is required to provide the CBB with a draft of agreements or contracts related to the depositing of securities and registration arrangements.
              Amended: April 2014
              January 2014

          • Rights Offering

            • OFS-4.3.3

              An application to the CBB for a rights issue by a listed issuer need not contain the following:

              (a) A copy of the Memorandum and Articles of Association, if such document has already been submitted to the CBB, as amended; nor
              (b) A separate copy of the previous annual audited financial statements and/or interim period reviewed financial statements, but these must be included in the rights issue offering document.
              January 2014

          • Private Placement

            • OFS-4.3.4

              An application for private placement of any securities must include the following additional information and documents:

              (a) A confirmation from the issuer and/or lead manager that the offer will not be offered to the public and only offered in line with requirements of Section OFS-2.4;
              (b) A copy of the subscription form which must include the accredited investor status confirmation; and
              (c) A list of the expected accredited investors, if available at the time of submission.
              January 2014

          • Employee Stock Option Plan

            • OFS-4.3.5

              An application for employees stock option plan proposed by a listed issuer is subject to requirements under Subparagraphs OFS-4.2.1(a) and (b).

              January 2014

          • Capitalisation Issue

            • OFS-4.3.6

              If the capitalisation issue is made in the form of a rights issue, then the same requirements stipulated under Section OFS-4.2 as well as Paragraphs OFS-4.3.2 and OFS-4.3.3 will apply.

              January 2014

            • OFS-4.3.7

              If the capitalisation issue is made in the form of a stock dividend for free it is only subject to the requirements under Subparagraphs OFS-4.2.1(a) and (b).

              January 2014

          • Consideration Issue

            • OFS-4.3.8

              An application for a consideration issue by a listed issuer, or listing applicant through which an issue of securities as a consideration other than cash in a transaction, or in connection with a take-over or merger or the division of an issuer is subject to the Take-over, Mergers Acquisitions and Share Repurchases (TMA) Module.

              January 2014

          • Swapping, Exchange and Substitution of Securities

            • OFS-4.3.9

              An application for the swapping, exchange or substitution of listed securities must be made as an application for listing, rather than as an offering of securities.

              January 2014

          • Applications of Listings for Publicly Traded Securities

            • OFS-4.3.10

              An application for the listing of publicly traded securities must be dealt with either as an initial public offering, or an initial offer for sale of securities, as mentioned above.

              January 2014

          • Issuing of Securities under Privatisation Programmes

            • OFS-4.3.11

              For any state owned entity, or government owned company planning to issue shares to the public, it must either be made as a public offering, or initial offer for sale of securities, as the case may be, and is subject to the abovementioned requirements provided for public offering as per Paragraph OFS-4.3.2 unless otherwise exempted by the CBB under Section OFS-1.13.

              January 2014

          • Debt Securities

            • OFS-4.3.12

              The following additional information and documents must be provided with an application for the offering of debt securities:

              (a) A copy of the trust deed or other document securing the debt securities;
              (b) A copy of any collateralising instruments or details of underlying assets;
              (c) A copy of any intended guarantees provided to holders of debt securities; and
              (d) A copy of the underlying asset valuation report produced by at least two independent valuers.
              January 2014

          • Warrants and Other Certificates

            • OFS-4.3.13

              Where appropriate, a copy of the custodial or trusteeship agreement for the underlying securities must be provided with the application for the offering of warrants and other certificates.

              January 2014

          • Islamic Securities

            • OFS-4.3.14

              The following additional information and documents must be provided with the application for the offering of Shari'a compliant securities:

              (a) A copy of Shari'a Pronouncement report that the transaction is in compliance with the principles of Shari'a;
              (b) A copy of the trust deed or other document securing the Shari'a compliant securities together with any trustees agreement;
              (c) A copy of any collateralising instruments and details of underlying assets;
              (d) A copy of the underlying asset valuation report produced by at least two independent valuers; and
              (e) Any other documents made available for inspection.
              January 2014

          • Assets-Backed and Mortgage-Backed Securities

            • OFS-4.3.15

              The following additional information and documents must be provided with an application for the offering of assets-backed and mortgage-backed securities:

              (a) A copy of the trust deed or other document securing the assets-backed and mortgage-backed securities; and
              (b) A copy of the underlying asset valuation report produced by at least two independent valuers.
              January 2014

          • Offers by Overseas Issuers

            • OFS-4.3.16

              The following additional information, documents (to be provided with the application) are required for an offering of securities by overseas issuers:

              (a) A copy of any necessary approval from the home regulator;
              (b) A copy of the home market's relevant laws, rules and regulations that show that no restrictions are imposed on the transferability of the securities;
              (c) Detailed information on listing requirements and securities performance on the home or other market(s);
              (d) Confirmation by the overseas issuer that it will adhere to the general requirements as well as with the additional requirements and declarations, either in accordance with the type of offer or type of securities, as stipulated in this Module;
              (e) An appointment of a listing agent where the securities are to be listed on a licensed exchange; and
              (f) The issuer to bear the costs of any investigation or inspection by the CBB.
              January 2014

            • OFS-4.3.17

              The CBB may grant exemptions to any overseas issuer's application, depending upon the type of offer and type of securities on a case-by-case basis.

              January 2014

          • Other Offering Approved by the CBB

            • OFS-4.3.18

              The CBB may impose additional requirements in respect of the offer of securities by way of a guaranteed issue.

              January 2014

            • OFS-4.3.19

              The CBB (in conjunction with the licensed exchange where relevant) may exempt start-up or small and medium size companies from parts of this Module, as it deems appropriate.

              January 2014

        • OFS-4.4 OFS-4.4 Preliminary/Red Herring Prospectus to be Made Public

          • OFS-4.4.1

            The draft offering document or red herring prospectus filed with the CBB must be made public for a period of 15 days from the date of filing the offering document with the CBB.

            Amended: April 2014
            January 2014

          • OFS-4.4.2

            The lead manager must, while filing the draft offering document with the CBB:

            (a) File the draft offering document with the stock exchanges where the securities are proposed to be listed; and
            (b) Make copies of the draft offering document available to the public, host the draft and final offering documents on the websites of the issuer, lead manager and underwriters associated with the issue as the case may be, and also ensure that the contents of documents hosted on the websites are the same as that of their printed versions.
            January 2014

          • OFS-4.4.3

            Public investors may provide the CBB with their comments and complaints, and the lead manager must make available to the CBB all comments and complaints received by it.

            January 2014

          • No Complaints Certificate

            • OFS-4.4.4

              After a period of 21 days from the date the draft offering document is made public, the lead manager must file a statement with the CBB giving a list of complaints received, a statement whether it proposes to amend the draft offering document or not, and highlight those amendments.

              Amended: April 2014
              January 2014

      • OFS-5 OFS-5 Offering Documents

        • OFS-5.1 OFS-5.1 Prospectus Requirements

          • OFS-5.1.1

            A prospectus must be drawn up for every offer of securities. The prospectus must contain the minimum information requirements set out in Sections OFS-5.2 to OFS-5.10 and in this Module and must be submitted to the CBB for approval.

            January 2014

          • OFS-5.1.2

            Issuers of securities, depending on the industry that the issuer is involved in (e.g. engaged in specialised industries (i.e. banking, insurance, mining, telecommunications and oil and gas companies as well as any other specialised industries), are required to provide additional information as directed by the CBB.

            Amended: October 2017
            January 2014

          • Material Information

            • OFS-5.1.3

              The issuer must disclose any information that would be material to an investor's investment decision.

              January 2014

            • OFS-5.1.4

              In addition to the information prescribed under this Module, a prospectus must include all such information within the knowledge of those preparing the prospectus so that investors may make an informed assessment.

              January 2014

            • OFS-5.1.5

              It is the responsibility of each issuer and lead manager to determine the material information:

              (a) According to the particular nature of its own affairs and the nature and type of securities for which an offering or listing is sought;
              (b) Necessary to enable a person who invests or seeks to invest in securities to make an informed assessment of the activities, assets, liabilities, financial position, management and prospects of the issuer, and of its profits and losses and the rights attached to such securities; and
              (c) The implicit risk associated with such investment.
              January 2014

            • OFS-5.1.6

              For the purpose of Paragraph OFS-5.1.5, material information consists of both material facts and material changes related to the business and affairs of the issuer, taking into account qualitative and quantitative facts, developments and events capable of influencing the offering or market price or value of issued securities.

              January 2014

          • Omission of Information

            • OFS-5.1.7

              If a disclosure requirement is not applicable to an issuer's sphere of activity or legal form, no information need be provided in response to that requirement, although equivalent information must be given.

              January 2014

            • OFS-5.1.8

              For purposes of Paragraph OFS-5.1.7, the CBB may authorise the omission of information from the prospectus if it considers that:

              (a) Such information is of minor importance only and as such, will not influence the assessment of the activities, assets, liabilities, financial position, profits and losses, or implicit risks and prospects of the issuer;
              (b) Such information required in the prospectus represents a competitive advantage for the issuer, and its disclosure could affect its financial situation or operating results; or
              (c) Disclosure of such information would be contrary to the public interest, or be seriously detrimental to the issuer, provided that such an omission would not be likely to mislead the public with regard to facts and circumstances, knowledge of which is essential for the assessment of the securities in question.
              January 2014

            • OFS-5.1.9

              To be granted the right to omit information as noted in Paragraph OFS-5.1.8, the issuer must obtain the CBB's authorisation by explaining in writing to the CBB the reasons for not making information public.

              January 2014

          • Replacement and Supplementary Document

            • OFS-5.1.10

              A supplementary or replacement prospectus is a prospectus that has the same wording as the original prospectus, except for the provision of new or additional information, or the correction of deficiencies in the original prospectus.

              January 2014

            • OFS-5.1.11

              A supplementary or replacement prospectus must be submitted to the CBB as soon as practicable if, during the validity period of a prospectus, the issuer becomes aware that the prospectus is deficient or outdated in that:

              (a) The prospectus contains a material statement that is false or misleading;
              (b) There is a material omission from the prospectus;
              (c) There has been a significant change affecting information in the prospectus; or
              (d) A significant new matter has arisen, and the prospectus content requirements would have required information on that matter to have been included in the prospectus, if the matter had arisen when the prospectus was being prepared.
              January 2014

            • OFS-5.1.12

              The supplementary and/or replacement prospectus must be approved by the CBB and published in summary form in accordance with Article 81(b) of the CBB Law.

              January 2014

            • OFS-5.1.13

              The supplementary or replacement prospectus may be used to correct, update or add to the original prospectus at any time before the date of the CBB approval and/or start of the offering period.

              January 2014

            • OFS-5.1.14

              All supplementary or replacement prospectuses must contain the following:

              (a) A statement that it is a supplementary or replacement prospectus;
              (b) An identification of the prospectus it supplements or replaces;
              (c) An identification of any previous supplementary or replacement prospectus in relation to the same offer;
              (d) A statement that it is to be read together with the prospectus, as well as any previous supplementary or replacement prospectus; and
              (e) A responsibility statement from the board of directors of the issuer.
              January 2014

            • OFS-5.1.15

              All supplementary and/or replacement prospectuses must clearly indicate the changes and revisions made.

              January 2014

            • OFS-5.1.16

              For purposes of Paragraph OFS-5.1.15, such changes must be made clear in all copies provided to the CBB and the investing public.

              January 2014

          • CBB Approval

            • OFS-5.1.17

              Application for approval for any changes to the prospectus must be accompanied by the following:

              (a) The supplementary and/or replacement prospectus containing at least the minimum information set out in this Module;
              (b) A declaration by the issuer and the lead manager that the changes to the supplementary and/or replacement prospectus are free from false or misleading statements, or information biased towards any of its present shareholders and future investors;
              (c) A declaration by the issuer and the lead manager that the changes to the supplementary and/or replacement prospectus do not omit any material information; and
              (d) A declaration by the issuer and the lead manager that the changes to the supplementary and/or replacement prospectus are to the best of their knowledge in accordance with all the applicable laws, rules and regulations.
              January 2014

          • Announcement

            • OFS-5.1.18

              For public offers, the issuer must inform the public of the changes and make the supplementary and/or replacement prospectus available to it. In accordance with Article 84 of CBB Law of 2006, issuers of securities must publish a summary of the supplementary and/or replacement prospectus in two daily local newspapers, one in Arabic and the other in English and disclose the material amendments therein.

              January 2014

          • Equivalent Information

            • OFS-5.1.19

              For Bahraini issuers who made an offer or listed their securities outside Bahrain, and for overseas issuers who made an offer or listed their securities in Bahrain, all information of importance to shareholders made public about the issuer in other markets must be made public in Bahrain, whether or not disclosure of such information would otherwise be required by the CBB.

              January 2014

          • Presentation

            • OFS-5.1.20

              Although the information sections and order of presentation are not mandatory, the CBB recommends that the format of the standards outlined in this Module be followed to enhance comparability. If the same information required by this Module is also required by the body of accounting principles used in preparing financial statements, the information need not be repeated, as long as there is a cross-reference to the location of the information. It is also recommended that a table of contents be provided at the beginning of the document.

              January 2014

          • Validity of the Offering Document

            • OFS-5.1.21

              The prospectus must remain valid for a maximum period of six months from the date of notification of the CBB approval. After this period no person shall offer securities based on such prospectus, unless approved by the CBB.

              January 2014

          • Preliminary or Red Herring Prospectuses

            • OFS-5.1.22

              When a draft prospectus is submitted to the CBB or to any appointed advisor, the final offering price is not required to be disclosed. The offering price must however be included in the final printed proof prospectus and before the start of the offering period is set.

              January 2014

          • Responsibility for Offering Document

            • OFS-5.1.23

              In accordance with Article 85 of the CBB Law, the person responsible for the preparation of the prospectus must ensure that it is free of incorrect or misleading information. Furthermore, Article 166 (b) makes it an offence to intentionally include false or misleading information and that the responsible persons may, subject to any greater penalty under the penal code, be punished by imprisonment or a fine not exceeding BD3,000.

              January 2014

            • OFS-5.1.24

              The following persons are responsible for the reliability and accuracy of the prospectus or offering documents:

              (a) The issuer of the securities covered by the prospectus;
              (b) The board of directors of the issuer of the securities;
              (c) The lead manager of the securities offered; and
              (d) Any other appointed advisor or person whose name appears in the prospectus or offering document each in their respective capacity according to the declaration made by him.
              January 2014

          • Consent and Declaration

            • OFS-5.1.25

              The issuer and/or lead manager must obtain confirmation and/or consent letters from the appointed advisors or experts acknowledging their responsibilities and obligations under Article 85 of the CBB Law of 2006.

              January 2014

          • Registration and Publication

            • OFS-5.1.26

              If the prospectus is approved by the CBB subject to changes, the final corrected copy must be registered with the CBB within 24 hours prior to the date of commencement of the offering period.

              January 2014

          • Documents Available for Inspection

            • OFS-5.1.27

              The prospectus must be attached with all agreements, contracts, arrangements and documents required under this Module, or as referred to in the prospectus as being available for inspection.

              January 2014

          • Preparation of the Prospectus

            • OFS-5.1.28

              The issuer, lead manager, or any other appointed advisors or persons involved in the preparation of any offering documents must ensure that the content and the statements included in such documents will meet, but not be limited to the following requirements:

              (a) The prospectus and all statements included therein must be factual, clear and succinct;
              (b) Must be balanced and fair;
              (c) Must contain sufficient quantitative information to allow investors to make informed decisions regarding their participation in the offer;
              (d) Must avoid any omission of important and favourable facts, or minimising such facts by "burying" them at the end of the related statement or at the end of a section of information, or provided as an appendix to the prospectus, instead of including such facts in the main body of the prospectus;
              (e) Must not include a presentation of estimates, projections, forecasts, or forward looking statements or overviews, without sufficient qualification, or without a sufficient factual basis;
              (f) Must not include any promotional jargon calculated to excite rather than to inform;
              (g) Must avoid using negative statements phrased so as to create a positive implication like "The company cannot now predict whether the development will have a materially favourable effect on its earnings," (creating the implication that the effect will be favourable even if not materially favourable), or "The company expects that the development will not have a materially favourable effect on earnings in the immediate future," (creating the implication that the development will eventually have a materially favourable effect);
              (h) Must avoid over-technical language, and where possible, use language comprehensible to laymen; and
              (i) Must avoid presentation of providing information in the form of diagrams and charts, without first presenting the same information in the form and style of written statements.
              January 2014

            • OFS-5.1.29

              For the purpose of Paragraph OFS-5.1.28, unwarranted promotional information means disclosing information beyond that necessary to inform investors and used only as an attempt to influence potential subscribers.

              January 2014

            • OFS-5.1.30

              In order to meet the requirements under Paragraphs OFS-5.1.31 and OFS-5.1.32, the contents of the prospectus and statement therein should either be prepared, reviewed, or edited by the legal advisor or other related appointed advisors, depending on the importance and complexity of the concerned contents or statement.

              January 2014

          • Use of Prospectus

            • OFS-5.1.31

              No person shall use any offering document unless:

              (a) It has been submitted to and approved by the CBB and published; and
              (b) Where required, a summary of the offering document has been published in one Arabic and one English language daily newspaper published in Bahrain.
              January 2014

        • OFS-5.2 OFS-5.2 Contents of the Prospectus

          • Specific Content for Equity Securities

            • OFS-5.2.1

              An offering document in respect of equity securities must contain the minimum content requirements of this Section and be prepared in accordance with Appendix 1.

              January 2014

          • Front Cover Page

            • OFS-5.2.2

              Front cover page: The cover page of the offering document must contain the following particulars:

              (a) Full name and registration number of the issuer;
              (b) Type and amount of securities;
              (c) Date of the offering document;
              (d) Date of expiry of validity of the prospectus;
              (e) Logo and full name of each advisor;
              (f) Logo and full name of the lead manager and co-managers;
              (g) Logo and name of the underwriter, if any;
              (h) Face or par value of the securities;
              (i) Offer price;
              (j) Premium (if applicable);
              (k) Placement fee or charge (if applicable);
              (l) Minimum subscription limit (if applicable);
              (m) Maximum subscription limit (if applicable);
              (n) Eligible subscribers (general classification by nationality or region); and
              (o) Standard disclaimer statement, written in capital letters and box framed, as follows:
              THE CENTRAL BANK OF BAHRAIN AND [NAME OF THE LICENSED EXCHANGE] ASSUME NO RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THE STATEMENTS AND INFORMATION CONTAINED IN THIS DOCUMENT AND EXPRESSLY DISCLAIM ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT.
              January 2014

            • OFS-5.2.3

              If the offer is planned to be issued in any other jurisdiction or is planned to be listed on any other regulated exchange(s) then the name of the securities regulator of such jurisdiction and/or the name of the other regulated exchange may be added to the above disclaimer statement, if such regulator or regulated exchange has the same or equivalent requirement.

              January 2014

            • OFS-5.2.4

              The CBB will not permit any change, alteration, modification, reduction and/or addition in the above disclaimer statement, other than the cases mentioned under Paragraph OFS-5.2.3.

              January 2014

          • Inside Cover Page

            • OFS-5.2.5

              The prospectus must include on the inside cover page the following standard prominent and legible declaration and responsibility statement within a box frame:

              THE DIRECTORS OF THE COMPANY, WHOSE NAMES APPEAR HEREIN, ACCEPT RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THIS DOCUMENT. TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THE DIRECTORS, WHO HAVE TAKEN ALL REASONABLE CARE TO ENSURE THAT SUCH IS THE CASE, THE INFORMATION CONTAINED IN THIS DOCUMENT IS IN ACCORDANCE WITH THE FACTS AND CONTAINS NO OMISSIONS LIKELY TO AFFECT THE IMPORTANCE AND COMPLETENESS OF THE DOCUMENT.
              January 2014

            • OFS-5.2.6

              The abovementioned standard responsibility statement must be duly signed by the issuer's board of directors.

              January 2014

            • OFS-5.2.7

              The standard responsibility statement must be produced in the prospectus and the same must be submitted to the CBB.

              January 2014

            • OFS-5.2.8

              The CBB will not normally accept any board of directors responsibility statement, unless it is duly signed by all directors. In cases where one or more of the directors cannot provide their signature on such statement, the issuer is required to provide to the CBB and disclose in the prospectus itself the actual reasons and justification.

              January 2014

            • OFS-5.2.9

              In addition to the information required to be included on the front and inside cover pages of the prospectus, the prospectus must contain, at the minimum, the following information:

              (a) Important Notice - which may include:
              (i) Important notice to subscribers;
              (ii) Due diligence statements;
              (iii) Forward looking statements; and
              (iv) General risk statement;
              (b) Applicants Identification and Anti-Money Laundering requirement;
              (c) Table of contents;
              (d) Glossary of the defined terms and abbreviations;
              (e) Offering timetable;
              (f) Resolutions and approvals;
              (g) Summary of the offering;
              (h) Offering statistics and expected timetable;
              (i) Information on the issuer, which may include:
              (i) Background and history;
              (ii) Principal activities;
              (iii) Business strategy;
              (iv) Organisational structure;
              (v) Corporate governance practices;
              (vi) Board of Directors
              (vii) Board of Directors practices;
              (viii) Senior management team;
              (ix) Employees;
              (x) Compensation;
              (xi) External auditor;
              (xii) Legal advisor and other advisors;
              (xiii) Major shareholders and transactions;
              (xiv) Related party transactions;
              (xv) Interests of experts and counsel;
              (xvi) Material contracts;
              (xvii) Business overview;
              (xviii) Key financial information;
              (xix) Operating and financial review and prospects;
              (xx) Property, plant and equipment;
              (xxi) Research and development, patents and licenses;
              (xxii) Significant assets and liabilities;
              (xxiii) Liquidity and capital resources;
              (xxiv) Consolidated financial statements;
              (xxv) Material changes to financial statements;
              (xxvi) Restatement of financial statements;
              (xxvii) Ratios and analysis;
              (xxviii) Projections of financial statements; and
              (xix) Subsidiary's separate financial statements;
              (j) Industry analysis which may include:
              (i) Economic overview;
              (ii) Sectoral performance and overview; and
              (iii) Sub-sectoral performance and overview;
              (k) Investment considerations, which may include:
              (i) Equity securities' rights and obligations;
              (ii) Ranking of shares;
              (iii) Dividend policy;
              (iv) Listing of shares;
              (v) Description of the offering;
              (vi) Underwriting arrangements;
              (vii) Commitments to the offering arrangements;
              (viii) Contracts or arrangements with the appointed advisor;
              (ix) Expenses of the issue;
              (x) Use of proceeds; and
              (xi) Dilution;
              (l) Risk factors, which may include:
              (i) General risks;
              (ii) Business risks;
              (iii) Legal and regulatory risks; and
              (iv) Other specific risks;
              (m) Disputes, litigations and court orders;
              (n) Subscription terms and conditions, which may include:
              (i) Application procedures;
              (ii) Subscription restrictions;
              (iii) Subscription period;
              (iv) Receiving banks;
              (v) Mode of payment;
              (vi) Fund transfer fees and charges;
              (vii) Rejected applications;
              (viii) Allotment;
              (ix) Over-subscription allotment;
              (x) Dispatching and refunds; and
              (xi) Announcements and acknowledgements;
              (o) Additional information, which may include:
              (i) Share capital structure; and
              (ii) Memorandum and Articles of Association;
              (p) Applicable law;
              (q) Documents available for inspection; and
              (r) Appendices.
              January 2014

        • OFS-5.3 OFS-5.3 Additional and Specific Content for Debt Securities

          • OFS-5.3.1

            An offering document in respect of debt securities must contain the minimum content requirements of this section and be prepared in accordance with Appendix 3.

            January 2014

          • Front Cover Page

            • OFS-5.3.2

              Front cover page:

              The cover page of the debt securities offering document must contain the following particulars:

              (a) Full name and registration number of the issuer;
              (b) Full name and registration number of the originator;
              (c) Logo and full name of the guarantor, if any;
              (d) Type and amount of debt securities;
              (e) Date of the offering document;
              (f) Date of the expiry of the validity of the prospectus;
              (g) Logo and full name of each advisor;
              (h) Logo and full name of the lead manager, primary dealer, issuing house;
              (i) Logo and full name of co-managers;
              (j) Logo and name of the underwriter, if any;
              (k) Logo and full name of the trustee;
              (l) Rating of debt securities, if any;
              (m) Face or par value;
              (n) Offer price;
              (o) Premium (if applicable);
              (p) Placement fee or charge (if applicable);
              (q) Minimum subscription limit (if applicable);
              (r) Maximum subscription limit (if applicable);
              (s) Eligible subscribers (general classification by nationality or region); and
              (t) Standard disclaimer statement, written in capital letters and box framed, as follows:

              THE CENTRAL BANK OF BAHRAIN AND [NAME OF LICENSED EXCHANGE] ASSUME NO RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THE STATEMENTS AND INFORMATION CONTAINED IN THIS DOCUMENT AND EXPRESSLY DISCLAIM ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT.
              January 2014

          • Inside Cover Page

            • OFS-5.3.3

              The offering document must include on the inside cover page the standard prominent and legible declaration and responsibility statement within a box frame:

              THE DIRECTORS OF THE COMPANY, WHOSE NAMES APPEAR HEREIN, ACCEPT RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THIS DOCUMENT. TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THE DIRECTORS, WHO HAVE TAKEN ALL REASONABLE CARE TO ENSURE THAT SUCH IS THE CASE, THE INFORMATION CONTAINED IN THIS DOCUMENT IS IN ACCORDANCE WITH THE FACTS AND CONTAINS NO OMISSIONS LIKELY TO AFFECT THE IMPORTANCE AND COMPLETENESS OF THE DOCUMENT.
              January 2014

            • OFS-5.3.4

              The abovementioned standard responsibility statement must be duly signed by the issuer's/originator's board of directors.

              January 2014

            • OFS-5.3.5

              The standard responsibility statement must be produced in the offering document and the same must be submitted to the CBB.

              January 2014

            • OFS-5.3.6

              The CBB will not normally accept any board of directors' responsibility statement unless it is duly signed by all directors. In cases where one or more of the directors cannot provide their signature on such statement, the issuer is required to provide to the CBB and disclose in the offering document itself, the actual reasons and justifications.

              January 2014

            • OFS-5.3.7

              In addition to the information required to be included on the front and inside cover pages of the prospectus or offering documents, the offering documents of debt securities must contain, at the minimum, the following sections of information:

              (a) Important Notice - which may include:
              (i) Important notice to subscribers;
              (ii) Due diligence statements;
              (iii) Forward looking statements; and
              (iv) General risk statement;
              (b) Applicants Identification and Anti-Money Laundering requirement;
              (c) Table of contents;
              (d) Glossary of the defined terms and abbreviations;
              (e) Offering timetable;
              (f) Resolutions and approvals;
              (g) Summary of the offering;
              (h) Offering statistics and expected timetable;
              (i) Structural overview of the securitisation transaction:
              (i) Summary of transaction;
              (ii) Transaction overview diagram;
              (iii) Cash flow description;
              (iv) Cash inflow;
              (v) Monthly instalment;
              (vi) Cash outflow;
              (vii) Issuance cost;
              (viii) Annual expenses;
              (ix) Delinquencies and defaults;
              (x) Investment parameters for the investment of temporary liquidity surpluses;
              (xi) Source of payments;
              (xii) Order of priority of payments;
              (xiii) Fees payable;
              (xiv) Sale of the underlying assets;
              (xv) Nature of the sale;
              (xvi) Terms of the sale;
              (xvii) Underlying assets;
              (xviii) Purchase consideration;
              (xix) Cancellation;
              (xx) Debt securities issuance;
              (xxi) Partial early redemption;
              (xxii) Mandatory redemption in full;
              (xxiii) Formula for optional/mandatory redemption in full;
              (xxiv) Debt securities redemption table;
              (xxv) Servicing function;
              (xxvi) Servicing by the originator;
              (xxvii) Servicing of the debt securities by the issuer; and
              (xxviii) Utilisation of proceeds;
              (j) The following minimum information must be provided for:
              (i) Details of the issuer (for all issues);
              (ii) Details of the originator (if different from the issuer);
              (iii) Details of the guarantor (for all guaranteed issues):
              •   Background and history;
              •   Principal activities;
              •   Business strategy;
              •   Organisational structure;
              •   Corporate governance practices;
              •   Board of Directors
              •   Board of Directors practices;
              •   Senior management team;
              •   Employees;
              •   Compensation;
              •   External auditor;
              •   Legal advisor and other advisors;
              •   Major shareholders and transactions;
              •   Related party transactions;
              •   Interests of experts and counsel;
              •   Material contracts;
              •   Business overview;
              •   Key financial information;
              •   Operating and financial review and prospects;
              •   Significant assets and liabilities;
              •   Property, plant and equipment;
              •   Research and development, patents and licenses;
              •   Liquidity and capital resources;
              •   Consolidated financial statements;
              •   Material changes to financial statements;
              •   Restatement of financial statements;
              •   Ratios and analysis;
              •   Projections of financial statements; and
              •   Subsidiary's separate financial statements;
              (k) Industry analysis which may include:
              (i) Economic overview;
              (ii) Sectoral performance and overview; and
              (iii) Sub-sectoral performance and overview;
              (l) Investment considerations, which may include:
              (i) Limited recourse;
              (ii) The debt securities;
              (iii) No prior market for the debt securities;
              (iv) Market value of the debt securities;
              (v) Fluctuation of interest rates;
              (vi) Inflation risks;
              (vii) Partial early redemption of the debt securities;
              (viii) Legal investment considerations;
              (ix) Investment in the debt securities may not be suitable for all investors;
              (x) The underlying assets;
              (xi) Timeliness of collections;
              (xii) Conditions of the sector/sub-sector/market;
              (xiii) Obligor's obligations;
              (xiv) No perfection of the issuer's interests in the underlying assets;
              (xv) No assurance on conformity with eligibility criteria;
              (xvi) Reliance on the servicer;
              (xvii) Rescheduling of payment obligations;
              (xviii) Replacement of servicer and transaction administrator;
              (xix) The issuer;
              (xx) Bankruptcy risk;
              (xxi) Dependence on key personnel;
              (xxii) No recourse to shareholder;
              (xxiii) No operational history;
              (xxiv) Limitation on enforcement of security and foreclosure;
              (xxv) Tax risks;
              (xxvi) Absence of independent valuation of the underlying assets;
              (xxvii) General risk associated with emerging markets; and
              (xxviii) Political, economic and social consideration relating to home market;
              (m) Risk factors, which may include:
              (i) Credit risk;
              (ii) Legal risk;
              (iii) Interest rate risk;
              (iv) Operational risk;
              (v) Currency risk;
              (vi) Liquidity risk;
              (vii) Maturity risk;
              (viii) Other risks;
              (n) Disputes, litigations and court orders;
              (o) Subscription terms and conditions, which may include:
              (i) Type and nominal amount of debt securities;
              (ii) Ranking of debt securities;
              (iii) Issue price;
              (iv) Interest/coupon/profit rate/ income;
              (v) Minimum subscription required of the debt securities in order to satisfy the objectives of the issue, offer or invitation (to include procedures for refund if this requirement is not met);
              (vi) Tenor (nature) of the debt securities;
              (vii) Form and denomination of debt securities on issuance;
              (viii) Underwriting arrangements;
              (ix) Events of default;
              (x) Details of any security for the debt securities;
              (xi) Rating assigned to debt securities (together with a description of the rating);
              (xii) Type of listing that is sought;
              (xiii) Summary of rights conferred upon the holders of debt securities;
              (xiv) Governing law — any special legislation under which the debt securities have been created and the choice of jurisdiction in the event of litigation;
              (xv) Repayment terms and frequency of interest/profit/income payments;
              (xvi) Shari'a principle and concept adopted (for Islamic debt securities);
              (xvii) Types of underlying assets of the transaction;
              (xviii) Details of any sinking fund requirement; and
              (xix) Regulatory approvals required including dates of approval;
              (p) Announcements and acknowledgements;
              (q) Additional information, which may include:
              (i) Share capital structure;
              (ii) Memorandum and Articles of Association;
              (r) Applicable law;
              (s) Documents available for inspection; and
              (t) Appendices.
              January 2014

        • OFS-5.4 OFS-5.4 Additional and Specific Content for Convertible Securities

          • OFS-5.4.1

            The issuer of convertible securities must disclose in the offering document the extent to which the shareholder may subscribe for the convertible securities.

            January 2014

          • OFS-5.4.2

            For the purpose of this Section, securities may be converted into other types of securities, or these can be converted into another class of the same securities. The conversion of securities may also take place within the same securities issuer's company and/or group, or in relation to another company or group.

            January 2014

          • OFS-5.4.3

            In the case of convertible securities which are exchangeable for securities of another company, an issuer must submit to the CBB the annual report and accounts of that other company unless that company is listed or adequate information is otherwise available.

            January 2014

          • OFS-5.4.4

            If the debt securities are convertible into equity or are issued with warrants, whether or not detachable, the following detailed information (where applicable) must be made available:

            (a) Mode of conversion;
            (b) Number of warrants;
            (c) Conversion period;
            (d) Price of warrants;
            (e) Conversion ratio;
            (f) Rights attached to warrants;
            (g) Conversion price;
            (h) Warrant exercise period; and
            (i) Warrant exercise price.
            January 2014

        • OFS-5.5 OFS-5.5 Additional and Specific Content for Asset-backed Securities

          • OFS-5.5.1

            With regard to asset-backed securities, the following information must be disclosed in addition to the minimum content requirements set out in section OFS-5.3 and Appendix 4:

            (a) Under a separate section of the offering document, a description of the assets used to back the asset-backed securities, giving at least the following (where relevant):
            (i) The legal jurisdiction(s) to which the assets are subject;
            (ii) The types of assets;
            (iii) The expiry or maturity date(s) of the assets;
            (iv) The amount of the assets;
            (v) Where the assets are secured on or backed by real property or other physical assets, or rely on such security, the ratio of the amount of the assets to the value or amount of such security at origination, if available;
            (vi) For loans and credit agreements, the principal lending criteria and extent to which loans may be included which do not meet these criteria;
            (vii) An indication of significant representations and warranties given to the issuer relating to the assets;
            (viii) The method of origination or creation of the assets;
            (ix) Any rights to substitute the assets and a description of the assets which may be substituted for the original assets;
            (x) For loans and credit agreements, any rights or obligations to make further advances;
            (xi) A description of the principal insurance policies, including the names, and where appropriate, the addresses and a brief description of the providers. Any concentration with one insurer should be disclosed if it is material to the transaction;
            (xii) Where the assets consist of obligations of an obligor's accounts for 10% or more of the assets, so far as the issuer is aware and/or is able to ascertain from information published by the obligor(s), the information required in respect of each obligor will be the same as that which would be required if it were itself the issuer of the securities to be listed;
            (xiii) Where it is already listed on a regulated stock exchange or the obligations are guaranteed by an entity listed on a regulated stock exchange, in this case only the name, address, country of incorporation, nature of business and name of the exchange on which its securities are listed need be disclosed in respect of the obligor and the guarantor (if applicable);
            (xiv) Any relationship between the issuer, guarantor and obligor, if any, must be included. The principal terms and conditions of the obligations must be stated, except where the obligations are debt securities listed on a regulated stock exchange;
            (xv) Where the assets consist of obligations of more than 10 obligors, or where an obligor accounts for less than 10% of the assets the general characteristics and descriptions of the obligors must be given; and
            (xvi) Where the assets consist of equity securities, the information under section OFS-5.2 should be included in respect of those securities.
            (b) Investment considerations:
            (i) An explanation of any matter of significance to investors relating to the issue. Any such explanation should be given appropriate prominence depending on the nature of the matter concerned and its significance to investors; and
            (ii) Where the issuer proposes to or may issue further debt securities backed by the same assets, a prominent statement to that effect and unless those further debt securities are fungible with or are subordinated to any class of existing listed debt security, a statement that the prior approval of the holders of that class will be sought.
            (c) A description of the method and a statement of the date of the sale, transfer or assignment of the assets or of any rights in the assets to the issuer;
            (d) A description of the structure of the transaction;
            (e) An explanation of the flow of funds stating:
            (i) How the cash flow from the assets is expected to meet the issuer's obligations to holders of the securities;
            (ii) Information on any credit enhancements;
            (iii) An indication of where material potential liquidity shortfalls are expected to occur;
            (iv) The availability of any liquidity supports as an indication of provisions to cover interest shortfall risks;
            (v) An indication of any investment parameters for the investment of temporary liquidity surpluses;
            (vi) How payments are collected in respect of the assets;
            (vii) The order of priority of payments made by the issuer to the holders of the class of debt securities in question;
            (viii) Any fees payable by the issuer;
            (ix) Details of any other arrangements upon which payments of interest and principal to investors are dependent;
            (x) Information regarding the accumulation of surpluses in the issuer; and
            (xi) Details of any subordinated debt finance.
            (f) The name, address, description and significant business activities of the originator, or creator of the assets backing the issue;
            (g) The name, address, description and significant business activities of the administrator or equivalent, (if any), together with a summary of the administrator's responsibilities and a summary of the provisions relating to the termination of the appointment of the administrator and the appointment of an alternative administrator;
            (h) The names and addresses and brief description of:
            (i) Any swap counterparties and any providers of other material forms of enhancement; and
            (ii) The banks with which the main accounts relating to the transaction are held.
            (i) If applicable, a statement that the issuer does not intend to publish annual reports and accounts and that the trust deed constituting the issue requires the issuer to provide written confirmation to the trustee (or equivalent), on an annual basis, that no event or default or other matter which is required to be brought to the trustee's attention has occurred.
            January 2014

          • OFS-5.5.2

            If applicable, all information under Paragraph OFS-5.5.1 must be disclosed in the offering document in respect of any underlying assets used to secure the issued securities, whether classified as asset-back securities or otherwise.

            January 2014

        • OFS-5.6 OFS-5.6 Additional and Specific Content for Special Purpose Vehicles (SPV)

          • OFS-5.6.1

            In respect of a Special Purpose Vehicle (SPV) created for the purpose of issuing debt securities, the appointed advisor, or issuer, or other sponsor for the issue, must disclose to the CBB all relevant facts and information relating to the legal, commercial and economic structure associated with the issue.

            January 2014

          • OFS-5.6.2

            The Memorandum and Articles of Association, or copy of such document of the SPV as an issuer, must be submitted to the CBB along with the offering application and must be made available for inspection to the subscriber.

            January 2014

          • OFS-5.6.3

            SPVs are responsible to meet all ongoing obligations related to the securities issued.

            January 2014

          • Additional Issue

            • OFS-5.6.4

              In the case of an issuer wishing to issue more debt securities which are:

              (a) Backed by the same assets;
              (b) Not freely exchangeable with existing classes of debt securities; or
              (c) Not subordinated to existing classes of debt securities;

              then the issuer must inform the debt security holders of the existing classes.

              January 2014

        • OFS-5.7 OFS-5.7 Additional and Specific Content for Islamic Securities

          • OFS-5.7.1

            The application for approval from the CBB for making an offering of Islamic securities must include the following attachments:

            (a) A declaration by the Shari'a advisor that the transaction is in compliance with the principles of Shari'a;
            (b) A declaration by the issuer that the vehicle issuing the securities will remain subject to proper Shari'a review, until the maturity date of the security; and
            (c) A copy of the trust deed or other document securing or constituting the Islamic securities.
            January 2014

          • Appointed Shari'a Advisors

            • OFS-5.7.2

              The offering document must contain the identity of the appointed advisors, including the Shari'a advisor.

              January 2014

          • Shari'a Advisor's Report

            • OFS-5.7.3

              The offering document must contain a Shari'a advisor's report that, at the minimum, covers the compliance of the security and its structure with the Shari'a principles.

              January 2014

        • OFS-5.8 OFS-5.8 Additional and Specific Contents of the Offering Document for Warrants

          • OFS-5.8.1

            The offering document must contain all the information that reasonable investors would require in order to make an informed decision of:

            (a) The capacity of the issuer and guarantor (if any) to fulfil the obligations specified under the terms of the issue; and
            (b) The risks, rights and obligations associated with the warrants.
            January 2014

          • OFS-5.8.2

            The offering documents for warrants must contain, at the minimum, the following information:

            (a) Terms and structure of the issue;
            (b) Financial information on the issuer and its guarantor (if any);
            (c) Financial information on the entity whose securities are the subject of the issue of warrants;
            (d) Whether the issuer has authority to issue further warrants; and
            (e) If the warrants are not fully covered by the underlying securities held by a trustee, a declaration that the issuer has appropriate risk management capabilities to manage the warrants issue.
            January 2014

          • OFS-5.8.3

            In the case of warrants relating to equity or debt securities, the offering document must contain at the minimum:

            (a) The names of the regulated exchange (if any) on which equity securities are already listed or traded;
            (b) The name, registered office and, if different, head office of the issuer;
            (c) The country of incorporation of the issuer; and
            (d) The title of the securities including nominal value.
            January 2014

          • OFS-5.8.4

            Additional information to be contained in the offering document, where warrants offer rights to acquire securities:

            (a) In the case of warrants offering rights to acquire equity securities:
            (i) A statement regarding tax on the income from the shares withheld at source in the country of origin;
            (ii) A statement whether the issuer assumes responsibility for the withholding of tax at source;
            (ii) Arrangements for transfer of the shares and (where permitted) any restrictions on their free transferability (for example, provisions requiring transfers to be approved); and
            (iv) A statement whether the shares are in registered or bearer form.
            (b) In the case of warrants offering rights to acquire debt securities:
            (i) A statement regarding tax on the income from the debt securities withheld at source in the country of origin;
            (ii) A statement whether the issuer assumes responsibility for the withholding of tax at source;
            (iii) A statement whether the debt securities are in registered or bearer form; and
            (iv) Details of any arrangements for transfer of the securities and any restrictions on the free transferability of the debt securities.
            January 2014

          • OFS-5.8.5

            Where any security represents 10 percent or more of the total value of the securities underlying the warrant, a table showing the price range of each such security for each of the last three years must be included.

            January 2014

          • OFS-5.8.6

            In the case of warrants relating to indices, the offering document must contain at the minimum:

            (a) A description of the index, including the name of the publisher of the index, its date of establishment, how it is compiled and a summary of its components;
            (b) An explanation of the computation of the index;
            (c) The frequency with which the index is updated and published; and
            (d) The provisions in the event of modification and discontinuance of the index.
            January 2014

          • OFS-5.8.7

            In the case of warrants relating to other types of securities, assets or variables, the offering document must contain at the minimum:

            (a) A description of the securities, assets or variables;
            (b) A description of the market on which they are traded, including its date of establishment, an indication of daily trading volumes, how price information is published, information as to the standing of the market in its country and the name of the market's regulatory authority; and
            (c) The frequency with which prices of the relevant securities, assets or variables are published.
            January 2014

        • OFS-5.9 OFS-5.9 Additional and Specific Content for Private Placement Memorandum (PPM)

          • OFS-5.9.1

            An offering document for a private placement of securities must meet the requirements of the particular security, as laid out in OFS-5.1, OFS-5.2 and OFS-5.3, and Appendix 2 in regard to preparation. In addition to the above, it must meet the specific requirements for private placement as outlined in this Section.

            January 2014

          • Confirmation as Accredited Investor

            • OFS-5.9.2

              The issuer must obtain a signed confirmation from its investors as to their status as accredited investors using the "Accredited Investors" Form (Appendix 11).

              January 2014

            • OFS-5.9.3

              The issuer must submit a copy of the status confirmation contained in Rule OFS-5.9.2 on submission of the offering document.

              January 2014

          • Suitability of Investors and Risk Statements

            • OFS-5.9.4

              The offering document must contain the following statement in respect of suitability of investors:

              "This offer is a private placement. It is not subject to all of the regulations of the Central Bank of Bahrain that apply to public offerings of securities. This Memorandum is therefore intended only for "Accredited Investors" as defined in the Glossary to this Memorandum.

              The securities offered by way of Private Placement may only be offered in minimum subscriptions of $100,000 (or equivalent in other currencies).

              The Central Bank of Bahrain assumes no responsibility for the accuracy and completeness of the statements and information contained in this document and expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents of this document.

              The Board of Directors and the management of the issuer accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Board of Directors and the management, who have taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the reliability of such information".

              January 2014

            • OFS-5.9.5

              The offering document must contain statements covering the risk of investment to the effect that:

              (a) All prospective investors should make their own investigation into the offer, and consult their own advisors concerning the risks of the investors and the suitability of the securities for their individual requirements; and
              (b) There may be a lack of liquidity and lack of public market for the securities on offer.
              January 2014

            • OFS-5.9.6

              Issuers must ensure that all relevant financial and risk information is placed in the offering document to allow investors to make an informed decision.

              January 2014

          • Utilisation of Proceeds and Disclosure of Fees

            • OFS-5.9.7

              In line with Subparagraph OFS-1.5.2(i), all funds collected through an offering document must only be utilised as prescribed in the offering document, and such condition must be clearly stated in the prospectus under the related section 'Use of Proceeds'. Any usage of funds that is not as stated in the offering document is prohibited without the consent of the securities holders and the approval of the CBB. All applications to the CBB for approval must include evidence of the consent of the securities holders.

              January 2014

            • OFS-5.9.8

              The PPM must disclose the estimated total amount of the proceeds of the issue, and the proposed timetable for their utilisation. Disclosure must also be made of the total amount of fees payable by the investors, up-front discount or placement commission agreed by the underwriters or other placement or selling agents and the issuer of selling shareholders, as well as the percentage such up-front discounts or placement commissions represent of the total amount of the offering, and the amount of up-front discount or placement commission per security.

              January 2014

            • OFS-5.9.9

              The document must highlight to the investor the ultimate dilution of proceeds through the disclosure of fees, offering expenses or up-front discounts or placement commissions. There must be a statement of the major categories of expenses incurred in connection with the issuance and distribution of securities to be offered, and by whom the expenses are payable, if other than by the issuer. If any of the securities are to be offered for the account of an existing holder of securities in the issuer, the PPM must indicate the portion of expenses incurred by him.

              January 2014

            • OFS-5.9.10

              Any private placement of securities offered in the Kingdom of Bahrain should meet the requirements as set out in OFS-2.4.7 and must set fees within reasonable and justifiable levels that do not materially compromise the interests of the issuer or the investor. The above disclosures of fees and utilisation of proceeds must be made prominently and clearly for the attention of investors.

              January 2014

        • OFS-5.10 OFS-5.10 Additional and Specific Content for Guaranteed Issues

          • Guarantees

            • OFS-5.10.1

              With regards to the guaranteed issues, the following information must be disclosed in addition to the minimum content requirement set out in Section OFS-5.3:

              (a) Nature of guarantee, including description of any arrangement intended to ensure that any obligation material to the issue will be duly serviced, whether in the form of a guarantee, surety, keep well agreement, mono-line insurance policy or other equivalent commitment; and
              (b) Scope of guarantee:
              (i) Details regarding the terms and condition and scope of guarantee; and
              (ii) Details of any guarantors power of veto in relation to changes to security holder's rights.
              January 2014

            • OFS-5.10.2

              Where issuing and offering is sought for debt securities of an issuer guaranteed or secured by another legal entity other than its holding company, the guarantor will be required to comply with the requirements of this Section to the same extent as if such guarantor were the issuer of the relevant debt securities.

              January 2014

            • OFS-5.10.3

              An offering document issued in relation to a guaranteed issue must contain the same information regarding the guarantor as that regarding the issuer, so that, where appropriate the "issuer" should be read as applying equally to the guarantor.

              January 2014

            • OFS-5.10.4

              The relevant guarantee must be issued in conformity with the law of the place where the guarantor is incorporated or otherwise established and in conformity with the guarantor's Memorandum and Articles of Association or equivalent documents, and all authorisations needed for its issue under such law or documents must have been duly given.

              January 2014

      • OFS-6 OFS-6 Registration of Prospectus and Offering Documents

        • OFS-6.1 OFS-6.1 General Requirements

          • OFS-6.1.1

            The issuer, lead manager, or principal advisor must provide 2 copies to the CBB of the draft prospectus, together with a completed prospectus checklist (Appendix OFS-7). The CBB will not commence its review of a draft prospectus unless the prospectus is complete and attached with all required documents and information, as stipulated under Paragraph OFS-6.1.5.

            January 2014

          • OFS-6.1.2

            Once the CBB has completed its review of the draft prospectus and notified the issuer accordingly, the issuer is required to make any changes determined by the CBB and to submit the printed proof of the prospectus to the CBB for registration.

            January 2014

          • Registration

            • OFS-6.1.3

              A copy of the prospectus submitted for registration must be signed by each director of the issuer.

              January 2014

            • OFS-6.1.4

              If the prospectus is signed by an agent or alternate director, the printer's proof prospectus and the printed prospectuses must disclose this to be the case under the place where the respective director is meant to have signed the prospectus.

              January 2014

            • OFS-6.1.5

              The printed proof copy of the prospectus must be accompanied by the following:

              (a) An application for registration of the prospectus;
              (b) Any fees payable to the CBB as per Appendix OFS-6 and Section OFS-8.2;
              (c) A letter of approval from any other relevant regulator or other authority;
              (d) Original copies of all letters of confirmation, declaration or consent;
              (e) A certified copy of all material contracts and documents available for inspection disclosed in the prospectus, and in the case of contracts not reduced into writing, a memorandum which gives full particulars of the contracts;
              (f) A certified copy of underwriting agreements (if applicable);
              (g) Memorandum and Articles of Association of the issuer, originator and/or guarantor and Certificate of Incorporation or Commercial Registration (or equivalent documents);
              (h) Original written authority by directors appointing any agents to sign the prospectus on their behalf;
              (i) Letter of confirmation from the issuer and/or lead manager, that the printed proof copy of the prospectus has incorporated all changes as required by the CBB; and
              (j) Letter of confirmation from the issuer, lead manager, or other appointed advisors that the final printed copy of the prospectus will be the same as the printed proof of the prospectus registered with the CBB.
              January 2014

      • OFS-7 OFS-7 Distribution and Subscription

        • OFS-7.1 OFS-7.1 Prior Request for Announcement and Invitation for Subscription

          • OFS-7.1.1

            No person may make an announcement for invitation for subscription of an offering of securities, unless he makes sure that the following requirements are met:

            (a) The prospectus or offering document has been duly approved and registered with the CBB;
            (b) All designated advisors have been duly appointed and are ready to undertake their roles and responsibilities;
            (c) All requirements and arrangements related to the offer are in place or it has made sure that such requirements and arrangements will be in place in due course before the announcement of the offer, or commencement of the offering period;
            (d) The availability of a sufficient number of final printed copies of the prospectus or offering document being not later than the date of the commencement of the offering period, and free of charge to potential subscribers on request;
            (e) Confirmation to the CBB that no more changes, amendments or alterations in respect of the information contained in the prospectus or offering document, appointment of the advisors or any information related to the issuer itself, or to the issue will take place after the announcement of the offer or thereafter and a supplementary or replacement prospectus will have to be made as per Paragraph OFS-5.1.11;
            (f) No press releases, press articles and/or interviews or any other form of dissemination of information related to the issue will take place before the subscription invitation announcement in the local daily newspaper; and
            (g) Ensure that all permanent and temporary insiders fully adhere to the insiders' trading rules and confirmation to this extent is submitted to the CBB not later than the commencement of the offering period.
            January 2014

          • Timetable and Record Date

            • OFS-7.1.2

              No person may make an announcement or invitation for subscription of securities, without determining the final record date, which must be a future date after the announcement of the offer but before the commencement of the offering period:

              (a) In relation to a public offer, the CBB must be notified at least 10 days before the intended record date;
              (b) The offering document and public announcement must disclose the record date; and
              (c) Once announced, the issuer must not make any subsequent alterations to the record date.
              Amended: April 2014
              January 2014

          • Offer Period

            • OFS-7.1.3

              Unless otherwise determined in law or agreed by the CBB, the offer period for subscription of securities must be open for subscription as follows:

              (a) For equity securities, the offer period cannot be less than 10 calendar days after the day of commencement of the offer and must not exceed a maximum period of 6 months;
              (b) For a secondary listing involving an offer of shares or in the case of a rights issue, 5 days from the issue of an announcement stipulating the issue is fully subscribed;
              (c) For other securities the offer period must not be less than 15 calendar days after the day of commencement of the offer. Additionally, it must not exceed a maximum period of 6 months from the date of opening unless extended by the CBB in writing;
              (d) For any offering of securities, the offering period must not extend beyond the validity of the date of the prospectus or offering document, which is a period of 6 months; and
              (e) Must not allow for the closing of the offering period to be less than 1 month from the publication of annual audited financial statements, or interim unaudited but reviewed financial statements.
              Amended: April 2014
              January 2014

          • Offer Price

            • OFS-7.1.4

              An issuer, when stating an offer price must also make reference to and provide a description in the prospectus or offering document of the bookbuilding, underwriting, price stabilisation or other relevant price factors.

              January 2014

            • OFS-7.1.5

              Where an issuer is making a public offer following a rights share offering or a private offer, it may price the offers differently for the public offer or private placement. In such cases, the differential pricing must also consider the market trends and the justification for the price difference must be outlined in the offering document. The CBB will determine whether the differential pricing is in the best interests of the investors and the market in general.

              January 2014

          • Listings

            • OFS-7.1.6

              Where the securities are to be listed on a licensed exchange, this must be disclosed in the offer and must provide the following information:

              (a) Location and name of the exchange;
              (b) Listing agent, if any;
              (c) Planned listing timeline;
              (d) The percentage of the total issued and outstanding securities to be made available for public subscription and trading on a licensed exchange;
              (e) Any market making or price stabilisation arrangements;
              (f) Any anticipated buy back agreement or related intention of the issuer;
              (g) Any lock up period of major or other class of securities holders;
              (h) The necessary clearing, settlement, central depository and securities transfer ownership arrangements; and
              (i) Any intention or agreement for a secondary (cross) listing.
              January 2014

            • OFS-7.1.7

              Where the offering document states that the offer will be listed on issue, the CBB may prevent allotment from taking place where the issuer has not obtained the authority to list from the licensed exchange at the time of issue, and order that the issuer refund any monies paid by subscribers in respect of such issue.

              January 2014

            • OFS-7.1.8

              The issuer, lead manager and/or any other appointed advisor must ensure that the requisite listing agreement is signed within a maximum of 10 calendar days from the closing date of the offering period, and that the date for commencement of trading on a licensed exchange is within a maximum of 15 calendar days from the closing date of the offering period. Immediately upon the signing of the listing agreement with the licensed exchange, the lead manager must notify the CBB confirming the signing of the listing agreement and inform the CBB of the date for the commencement of trading.

              Added: October 2017

            • OFS-7.1.9

              As the listing authority under Article 86 of the CBB Law, the CBB shall retain the right to determine and decide on the final date of listing and/or date of commencement of trading of securities on a licensed exchange.

              Added: October 2017

        • OFS-7.2 OFS-7.2 Announcement

          • OFS-7.2.1

            No person may make a public offer of securities unless a summary of the offering document has been published in two local daily newspapers, one in Arabic and one in English.

            January 2014

          • OFS-7.2.2

            The summary of the offering document must be published in at least a 52 cm x 31.5 cm format. For those papers whose pages are smaller than the prescribed size noted in this Paragraph, the publication must take place over 2 pages or more to meet the total size specified and must be clear and legible.

            January 2014

          • OFS-7.2.3

            The offering document must be made available to the public at least 5 calendar days prior to the commencement of the offering period and at the same time as publishing the summary of the offering document.

            January 2014

          • OFS-7.2.4

            The offering document available to the public must be identical to the printed proof version approved by the CBB.

            January 2014

          • OFS-7.2.5

            The offering document is available to the public when:

            (a) An announcement is made in accordance with Rule OFS-7.2.1;
            (b) It is publicly available in final printed form free of charge at the registered office of the issuer, lead manager and receiving bank for public offering and, if applicable, at the offices of the principal advisor or other designated advisor placing or selling the securities; and
            (c) If available in electronic form, it is available on the issuer's, lead manager's or other principal advisor's website.
            January 2014

          • OFS-7.2.6

            Announcements for a public offering must:

            (a) Contain a prominent statement to the effect that the advertisement is not an offering document and investors should not subscribe for any securities, except on the basis of information in the offering document;
            (b) Indicate the date of approval by the CBB of the offering document;
            (c) Indicate how the offering document may be obtained, including particulars of the internet website where a soft copy of the document can be found if available;
            (d) Include clear risk warnings, including the potential for loss that is to be prominently presented and not obscured or disguised; and
            (e) Be consistent with the information contained in the offering document.
            January 2014

          • OFS-7.2.7

            An issuer and its affiliated employees and professional advisors are prohibited from stating or disseminating any statements during the offering period that may lead to:

            (a) Encouragement of subscription for the securities;
            (b) Inducement of a particular person to deal in the securities;
            (c) Sale or purchase of the securities; or
            (c) Raising, lowering, maintaining or stabilising the market price of the securities in conjunction with dissemination or statement of misleading information.
            January 2014

          • OFS-7.2.8

            No announcement, advertisement or promotion of an offer of securities that would constitute or induce a person to subscribe for such securities may be made without meeting the requirements of Paragraph OFS-5.1.28.

            January 2014

        • OFS-7.3 OFS-7.3 Stop Order for Offering Document

          • OFS-7.3.1

            The following is a non-exclusive list of examples under which the CBB may issue an order under this Section:

            (a) If there exists any statement or matter which, in the opinion of the CBB, is false or misleading;
            (b) Omission of information that should have been included in the offering documents in accordance with this Module;
            (c) There is a change in circumstances of the issuer or conditions;
            (d) If the offering period is fixed or extended to be close to the date of the next declaration of the issuer's financial statements for a period not less than 30 calendar days;
            (e) Receipt of any serious complaint from the subscribers, particularly relating to the availability of the final printed offering document, or the imposition of additional cost or charges which have not been stipulated in the offering document;
            (f) The raising of new litigation or a court order related to the issuer and/or to the offering itself in or outside Bahrain; or
            (g) The withdrawal of any declaration or consent that has been given by any appointed advisor.
            January 2014

          • OFS-7.3.2

            The CBB may, by an order in writing, prevent any further use of a prospectus or offering document or issue, sale or allotment of securities connected to an offer where the issuer or any person acting on its behalf has committed a violation of the CBB Law, CBB rules or this Module. The CBB may in addition, issue such order where it believes such action is in the best interest of investors or the capital market in general.

            January 2014

        • OFS-7.4 OFS-7.4 Subscription Results and Allotment

          • Announcement of Subscription

            • OFS-7.4.1

              Subscription monies received in respect of a public offer must be held in a separate bank account with an approved receiving bank, until the final allotment of such securities has been approved by the CBB.

              January 2014

            • OFS-7.4.2

              The issuer, lead manager or other principal advisor must publish the results of the subscription of a public offer in at least two local newspapers, one in Arabic and the other in English, stating all facts related to the outcome of the subscription in at least a 26 cm x 31.5 cm format. The announcement must be published within a maximum period of two calendar days from the closing date of the offering period and must include the final allotment basis. The declared allotment basis must not be subject to any change thereafter.

              Amended: October 2017
              January 2014

            • OFS-7.4.3

              The issuer must allot or allocate securities within 6 calendar days of the closing date of the offer in accordance with the allotment basis stipulated in the offering document or otherwise approved by the CBB upon the subscription results and publication referred to in Paragraph OFS-7.4.2.

              Amended: October 2017
              January 2014

          • Under-subscription

            • OFS-7.4.4

              The offering document must provide full information about the possibility of an under-subscription event, particularly regarding the treatment of unsubscribed shares for those issues which are not fully underwritten.

              January 2014

            • OFS-7.4.5

              In the event that the issue is not underwritten no allotment may be made of any securities unless the subscription received is, at least equal to the minimum subscription amount set out in the offering document.

              January 2014

            • OFS-7.4.6

              If a public offering of equity securities has not been fully subscribed and the offer is underwritten, the underwriter must purchase the unsubscribed shares and after obtaining the CBB approval, may then re-offer or resell the unsubscribed shares. For the avoidance of doubt, any unsubscribed shares that might be re-offered or re-sold to a related company of the underwriter such as the company that controls it, its subsidiary, a subsidiary of the company that controls it and a company affiliated with it, shall be subject to the same underwriting commitment of the underwriter.

              Amended: October 2017
              January 2014

            • OFS-7.4.7

              If a rights offering of equity securities which is underwritten has not been fully subscribed during the offering period, the underwriter may either re-offer the unsubscribed shares to the public or purchase the unsubcribed shares.

              January 2014

            • OFS-7.4.8

              If a public offering of debt securities or other which is underwritten has not been fully subscribed for during the offering period, the underwriters must purchase the unsubscribed securities and after obtaining the CBB approval, may then resell these securities.

              January 2014

          • Over-subscription

            • OFS-7.4.9

              If an offer of securities is over-subscribed after the closing of the offering period, the issuer must allot the shares in accordance with the pre-determined basis of allotment which must be described in the offering document or otherwise approved by the CBB.

              January 2014

            • OFS-7.4.10

              Issuers and lead managers must make sure conditions relating to allotment basis and minimum subscription amounts are in compliance with the Memorandum and Articles of Association, or equivalent constitutional documents of the issuer, as well as in accordance with the applicable laws, rules and regulations.

              January 2014

          • General Guidance on the Allotment

            • OFS-7.4.11

              The basis of allotment of any securities offered, must be clearly stated in the offering document.

              January 2014

            • OFS-7.4.12

              While exercising the allotment of securities the issuer, lead manager, or any appointed advisor must ensure that:

              (a) For any new public offering of equity securities, no subscriber is allotted more than 10% of the total shares offered;
              (b) All subscribers are treated equally and in accordance with the allotment basis in all aspects, particularly when the rounding up rule is applied;
              (c) No payment, direct or indirect in the nature of a discount, commission and allowance or otherwise may be made either by the issuer or the promoters in any public offer to the parties who received firm allotment;
              (d) No shareholder of the issuer may receive, directly or indirectly, any consideration in the nature of fees, commission, allowance or other benefit, whether in cash or in kind, in a public offering;
              (e) The total securities allotted must in any case not exceed the total securities offered and approved by the General Assembly and the issuer, lead manager and any other appointed advisor must establish the allotment basis to avoid such possibility;
              (f) Allotment of securities must avoid allocation of any securities fraction, and therefore the issuer must provide provisions related to the possibility of fractions of securities remaining after final allotment; and
              (g) For any rights issue, the pro-rata allotment basis must be applied, or otherwise the General Assembly of securities holders must have approved such other allotment basis.
              January 2014

          • Over-allotments

            • OFS-7.4.13

              The "over-allotment option" may only be exercised if such an option is disclosed and provided for in the offering document.

              January 2014

            • OFS-7.4.14

              While exercising the over-allotment option, the issuer, lead manager or any other appointed advisor must fully adhere to general guidelines under Paragraph OFS-7.4.12.

              January 2014

            • OFS-7.4.15

              The CBB may allow the extension of the allotment period up to 6 calendar days to exercise the over-allotment option upon the request of the issuer, lead manager or any other appointed advisor on application, which contains the reasons and justifications for such extension.

              Amended: October 2017
              January 2014

            • OFS-7.4.16

              In the event of the over-allotment option, the issuer, lead manager or any other appointed advisor is not allowed to exercise any discrimination, whether in cash or in kind among the subscribers or allottees.

              January 2014

            • Trading of Underwritten Securities Subscribed by the Underwriter

              • OFS-7.4.17

                Where the underwriter has subscribed for, or purchased securities under an underwriting or sub-underwriting agreement following the under-subscription of the offering of securities, any intention to sell those securities in the ordinary course of trading on a licensed exchange shall, in the interest of maintaining market integrity, not be sold against any price stabilisation fund or the designated market maker as the buying counterparty.

                Added: October 2017

        • OFS-7.5 OFS-7.5 Refunding and Dispatching

          • OFS-7.5.1

            The issuer, lead manager or any other appointed advisor must refund the excess subscription money and dispatch securities within a maximum of 9 calendar days from the closing date of the offering period.

            Amended: January 2018
            Amended: October 2017
            January 2014

          • OFS-7.5.2

            A record for such refunding and dispatching must be maintained for further reference and CBB inspection requirements.

            January 2014

          • OFS-7.5.3

            If the issuer fails to meet the refunding and dispatching date under Rule OFS-7.5.1, an interest at one month BIBOR is payable to the subscriber with respect to the subscription amounts received for the period from the required refunding and dispatching date to the actual refunding or dispatching date.

            January 2014

          • Dematerialised Securities

            • OFS-7.5.4

              As per Paragraph OFS-1.5.5, securities issued to the public after the effective date of this Module must have an allocated ISIN and be in dematerialised form and the issuer is required to designate the clearing house, or depository facility in which such securities will be deposited.

              January 2014

            • OFS-7.5.5

              For the purposes of Article 178 of the CBB Law and Volume 6, dematerialised securities shall mean securities issued and entered in the registry in an electronic format and dematerialisation means the conversion of a security certificate from a physical form to an electronic form for securities that have already been issued before the effective date of this Module.

              January 2014

            • OFS-7.5.6

              For the purposes of dematerialisation, each subscriber or shareholder will have to open an account with a licensed clearing house or a licensed central depository, acceptable to the CBB, and then request for dematerialisation of his certificates through the depository.

              January 2014

            • OFS-7.5.7

              The dispatching of the dematerialised securities must be done in accordance with the CSD Module and SROs business rules.

              January 2014

            • OFS-7.5.8

              The ownership and entitlement of allotted securities for each subscriber or allottee is established by book entry in the register maintained by the licensed clearing house and or licensed central depository, rather than through the issuing of a physical share certificate.

              January 2014

          • Physical Securities

            • OFS-7.5.9

              Subject to the requirements of the CSD Module, unless the security is required to be in dematerialised form, the subscriber may request a certificate as evidence of his shareholding, which certificate must contain or be in the following form:

              (a) The serial number;
              (b) The par value and class of the security;
              (c) The name of the issuer and the authority under which it was incorporated;
              (d) The address of the registered office of the issuer;
              (e) The name and address of the clearing house, central depository institution, and/or securities ownership transfer agent, if it is different from the registered office of the issuer;
              (f) Where a rubber seal is imprinted, original signatures must support it;
              (g) Where an embossed seal is used, it may, subject to the Articles of Association of the issuer, be supported by facsimile signatures only;
              (h) Where only the seal is used without supporting signatures, the method or system of control by the issuer on the application of the seal must be approved by the auditor of the issuer, and a copy of such approval forwarded to the CBB;
              (i) The certificate security must be designed so that the paper quality and watermark forgery and/or alterations are easily detectable;
              (j) The printing of securities certificates must only be entrusted to recognised securities printers; and
              (k) The size of the certificate is prescribed by the clearing house and/or central depository, which is used by the issuers.
              January 2014

            • OFS-7.5.10

              [This Paragraph was deleted in October 2017]

              Deleted: October 2017
              January 2014

      • OFS-8 OFS-8 Fees and Charges

        • OFS-8.1 OFS-8.1 Introduction

          • OFS-8.1.1

            Offering of securities is subject to fees levied by the CBB, pursuant to Article 180 of the CBB Law and Resolution No.(1) of 2007 with respect to determining fees categories due for licenses and services provided by the CBB. The fees charged vary depending on the nature of the offering and is payable at the time of submission of application.

            January 2014

        • OFS-8.2 OFS-8.2 Fees for Offering of Securities

          • OFS-8.2.1

            Subject to any regulation issued by the CBB in respect of fees and charges, for any offering of securities, certain non-refundable fees are payable to the CBB as set out in Paragraph OFS-8.2.3f.

            January 2014

          • OFS-8.2.2

            An application for approval or reviewing an offering document related to an offering of securities will not be regarded as complete or submitted until the fee has been paid in full.

            January 2014

          • OFS-8.2.3

            The following table outlines the fees payable to the CBB for the various services provided:

            (amount in BD)

            No. Type of Approval % of Issue/Offer Value Min Amount Max Amount
            A Registration of Equity Securities Offering Documents.
            1 Public Offering. 0.005% 1000 5000
            2 Rights Offering for Listed Issuer. 0.00125% 500 1000
            3 Private Placement Memorandum. 0.005% 1000 5000
            4 Warrants on Equity. 0.00125% 500 1000
            B Registration of Preference Shares, Bonds, Debt Securities and Islamic Sukuk Offering Documents.
            1 Applications of securities to be Listed. (Public) 0.005% 1000 5000
            2 Applications of securities not to be Listed.(PPM) 0.006% 2000 6000
            C Registration of Convertible into Equity Securities Offering Documents.
            1 Application of securities to be Listed.(Public) 0.003% 1000 5000
            2 Application of securities not to be Listed.(PPM) 0.006% 2000 6000
            D Registration of Structured Products Offering Documents. 0.006% 2,000 6,000
            E Registration of Options, Commodities, Futures or Derivatives Contracts. Fixed 500 500
            F Registration of Replacement and Supplementary Prospectus. Fixed 100 100
            G Registration of Pricing Statements (Term Sheets) for Programmes. Fixed 100 100
            H Registration of Capital Securities Offering Documents. 0.006% 2,000 6,000
            I Filing of Offering Documents in relation to Exempt Offers. Fixed 2,000 6,000
            J Examining of an application to approve the increase of the Capital of Listed Companies. Fixed 100 100
            Amended: January 2021
            January 2014

    • TMA — Take-overs, Mergers and Acquisitions

      • TMA-A TMA-A Introduction

        • TMA-A.1 TMA-A.1 Purpose

          • Executive Summary

            • TMA-A.1.1

              The Module provides an orderly framework within which takeovers, mergers or acquisitions and share repurchases are to be conducted and sets forth special requirements relating to timing and mode of offer, announcements, documentaton and disclosure of adequate information to enable shareholders to make an informed decision as to the merits of an offer relating to a takeover, merger or acquisition.

              Amended: October 2019

            • TMA-A.1.2

              The general principles contained in the Module represent the overarching principles relevant to takeovers, mergers and share repurchases. In addition to the general principles, each chapter contains a series of rules, some of which are effectively expansions of the general principles and examples of their application and others are rules of procedure designed to govern specific types of takeovers, mergers or share repurchases.

              Amended: October 2019

            • TMA-A.1.3

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-A.1.4

              The CBB may modify or relax the application of a rule if it considers that in the specific circumstances of the case, strict application of a rule would operate in an unnecessarily restrictive or unduly burdensome, or otherwise inappropriate manner.

            • TMA-A.1.5

              The Module also seeks to ensure that the shareholders in the company subject to a takeover are given sufficient information, advice and time to consider and decide on the offer and in some instances an option to relinquish their holdings. The Module seeks to achieve fair treatment by requiring equality of treatment of shareholders of publicly listed companies which are targets in a takeover, merger or acquisition as defined in the Glossary in Part B of the CBB Rulebook Volume 6.

              Amended: October 2019

            • TMA-A.1.6

              Since the primary purpose of Module TMA is to facilitate fair treatment for all shareholders of publicly listed companies affected by TMA, it is not concerned with the financial or commercial advantages or disadvantages of a takeover, merger or acquisition which are matters for the company and its shareholders to decide on.

              Amended: October 2019

          • Legal Basis

            • TMA-A.1.7

              Article 3 of the Central Bank of Bahrain and Financial Institutions Law (the "CBB Law") states that the objectives of the CBB are to, inter alia, develop the financial sector and enhance confidence therein and protect the interests of depositors and customers of financial institutions, and enhance the Kingdom's credibility as an international financial centre.

            • TMA-A.1.8

              Parts 2 and 4 of the CBB Law empower the CBB to lay down rules for licencees, listed companies and others who undertake capital market and/or securities-related activity in the Kingdom;

            • TMA-A.1.9

              Article 38(a) of the CBB Law empowers the Governor of the CBB to issue Directives to ensure the implementation of the CBB Law, any regulations issued in accordance with that Law and the achievement of the objectives of the CBB.

            • TMA-A.1.10

              These rules are issued by way of a legally-binding Directive.

            • TMA-A.1.11

              Article (3) of Decree No. 64 of 2006 with respect to promulgating the Central Bank of Bahrain and Financial Institutions Law (CBB Law) states that the provisions of the Commercial Companies Law (CCL) issued by Decree No. 21 of 2001 shall apply on all matters that are not stipulated in the CBB Law.

            • TMA-A.1.12

              Following is also list of relevant Articles of the CBB Law that apply to persons covered by Module TMA:

              Circular/ other references Provision Subject
              CBB Law 2006 Article 99–100 and Article 105 Restrictions of publishing market information and the use and disclosure of insider information.
              CBB Law 2006 Article 167 Penalty for violating Article 100.
              CBB Law 2006 Article 106 The offence of market manipulation.
              CBB Law 2006 Article 168 Penalty for violating Article 106.
              CBB Law 2006 Article 163 Penalty for concealing documents and information or providing false or misleading information or statements.
              CBB Law 2006 Article 128 Imposing restrictions on licensees and listed companies.
              CBB Law 2006 Article 132 Public censure on breaches committed by licensees and listed companies.
              CBB Law 2006 Article 52 –56 Nature and limits of control, procedures that must be undertaken and the regulations and conditions for granting approval of control
              CBB Law 2006 Article 162 Penalty for violating Article 52–58.

          • Role of the CBB

            • TMA-A.1.13

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-A.1.14

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-A.1.15

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-A.1.16

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

        • TMA-A.2 TMA-A.2 Module History

          • TMA-A.2.1

            This Module was first issued in December 2008. It is numbered as version 01. All subsequent changes to this Module are annotated with a sequential version number: UG-3 provides further details on Rulebook maintenance and version control.

          • TMA-A.2.1A

            A list of recent changes made to this Module is provided below:

            Module Ref. Change Date Description of Changes
            TMA-3.1.4 04/2013 Guidance Paragraph deleted on mandatory offer limit.
            Module TMA 10/2019 Restructured the whole Module TMA (including moving definitions to the glossary and also the appendices under Part B of the CBB Rulebook Volume 6)

          • Superseded Requirements

            • TMA-A.2.2

              This Module supersedes the following provisions contained in circulars or other regulatory instruments:

              Circular/ other references Provision Subject
                   
                   
                   
                   
                   
                   
                   

        • TMA-A.3 TMA-A.3 [This Section was deleted in October 2019].

          • TMA-A.3.1

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.2

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.3

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.4

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.5

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.6

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.7

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-A.3.8

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

      • TMA-B TMA-B Scope of Application

        • TMA-B.1 TMA-B.1 Scope

          • TMA-B.1.1

            Module TMA applies to persons ("relevant persons") involved in, engaging in or intending to engage in an offer for, takeover or merger or acquisition of a controlling interest in a company whose primary listing of its ordinary equity securities is on a licensed exchange in the Kingdom of Bahrain.

            Amended: October 2019

          • TMA-B.1.2

            The Module applies to take-overs, mergers, acquisitions and share repurchases affecting:

            (a) Bahrain domiciled publicly listed company whose ordinary voting equity securities are listed on a licensed exchange in Bahrain are the potential targets for takeovers, mergers and acquisitions; or
            (b) Overseas company whose primary listing of its ordinary voting equity securities is on a licensed exchange in Bahrain.
            Amended: October 2019

          • TMA-B.1.3

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-B.1.4

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-B.1.5

            The TMA Module will not require holders of securities of 30% or more in a listed company at the effective date of this Module to make an offer under this Module. However, such holders shall comply with the requirments of this Module if they plan to increase their existing holdings by any method as per the requirements of this Module.

            Amended: October 2019

          • TMA-B.1.6

            "While the TMA Module applies to listed companies in which control may change, there are circumstances such as where an unlisted company is a target of a listed company (reverse takeover) in which it is necessary to consider the spirit, General Principles, standards and rules of this Module wherever it is applicable. When there is any doubt as to whether a proposed course of conduct accords with the spirit, General Principles, standards and rules of this Module, parties or their advisers should consult the CBB in advance."

            Amended: October 2019
            Amended: April 2013

          • TMA-B.1.7

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-B.1.8

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • Exemptions

            • TMA-B.1.9

              Module TMA does not apply to offers of equity securities for the following:

              (a) Offers for non-voting, non-equity capital unless required by this Module;
              (b) An exempt share repurchase;
              (c) An offer document filed with the CBB under Module OFS for the sole purpose of issuing or listing securities that are convertible to equity securities and do not confer, directly or indirectly, a voting right to the holder of such securities;
              (d) The relevant person has or had, at any time, financial instruments that are convertible to equity securities and do not confer, directly or indirectly, a voting right;
              (e) The relevant person is not subject to Module TMA under CBB Law;
              (f) An exempt fund manager or an exempt principal trader recognized as such by the CBB for the purposes of the Module; and
              (g) Acquisition of a controlling interest pursuant to an underwriting agreement subject to the timeline of the disposal of such acquisition being approved by the CBB.
              Amended: October 2019
              Amended: April 2013

            • TMA-B.1.10

              [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

            • TMA-B.1.11

              [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

            • TMA-B.1.12

              [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • Compliance Responsibility

            • TMA-B.1.13

              Each director of an offeror and of the offeree company as well as those acting in concert and their professional advisers has a responsibility to ensure, so far as he is reasonably able, that the requirements of this Module are complied with in the conduct of transactions which are the subject of the TMA Module.

              Amended: October 2019

            • TMA-B.1.14

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-B.1.15

              The primary responsibility for ensuring compliance with the Module rests with parties involved in a take-over, merger, acquisition, or share repurchase and their professional advisers as follows:

              (a) Persons or groups of persons who seek to gain or consolidate control of companies that are subject to the Module; and
              (b) Their brokers and other professional advisers; or parties who otherwise participate in, act in concert or are connected with, transactions to which the Module applies.
              Amended: October 2019

            • TMA-B.1.16

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

          • Penalty for Non Compliance

            • TMA-B.1.17

              Without prejudice to any greater penalty prescribed under the Penal Code or any other law, including the relevant provisions of the CBB Law, any person who breaches any of the provisions of this module shall be liable to a fine and such other restrictions and prohibitions the CBB may choose to impose under the CBB Law.

              Amended: October 2019

        • TMA-B.2 TMA-B.2 [This Section was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2010].

          • TMA-B.2.1

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.2

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.3

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.4

            Associated company: A company shall be deemed to be an associated company of another company if one of them owns or controls 20% or more of the voting rights of the other or if both are associated companies of the same company.

          • TMA-B.2.5

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.6

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.7

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.8

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.9

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.10

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.11

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.12

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.13

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.14

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.15

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.16

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.17

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.18

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.19

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.20

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.21

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.22

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.23

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.24

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.25

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.26

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.27

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.28

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.29

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.30

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.31

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.32

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.33

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.34

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.35

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.36

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.37

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.38

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

          • TMA-B.2.39

            [This Paragraph was moved to the Glossary under Part B of the CBB Rulebook Volume 6 in October 2019].

      • TMA-1 TMA-1 General Principles

        • TMA-1.1.1

          [This Paragraph was deleted in October 2019].

          Deleted: October 2019

        • TMA-1.1.2

          Equal Treatment to all Shareholders: All relevant persons including any persons acting in concert in relation to an offer must treat all holders of each class of securities of an offeree company in a fair and equitable manner demonstrating no bias to a single, group or class of shareholders.

          Amended: October 2019

        • TMA-1.1.3

          Duties of Directors with Personal Interests: Directors of an offeror and the offeree company must always, in advising their shareholders, act only in their capacity as directors and not have regard to their personal or family shareholdings or to their personal relationships with the companies. They must only consider the shareholders' interests taken as a whole when they are giving advice to shareholders. Directors of the offeree company must give careful consideration before they enter into any commitment with an offeror which would restrict their freedom to advise their shareholders. Such commitments may give rise to conflicts of interest or result in a breach of the directors' fiduciary duties.

          Amended: October 2019

        • TMA-1.1.4

          Minority interests must be protected: Oppression of minority or non-controlling shareholders is not acceptable in any case. Therefore, rights of control must be exercised in good faith in the context of protecting minority shareholders.

          Amended: October 2019

        • TMA-1.1.5

          Information to All Shareholders: During the course of an offer, or when an offer is in contemplation, neither an offeror, nor the offeree company, nor any of their respective advisers may furnish information to some shareholders which is not made available to all shareholders. This principle does not apply to the furnishing of information in confidence by the offeree company to a bona fide potential offeror or vice versa.

          Amended: October 2019

        • TMA-1.1.6

          Standards of Care in Documents: All relevant persons including any persons acting in concert in relation to an offer must, as with a prospectus act with due skill, care and diligence in relation to all matters connected with an offer including but not limited to matters relating to standards of research and analysis, public announcements, documentation, information being given to shareholders and the appointment of advisers, among others.

          Amended: October 2019

        • TMA-1.1.7

          Announcements: An offeror must announce an offer only after careful and responsible consideration. The same applies to making acquisitions which may lead to an obligation to make a mandatory offer. In either case the offeror and its advisers must be satisfied that it can and will continue to be able to implement the offer in full.

          Amended: October 2019

        • TMA-1.1.8

          Sufficient Information and Time to Shareholders: Shareholders must be given sufficient information, advice and time to reach an informed decision on an offer. No relevant information must be withheld. All documents must, as in the case with a prospectus, be prepared with the highest possible degree of care, responsibility and accuracy.

          Amended: October 2019

        • TMA-1.1.9

          Full and Prompt Disclosure and Prevention of a False Market: All relevant persons including any persons acting in concert in relation to an offer must ensure that all information provided in offer, announcements and related documentation is clear, fair and not misleading, and appropriate to the information needs of the readers. All persons concerned with offers must make full and prompt disclosure of all relevant information and take every precaution to avoid the creation or continuance of a false market. Relevant persons and their professional adviser(s) involved in an offer covered by this Module must take care that statements are not made which may mislead shareholders or the market.

          Amended: October 2019

        • TMA-1.1.10

          No Frustration of Bona Fide Offer: At no time after a bona fide offer has been communicated to the board of the offeree company, or after the board of the offeree company has reason to believe that a bona fide offer might be imminent, may the board of the offeree company take any action in relation to the affairs of the company, without the approval of shareholders in a general meeting, which could effectively result in any bona fide offer being frustrated or in the shareholders being denied an opportunity to decide on its merits.

          Amended: October 2019

        • TMA-1.1.11

          Secrecy before Announcements: At any time before the offer or during the offer, the management of all relevant persons including any persons acting in concert in relation to an offer and professional adviser(s) must maintain secrecy and confidentiality of the offer.

          Amended: October 2019

        • TMA-1.1.12

          Limitation On Directors' Actions: The boards of an offeror and the offeree company and their respective advisers and associates have a duty to act in the best interests of the shareholders of the offeror and offeree company respectively, and these General Principles and the Rules may impinge on the freedom of action of boards and persons involved in offers. They must, therefore, accept that there are limitations, in connection with transactions which are the subject of the Modules, on the manner in which the pursuit of those interests can be carried out.

          Each director of an offeror and of the offeree company has a responsibility to ensure, so far as he is reasonably able, that this Module is complied with in the conduct of transactions which are the subject of this Module.

          Amended: October 2019

        • TMA-1.1.13

          Acquisition or Consolidation of Control: If control of a company changes or is acquired or is consolidated, a mandatory offer to all other shareholders is required. Where an acquisition is contemplated as a result of which a person may incur such an obligation, he must, before making the acquisition, ensure that he can and will continue to be able to implement such an offer.

          Amended: October 2019

        • TMA-1.1.14

          Appointment of Professional Adviser(s): An offeree board which receives an offer or is approached with a view to an offer being made, should in the interest of its shareholders, seek professional advice by a professional adviser(s).

          Amended: October 2019
          Amended: April 2013

        • TMA-1.1.15

          Co-operation with the CBB: All parties concerned with transactions subject to this Module are required to co-ordinate and co-operate to the fullest extent with the CBB's Capital Markets Supervision Directorate, and to provide all relevant information.

          Amended: October 2019

        • TMA-1.1.16

          Validity of CBB Approval: Where a transaction requires CBB prior approval, any execution or part thereof must take place within a period of 90 days (including any applicable lock-up period) from the date of the approval, unless otherwise stipulated in writing by the CBB.

          Amended: October 2019

        • TMA-1.1.17

          Transactions to be concluded on a licensed exchange: Except with the consent of the CBB, any transaction concluded in terms of this Module shall be executed on the relevant licensed exchange.

          Amended: October 2019
          Amended: April 2013

      • TMA-2 TMA-2 Rules

        • TMA-2.1 TMA-2.1 Communication of the Offer

          • TMA-2.1.1

            An offer must be put forward in the first instance to the board of directors (the "board") of the offeree company in writing.

          • Identity of Offeror

            • TMA-2.1.2

              If the offer or an approach with a view to an offer being made is not made by the ultimate offeror or potential offeror, the identity of that person must be disclosed at the outset to the board of the offeree company. When that person is a company, the identity of its ultimate controlling shareholder(s) and the identity of its ultimate parent company, or, where there is a listed company in the chain between such company and its ultimate parent company, the identity of such listed company must be disclosed.

              Amended: October 2019

          • Seriousness of Offeror

            • TMA-2.1.3

              The board of the offeree company when approached is entitled to be satisfied that the offeror is, or will be, in a position to implement the offer in full. An offeror, upon receiving a request from the board of the offeree company, must provide reasonable information to verify that the offeror is, or will be, in a position to implement the offer in full.

          • Confidentiality

            • TMA-2.1.4

              The confidentiality of the offer before an announcement must be maintained and all persons in possession of confidential information, and particularly price-sensitive information, concerning an offer or contemplated offer must treat that information as secret and may only pass it to another person if it is necessary to do so and if the other person understands the need for secrecy.

              Amended: October 2019

        • TMA-2.2 TMA-2.2 Independent Advice and Shareholder Approval

          • Appointment of Advisors by Offeree

            • TMA-2.2.1

              Independent advice must be obtained as to whether or not the offer is in the interests of the shareholders.

              A board which receives an offer, or is approached with a view to an offer being made, must, in the interests of shareholders, appoint an independent professional adviser to advise the board as to whether the offer is, or is not, fair and reasonable and as to acceptance and voting. Such advice, including reasons, must be obtained in writing and made known to shareholders by including it in the offeree board circular along with the recommendation of the offeree company's board regarding acceptance of the offer.

              If any of the directors of an offeree company is faced with a conflict of interest, the offeree company's board must be notified of his/their interest and must not vote on the resolution to be adopted in regards of the offer, and if possible, establish an independent committee of the board to discharge the board's responsibilities in relation to the offer. The board must announce the appointment of the professional adviser in the initial announcement of the offer or possible offer, or as soon thereafter as the appointment is made.

              Amended: October 2019

            • TMA-2.2.2

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.2.3

              When it is not possible to give a recommendation or there is a divergence of views amongst board members and the professional advisor as to the merits of the offer or recommendation being made, then it must be drawn to the shareholders attention. A written advice (as mentioned in TMA-2.2.1) must be made available and known to shareholders, including the arguments for acceptance or rejection, emphasising the important factors.

              Amended: October 2019

            • TMA-2.2.4

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

          • In-Eligible Professional Adviser(s)

            • TMA-2.2.5

              A person shall not be appointed as an independent professional adviser if the person is a related company to the offeror or offeree or who has, or had, a significant connection, financial or otherwise, with either the offeror or the offeree company, or the controlling shareholder(s) of either of them, of a kind likely to create, or to create the perception of, a conflict of interest, or reasonably likely to affect the objectivity of his advice.

              Amended: October 2019

          • Advice to Independent Shareholders

            • TMA-2.2.6

              If there are shareholders who are not independent because they have an interest in the proposed offer other than their interest as a shareholder of the offeror or the offeree company, as the case may be, such conflict of interest must be declared and made clear to the other shareholders. The professional adviser must endeavour to represent the best interests of the offeror or the offeree company, respectively, by concerning itself only with the interests of the independent shareholders.

              Amended: October 2019

          • Independent Committee

            • TMA-2.2.7

              Members of an independent committee of a company's board of directors (established to discharge the board's responsibilities in relation to the offer) must consist of directors of the company who have no direct or indirect interest in any offer or possible offer for consideration by the independent committee other than, in the case of a director of the offeree company, as a shareholder of the offeree company. For this purpose, it is presumed that employees of an offeree company that is an associated company of the offeror have an indirect interest in an offer and are therefore not independent. The same presumption is applicable to employees, directors, agents, partners, connected persons and affiliates of any person that exercises control or direction over the business and operations of any offeror or the offeree company respectively if such person has a direct or indirect interest in the offer. If it is not possible to form an independent committee, responsibility for representing the interests of any independent shareholders must reside primarily with the professional adviser. In case of doubt the CBB must be consulted.

              Amended: October 2019

          • Shareholder Votes to be Conducted by Way of a Poll

            • TMA-2.2.8

              Whenever this Module requires a matter to be approved by shareholders or any class or group thereof in general meeting the vote must be conducted by way of a poll. The results of the poll must be announced.

              Amended: October 2019

          • Approval of Delistings by Independent Shareholders

            • TMA-2.2.9

              If after a proposed offer the shares of the offeree company are to be delisted from the licensed exchange, neither the offeror nor any persons acting in concert with the offeror may vote at the meeting, if required, of the offeree company's shareholders. The resolution to approve the transfer of the company and the delisting must be subject to:

              (a) Approval by at least 75% of the votes attaching to the disinterested shares that are cast either in person or by proxy at a duly convened meeting of the holders of the disinterested shares;
              (b) The number of votes cast against the resolution being not more than 10% of the votes attaching to all disinterested shares; and
              (c) The offeror being entitled to exercise, and exercising, its rights of compulsory acquisition.
              Amended: October 2019

          • Board of Offeror Company

            • TMA-2.2.10

              Where an offeror is a listed company, and the offer being made is a reverse takeover or when the directors of the offeror are faced with a conflict of interest, the board of the offeror must obtain professional independent advice as to whether the making of the offer is in the interests of the offeror's shareholders. The advice must be obtained before announcing an offer or revised offer. The offer or revised offer must also be made subject to the approval of the shareholders of the offeror in a general meeting. The advice must be in writing and sent to the shareholders with the notice of the meeting. If an offeror considers that these requirements should not apply, where for example the offer is not material to the offeror, it may apply to the CBB for a waiver of these requirements.

              Amended: October 2019

          • Offers for Companies that Control the Offeror

            • TMA-2.2.11

              Where an offeror is a listed company, and it or a subsidiary thereof proposes to make an offer for another company that, together with any persons acting in concert with the offeree company, controls, directly or indirectly, the offeror, the offeror's board must establish an independent committee to assess the proposed offer and the CBB should be consulted.

              Amended: October 2019

          • Conflicting Views

            • TMA-2.2.12

              If the board of the offeree company is split in its views on an offer, the minority must provide their views and these must be recorded in the minutes of the meeting. CBB will require the offeree to circulate these views.

              Amended: October 2019

            • TMA-2.2.13

              If a director has a conflict of interest, he must not be joined with the rest of the board in the expression of their views on the offer. The conflict must be explained to the shareholders.

              Amended: October 2019

        • TMA-2.3 TMA-2.3 Announcement of Offer or Possible Offer

          • Announcement to be Made by Offeror

            • TMA-2.3.1

              Except in the case of a mandatory offer where any of the circumstances occurring in TMA-2.3.10, a brief announcement that a potential offeror is considering making an offer must be made after obtaining permission from the CBB.

            • TMA-2.3.2

              Before the board of the offeree company is approached, the responsibility for making an announcement lies with the offeror or potential offeror. The offeror or potential offeror should, therefore, keep a close watch on the offeree company's share price and volume for signs of unusual movement.

              Amended: October 2019

          • Announcements to be Made by Potential Vendor

            • TMA-2.3.3

              The potential vendor must make an announcement when there are negotiations or discussions between a potential offeror and the holder, or group of holders, of shares carrying 30% or more of the voting rights of the company and the company is subject to rumour or speculation about a possible offer or there is unusual movement in its share price or in the volume of share turnover, and there are reasonable grounds for concluding that it is the potential vendor's actions which have led to the situation.

              Amended: October 2019

          • Suspension of Trading

            • TMA-2.3.4

              When an announcement is required under this Section, the listed company(ies) being the offeror or the offeree company, as the case may be, must notify the CBB and the licensed exchange immediately that an announcement is imminent and if there is any possibility that an uninformed market for shares of the offeror or the offeree company could develop prior to publication of the announcement, serious consideration must be given to requesting a suspension of trading in such shares pending publication of the announcement. A potential offeror must not attempt to prevent the board of the offeree company from making an announcement or requesting the licensed exchange to grant a temporary suspension of trading at any time the board thinks appropriate. The CBB or the licensed exchange may, at their discretion and irrespective of whether or not there is a request, suspend trading temporarily on the shares of a listed company being an offeree or offeror.

              Amended: October 2019

          • Announcements of Certain Purchases

            • TMA-2.3.5

              Acquisitions of voting rights of the offeree company by an offeror or by any person acting in concert with the offeror may give rise to an obligation to make a cash offer, to increase an offer or to make a mandatory offer. Immediately after any acquisition giving rise to any such obligation, an announcement must be made, stating the number of shares acquired and the price paid, together with the information required (to the extent that it has not previously been announced).

              Amended: October 2019

            • TMA-2.3.6

              CBB should be consulted if an offeror is wishing to approach a wider group, for example in order to arrange financing for the offer, whether through equity or debt, or to organize a consortium to make the offer.

            • TMA-2.3.7

              Where the offeror or offeree does not make an announcement when obliged to do so in terms of this Module, the CBB shall have the right to, without prejudice to any further action imposed by the CBB, instruct the offeror and the offeree to make an announcement in accordance with this Module and the offeror or offeree must comply with the time stipulated in the instruction.

              Amended: October 2019

          • Publication of an Announcement about an Offer or Possible Offer

            • TMA-2.3.8

              When an offer or possible offer is announced, the announcement must be in accordance with Appendix B in Part B of the CBB Rulebook Volume 6 and be sent to the licensed exchange and published in two local daily newspapers in Bahrain, one in Arabic, or Arabic and the other in English.

              Amended: October 2019

            • TMA-2.3.9

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.3.10

              An offeror or potential offeror must make an announcement under the following conditions:

              (a) Before an approach has been made to the offeree company, the offeree company is in the subject of rumour or speculation about a possible offer.
              (b) There is unusual movement in the company's share price or in the volume of share turnover, and there are reasonable grounds for concluding that it is the actions of the potential offeror or persons acting in concert with it through inadequate security, which have led to the situation;
              (c) When negotiations or discussions are about to be extended to include more than a very restricted number of persons; outside those who need to know in the companies concerned and their immediate advisors; or
              (d) Immediately upon acquisition of voting rights which gives rise to an obligation to make a mandatory offer. The announcement that an obligation has arisen must not be delayed due to information being obtained, additional information can be the subject of a later supplementary announcement.
              Amended: October 2019

          • Announcement to be Made by Offeree

            • TMA-2.3.11

              Following an approach to the board of the offeree company which may or may not lead to an offer, the primary responsibility for making an announcement will normally rest with the board of the offeree company. The offeree company must, therefore, keep a close watch on its share price and volume.

              The board of the offeree company must make an announcement to the licensed exchange and market and inform its shareholders immediately upon the occurrence of the following conditions:

              (a) A firm intention to make an offer has been notified to the board of the offeree company from an authorised source, irrespective of the attitude of the board of the offeree company;
              (b) When following an approach to the offeree company, whether there is a firm intention to make an offer or not, the offeree company is the subject of rumour or speculation about a possible offer or there is unusual movement in its share price or in the volume of share turnover;
              (c) When negotiations or discussions about a potential offer are about to be extended to include more than a very restricted number of persons;
              (d) When the board of a company is aware that there are negotiations or discussions between a potential offeror and the holder, or group of holders of shares carrying 30% or more of the voting rights of a company; or
              (e) When the board of a company is seeking potential offerors, and
              (i) The company is the subject of rumour or speculation about a possible offer, or there is unusual movement in its share price or a significant increase in the volume of share turnover; or
              (ii) More than a very restricted number of potential purchasers or offeror are about to be approached.
              Amended: October 2019
              Amended: April 2013

            • TMA-2.3.12

              When a proposed offer is conditional on acceptances or undertakings to accept by one or more shareholders, the proposed announcement must include a statement by those shareholders who have accepted or undertaken to accept the offer, whether such acceptances or undertakings are revocable, and if so, the conditions under which such acceptances or undertakings may be revoked.

              Amended: October 2019

          • Firm Intention to Make an Offer by Offeror

            • TMA-2.3.13

              An offeror must announce a firm intention to make an offer where such offeror has every reason to believe that it can and will continue to be able to implement the offer.

              Amended: October 2019

            • TMA-2.3.14

              The announcement of a firm intention to make an offer must state the following:

              (a) Terms of the offer;
              (b) Identity of the offeror and, where the offeror is a company, the identity of its ultimate controlling shareholder and the identity of its ultimate parent company, or where there is a listed company in the chain between such company and its ultimate parent company, the identity of such listed company;
              (c) Details of any existing holding of shares and rights over shares in the offeree company:
              (i) Which the offeror owns or over which it has control or direction;
              (ii) Which is owned or controlled or directed by any person acting in concert with the offeror;
              (iii) In respect of which the offeror or any person acting in concert with it has received an irrevocable commitment to accept the offer; and
              (iv) In respect of which the offeror or any person acting in concert with it holds convertible securities, warrants or options;
              (d) Details of any outstanding derivative in respect of securities in the offeree company entered into by the offeror or any person acting in concert with it;
              (e) All conditions (including normal conditions relating to acceptance, listing and change in capital) to which the offer is subject;
              (f) Details of any arrangement (whether by way of option, indemnity or otherwise) in relation to shares of the offeror or the offeree company and which might be material to the offer. Details of any relevant securities of the offeree company in which the offeror or any person acting in concert with it has an interest or has a right to subscribe. In each case, the nature of the interests or rights concerned needs to be specified;
              (g) Details of any relevant securities of the offeree company which the offeror or any person acting in concert with it has borrowed or lent, save for any borrowed shares which have been either on-lent or sold;
              (h) All conditions (including normal conditions relating to acceptances, admission to listing, admission to trading and increase of capital) to which the offer or the posting of it is subject;
              (i) Details of any agreements or arrangements to which the offeror is party which relate to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or the consequences of its doing so, including details of any break fees payable as a result; and
              (j) Details of any arrangement for the payment of an inducement fee or similar arrangement.
              Amended: October 2019
              Amended: April 2013

            • TMA-2.3.15

              Where the offer is for cash, or includes an element of cash, the announcement of firm intention must include a statement that the professional adviser, or another appropriate third party, have taken all reasonable steps to convince themselves that sufficient resources are available to the offeror to satisfy the full implementation and acceptance of the offer.

              Amended: October 2019

            • TMA-2.3.16

              Except with the consent of the CBB, if an incorrect or misleading statement is made in an announcement by the potential offeror, or on behalf of the potential offeror, or its directors, or officials or advisors, and not immediately withdrawn, then the potential offeror will be bound by the statement if an offer for the offeree company is subsequently made.

            • TMA-2.3.17

              Except with the consent of the CBB, where the incorrect or misleading statement concerned relates to the price of a possible offer (or a particular exchange ratio in the case of a proposed securities exchange offer), the potential offeror will not be allowed subsequently to make an offer for the offeree company at a lower price (taking the price of any securities concerned at the date of announcement of the firm intention to make the offer), unless there has occurred an event which the potential offeror specified in the statement as an event which would enable it to be set aside.

          • Preconditions

            • TMA-2.3.18

              Any pre-conditions included in an announcement to making a possible offer must be agreed in advance by the CBB and clearly state whether or not the pre-conditions must be satisfied before an offer can be made or whether they are waived.

          • Announcement of the Progress of the Offer

            • TMA-2.3.19

              Until a firm intention to make an offer has been notified a brief announcement by a potential offeror or the offeree company that talks are taking place or that a potential offeror is considering making an offer will normally satisfy the obligations under this Section.

              If following the announcement of a possible offer no further announcement has been made in respect of that offer or possible offer within one month, an announcement must be made setting out the progress of the talks or the consideration of a possible offer. This obligation continues, and announcements will be required monthly, until announcement of firm intention to make an offer or of a decision not to proceed with an offer. When talks are terminated or a potential offeror decides not to proceed with an offer, clear and unambiguous announcement must be made to that effect.

              Amended: October 2019

          • Statements of Intention Not to Make an Offer

            • TMA-2.3.20

              A person making a statement that he does not intend to make an offer for a company must make a statement to the market that is very clear and unambiguous.

              Amended: October 2019

            • TMA-2.3.21

              Except with the consent of CBB, unless there has been a material change of circumstances or an event has occurred which the person specified in his statement as an event which would enable it to be set aside, neither the person making the statement, nor any person acting in concert with him, nor any person who is subsequently acting in concert with either of them, may within six months from the date of the statement:

              (a) Announce an offer or possible offer for the offeree company, including a partial offer;
              (b) Acquire any interest in shares of the offeree company if any such person is obliged under TMA-3.1 to make a mandatory offer;
              (c) Acquire any interest, or procure an irrevocable commitment in respect of, shares of the offeree company if the shares in which such person, together with any persons acting in concert with him, would be interested and the shares in respect of which he, or they, had acquired irrevocable commitments would in aggregate carry 30% or more of the voting rights of the offeree company;
              (d) Make any statement which raises or confirms the possibility that an offer might be made for the offeree company; or
              (e) Proceed with actions to make a possible offer, for the offeree company, where knowledge of the possible offer might be extended outside the potential offeror and immediate advisors.
              Amended: October 2019

            • TMA-2.3.22

              Failure to comply with this rule may lead to the period of six months set out to be extended.

            • TMA-2.3.23

              Any person considering issuing a statement of an intention not to make an offer should consult CBB; particularly when specific reservations are to be included or to be set aside.

            • TMA-2.3.24

              Restrictions imposed by TMA-2.3.21 on statements made will apply to any persons acting in concert with the person making the statement. Unless clear in the statement or at the time of the statement, the restrictions will not apply to the persons acting in concert and that they are continuing to consider making an offer.

              Amended: October 2019

            • TMA-2.3.25

              When a person is announcing in a statement an intention of not making an offer, CBB will take into account the manner of any public reporting following the statement. Advisors should advise the directors and officials of companies of the implications of TMA-2.3.21.

        • TMA-2.4 TMA-2.4 No Frustrating Action

          • TMA-2.4.1

            Once a bona-fide offer has been communicated to the board of an offeree company or the board of an offeree company has reason to believe that a bona-fide offer may be imminent, no action which could effectively result in an offer being frustrated, or in the shareholders of the offeree company being denied an opportunity to decide on the merits of an offer, shall be taken by the board of the offeree company in relation to the affairs of the company without the approval of the shareholders of the offeree company in general meeting. In particular the offeree company's board must not, without such approval, do or agree to do the following:

            (a) Issue any shares;
            (b) Create, issue or grant, or permit the creation, issue or grant of, any convertible securities, options or warrants in respect of shares of the offeree company;
            (c) Other than during the normal course of business, sell, dispose of or acquire assets of a material amount;
            (d) Enter into contracts, including service contracts, otherwise than in the ordinary course of business; or
            (e) Cause the offeree company or any subsidiary or associated company to purchase or redeem any shares in the offeree company or provide financial assistance for any such purchase.

          • TMA-2.4.2

            For purposes of Paragraph TMA-2.4.1, where the offeree company is under a prior contractual obligation to take any such action, or where there are other special circumstances, the CBB must be consulted at the earliest opportunity.

            Amended: October 2019

        • TMA-2.5 TMA-2.5 No Withdrawal of an Offer

          • TMA-2.5.1

            Except with the consent of the CBB, following an announcement of a firm intention to make an offer, the offeror cannot withdraw the offer and must continue to implement it unless the offer is subject to the fulfilment of a specified condition and the condition has not been met.

          • TMA-2.5.2

            A change in general economic, industrial or political circumstances will not justify failure to proceed with an announced offer, unless circumstances of an exceptional and specific nature arise.

          • TMA-2.5.3

            If a competitor has posted a higher offer to the one already made by the first offeror, the CBB may consent to the withdrawal of the announced offer. This should not carry any additional conditions other than those necessary for the implementation of such announced offer.

          • TMA-2.5.4

            If an offeror is permitted to withdraw from an offer, or an offer is waived because of non-fulfilment of a condition, the offeror will be required to make an announcement giving reasons for the withdrawal.

          • TMA-2.5.5

            The CBB may seek to hear views of the offeree company and its advisors, prior to consenting to a withdrawal of an announced offer.

        • TMA 2.6 TMA 2.6 Information to Offeror(s)

          • TMA-2.6.1

            Upon signing a confidentiality agreement to give access to any due diligence material, any information, including particulars of shareholders, given to one offeror or potential offeror must be furnished equally and promptly to any other bona fide offeror or potential offeror.

            Amended: October 2019

          • TMA-2.6.2

            If the offer or potential offer is a management buy-out or similar transaction, the information which this Paragraph requires to be given to a competing or potential offeror is:

            (a) The information generated by the offeree company (including the management of the offeree company acting in their capacity as such) which is passed to external providers or potential providers of finance (whether equity or debt) to the offeror or potential offeror; and
            (b) Any other information that is material in the context of making an offer insofar as the board of the offeree company is aware that the management is in possession of such information.

            This, however, does not include providing information on the offeree company's trade and business secrets. The CBB expects the directors of the offeree company who are involved in making the offer to cooperate with the independent directors of the offeree company and its advisers in the assembly of information.

            Amended: October 2019
            Amended: April 2013

          • TMA-2.6.3

            The information related to an offer should be provided by the offeree company to the ultimate offeror or potential offeror, the identity of which must be disclosed to the directors of the offeree company.

            Amended: October 2019

          • Mutual Due Diligence Review

            • TMA-2.6.4

              Where the consideration under an offer includes exchange of securities, the offeror and the offeree company may, subject to such terms and conditions as may be agreed between the offeror and offeree company under a confidentiality agreement, undertake mutual due diligence (mutual due diligence review) of each other's business.

              Added: October 2019

            • TMA-2.6.5

              Where the CBB is of the opinion that mutual due diligence review as referred to in Paragraph TMA-2.6.4 is in the best interest of the shareholders, it may, at its sole discretion, by notice in writing, order the offeror and the offeree company to enter into a mutual due diligence review agreement.

              Added: October 2019

        • TMA 2.7 TMA 2.7 Timing and Content of Documents

          • Equality of Information to Shareholders

            • TMA-2.7.1

              All offeree company shareholders must be given sufficient information and advice about an offer. Information must be made equally available to all shareholders, at the earliest and in the same manner to enable them to reach an informed decision about the offer.

              Amended: October 2019

            • TMA-2.7.2

              Shareholders must, in accordance with Appendix C in Part B of the CBB Rulebook Volume 6, be given all the facts necessary to make an informed judgment on the merits or demerits of an offer. Such facts require accurate and fair presentation and must be given to the shareholders early enough to enable them to make a decision in good time. The obligation of the offeror in these respects towards the shareholders of the offeree company is no less than the offeror's obligation towards its own shareholders. In particular, whether or not the offer consideration is cash, information must be given about the offeror.

              Amended: October 2019

            • TMA-2.7.3

              The offer document must include a heading stating: "If you are in doubt about any aspect of this offer, you should consult a licensed securities dealer or licensed institution in securities, a bank manager, solicitor or attorney, professional accountant, or other professional advisor."

            • TMA-2.7.4

              No new material must be released in meetings, interviews or discussions with the media. If any new information is made public as a result of meetings, interviews or discussions with the media, then a circular must be sent to shareholders and where appropriate newspaper space.

              Amended: October 2019

          • Subsequent Documents

            • TMA-2.7.5

              Documents subsequently sent to shareholders of the offeree company must contain details of any material changes in information previously submitted or published by or on behalf of either party during the offer period. If there have been no such changes this must be stated. In particular, the following matters must be updated:

              (a) Changes or additions to material contracts;
              (b) Shareholdings and dealings;
              (c) Changes to directors' service contracts;
              (d) Special arrangements;
              (e) Ultimate owner of securities acquired under the offer; and
              (f) Arrangements in relation to dealings.
              Amended: October 2019
              Amended: April 2013

          • Offer Document Time Limit

            • TMA-2.7.6

              The offer document must be sent to the offeree company by or on behalf of the offeror within 21 calendar days of the date of the announcement of the terms of the offer. The CBB's consent is required if the offer document may not be posted within this period.

              Amended: October 2019

          • Timing and Contents of Offeree Board Circular

            • TMA-2.7.7

              The offeree company must send to all its shareholders within a maximum period 21 calendar days from the receiving date of the offer document, the circular containing the information in Appendix D in Part B of the CBB Rulebook Volume 6 and the information set out in Appendix C in Part B of the CBB Rulebook Volume 6, together with any other information it considers to be relevant to enable its shareholders to reach an informed decision on the offer. The CBB's consent is required if the offeree board circular (Appendix D in Part B of the CBB Rulebook Volume 6) may not be posted within this period. The offeree board circular, to be attached to the offer document in accordance with Appendix D in Part B of the CBB Rulebook Volume 6, must include the views of the offeree company's board or its independent committee on the offer and the written advice of its professional adviser as to whether the offer is, or is not, fair and reasonable and the reasons thereof.

              Amended: October 2019

            • TMA-2.7.8

              If the circular (Appendix D in Part B of the CBB Rulebook Volume 6) is not issued by the professional advisor, then it should include a statement that the professional advisor has given and not withdrawn his consent to the issue of the circular, including his recommendation.

              Amended: October 2019

          • Prospectus Standard

            • TMA-2.7.9

              Each document issued or statement made in relation to an offer or possible offer or during an offer period must, as is the case with a prospectus, satisfy the highest standards of accuracy and the information given must be adequately and fairly presented. This applies whether the offeror, the offeree company, or any of their advisors or agents issues the document, advertisement, or announcement. Those who issue or make any such document or statement must ensure that it remains accurate and up-to-date throughout the offer period, and must notify shareholders of any material changes as soon as possible.

              Amended: October 2019

          • Directors' Responsibility Statement

            • TMA-2.7.10

              All documents must state on the inside cover page that: All directors of the company issuing the document, whose names appear therein, jointly and severally accept full responsibility for the accuracy of information contained in the document. To the best of the knowledge and belief of the directors, who have taken all reasonable care to ensure that such is the case, the information contained in the document is in accordance with the facts and contains no omissions likely to affect the importance and completeness of the document.

              Amended: October 2019

            • TMA-2.7.11

              If it is proposed that any director be excluded from the Director's Responsibility Statement, the CBB's consent is required. Such consent is given only in exceptional circumstances and in such cases the omission and the reasons for it must be stated in the document to which the Director's Responsibility Statement applies.

              Amended: October 2019

            • TMA-2.7.12

              The directors of the offeree company should comment on the statement in the offer document regarding the offeror's intentions in respect of the offeree company and its employees.

          • Arabic/English Language

            • TMA-2.7.13

              Each document must be written in Arabic and/ or English and shall include or be accompanied by a translation, as the case requires, in Arabic or English.

              Amended: October 2019

          • Documents to be on Display

            • TMA-2.7.14

              Except with the consent of the CBB, the following documents must be available for inspection from the time that the offer document or the offeree board circular is published, until the end of the offer period. The offer document and the offeree board circular must state which documents are available and where, and the place where inspection can be made:

              (a) Memorandum and articles of association of the offeror or the offeree company or equivalent documents;
              (b) Audited consolidated accounts of the offeror or the offeree company for the last two financial years for which these have been published in accordance with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) or other accounting standards acceptable to the CBB;
              (c) All service contracts of offeree company directors;
              (d) Any report, letter, valuation or other document any part of which is exhibited or referred to in any document issued by or on behalf of the offeror or the offeree company;
              (e) Written consents of the professional advisers;
              (f) All material contracts in relation to the offer;
              (g) Where a profit forecast has been made, the reports of the auditors or consultant accountants and of the professional advisers in addition to the letters giving the consent of the auditors or consultant accountants and of the professional advisers to the issue of the relevant document with the report in the form and context in which it is included or, if appropriate, to the continued use of the report in a subsequent document;
              (h) Where an asset valuation has been made, the valuation certificate and associated report containing details of the aggregate valuation, in addition to a letter stating that the valuer has given and not withdrawn his consent to the publication of his name in the relevant document;
              (i) Any document evidencing an irrevocable commitment or a letter of intent which has been procured by the offeror or offeree company (as appropriate) or any of their respective associates;
              (j) Where the CBB has given consent to aggregation of dealings, a full list of all dealings;
              (k) Documents relating to the financing arrangements for the offer or a detailed statement from the professional advisor indicating that they have taken all reasonable steps to convince themselves that sufficient resources are available to implement the offer;
              (l) Documents relating to the payment of an inducement fee or similar arrangement;
              (m) Any agreements or arrangements, or, if not reduced to writing, a memorandum of all the terms of such agreements or arrangements, disclosed in the offer document; and
              (n) Any agreements or arrangements, or, if not reduced to writing, a memorandum of the terms of such agreements or arrangements.
              Amended: October 2019

        • TMA-2.8 TMA-2.8 The Offeree's Director Responsibilities

          • TMA-2.8.1

            The board of directors of the offeree company must ensure that proper arrangements are in place to enable it to monitor to ensure that:

            (a) The board is provided promptly with copies of all documents and announcements issued by or on behalf of their company which bear on the offer; the board receives promptly details of all dealings in relevant securities made by their company or its associates and details of any agreements, understandings, guarantees, expenditure (including fees) or other obligations entered into or incurred by or on behalf of their company in the context of the offer which do not relate to routine administrative matters;
            (b) Those directors or committee members appointed in terms of TMA-2.2.7 undertaking daily responsibilities for the offer are in a position to justify to the board all their actions and proposed courses of action;
            (c) The opinions of advisers are available to the board; and
            (d) The possible temporary insiders are identified and that the offeree company complies with its Policy of Insiders.
            Amended: October 2019
            Amended: April 2013

          • TMA-2.8.2

            The procedures identified in TMA-2.8.1 must be followed, and board meetings must be held, whenever necessary throughout the offer in order to ensure that all directors remain updated with events and with actions taken.

            Amended: October 2019

          • TMA-2.8.3

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-2.8.4

            [This Paragraph was deleted in October 2019].

            Deleted: October 2019

          • TMA-2.8.5

            Where directors (including their connected persons, related trusts and companies controlled by such directors, connected persons and related trusts) or shareholders or groups of shareholders acting collectively holding effective control, whether represented on the board or not, sell shares to a purchaser, as a result of which the purchaser is required to make an offer under TMA-3.1 (Mandatory Offer), the vendors must ensure that as a condition of the sale the purchaser undertakes his obligations in accordance with TMA-3.1 .

            Amended: October 2019

          • Resignation of Directors of Offeree Company

            • TMA-2.8.6

              Once a bona-fide offer has been communicated to the board of the offeree company or the board of the offeree company has reason to believe that a bona-fide offer is imminent, except with the consent of the CBB, the directors of an offeree company or any of its subsidiaries must not resign until the first closing date of the offer, or the date when the offer becomes or is declared unconditional, whichever is the later. Resignation of directors of the offeree company must be made in accordance with the offeree company's Memorandum and Articles of Association.

              Amended: October 2019

          • Prompt Registration of Transfers

            • TMA-2.8.7

              The board and officials and registrars of an offeree company should use their best endeavours to ensure the prompt registration of transfers during an offer period so that shareholders can freely exercise their voting and other rights.

              Added: October 2019

        • TMA-2.9 TMA-2.9 Profit Forecast and Other Financial Information

          • TMA-2.9.1

            The directors are responsible for ensuring that the profit forecasts are compiled with the highest standards, presentation and accuracy to shareholders in an offer. Financial advisors must ensure that the directors are preparing the forecasts with sufficient explanation on how the projection was calculated, taking into account all the assumptions and risk of failure in the projected result. Such project must be examined and reported on by independent reporting accountants, experts, or consultants in accordance with the applicable international standard (International Standard on Assurance Engagement — ISAE).

          • TMA-2.9.2

            Profit forecasts provided by the offeror and/or the offeree must include:

            (a) A profit forecast for the current financial year. If the forecast year is less than three months of the current financial year, then the period of the forecast will be the current financial year and the next immediate financial year;
            (b) The assumptions, in addition to the commercial assumptions, on which the forecasts are based must be included in documents sent to offeree shareholders with regards to an offer;
            (c) A statement with the consent of the relevant advisors, including the consultant accountant and professional advisor, that they have given and not withdrawn their consent to the publication of the profit forecast;
            (d) A statement by the directors that the forecast remains valid for the purpose of their offer and that the professional advisors and accountants who reported the forecast agree that their reports continue to apply;
            (e) The accounting policies and calculations of the forecasts which have been examined and reported on by the auditors, consultant accountants or any other professional advisor of the offeror or the offeree; and
            (f) When a profit forecast is made in relation to a period in which trading has already commenced, any previously published profit figures in respect of any expired part of that trading period, together with comparable figures for the same part of the preceding year.
            Amended: October 2019

          • TMA-2.9.3

            When income from land and buildings is a material element in a forecast, that part of the forecast must normally be examined and reported on by an independent valuer. Exceptional items should also be examined and reported on with special care.

            Amended: October 2019

          • TMA-2.9.4

            Except with the consent of the CBB, any profit forecast which has been made before the commencement of the offer period must be examined, reproduced and reported on in the document sent to shareholders.

            Amended: October 2019

          • TMA-2.9.5

            Exceptionally, the CBB may accept that, because of the uncertainties involved, it is not possible for a forecast previously made to be reported on in accordance with this Module nor for a revised forecast to be made. In these circumstances, the CBB would insist on shareholders being given a full explanation as to why the requirements of this Module were not capable of being met.

          • Publication of Reports

            • TMA-2.9.6

              When a profit forecast is made during an offer period, any documents sent to shareholders must include the forecast reports as required by TMA-2.9.2(e), TMA-2.9.3 and TMA-2.9.4. The reports must include a statement that consent has been given and has not been withdrawn to the circulation to shareholders.

              Amended: October 2019

            • TMA-2.9.7

              If a company's forecast is published first in a press announcement, it must be repeated in full, together with the reports required in TMA-2.9.2(e), TMA-2.9.3 and TMA-2.9.4, in the documents sent to shareholders. The reports must include a statement that consent has been given and has not been withdrawn to the publication.

              Amended: October 2019

          • Continuing Validity of Forecast

            • TMA-2.9.8

              When a company includes a forecast in a document, any document subsequently sent out by that company in connection with that offer must, contain a statement by the directors that the forecast remains valid for the purpose of the offer and that the professional advisers and accountants who reported on the forecast have indicated that they have no objection to their reports continuing to apply.

              Amended: October 2019

          • Statements Which will be Treated as Profit Forecasts

            • TMA-2.9.9

              When no particular figure is mentioned or even if the word "profit" is not used, certain forms of words may constitute a profit forecast, particularly when considered in context. Examples are "profits will be somewhat higher than last year" and "performance in the second half-year is expected to be similar to our performance and results in the first half-year" (when interim figures have already been published). Whenever a form of words puts a floor under, or a ceiling on, the likely profits of a particular period or contains the data necessary to calculate an approximate figure for future profits, it will be treated by the CBB as a profit forecast which must be reported on. In cases of doubt, the CBB should be consulted in advance.

            • TMA-2.9.10

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.9.11

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.9.12

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

          • When a Forecast Relates to a Period which has Commenced

            • TMA-2.9.13

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

          • Merger Benefits Statements in Securities Exchange Offers

            • TMA-2.9.14

              In a securities exchange offer, a quantified statement about the expected financial benefits of a proposed takeover or merger is deemed to be a profit forecast statement for the purpose of this TMA-2.9. In addition to satisfying the existing standards of information and requirements under the TMA Module, a person issuing such a statement must provide:

              (a) The basis of the belief (including sources of information) supporting the statement;
              (b) An analysis and explanation of the constituent elements sufficient to enable shareholders to understand the relative importance of these elements; and
              (c) A base figure for any comparison drawn.
              Amended: October 2019
              Amended: April 2013

        • TMA-2.10 TMA-2.10 Asset Valuation

          • TMA-2.10.1

            When a valuation of assets is given in connection with an offer, it must be supported by the opinion of a named independent valuer who has no connection with other parties to the transaction. Asset valuations by a professionally qualified independent valuer must be provided when asset values are a particularly significant factor in assessing the relevant takeover or merger transaction.

            Amended: October 2019

          • TMA-2.10.2

            Valuation of assets documents provided by the offeror or the offeree must include:

            (a) The professional qualifications and address of the independent valuer;
            (b) The basis of valuation;
            (c) The opinion of the independent valuer supporting the valuation;
            (d) The effective date at which the assets were valued. If a valuation is not current, the valuer must state that a current valuation would not be materially different and if this statement cannot be made, the valuation must be updated;
            (e) A statement with the consent of the valuer that he has given and not withdrawn his consent to the use of his valuation report.

          • TMA-2.10.3

            Valuation report addressed to shareholders must be made available for inspection together with an associated report containing details of the aggregate valuation. Where CBB is satisfied that such disclosure may be commercially disadvantageous to the company concerned, it will allow the report to be in a summarized form.

          • Basis of Valuation

            • TMA-2.10.4

              In any valuation of an asset or business the basis of valuation must be clearly stated. Only in exceptional circumstances should it be qualified and in that event the valuer must explain the meaning of the words used. The material assumptions made in a valuation must be stated in the valuation.

              Amended: October 2019

            • TMA-2.10.5

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.10.6

              In the case of land currently being developed or with immediate development potential, in addition to giving the open market value in the state existing at the date of valuation, the valuation should include:-

              (a) The value after the development has been completed;
              (b) The estimated total cost, including carrying charges, of completing the development and the anticipated dates of completion and of letting or occupation; and
              (c) A statement whether planning or other regulatory consent has been obtained and, if so, the date thereof and the nature of any conditions attaching to the consent which affect the value.

              However, the value of the property should also be given as a net of any charges, levy, tax, etc.

              Amended: April 2013

          • Opinion and Consent Letters

            • TMA-2.10.7

              Standards of care; A valuation must be made with due care and consideration by the valuer or professional adviser making the valuation.

              Amended: October 2019

            • TMA-2.10.8

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.10.9

              When the valuer withdraws its written consent, the document must state such fact.

            • TMA-2.10.10

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

          • [This Subsection was deleted in October 2019]

            • TMA-2.10.11

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

        • TMA-2.11 TMA-2.11 Issuance of Documents

          • Filing of Documents for Comments

            • TMA-2.11.1

              All documents must be filed with the CBB for comment prior to release or publication and must not be released or published until the CBB has confirmed within 15 days that it has no further comments thereon. The final printed copies of the document must be filed with the CBB.

          • Publication of Documents

            • TMA-2.11.2

              All announcements in respect of listed companies must be made in accordance with the requirements of the Disclosure Standards. All announcements in respect of unlisted companies must be circulated to their shareholders.

          • [This Subsection was deleted in October 2019]

            • TMA-2.11.3

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

        • TMA-2.12 TMA-2.12 Offers for More than One Class of Equity Shares

          • TMA-2.12.1

            Where a company has more than one class of equity share capital, a comparable offer must be made for each class whether such capital carries voting rights or not. The comparable offer or proposal for each class of share capital required must normally be subject to similar conditions. Such a scheme must be considered at separate meetings for each class of the equity share capital, if required by law or the company's Memorandum and Articles of Association.

            Amended: October 2019

        • TMA-2.13 TMA-2.13 Appropriate Offers for Convertibles

          • Offeree Companies with Convertible Securities

            • TMA-2.13.1

              Where an offer is made for equity share capital and the offeree company has convertible securities outstanding, the offeror must make an appropriate offer or proposal to the holders of the convertible securities to ensure that their interests are safeguarded. Holders of convertible securities must be treated equally.

              Amended: October 2019

          • Professional Independent Advice

            • TMA-2.13.2

              The board of the offeree company must obtain professional independent advice in writing on the offer or proposal to the holders of convertible securities and the substance of such advice must be made known to all holders of its securities, together with the board's views on the offer or proposal.

              Amended: October 2019

          • Dispatch of Appropriate Offers

            • TMA-2.13.3

              Whenever practicable the offer or proposal should be dispatched to the holders of convertible securities at the same time that the offer document is posted to other shareholders, but if this is not practicable the CBB should be consulted and the offer or proposal should be dispatched as soon as possible thereafter.

              Amended: October 2019

          • Conditions of Appropriate Offers

            • TMA-2.13.4

              The offer or proposal required by TMA-2.13.1 must be made conditional on the offer for equity share capital becoming or being declared unconditional and should not normally be subject to any other conditions. It may, however, be put by way of a scheme to be considered at a meeting of the holders of convertible securities in accordance with the Memorandum and Articles of Association and/or offer documents in respect of such securities, as the case may be.

              Amended: October 2019

          • Warrants, Options and Subscription Rights

            • TMA-2.13.5

              The provision of Paragraph TMA-2.13.1 applies also when an offeree company has warrants, options or subscription rights outstanding in respect of any class of equity share capital (including non-transferable options), with the appropriate amendments.

              Amended: October 2019

        • TMA-2.14 TMA-2.14 Offer Timetable

          • Offer to Remain Open for 15 Days

            • TMA-2.14.1

              [This Paragraph was moved to TMA-2.14.2A in October 2019].

              Amended: October 2019

            • TMA-2.14.2A

              Where a conditional offer becomes or is declared unconditional, it must remain open for acceptance for not less than 15 calendar days thereafter.

              Added: October 2019

          • Offering Period

            • TMA-2.14.2

              Where an offer document and the offeree board circular are distributed on different dates, the offer must initially be open for acceptance for at least 15 calendar days following the date on the later date in respect of which the document is posted.

              In any announcement of an extension of an offer, the next closing date must be stated.

              Amended: October 2019

          • Final Day Rule

            • TMA-2.14.3

              Except with the consent of the CBB, an offer (whether revised or not) may not become or be declared unconditional as to acceptances after the official working hours on the 60th day after the day the initial offer document was posted. The CBB's consent will normally be granted only if a competing offer has been announced (in which case both or all offerors will normally be bound by the timetable established by the posting of the competing offer document which is posted later).The consent of the CBB, in such cases, will only be given in very exceptional circumstances.

              Amended: October 2019

          • Compulsory Acquisition

            • TMA-2.14.4

              Where an offeror has stated in the offer document its intention to avail itself of any powers of compulsory acquisition, the offer must not remain open for acceptance for more than 90 days from the posting of the offer document, unless the offeror has by that time become entitled to exercise such powers of compulsory acquisition, in which event it must do so without delay.

              Amended: October 2019

          • Time for Fulfillment of all other Conditions

            • TMA-2.14.5

              Except with the consent of the CBB, all conditions must be fulfilled or the offer must lapse within 15 calendar days of the first closing date or of the date the offer becomes or is declared unconditional as to acceptances, whichever is the later.

              Amended: October 2019

        • TMA-2.15 TMA-2.15 Revised and Alternative Offers

          • Offer Open for 15 Calendar Days after Revision

            • TMA-2.15.1

              If, in the course of an offer, the offeror revises its terms, all offeree company shareholders, whether or not they have already accepted the offer, will be entitled to the revised terms. A revised offer must be kept open for at least 15 calendar days following the date on which the revised offer document is posted. Therefore, no revised offer document may be posted in the 15 calendar days ending on the last day the offer is able to become unconditional as to acceptances.

              Amended: October 2019

          • New Conditions for Improved Offers

            • TMA-2.15.2

              An offeror may introduce new improved conditions to be attached to a revised offer, but only to the extent necessary to implement the revised offer and subject to the consent of the CBB.

              Amended: October 2019

          • Reintroduction of Alternative Offers

            • TMA-2.15.4

              Where a firm statement has been made that an alternative offer will not be extended or reintroduced, neither that alternative, nor any substantially similar alternative, may be extended or reintroduced. Where, however, such a statement has not been made and an alternative offer has closed, an offeror will not be precluded from reintroducing that alternative at a later date. Reintroduction constitutes a revision of the offer and is, therefore, subject to the requirements of, and only permitted as provided in, this Section.

              Amended: October 2019

            • TMA-2.15.5

              CBB must be consulted if a competitive situation continues to exist in the later stages of the offer period. CBB will normally consider applying a procedure to resolve the situation which is agreed between competing offerors and the board of the offeree company.

        • TMA-2.16 TMA-2.16 Acceptors' Right to Withdraw

          • TMA-2.16.1

            An acceptor will be entitled to withdraw his acceptance after 14 days from the first closing date of the offer, if the offer has not become unconditional as to acceptances by that date. Such entitlement to withdraw will be exercisable until the offer becomes unconditional as to acceptances. However, on the 60th day (or any date beyond which the offeror has stated that its offer will not be extended) the final time for the withdrawal must coincide with the final time for the lodgement of acceptances.

            Amended: October 2019

        • TMA-2.17 TMA-2.17 Statements during Course of Offer

          • TMA-2.17.1

            Information, documents, advertisements or statements issued during an offer period must not be misleading and must be of the highest standard and accuracy. This is whether the information is issued directly by the offeror, offeree or by the advisors. All parties and their advisers are responsible for ensuring that any release of information abides with this rule.

          • TMA-2.17.2

            Any parties of an offer or potential offer and their advisors must take care not to issue any statements which, while not factually inaccurate, may mislead shareholders and the market and cause uncertainty. Statements regarding an offeror improving his offer without committing itself to doing so must not be made.

          • TMA-2.17.3

            Documents issued to shareholders or advertisements published in relation to an offer by, or on behalf of, the offeror or the offeree company, must state where appropriate, that the directors of the offeror and/or the offeree company accept full responsibility for the information contained in the documents and advertisements, to the best of their knowledge, that the information contained in the document or advertisement is in accordance with the facts and that it contains no omissions likely to affect the importance and consistencies of the document.

          • No Extension Statements

            • TMA-2.17.4

              If statements in relation to the duration of an offer such as "the offer will not be extended beyond a specified date unless it is unconditional as to acceptances" ("no extension statements") are included in documents sent to offeree company shareholders, or are made by or on behalf of an offeror, its directors, officials or advisers, and not withdrawn immediately if incorrect, only in extremely exceptional circumstances will the offeror be allowed subsequently to extend its offer beyond the stated date except where the right to do so has been specifically reserved.

              Amended: October 2019

          • No Increase Statements

            • TMA-2.17.5

              If statements in relation to the value or type of consideration such as "the offer will not be further increased" or "our offer remains at BHD X per share and it will not be raised" ("no increase statements") are included in documents sent to offeree company shareholders, or are made by or on behalf of an offeror, its directors, officials or advisers, and not withdrawn immediately if incorrect, only in extremely exceptional circumstances will the offeror be allowed subsequently to amend the terms of its offer in any way even if the amendment would not result in an increase of the value of the offer (e.g. the introduction of a lower paper alternative) except where the right to do so has been specifically reserved.

              Amended: October 2019

            • TMA-2.17.6

              An offeror or offeree company must not make statements about the level of support received from shareholders or other persons, unless they have clearly stated their intentions to the offeror or offeree company, or advisors, as appropriate. CBB will require statements made to be verified, which could include the shareholder confirming their support in writing to the offeror or its advisors, which will then be treated as a letter of intent/consent, as the case may be.

              Amended: October 2019

            • TMA-2.17.7

              Shareholders must not be pressured by any means or by any party involved in an offer to accept or reject such offer through information, documents, advertisements or statements.

              Amended: October 2019

          • Advertisements

            • TMA-2.17.8

              Any advertisements published in terms of the Module must obtain the prior approval of the CBB. The publication of advertisements in relation to an offer or potential offer is prohibited unless they fall within the following categories:

              (a) Product advertisements not having an effect on an offer or potential offer, CBB must be consulted if there is any doubt;
              (b) Corporate image advertisements not having an effect on an offer or potential offer;
              (c) Advertisements in relation to non-controversial information about an offer, such as the value of an offer or closing dates;
              (d) Advertisements in relation to preliminary or interim results;
              (e) Advertisements comprising a tender offer; or
              (f) [This Subparagraph was deleted in October 2019]
              (g) Advertisements published with the specific prior consent of CBB.
              Amended: October 2019

            • TMA-2.17.9

              Any forms connected with an offer, including acceptance forms, withdrawal forms, proxy cards must not be published in newspapers or any form of advertisement.

          • Telephone Campaigns

            • TMA-2.17.10

              Campaigns relating to contacting shareholders or persons interested in the offer by telephone must be conducted only by the professional advisor and his staff, who are fully aware of the responsibilities and requirements of this Module. Information passed to such persons must be accurate, already published and not misleading. Persons contacted must not be pressured and must be encouraged to consult their advisors.

              Amended: October 2019

            • TMA-2.17.11

              [This Paragraph was deleted in October 2019]

              Deleted: October 2019

        • TMA-2.18 TMA-2.18 Announcement of Result of Offer

          • Timing and Contents

            • TMA-2.18.1

              An offeror must publish an announcement on the day on which the offer will expire, or becomes or is declared unconditional as to acceptances, or is revised or extended.

              Amended: October 2019

            • TMA-2.18.2

              The offeror must also forward such announcement to the CBB and the licensed exchange and offeree company and publish the announcement on the website of the licensed exchange before trading hours at the licensed exchange in Bahrain no later than 09:00 on the business day following the day of the abovementioned announcement date.

              Amended: October 2019

            • TMA-2.18.3

              The announcement must state the number of shares and rights over shares:

              (a) For which acceptances of the offer have been received;
              (b) Held, controlled, or directed by the offeror or persons acting in concert with it before the offer period; and
              (c) Acquired or agreed to be acquired during the offer period by the offeror or any persons acting in concert with it.
              Amended: October 2019
              Amended: April 2013

            • TMA-2.18.4

              The announcement must include a prominent statement of the total numbers of shares which the offeror may count towards the satisfaction of its acceptance condition and must specify the percentages of each class of relevant securities represented by these figures. CBB must be consulted if the offeror wishes to make any other statement about acceptance levels in any announcement made.

              Amended: October 2019

            • TMA-2.18.5

              The offeror must send copies of the certificate issued by the designated receiving bank to the CBB, the licensed exchange and the offeree company's professional advisor as soon as possible after it is issued.

              Amended: October 2019

            • TMA-2.18.6

              If statements are made during an offer by an offeror or its advisors, either orally or written, about level of acceptances of the offer or number or percentages of shareholders who have accepted the offer, then an immediate announcement must be made.

            • TMA-2.18.7

              Companies whose securities are not admitted to listing or trading that are a party to the offer will normally not be required to make a public announcement, however it will be required to inform all shareholders about the result of the offer.

              Amended: October 2019

            • TMA-2.18.8

              When the offeree company has the intention to make an announcement on the level of withdrawals of acceptance of an offer, CBB must be consulted before any announcement is made.

          • Consequences of Failure to Announce

            • TMA-2.18.9

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.18.10

              If the offeror is unable to comply with any of the requirements of this Section, within the time limit granted, the CBB shall have the right to request the licensed exchange to suspend dealings in the offeree company's shares and, where appropriate, in the offeror's shares until the relevant information and documents are provided.

              Amended: October 2019

            • TMA-2.18.11

              If an offeror has been declared unconditional as to acceptance, but the offeror fails to comply with any of the requirements of this Section by the close of trading at the licensed exchange in Bahrain on the relevant day, the CBB shall have the right to grant the acceptors the right of withdrawal from the offer.

              Amended: October 2019

            • TMA-2.18.12

              This right of withdrawal may be terminated not less than 8 days after the relevant date in the case that the offeror confirms that the offer is still unconditional as to acceptances and complies with this Section.

              Amended: October 2019

        • TMA-2.19 TMA-2.19 Settlement of Consideration and Share Transfer

          • Timing of Acquisition and Payment

            • TMA-2.19.1

              Shares represented by acceptances in any offer must not be accepted by the offeror until the offer has become or has been declared unconditional. Such shares must be paid by the offeror in accordance with the terms of payment as stipulated in the offer document.

              Amended: October 2019

          • Withdrawn or Lapsed Offers

            • TMA-2.19.2

              If an offer is withdrawn or lapses, the offeror must, as soon as possible but in any event within 7 calendar days thereof, post the share certificates or transfer documents lodged with acceptance forms to, or make such share certificates or transfer documents available for collection by, those offeree company shareholders who accepted the offer.

              Amended: October 2019

            • TMA-2.19.3

              The offeror must as and by way of security for performance of his obligations under this Module, deposit in an escrow account a sum equivalent to 100% of the consideration payable in cash under the offer before the commencement of the offer period.

              Added: October 2019

            • TMA-2.19.4

              The total consideration payable under the public offer shall be calculated assuming full acceptances.

              Added: October 2019

            • TMA-2.19.5

              The escrow account can be maintained either as a cash deposit with a CBB licensed bank; or as a bank guarantee in favour of the professional adviser.

              Added: October 2019

          • Payment of Consideration

            • TMA-2.19.6

              For the amount of consideration payable in cash, the offeror must prior to the execution date of the transaction, open an account with a licensed bank and deposit the entire sum payable to the shareholders as consideration for acceptances received and accepted. The amount to be so deposited shall be the relevant total from the escrow account.

              Added: October 2019

            • TMA-2.19.7

              In respect of consideration payable by way of exchange of securities, the offeror must ensure that the securities are actually issued and dispatched to the shareholders within a period of 7 calendar days from the last closing date of the offer.

              Added: October 2019

        • TMA-2.20 TMA-2.20 Restrictions on Dealings before and during the Offer

          • Restrictions on Dealings Before the Offer

            • TMA-2.20.1

              No dealings of any kind in the securities of the offeree company (including convertible securities, warrants, options and derivatives in respect of such securities) may be transacted by any person, not being the offeror, who is engaged in the offer and who has confidential price-sensitive information concerning an actual or contemplated offer or revised offer between the time when there is reason to suppose that an approach or an offer or revised offer is contemplated and the announcement of the approach, the offer, the revised offer, or of the termination of the discussions where an announcement of the offer has been made public.

              Amended: October 2019

            • TMA-2.20.2

              Such restrictions do not apply to persons acting in concert with an offeror in respect of dealings where the securities of such dealings are excluded from the offer or where there are no-profit arrangements in place.

              Amended: October 2019

            • TMA-2.20.3

              No person who is engaged in the offer and who has access to the price-sensitive information may deal in securities of the offeror except where the proposed offer is not price-sensitive in relation to such securities.

              Amended: October 2019

            • TMA-2.20.4

              No person who is engaged in the offer and who has access to the price-sensitive information may make any recommendations to any other person as to dealing in the relevant securities.

              Amended: October 2019

            • TMA-2.20.5

              CBB must be consulted before acquisitions of interests in offeree company securities are made by members or potential members of a consortium. If there are existing interests in such securities, it will be necessary to satisfy the CBB that they were acquired before the consortium was formed.

              Amended: October 2019

            • TMA-2.20.6

              CBB will regard a person to have access to confidential price-sensitive information concerning an offer or contemplated offer if any of the following applies:

              (a) A director or employee of one of the companies concerned or engaged in the offer;
              (b) A professional adviser to one of the companies concerned or engaged in the proposed offer;
              (c) In a position to have received and has actually received information through a confidential relationship;
              (d) Connected persons and companies controlled by the offeror and those described in (a), (b) and (c).
              Amended: October 2019

          • No-Profit Arrangement

            • TMA-2.20.7

              Arrangements made by a potential offeror with a person acting in concert, where securities in the offeree company are acquired by the person acting in concert and the offeror will bear all the risks and receive all the benefits are not prohibited by TMA-2.20.1. Arrangements which have benefits or potential benefits to the person acting in concert, beyond normal expenses and carrying costs, are normally prohibited. In cases of doubt, CBB should be consulted.

              Amended: October 2019

          • Restrictions on Dealings during an Offer

            • TMA-2.20.8

              The offeror and persons acting in concert with it must not sell any securities in the offeree company during the offer period except with the prior consent of the CBB, after 24 hour's advance notice by public announcement of the intention to sell.

              Amended: October 2019

            • TMA-2.20.9

              The CBB will not provide its consent for the sale of securities by an offeror and persons acting in concert with it where a mandatory offer is being made.

              Amended: October 2019

            • TMA-2.20.10

              After an announcement of an intention to sell the securities of the offeree company has been made, neither the offeror nor persons acting in concert with it can make further purchases and only in exceptional circumstances will the CBB allow the offeror to raise the offer price.

              Amended: October 2019

            • TMA-2.20.11

              Subject to TMA-2.20.8 in respect of the conditions applicable, the sale of any shares in the offeree company must not be below the offer price.

              Amended: October 2019

            • TMA-2.20.12

              An offeror or other persons shall be restricted from dealing or procuring other persons to deal, if the offeror has been supplied by the offeree company with confidential price sensitive information during offer discussions.

              Amended: October 2019

            • TMA-2.20.13

              The consent of the CBB is not required for placing or underwriting arrangements made during an offer in order to achieve the minimum public shareholding to maintain the listing of the offeree company's shares provided that such arrangements are not effective prior to the date when the offer becomes or is declared unconditional. If an offeror wishes to make such arrangements in order to hold less than 75% (or such percentage as may be relevant in the event that the licensed exchange has accepted that a percentage other than 20% of the offeree company's shares needs to be in public hands to maintain the listing of the offeree company's shares) of the offeree company's shares, the consent of the CBB is required.

              Amended: October 2019

            • TMA-2.20.14

              Directors and professional advisers to a company who have interests in securities in that company that is party to an offer, must not deal in such securities contrary to any advice they have given to shareholder, or which it can be reasonably assumed that they were associated, without giving a 24 hours advance public notice of their intentions with an explanation.

              Amended: October 2019

          • Restriction on Dealings by Offeror during Non-Cash Offers

            • TMA-2.20.15

              Where the consideration under an offer includes securities of the offeror or a person acting in concert with it, neither the offeror nor any person acting in concert with it may deal in any such securities during the offer period.

              Amended: October 2019

          • Restrictions on Dealings by a Competing Offeror

            • TMA-2.20.16

              Except with the consent of the CBB, where two competing offers have been made and one of the offers has lapsed, then neither that offeror nor any person acting in concert with that offeror may acquire any interest in shares in the offeree company at a price higher than that made available under its lapsed offer.

              Amended: October 2019

            • TMA-2.20.17

              Paragraph TMA-2.20.16 shall not apply where each of the competing offers has either been declared unconditional in all respects or has itself lapsed.

              Amended: October 2019

            • TMA-2.20.18

              For the purpose of Paragraph TMA-2.20.16, the price of the lapsed offer shall be calculated as at the day the offer lapsed.

              Amended: October 2019

          • Dealings After Termination of Discussions

            • TMA-2.20.19

              If following an announcement that offer discussions are taking place, or that an approach or offer is being contemplated, discussions are then terminated or the offeror then decides not to proceed with an offer, an announcement of the position must take place before any dealings in securities of the offeree company take place by any person privy to confidential information.

              Amended: October 2019

          • Dealings in Offeree Company Securities by Certain Offeree Company Associates

            • TMA-2.20.20

              During the offer period, professional advisers or stockbrokers (or any person controlling, controlled by or under the same control as any such adviser or stockbroker) to an offeree company (or any of its parents, subsidiaries or fellow subsidiaries, or their associated companies or companies of which such companies are associated companies) must not, except with the consent of CBB:

              (a) Purchase offeree company securities or deal in convertible securities, warrants, options or derivatives in respect of such securities for its own account or for its discretionary clients;
              (b) Make any loan to a person to assist in making any such purchases; or
              (c) Enter into any indemnity or option arrangement or any arrangement, agreement or understanding, formal or informal, or in any other nature, which may be an inducement for a person to retain, deal or refrain from dealing in relevant securities of the offeree company.

            • TMA-2.20.21

              Paragraph TMA-2.20.20 does not apply to fund managers and principal traders that are exempt by CBB who are dealing for any of their investment accounts managed on a discretionary basis.

              Amended: October 2019

          • Gathering Irrevocable Commitments

            • TMA-2.20.22

              Any person proposing to contact a private individual or a corporate shareholder with the aim of obtaining an irrevocable commitment should consult CBB in advance.

              Amended: October 2019

        • TMA-2.21 TMA-2.21 Disclosure of Dealings During Offer Period

          • Dealings by Parties and by Associates for Themselves or for Discretionary Clients

            • TMA-2.21.1

              Dealings in relevant securities by an offeror or the offeree company, and by any associates, for their own account or for the account of discretionary investment clients account during an offer period must be publicly disclosed.

              Amended: October 2019

            • TMA-2.21.2

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.21.3

              Except with the consent of the CBB, dealings in relevant securities during an offer period for the account of discretionary investment clients by an associate which is an exempt fund manager connected with an offeror or the offeree company must be privately disclosed. If, however, the Exempt fund manager is an associate by virtue of sub-paragraph (f) of the definition of associate, the exempt fund manager must disclose publicly, in addition to disclosing privately.

              Amended: October 2019

          • Dealings by Parties and by Associates for Non-Discretionary Clients

            • TMA-2.21.4

              Except with the consent of the CBB, dealings in relevant securities during an offer period by an offeror or the offeree company, and by any associates, for the account of non-discretionary investment clients (other than an offeror, the offeree company and any associates) must be privately disclosed.

              Amended: October 2019

          • Discretionary Accounts

            • TMA-2.21.5

              If a person manages investment accounts on a discretionary basis, relevant securities so managed will be treated, for the purpose of this rule, as controlled by that person and not by the person on whose behalf the relevant securities are managed. Except with the consent of the CBB, where more than one discretionary investment management operation is conducted in the same group, relevant securities controlled by all such operations will be treated for the purpose of this rule as those of a single person and must be aggregated.

              Amended: October 2019

          • Connected Exempt Principal Traders

            • TMA-2.21.6

              Dealings in relevant securities by an exempt principal trader connected with an offeror or the offeree company must be aggregated and disclosed to the licensed exchange before trading hours at the licensed exchange in Bahrain on the business day following the date of the transactions.

              In the case of dealings in options or derivatives, full details must be given so that the nature of the dealings can be fully understood.

              Amended: October 2019

            • TMA-2.21.7

              For the purposes of this Section, the disclosure shall consider the following:

              (a) Disclosure shall be made before trading hours at the licensed exchange in Bahrain on the business day following the date of the transaction. CBB should be consulted on any practical difficulties;
              (b) In the case of a public disclosure, dealings should be disclosed in writing to all offerors and the offeree company or their respective professional advisers while also disclosing to the CBB and also, in respect of dealings in listed securities, to the licensed exchange; and
              (c) The disclosure shall include the following:
              (i) The total number of securities purchased or sold;
              (ii) Prices paid or received. In the case of an average price bargain each underlying trade should be disclosed;
              (iii) Identity of the associate or any other person dealing if different from the owner or controller;
              (iv) If dealing with an associate, an explanation of how that status arises;
              (v) If disclosure is made by a 5 percent shareholder or group of shareholders, a statement to that effect;
              (vi) The resultant total number of relevant securities owner or controlled by the associate and percentage which it represents; and
              (vii) If relevant, details of any arrangements required in the context of indemnity and other arrangements.
              Amended: October 2019
              Amended: April 2013

        • TMA-2.22 TMA-2.22 When Cash Offer is Required

          • TMA-2.22.1

            Except with the CBB's consent, a cash offer is required where:-

            (a) The offeror and any person acting in concert with it has bought for cash during the offer period and within 6 months prior to its commencement, an interest in shares of any class under offer in the offeree company carrying 10% or more of the voting rights of that class; or
            (b) In the view of the CBB there are circumstances which render such a course necessary.

            The offer for each class of shares must be in cash or accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert with it for shares of the class during the offer period and within 6 months prior to the commencement.

            Amended: October 2019
            Amended: April 2013

        • TMA-2.23 TMA-2.23 Purchases at Above Offer Price

          • Highest Price Paid

            • TMA-2.23.1

              [This Paragraph was deleted in October 2019].

              Deleted: October 2019

            • TMA-2.23.2

              [This Paragraph was moved to Paragraph TMA-2.23.5A in October 2019].

              Amended: October 2019

          • Acquisitions Before Announcement of a Firm Intention to Make an Offer

            • TMA-2.23.3

              The offer to the holders of shares of the same class shall not be on less favourable terms, when an offeror or any person acting in concert with it has acquired an interest in shares in the offeree company:

              (a) Within the three month period prior to the commencement of the offer period; or
              (b) During the period, if any, between an announcement made by the offeror and the commencement of the offer period.
              Amended: October 2019

          • Acquisitions After Announcement of a Firm Intention to Make an Offer

            • TMA-2.23.4

              After an announcement of a firm's intention to make an offer and before the offer closes for acceptance, an offeror or any person acting in concert with it acquires any interest in shares at above the offer price, it shall increase its offer to not less than the highest price paid for the interest in shares acquired in such circumstances.

              Amended: October 2019

            • TMA-2.23.5

              Immediately after the acquisition of shares at above the offer price, the offeror must announce that a revised offer will be made in accordance with this Section. This announcement must state the number of shares concerned and the price paid.

              Amended: October 2019

            • TMA-2.23.5A

              Subscription for new securities at a price above the offer price will be treated as a purchase for the purposes of Paragraph TMA-2.23.4.

              Added: October 2019

          • Offers Involving a Further Issue of Listed Securities

            • TMA-2.23.6

              If the offer involves a further issue of securities of a class already listed on a licensed exchange, the current value of the offer on a given day should normally be established by reference to the weighted average traded price of board lots (excluding special bargains and odd lots) of such securities traded during the immediately preceding trading day. If the offer involves a combination of cash and securities and further purchases of the offeree company's shares oblige the offeror to increase the value of the offer, the offeror must endeavour, as far as practicable, to effect such increase while maintaining the same ratio of cash to securities as is represented by the offer.

              Amended: October 2019

        • TMA-2.24 TMA-2.24 Provision for Escrow

          [This Section was moved to Section TMA-2.19 in October 2019]

          • TMA-2.24.1

            [This Section was moved to Section TMA-2.19 in October 2019]

            Amended: October 2019

          • TMA-2.24.2

            [This Section was moved to Section TMA-2.19 in October 2019]

            Amended: October 2019

          • TMA-2.24.3

            [This Section was moved to Section TMA-2.19 in October 2019]

            Amended: October 2019

          • Payment of Consideration

            [This Section was moved to Section TMA-2.19 in October 2019]

            • TMA-2.24.4

              [This Section was moved to Section TMA-2.19 in October 2019]

              Amended: October 2019

            • TMA-2.24.5

              [This Section was moved to Section TMA-2.19 in October 2019]

              Amended: October 2019

        • TMA-2.25 TMA-2.25 No Special Deals or Arrangements with Selected Shareholders

          • TMA-2.25.1

            Except with the CBB's consent, the offeror or persons acting in concert with it may not make any arrangements with selected shareholders; and may not deal or enter into arrangements to deal; or make purchases or sales of shares of the offeree company; or enter into arrangements concerning acceptance of an offer either during an offer or when one is reasonably in contemplation, if there are favourable conditions attached which are not being extended to all shareholders.

            Amended: October 2019

          • TMA-2.25.2

            An arrangement with special conditions attached includes any arrangement where there is a promise to make good to a vendor of shares any difference between the sale price and the price of any subsequent successful offer, revised offer or successful competing offer. An irrevocable commitment to accept an offer combined with an option to put the shares to the offeror should the offer fail will also be regarded as such an arrangement.

            Amended: October 2019

          • TMA-2.25.3

            Two-tier offers where shareholders who accept the offer before a stipulated cutoff date would receive a higher consideration than those who accept the offer after the cut-off date will be regarded as arrangements with special conditions. A two-tier offer that offers to pay a higher offer price if a certain level of acceptances is reached will not be regarded as an arrangement with special conditions if the higher offer price is payable to all accepting shareholders.

            Amended: October 2019

          • TMA-2.25.4

            Paragraph TMA-2.25.1 also covers cases where a shareholder in an offeree company is to be remunerated for playing a part in promoting an offer. The CBB will normally consent to such remuneration, provided that the shareholding is not substantial and it can be demonstrated that a person who had performed the same services, but had not at the same time been a shareholder, would be entitled to receive no less remuneration.

            Amended: October 2019

          • TMA-2.25.5

            The CBB should be consulted if the management of the offeree company is to remain financially interested in the business after the offer is completed. The methods by which this may be achieved vary but the principle which the CBB is concerned to safeguard is that the risks as well as the rewards associated with an equity shareholding should apply to the management's retained interest.

            Amended: October 2019

        • TMA-2.26 TMA-2.26 Proxies

          • TMA-2.26.1

            A shareholder must not appoint a person as his proxy to vote in respect of his shares in the offeree company; or to exercise any other rights; or to take any other action in relation to those shares unless the appointment is under the following conditions:

            (a) The offer is unconditional in all respects;
            (b) The votes are to be cast as far as possible to satisfy any outstanding condition to the offer, where relevant;
            (c) The appointment ceases to be valid if the acceptance is withdrawn; and
            (d) The appointment only applies to shares assented to the offer.
            Added: October 2019

          • TMA-2.26.2

            The terms for the appointment of a proxy must be set out in the offer document.

            Added: October 2019

      • TMA-3 TMA-3 Types of Offer

        • TMA-3.1 TMA-3.1 Mandatory Offer

          • Conditions for a Mandatory Offer

            • TMA-3.1.1

              A mandatory offer is required when:

              (a) Any person acquires, whether by series of transactions over a period of time or not, 30% or more of the voting rights of a company;
              (b) Two or more persons are acting in concert and they collectively hold less than 30% of the voting rights of a company, and any one or more of them acquires voting rights which increases to 30% or more of the voting rights of the company; or
              (c) Any person holds not less than 30% of the voting rights of a company but does not hold shares carrying more than 50% of such voting rights acquires additional shares carrying more than 1% of the voting rights in any period of 6 months; or
              (d) Two or more persons are acting in concert, and they collectively hold not less than 30%, but not more than 50% of the voting rights of a company, and any one or more of them acquires additional voting rights carrying more than 1% of the voting rights in any period of 6 months.
              Amended: October 2019

            • TMA-3.1.2

              The person making the mandatory offer is required to extend offers to all holders of each class of equity share capital of the company, whether the class carries voting rights or not, and also to the holders of any class of voting non-equity share capital in which such person, or persons acting in concert with him, hold shares.

              Amended: October 2019

            • TMA-3.1.3

              Offers for different classes of equity share capital should be consulted in advance in such cases.

              Amended: October 2019

          • Creeping Provision

            • Acquisition and Disposal

              • TMA-3.1.3A

                Any person, or together with persons acting in concert, holding not less than 30% but not more than 50% of the voting rights of a company may be permitted to acquire additional shares carrying not more than 1% of such voting rights in any period of 6 months without incurring an obligation to make a mandatory offer. Within this 1% band, dispositions of voting rights may be netted off against acquisitions thereof. If such person, or together with persons acting in concert, intend to acquire such additional shares, the CBB must be consulted in advance.

                Added: October 2019

            • Effect of Disposal

              • TMA-3.1.3B

                Any person, or together with persons acting in concert, holding not less than 30% of the voting rights of a company disposes of voting rights in circumstances other than those mentioned in Paragraph TMA-3.1.3A, then the provisions of TMA-3.1 shall apply to the reduced holding. As a result, an obligation to make a mandatory offer will arise if:

                a) the reduced holding is 30% and more and is increased by acquisition of voting shares by more than 1% in any period of 6 months; or
                b) following a reduction of the holding to less than 30%, it is increased to 30% or more.

                In this context, disposal of voting rights may not be netted off against acquisitions thereof.

                Added: October 2019

            • Holding between 49% and 50%

              • TMA-3.1.3C

                The restriction in Rule TMA-3.1.1 (c) applies to any person, or group of persons acting in concert, holding 50% or less of the voting rights. Thus, a person or group of persons holding between 49% and 50% of the voting rights of a company will be restricted from acquiring more than a further 1% of the offeree company's voting rights for any period of 6 months thereafter.

                Added: October 2019

              • TMA-3.1.3D

                A person or group of persons acting in concert, holding more than 50% of the voting rights of a company will normally be free to acquire further shares without incurring any obligation under TMA-3.1 to make a mandatory offer subject to Paragraph TMA-3.1.3E.

                Added: October 2019

            • Acquisition of voting rights by members of a group acting in concert

              • TMA-3.1.3E

                An obligation to make a mandatory offer will normally arise whenever a group of persons acting in concert collectively hold 30% or more of the voting rights of a company and as a result of an acquisition of the voting rights from another member of the group or from non-members, a single member comes to hold 30% or more of the voting rights of the company or, if holding between 30% and 50%, has acquired more than 1% of the voting rights in any period of 6 months.

                Added: October 2019

          • Placing and Other Arrangements

            • TMA 3.1.4

              [This Paragraph was deleted in April 2013].

              Deleted: April 2013

            • TMA-3.1.5

              An agreement between a shareholder and financial institutions and lending institutions, where the shareholder borrows money for the acquisition of shares which gives rise to an obligation under Paragraph TMA-3.1.1 will not normally result in such institution becoming a concert party.

              Amended: October 2019

            • TMA-3.1.6

              An offer will not be required under Paragraph TMA-3.1.1 where control of the offeree company is acquired as a result of a voluntary offer made in accordance with Module TMA to all the holders of voting equity share capital and other transferable securities carrying voting rights.

              Amended: October 2019

            • TMA-3.1.7

              If a person acquires shares other than through trading on the licensed exchange (exempted transaction) which makes the aggregate number of shares carrying voting rights in which he is interested to 30% or more then the CBB must be consulted.

              Amended: October 2019

            • TMA-3.1.8

              If a person borrows or lends shares he will be treated as holding the voting rights of such shares save for any borrowed shares which he has either on-lent or sold. CBB must be consulted in such cases before borrowing shares when taken together with shares he or any person acting in concert is interested in and shares already borrowed or lent by him or any person acting in concert would result in a mandatory offer.

              Amended: October 2019

          • Conditions and Consents

            • TMA-3.1.9

              Except with the consent of CBB:

              (a) An offeror shall not include any other condition in a mandatory offer other than the condition that the offer is subject to the offeror having received acceptances which would result in the offeror and all persons acting in concert with the offeror holding in aggregate more than 50% of the voting rights; and
              (b) No acquisition of any voting rights in shares which would give rise to a requirement for a mandatory offer may be made, if it is dependent on the passing of a resolution at any meeting of the shareholders of the offeror or upon any other conditions, consents or arrangements.
              Amended: October 2019
              Amended: April 2013

            • TMA-3.1.9A

              An offer made under TMA-3.1 should normally be unconditional when the offeror and persons acting in concert with it hold more than 50% of the voting rights before the offer.

              Added: October 2019

          • Nature of Consideration

            • TMA-3.1.10

              The consideration to be paid, or provided, for the acquisition of the voting rights to which the mandatory offer relates shall consist solely of cash, securities, or a combination thereof at not less than the highest price paid by the offeror or any person acting in concert with it for shares of that class of the offeree company during the offer period and within 6 months prior to its commencement.

              Amended: October 2019

            • TMA-3.1.11

              The cash offer, securities or a combination thereof for the purpose of Paragraph TMA-3.1.10 must remain open after the offer has become or is declared unconditional for not less than 15 days thereafter.

              Amended: October 2019

            • TMA-3.1.12

              When directors sell shares to an offeror which result in the offeror having to make a mandatory offer, the directors must ensure that the offeror fulfils his obligation under this Module.

              Amended: October 2019

            • TMA-3.1.13

              Such directors must not resign, except with the consent of CBB, from the board of directors until the first closing date of the takeover offer or the date when the takeover offer becomes or is declared unconditional as to acceptances, whichever is the later.

              Amended: October 2019

            • TMA-3.1.14

              Until the offer document has been posted, no offeror, or persons acting in concert, may be appointed to the board of the offeree company or any of its subsidiaries, or exercise or procure the exercise of the votes attaching to any shares in the offeree company.

              Amended: October 2019

          • Whitewash Resolution/Exemption from Mandatory Offer

            • TMA-3.1.15

              Relevant persons in an offer subject to the mandatory offer requirement may apply to the CBB to waive the obligation under the procedure set out for mandatory offers, if the mandatory offer is required as a result of:

              (a) Issuing new securities as consideration for an acquisition, cash injection or subsidiary loan; or
              (b) Fulfilment of obligations in respect of underwriting the issue of securities; or
              (c) Any other circumstance with CBB's approval.
              Amended: October 2019

            • TMA-3.1.16

              For purposes of Paragraph TMA-3.1.15, any application for an exemption from a mandatory offer obligation must be submitted to the CBB before the obligation is triggered.

              Amended: October 2019

            • TMA-3.1.17

              The waiver will be subject to the following conditions:

              (a) Obtaining an independent vote at a shareholders meeting of the offeree company (the Whitewash Resolution) to waive their right to receive a general offer from the offeror and parties acting in concert with the offeror. For this purpose, "independent vote" means a vote by shareholders who are not involved in, or interested in, the transaction in question;
              (b) The whitewash resolution is separate from other resolutions;
              (c) The offeror, parties acting in concert, and parties not independent from them must abstain from voting on the whitewash resolution;
              (d) The offeror, and parties acting in concert, have not acquired and will not acquire any shares or instruments convertible into options, in respect of shares of the offeree company:
              (i) During the period between the proposal announcement and the date shareholders approve the whitewash resolution; and
              (ii) In the 6 months prior to the announcement of the proposal to issue new securities but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of the company in relation to such issue;
              (e) An independent professional adviser shall be appointed by the offeree company to provide its independent shareholders with advice on the whitewash resolution;
              (f) The offeree company must provide a circular to shareholders giving the particulars, at a minimum, information included in Appendix A under Part B of the CBB Rulebook Volume 6; and
              (g) The offeror obtains the CBB's approval in advance.
              Amended: October 2019
              Amended: April 2013

            • TMA-3.1.18

              The CBB waiver cannot be transferred or assigned to another person.

            • TMA-3.1.19

              In the case of underwriting or placing of offeree company securities, the CBB must be furnished with details of all proposed underwriters or placees.

              Amended: October 2019

            • TMA-3.1.20

              An announcement must be made by the offeree company giving the result of the meeting and the number and percentage of offeree company shares that the offeror has become entitled to as a result subsequent to the meeting at which the proposals are considered by shareholders.

              Amended: October 2019

            • TMA-3.1.21

              Immediately following the approval of the proposals at the shareholders' meeting, the offeror will be free to acquire shares in the offeree company, subject to provisions under Module TMA.

              Amended: October 2019

          • Prompt Registration of Transfers

            • TMA-3.1.22

              [This Paragraph was moved to Paragraph TMA-2.8.7 in October 2019]

              Amended: October 2019

        • TMA-3.2 TMA-3.2 Partial Offer

          • CBB's Consent Required

            • TMA-3.2.1

              CBB's consent is required for any partial offer. CBB will normally grant consent in the case of an offer which could not result in the offeror and persons acting in concert with it being interested in shares carrying 30% or more of the voting rights of a company.

              Amended: October 2019

            • TMA-3.2.2

              Consent will not normally be granted in the case of an offer which could result in the offeror holding not less than 30%, and which must result in a holding of not more than 50% of the voting rights of a company.

              Amended: October 2019

          • Acquisition Prior to the Offer

            • TMA-3.2.3

              In the case of a partial offer which could result in the offeror and persons acting in concert with it holding 30% or more, but which must result in their holding less than 100%, of the voting rights of a company, such consent will not normally be granted if the offeror or persons acting in concert with it have acquired, selectively or in significant numbers, voting rights in the offeree company during the 6 months preceding the application for consent or if voting rights have been acquired at any time after the partial offer was reasonably in contemplation.

              Amended: October 2019

          • Acquisitions During and After the Offer

            • TMA-3.2.4

              In all partial offers, the offeror and persons acting in concert with it must not acquire any interest in shares in the offeree company during the offer period.

              Amended: October 2019

            • TMA-3.2.5

              The offeror or any person acting in concert with the offeror, or any person who is subsequently acting in concert with any of them in the course of the partial offer, must not acquire any interest in shares during the 12-month period following the end of the offer period, except with the consent of CBB.

              Amended: October 2019

          • Offer for between 30% and 50%

            • TMA-3.2.6

              Any partial offer which could result in the offeror holding 30% or more of the voting rights of a company must normally be conditional, not only on the specified number of acceptances being received, but also on approval of the offer, signified by means of a separate box on the form of acceptance, being given by shareholders holding over 50% of the voting rights not held by the offeror and persons acting in concert with it. This requirement may be waived if over 50% of the voting rights of the offeree company are held by one independent shareholder who has indicated his approval.

              Amended: October 2019

          • Control Position Warning

            • TMA-3.2.7

              In the case of a partial offer which could result in the offeror holding more than 50% of the voting rights of the offeree company, then this must be included in a prominent manner in the offer document.

              Amended: October 2019

            • TMA-3.2.8

              Where a partial offer made for a company with more than one class of equity share capital could result in the offeror and persons acting in concert with it being interested in shares carrying 30% or more of the voting rights, a comparable offer must be made for each class.

              Amended: October 2019

          • Precise Number of Shares to be Stated

            • TMA-3.2.9

              A partial offer must be made for a precise number of shares, such number must be stated, and the offer may not be declared unconditional as to acceptances unless acceptances are received for not less than that number.

              Amended: October 2019

          • Pro Rata Entitlement

            • TMA-3.2.10

              Partial offers must be made to all shareholders of the class and arrangements must be made for those shareholders who wish to do so to accept in full for the relevant percentage of their holdings. Shares tendered in excess of this percentage must be accepted by the offeror from each shareholder in the same proportion as the number tendered to the extent necessary to enable him to obtain the total number of shares for which he has offered.

              Amended: October 2019

            • TMA-3.2.11

              [This Paragraph was moved to Section TMA-2.26 in October 2019].

            • TMA-3.2.12

              [This Paragraph was moved to Section TMA-2.26 in October 2019].

        • TMA-3.3 TMA-3.3 Voluntary Offer

          • TMA-3.3.1

            A voluntary offer is a take-over offer for the voting shares of a company made by a person when he has not incurred an obligation to make a mandatory offer for the offeree company under TMA-3.1.1.

            Amended: October 2019

          • TMA-3.3.2

            A voluntary offer must be conditional upon the offeror receiving acceptances in respect of voting rights which, together with voting rights acquired or agreed to be acquired before or during the offer, will result in the offeror and person acting in concert with it holding more than 50% of the voting rights.

            Amended: October 2019

          • TMA-3.3.3

            A voluntary offer must not be made subject to conditions whose fulfilment depends on the subjective interpretation or judgement by the offeror or lies in the offeror's hands.

          • TMA-3.3.4

            Normal conditions, such as level of acceptance, approval of shareholders for the issue of new shares and listing, may be attached without reference to the CBB. The CBB should be consulted where other conditions would be attached.

          • TMA-3.3.5

            Where any condition states that the approval of a regulatory authority is required and where such approval is given subject to certain terms and conditions which substantially change the terms and circumstances of the offer, the offeror may, with the consent of the CBB, be permitted to withdraw its offer.

            Amended: October 2019

          • TMA-3.3.6

            Subject to Paragraph TMA-3.1.6, if during an offer period of a non-mandatory offer, the offeror is obliged under Paragraph TMA-3.1.1 to make a mandatory offer, CBB should be consulted in advance. Under such circumstances, the offeror is required to make an announcement.

            Amended: October 2019

          • TMA-3.3.7

            Voluntary offers made must, in respect of each class of equity securities involved, be in cash or securities or a combination thereof at not less than the highest price paid by the offeror or any person acting in concert with it for voting rights of the offeree company during the offer period and within 6 months prior to its commencement.

            Amended: October 2019

          • Pre-Condition in Firm Offer Announcements and Offer Conditions

            • TMA-3.3.8

              An offer must not normally be subject to conditions or pre-conditions which depend solely on subjective judgements by the directors of the offeror or of the offeree company (as the case may be) or the fulfillment of which is in their hands.

              Amended: October 2019

            • TMA-3.3.9

              The CBB may be prepared to accept an element of subjectivity in certain circumstances especially in cases involving official authorisations or regulatory clearances, the granting of which may be subject to additional material obligations for the offeror or the offeree company (as the case may be).

              Amended: October 2019

            • TMA-3.3.10

              [This Paragraph was deleted in October 2019].

          • Acceptability of Pre-Conditions

            • TMA-3.3.11

              Except with the consent of the CBB, an offer must not be announced subject to a pre-condition unless the pre-condition involves:

              (a) A material official authorisation; or
              (b) A regulatory clearance; and
              (c) The offer is publicly recommended by the board of the offeree company; or
              (d) The CBB is satisfied that it is likely to prove impossible to obtain the authorisation or clearance within the timetable.

              The CBB must be consulted in advance if a person proposes to include a pre-condition to which the posting of the offer will be subject.

              Amended: October 2019
              Amended: April 2013

            • TMA-3.3.12

              [This Paragraph was deleted in October 2019].

          • Invoking Conditions and Pre-Conditions

            • TMA-3.3.13

              An offeror must not invoke any condition or pre-condition so as to cause the offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition or pre-condition are of material significance to the offeror in the context of the offer. The acceptance condition is not subject to this provision.

              Amended: October 2019

            • TMA-3.3.14

              Following the announcement of a firm intention to make an offer, an offeror must use all reasonable efforts to ensure the satisfaction of any conditions or pre-conditions to which the offer is subject.

              Amended: October 2019

          • Invoking Offeree Protection Conditions

            • TMA-3.3.15

              An offeree company must not invoke, or cause or permit the offeror to invoke, any condition to an offer unless the circumstances which give rise to the right to invoke the condition are of material significance to the shareholders in the offeree company in the context of the offer.

              Amended: October 2019

        • TMA-3.4 TMA-3.4 Compulsory Acquisitions and Delisting

          • TMA-3.4.1

            A shareholder already holding or controlling 95% or more of the voting rights has to compulsorily offer to acquire the remaining voting rights within 3 months from the date of acquisition of 95% or more.

            Amended: October 2019

          • TMA-3.4.2

            On the completion of the acquisition for the remaining shares in a compulsory acquisition, the offeree company must apply to the CBB to delist from the licensed exchange.

            Amended: October 2019

          • TMA-3.4.3

            The consideration to be paid, or provided, for the acquisition of the voting rights to which the voluntary offer relates shall consist solely of cash, securities, or a combination thereof at not less than the highest price paid by the offeror or any person acting in concert with it for shares of that class of the offeree company during the offer period and within 6 months prior to its commencement.

            Amended: October 2019

        • TMA-3.5 TMA-3.5 [This Section was deleted in October 2019].

          • TMA-3.5.1

            [This Paragraph was deleted in October 2019].

          • [This subsection was deleted in October 2019].

            • TMA-3.5.2

              [This Paragraph was deleted in October 2019].

        • TMA-3.6 TMA-3.6 Restrictions Following an Offer

          • Delay of 12 Months before a Subsequent Offer

            • TMA-3.6.1

              Except with the consent of the CBB, where an offer has been announced or posted but has not become or been declared wholly unconditional and has been withdrawn or has lapsed, neither the offeror, nor any person who acted in concert with the offeror in the course of the original offer, nor any person who is subsequently acting in concert with any of them, may within 12 months from the date on which such offer is withdrawn or lapses either:

              (a) Announce an offer or possible offer for the offeree company (including a partial offer which could result in the offeror and persons acting in concert with it being interested in shares carrying 30% or more of the voting rights of the offeree company);
              (b) Acquire any interest in shares of the offeree company if the offeror or any such person would thereby become obliged to make an offer as per Section TMA-3.1;
              (c) Acquire any interest in, or procure an irrevocable commitment in respect of, shares of the offeree company if the shares in which such person, together with any persons acting in concert with him, would be interested and the shares in respect of which he, or they, had acquired irrevocable commitments would in aggregate carry 30% or more of the voting rights of the offeree company;
              (d) Make any statement which raises or confirms the possibility that an offer might be made for the offeree company; or
              (e) Take any steps in connection with a possible offer for the offeree company where knowledge of the possible offer might be extended outside those who need to know in the offeror and its immediate advisers.
              Amended: October 2019

          • Restrictions on a Partial Offer

            • TMA-3.6.2

              The restrictions in Paragraph TMA-3.6.1 will also apply following a partial offer:

              (a) Which could result in the offeror and persons acting in concert with it being interested in shares carrying not less than 30% but not holding shares carrying more than 50% of the voting rights of the offeree company whether or not the offer has become or been declared wholly unconditional. When such an offer has become or been declared wholly unconditional, the period of 12 months runs from that date; and
              (b) For more than 50% of the voting rights of the offeree company which has not become or been declared wholly unconditional.
              Amended: October 2019

            • TMA-3.6.3

              The restrictions in Paragraph TMA-3.6.1 will not normally apply following a partial offer which could only result in the offeror and persons acting in concert with it being interested in shares carrying less than 30% of the voting rights of the offeree company.

              Amended: October 2019

          • Delay of 6 Months

            • TMA-3.6.4

              Except with the consent of the CBB, if a person, together with any person acting in concert with him, holds shares carrying more than 50% of the voting rights of a company, neither that person nor any person acting in concert with him may, within 6 months of the closure of any previous offer made by him to the shareholders of that company which became or was declared wholly unconditional, make a second offer to any shareholder in that company, or acquire any interest in shares in that company, on more favourable terms than those made available under the previous offer. For this purpose the value of a securities exchange offer shall be calculated as at the date the offer closed. In addition, special deals with favourable conditions attached may not be entered into during this 6-month period.

              Amended: October 2019

          • Restrictions on Dealings by a Competing Offeror

            • TMA-3.6.5

              Except with the consent of the CBB, where an offer has been one of two or more competing offers and has lapsed, neither that offeror, nor any person acting in concert with that offeror, may acquire any interest in shares in the offeree company on more favourable terms than those made available under its lapsed offer until each of the competing offers has either been declared unconditional in all respects or has itself lapsed. For these purposes, the value of the lapsed offer shall be calculated as at the day the offer lapsed.

              Amended: October 2019

      • TMA-4 TMA-4 Share Repurchases

        • TMA-4.1 TMA-4.1 Share Repurchases

          • Increase in Shareholding Deemed to be Acquisitions

            • TMA-4.1.1

              If as a result of a share repurchase a shareholder's proportionate interest in the voting rights of the repurchasing company increases, such increase will be treated as an acquisition of voting rights for purposes of this Module.

              Amended: October 2019

            • TMA-4.1.2

              As a result, a shareholder, or group of shareholders acting in concert, could obtain or consolidate control of a repurchasing company and thereby become obliged to make a mandatory offer. If so the CBB should be consulted at the earliest opportunity.

              Amended: October 2019

            • TMA-4.1.3

              In the case of a share repurchase by general offer the CBB will treat an application for a waiver from the requirement to make a mandatory offer as if it were an application for a whitewash waiver. The CBB will normally grant such a waiver if:

              (a) The TMA Module implications of the share repurchase are disclosed in the repurchasing company's offer document;
              (b) The share repurchase is approved in accordance with applicable shareholder approval requirements by those shareholders who could not become obliged to make a mandatory offer as a result of the share repurchase; and
              (c) For the purpose of this Section, dealings in relevant securities include share repurchases of the relevant securities of a repurchasing company.
              Amended: October 2019
              Amended: April 2013

          • Shareholders' Approval

            • TMA-4.1.4

              During the course of an offer, or even before the date of the offer if the board of the offeree company has reason to believe that a bona fide offer might be imminent, no redemption or purchase by the offeree company of its own securities may, except in pursuance of a contract entered into earlier, be effected without the approval of the shareholders at a general meeting. The notice convening the meeting must include information about the offer or anticipated offer. Where an obligation or other special circumstance exists without a formal contract, the CBB must be consulted and its consent to proceed without a shareholders' meeting obtained.

              Amended: October 2019

          • Disclosure

            • TMA-4.1.5

              Dealings in relevant securities include the purchase of, or taking or exercising an option over, any of its own relevant securities by the offeree company. Shares repurchased by the offeree company are not considered outstanding for the purposes of voting, dividend or earnings per share calculations. Shares repurchased shall not be shown in the financial statements of the offeree company as a direct deduction from the outstanding shares or paid up share capital but must be represented as a deduction from other reserves and retained earnings. Therefore, listed companies shall not be entitled to repurchase its own shares unless it has sufficient distributable reserves or retained earnings. The total amount of securities of the relevant class remaining in issue following the redemption or purchase must also be disclosed.

              Amended: October 2019

          • Disclosure in the Offeree Board Circular

            • TMA-4.1.6

              The offeree board circular must state the amount of relevant securities of the offeree company which the offeree company has purchased during the period commencing 6 months prior to the offer period and ending with the latest practicable date prior to the posting of the document, and the details of any such redemptions and purchases, including dates and prices.

              Amended: October 2019

          • Redemption or Purchase of Securities by the Offeror Company

            • TMA-4.1.7

              The offer document must state (in the case of a securities exchange offer only) the amount of relevant securities of the offeror which the offeror has purchased during the period commencing 6 months prior to the offer period and the details of any such purchases, including dates and prices.

              Amended: October 2019

          • Repurchase Limit

            • TMA-4.1.8

              A company listed on a licensed exchange may repurchase its own shares, after obtaining shareholder approval up to a maximum of 10% of its issued and paid-up share capital. The CBB's prior approval must be sought before the company can repurchase its own shares.

              Amended: October 2019

            • TMA-4.1.9

              The shares repurchase can be used by the company for the purpose of:

              (a) Employee Stock Option Plan;
              (b) Capital reorganisation schemes;
              (c) Reselling such shares in order to support its share price and liquidity on a licensed exchange; or
              (d) For any other purpose with CBB approval.
              Amended: October 2019
              Amended: April 2013

            • TMA-4.1.10

              If the shares repurchased are not utilized for the purpose outlined in Paragraph TMA-4.1.9 for a period of 12 months without the consent of the CBB, such shares shall be considered redeemed and must be resold within the specified period.

              Amended: October 2019

      • Appendices Appendices

        • Appendix TMA-A Information to be Included Supporting a Whitewash Resolution

          (a) Details of the proposed issue of new securities or convertibles;
          (b) The dilution effect of issuing the new shares, or upon the exercise or conversion of th convertibles to be issued, to existing holders of voting rights;
          (c) The number and percentage of voting rights in the offeree company and the number of instruments convertible into, rights to subscribe for and option in respect of shares in the offeree company (other than the convertibles to be issued) held by the offeror and its concert parties as at the latest practicable date;
          (d) The number and percentage of voting rights to be issued to the offeror, or to be acquired by the offeror upon the exercise or conversion of the convertibles to be issued;
          (e) Where the proposal could result in the offeror holding shares carrying over 49% of the voting rights of the offeree company, there must be reference to this fact and to the fact that the offeror will be free to acquire further shares without incurring any obligation under TMA-3.1 to make a mandatory offer;
          (f) That shareholders, by voting for the whitewash resolution, are waiving their rights to a mandatory offer from the offeror at the highest price paid by the offeror and persons acting in concert with it for the shares of the offeree company in the past 6 months prior to the commencement;
          (g) That shareholders voting for the whitewash resolution could be foregoing the opportunity to receive a mandatory offer from another person who may be discouraged from making a mandatory offer due to the potential dilution effect of the convertibles;

        • Appendix TMA-B Information Contents of the Public Announcement of Offer

          The public announcement made by an offeror or offeree shall contain the following particulars:

          (a) The issued and paid up share capital of the offeree company, the number of fully paid up and partly paid up shares;
          (b) The total number and percentage of shares proposed to be acquired by the offeror
          (c) The minimum offer price for each fully paid-up or partly paid up share;
          (d) Mode of payment of consideration;
          (e) The identity of the offeror(s) and in case the offeror is a company or companies, the identity of the management and, or the persons having control over such company(ies) and the group, if any, to which the company(ies) belong;
          (f) The existing holding, if any, of the offeror in the shares of the offeree, including holdings of persons acting in concert with him;
          (g) The existing shareholding, if any, of the merchant banker in the offeree;
          (h) Salient features of the agreement, such as:
          (i) The date;
          (ii) The name of the seller;
          (iii) The price at which the shares are being acquired;
          (iv) The manner of payment of the consideration; and
          (v) The number and percentage of shares in respect of which the offeror has entered into the agreement to acquire the shares; or
          (vi) The consideration, monetary or otherwise, for the acquisition of control over the offeree company, as the case maybe;
          (i) The highest and the average price paid by the offeror or persons acting in concert with him for acquisition, if any, of shares of the offeree company made by him during the twelve month period prior to the date of public announcement;
          (j) Object and purpose of the acquisition of the shares and future plans, if any, of the offeror for the target company, including disclosures whether the offeror proposes to dispose of or otherwise encumber any assets of the offeree in the succeeding two years, except in the ordinary course of business of the offeree;
          (k) Where the future plans are set out, the public announcement shall also set out how the offeror propose to implement such future plans. The offeror shall not sell, dispose of or otherwise encumber any substantial asset of the offeree except with the prior approval of the shareholders.
          (l) The date by which individual letters of offer would be posted to each of the shareholders;
          (m) The date of opening and closure of the offer and the manner in which and the date by which the acceptance or rejection of the offer would be communicated to the shareholders;
          (n) The date by which the payment of consideration would be made for the shares in respect of which the offer has been accepted;
          (o) Disclosure to the effect that firm arrangement for financial resources required to implement the offer is already in place, including details regarding the sources of the funds whether domestic, i.e. from banks, financial institutions, or otherwise;
          (p) Regulatory and statutory approvals, if any, required to be obtained for the purpose of acquiring the shares under the Commercial Company Law 2001 and/or any other applicable laws;
          (q) Whether the offer is subject to a minimum level of acceptance from the shareholders; and
          (r) Such other information as is essential for the shareholders to make an informed decision in regard to the offer.
          Amended: April 2013

        • Appendix TMA-C Appendix TMA-C Offer Document for Takeovers, Mergers and Acquisitions

          • Offer and Offeror

            The following details of the offeror must be included in the offer document:

            (a) Name and address of the offeror and any financial advisor or other person making the offer on behalf of the offeror, and the principal members of the offeror's concert group;
            (b) The place of incorporation, a description of their capital structures, group structures, business and assets accompanied by a structural chart depicting the structure of the company.
            (c) If the offeror or persons acting in concert is a company, then the identity of the ultimate controlling shareholders, and the names of the directors and the directors of their ultimate parent companies, or where there is a listed company in the chain between such companies and their ultimate parent companies, the directors of such listed company;
            (d) A statement as to whether or not any securities acquired in pursuance of the offer will be transferred to any other persons, including the names of the persons of any such arrangement. Additionally, the terms and conditions of such arrangement;
            (e) CBB may at its discretion waive the above stated requirement (d); and
            (f) Offeror's intentions for the future of the company

            Details regarding the offeror's intentions for the future of the company must be included in the offer document:

            (a) Continuation of the business of the offeree company;
            (b) Strategic plans for the offeree company, and its repercussions on employment;
            (c) Any major changes to be introduced in the business, including redeployment of the fixed assets of the offeree company;
            (d) Long term commercial justification for the proposed offer; and
            (e) Continued employment of the employees and management of the offeree company and of its subsidiaries.
            Amended: April 2013

          • Shareholdings and Dealings

            The following details of the offeror's shareholding in the offeree company and other material information must be included in the offer document:

            (a) The shareholdings of the offeror in the offeree company;
            (b) In the case of securities exchange offers the shareholdings in the offeror and in the offeree company:
            (i) In which directors of the offeror are interested; and
            (ii) Which any persons acting in concert with the offeror own or control and the names of such persons;
            (c) By any persons who, prior to the posting of the offer document, have committed themselves to accept or reject the offer and the names of such persons;
            (d) Owned or controlled by a person with whom the offeror or any person acting in concert with the offeror has any arrangements involving rights over shares, and any agreement or understanding, formal or informal, relating to relevant securities which may be an inducement to deal or refrain from dealing; and
            (e) Dealings in offeror's shareholding during 6 months prior to offer period including prices, dates and volume.

            All conditions of the offer must be stated, including:

            (a) The price and other considerations to be paid for the securities.
            (b) Whether the offer is conditional upon acceptances being received in respect of a minimum number and the last day on which the offer can become unconditional to acceptances. This must include particulars of all documents required, and procedures to be followed for acceptances of an offer; and
            (c) A statement by the offeror regarding the intentions of availing of any powers of compulsory acquisition.
            Amended: April 2013

          • Market Prices of Offeree Company

            The closing price of the securities of the offeree company which are listed on the licensed Exchange, and are subject of the offer must be included in the offer document, as they stand:

            (a) On the latest practicable date prior to publication of the offer document;
            (b) On the last business day prior to the date of the initial announcement, if any;
            (c) On the last business day prior to the date of the announcement of a firm intention to make an offer; and
            (d) At the end of each of the calendar months during the period commencing 6 months prior to the commencement of the offer period and ending on the latest practicable date prior to the posting of the offer document.

            If any of the securities of the offeree company which are subject of the offer are not listed, any information available as to the number and price of transactions which have taken place during the period stated above should be stated along with the source.

            The highest and lowest closing market prices with the relevant dates during the period commencing 6 months prior the commencement of the offer period and ending on the latest practicable date prior to the posting of the offer document must be included in the offer document.

            Comparisons issued by the offeror between the value of the offer and previous prices of the offeree company's securities, then a comparison between the current value of the offer and the price of the offeree company's securities on the last business day prior to the commencement of the offer period must be included.

            Information should also be provided for securities of the offeror if the consideration for the offer involves such securities.

            Amended: April 2013

          • Offeror's Business

            Except with the consent of CBB, the following must be included in the offer document for all types of offers:

            (a) The nature of the offeror's business, its principal activities and its financial and trading prospects;
            (b) Details of the last 3 financial years for which the information has been published, turnover, net profit or loss before and after taxation, the charge for tax (where applicable), extraordinary items, minority interests, the amount absorbed by dividends and earnings and dividends per share;
            (c) A statement of the assets and liabilities shown in the last published audited accounts;
            (d) If provided in the last published audited accounts, a cash flow statement and any other primary statement shown;
            (e) All material changes in the financial or trading position or outlook of the offeror, following the last published audited accounts or a statement that there are no material changes;
            (f) Significant accounting polices together with any points from the notes to the relevant published accounts which are of major relevance to an appreciation of the figures;
            (g) If, due to a change in an accounting policy, figures are not comparable to a material extent, this should be disclosed and the approximate amount of the resultant variation should be stated;
            (h) Except for cash offer seeking to privatize the offeree company, all offer documents must contain a description of how the offer is to be financed and the source of the finance. The principal lenders or arrangers of such finance must be named; and
            (i) If any arrangements are made where the offeror intends that the payment of interest on repayment of or security for any liability will depend to an extent on the business of the offeree company, then a description of the arrangements must be included.
            Amended: April 2013

          • Financial Information

            Where the offer includes an element of cash or any other asset except new securities to be issued by the offeror company, then an independent financial advisor must include a confirmation that sufficient resources are available to satisfy full implementation of the offer.

            When an offer involves issuance of unlisted securities, the value of such securities estimated by an advisor, including the assumptions and method used to arrive at that value must be stated.

            The offer document must contain a statement to the effect that settlement of the consideration to which any shareholder is entitled under the offer will be implemented in full in accordance with the terms of the offer.

          • Arrangements

            If any arrangement involving rights over shares, any indemnity arrangement, and any agreement or understanding, formal or informal, relating to relevant securities which may be an inducement to deal or refrain from dealing exist between the offeror or any person acting in concert should be stated, otherwise it should be stated that no such arrangements have been made.

            The following regarding any arrangements or agreements made between the offeror and another party should be included in the offer document:

            (a) Details of compensation arrangements to be given to any directors of the offeree company in connection with the offer; and
            (b) A statement to whether any agreement, arrangement or understanding, including any compensation agreement exists; including its details, in connection with the offer, between the offeror or any person acting in concert with it and the directors or shareholders of the offeree company.
            Amended: April 2013

          • Offering of Securities

            The offeror company should include the following in the offer document when the offeror is offering its securities in exchange for the securities of the offeree company:

            (a) The nature of its business and its financial and trading prospects;
            (b) The date and country of its incorporation;
            (c) The address of its head office;
            (d) The authorized and issued share capital and the rights of the shareholders in respect of capital, dividends and voting;
            (e) A precise description of the rights of the holders of the securities, including as to ranking for dividends and capital;
            (f) Details of shares issued and shares repurchased starting the end of the last financial year of the offeror;
            (g) Details of options, warrants and conversion rights affecting shares in the offeror;
            (h) Details of any reorganisation of capital during the 2 financial years previous to the commencement of the offer period;
            (i) Details of any bank overdrafts or loans, or other similar transactions, mortgages, charges, guarantees or other material contingent liabilities of the offeror and any of its subsidiaries, or, if there are no such liabilities, a statement to that effect. Details should be not more than 3 months preceding the latest practicable date prior to the posting of the document;
            (j) Details of any material litigation to which the offeror is, or may become, a party;
            (k) Details of every material contract entered into 2 years prior to the commencement of the offer period;
            (l) When and how the documents of title to the securities will be issued;
            (m) The effect of the offer on the directors of the offeror. If there will be no effect, this must be stated; and
            (n) The effect of full acceptance of the offer upon the offeror's assets, liabilities, profits and business which may be significant for a proper appraisal of the offer. This does not require a profit forecast to be made.
            Amended: April 2013

        • Appendix TMA-D Appendix TMA-D Offeree Board Circular

          The offeree board circular must include the following regarding the view of the board:

          (a) The names of the directors of the offeree company;
          (b) The recommendation of the directors as to whether they accept or reject the offer, or a statement that the directors are unable to make a recommendation, in addition to their reasons for giving the recommendation or for making no recommendation; and
          (c) A copy of the written advice of the offeree company's financial advisors.
          Amended: April 2013

          • Shareholdings and Dealings

            The document of the offeree company advising its shareholders on an offer (whether recommending acceptance or rejection of the offer) must state:

            (a) The shareholdings of the offeree company in the offeror;
            (b) The shareholdings in the offeree company and in the offeror in which directors of the offeree company are interested;
            (c) The shareholdings in the offeree company and in the offeror (in the case of a securities exchange offer only):
            (i) Owned or controlled by the independent professional adviser to the offeree company; or
            (ii) By funds whose investments are managed by the adviser on a discretionary basis; and
            (d) Whether the directors of the offeree company intend, in respect of their own beneficial shareholdings, to accept or reject the offer.

            If in any of the above categories there are no shareholdings, then this fact should be stated. Where the persons mentioned above have dealt for value in shares during the six months prior to the offer period, the same should be disclosed (whether there is an existing holding or not).

            The above disclosure details must include dates and prices of the transaction.

            Amended: April 2013

          • Share Capital of Offeree Company

            The following information about the offeree should be disclosed:

            (a) The authorised and issued capital, and the rights of the shareholders in respect of capital, dividends and voting;
            (b) The number of shares issued since the end of the last financial year; and
            (c) Details of options, warrants and conversion rights affecting shares in the offeree company.
            Amended: April 2013

          • Financial Information

            The offeree circular must include the following information about the offeree company:-

            (a) The financial information of the last 3 financial years for which the information has been published, turnover, net profit or loss before and after taxation, the charge for tax, extraordinary items, exceptional items, minority interests, the amount absorbed by dividends, and earnings and dividends per share;
            (b) A statement of the assets and liabilities shown in the last published audited accounts;
            (c) A cash flow statement if provided in the last published audited accounts;
            (d) Any other primary statement shown in the last published audited accounts;
            (e) All material changes in the financial or trading position or outlook of the offeree company subsequent to the last published audited accounts or a statement that there are no known material changes;
            (f) Details relating to items referred to (a) above in respect of any interim statement or preliminary announcement made since the last published audited accounts;
            (g) Significant accounting policies together with any points from the notes to the relevant published accounts which are of major relevance to an appreciation of the information contained above (a) to (f);
            (h) Details of any qualification contained in the auditors' report in respect of each of the last 3 financial years or a statement that there is no such qualification; and
            (i) Where, because of a change in accounting policy, figures are not comparable to a material extent, this should be disclosed and the approximate amount of the resultant variation should be stated.
            Amended: April 2013

          • Director's Service Agreements

            The offeree board circular must contain particulars of all service contracts of any director:

            (a) Which, have been entered into or amended within 6 months before the commencement of the offer period;
            (b) Which are continuous contracts with a notice period of 12 months or more; or
            (c) Which are fixed term contracts with more than 12 months to run irrespective of the notice period.

            The particulars must be given of the earlier contracts, if any, which have been replaced or amended as well as the current contracts. If no disclosures are required to be made under this paragraph, this should be stated.

    • MAM — Prohibition of Market Abuse and Manipulation

      • MAM-A MAM-A Introduction

        • MAM-A.1 MAM-A.1 Purpose

          • Executive Summary

            • MAM-A.1.1

              The CBB believes that in order to achieve the basic objectives of securities regulation of ensuring investor protection and fairness, efficiency and transparency of the market, it is essential to ensure that prices of securities are determined by the collective judgment of uninterrupted market forces of supply and demand.

              November 2010

            • MAM-A.1.2

              Market manipulation, misleading behaviour or conduct, insider trading and fraudulent or deceptive behaviour or conduct may distort the price discovery system and distort prices and thereby unfairly disadvantage the investors. While the CBB Law criminalizes the offence of market manipulation, the CBB seeks to maintain investor confidence on the integrity and fairness of the Kingdom's capital market by clearly laying down the various types of prohibited market behaviour or conduct to facilitate the understanding of the market participants in this regard.

              November 2010

            • MAM-A.1.3

              The CBB's approach is to provide a strong and facilitative regulatory framework along with an effective enforcement of regulatory requirements. While the CBB favours an open and pragmatic approach to supervision within the boundaries set by the law and the CBB's regulations, and avoids a legalistic and confrontational style of supervision, it ensures effective enforcement of regulatory requirements.

              November 2010

            • MAM-A.1.4

              The CBB seeks to clearly lay down the rules that will be applied transparently and consistently to ensure that the bona fide investors and market participants are not inconvenienced in their normal course of business, by enabling them to take all reasonable precautions and exercise due diligence to avoid their engagement in prohibited market behaviour or conduct. This is intended to drive the development and strategic positioning of the Kingdom's capital market and lay a strong foundation for further growth.

              November 2010

          • Legal Basis

            • MAM-A.1.5

              Article 3(4) of the Central Bank of Bahrain and Financial Institutions (CBB) Law requires the CBB to protect the interests of depositors and the customers of financial institutions, and enhance the Kingdom's credibility as an international financial centre. Article 4(10) mandates the CBB to safeguard the legitimate interests of licensees' customers against the risks associated with the financial services industry.

              November 2010

            • MAM-A.1.6

              Article (38) (a) mandates the Governor of the CBB to issue necessary directives to ensure the implementation of the CBB Law and regulations and the achievement of the objectives of the CBB. Article (38) (b) provides the CBB with the power to issue necessary directives to ensure the implementation of CBB Laws and regulations that aim to formulate the understanding and implementation of the CBB Law.

              November 2010

            • MAM-A.1.7

              Chapter 1 of Part 5 of the CBB Law (Articles 97 to 105) defines insiders, inside information and market information, prohibits abuse of inside information, and provides defences. Particularly, Article 99 provides the CBB with the power to issue regulations concerning the necessary procedures and controls of publishing market information, and Article 105 states that a person shall not be guilty of inside dealing if he proves that the dealing was completed in accordance with CBB's price policies.

              November 2010

            • MAM-A.1.8

              Chapter 2 of Part 5 of the CBB Law (Articles 106 and 107) deals with violation of market dealings:

              Article 106 states that: "In the application of this law a person is guilty of market manipulation if he:

              (1) Is engaged, or encourages others to engage, in any conduct that may give a false or misleading impression as to the supply of or demand for, or the price or value of any securities.
              (2) Is engaged, or encourages others, to engage in any conduct that may give an unrealistic picture of the market regarding the volume and prices of any securities."

              Article 107 states that: "A person shall not be guilty of market manipulation if he proves that his reasons for engaging in the alleged conduct were legitimate and that he had acted in conformity with the accepted market practices in the market concerned, or that he had acted in conformity with any price stablization rules made by the Central Bank, or if he believed on reasonable grounds that his conduct did not violate Article 106 of this Law and that he had taken all reasonable precautions and exercised all due diligence to avoid behaving in any way against the said Article."

              November 2010

            • MAM-A.1.9

              Part 11 of the CBB Law (Articles 160 — 172) provides for penalties for various contraventions and violations of the provisions of the CBB Law:

              Article 167 specifically provides penalty for the offences of abuse of inside information and states that: "Without prejudice to any greater penalty prescribed in the Penal Code or under any law, a person who contravenes Article (100) of this Law, while he is fully aware, shall be liable to imprisonment for a term not exceeding six months and a fine not exceeding Bahraini Dinars (10,000), or either penalty".

              Article 168 specifically provides penalty for the offence of market manipulation and states that: "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, a person who contravenes Article (106) of this Law is guilty of an offence of market manipulation and shall be liable to imprisonment for a term not exceeding six months and a fine not exceeding Bahraini Dinars ten thousand (10,000), or either penalty".

              November 2010

            • MAM-A.1.10

              This Module contains the CBB's Directive relating to the prohibition of market abuse and market manipulation and is issued under the powers available to the CBB under Article 38 of the CBB Law, read with the abovementioned provisions of the CBB Law. The Directive under this Module is applicable to all market participants and relevant persons, including but not limited to issuers of securities or any person acting on their behalf, licensed exchanges, licensed market operators, licensed clearing houses, depositories, investment firms, business trusts, listed companies, any person acting for or on behalf of listed companies, shareholders of listed companies, share registrars, lead managers, underwriters, professional advisors, listing agents, auditors, financial analysts and any other person who engages or encourages others to engage in any acts of commission or omission covered by the scope of this Module, irrespective of whether such person is a market participant or not. These rules are issued by way of a legally-binding Directive.

              November 2010

        • MAM-A.2 MAM-A.2 Module History

          • Evolution of Module

            • MAM-A.2.1

              This Module was first issued in January 2009. Any material changes that are subsequently made to this Module are annotated with the calendar quarter date in which the change is made; Chapter UG-3 provides further details on Rulebook maintenance and version control.

              November 2010

            • MAM-A.2.2

              The CBB's Disclosure Standards issued vide Circular No. ODG/407/03 dated 3rd December 2003 and available at www.cbb.gov.bh, inter-alia, contain ongoing obligations of issuers, including immediate announcement of material information, rules governing transactions of directors and senior management and guidelines for trading by directors and senior management and their related parties. The principles contained in the CBB's Disclosure Standards will become part of Module DIS (Disclosure) on its issuance.

              November 2010

            • MAM-A.2.3

              The BSE's Guidelines on Issuers' Key Person Dealing Policies and available at www.bahrainstock.com, contains rules for the prohibition of abuse of inside information and guidelines and procedures for monitoring, supervising and handling of insiders' issues, as well as insiders' duty to declare and restrict their dealings.

              November 2010

            • MAM-A.2.3A

              The most recent changes made to this Module are detailed in the table below:

              Module Ref. Change Date Description of Changes
              MAM-2.14.1 04/2021 Changed guidance to Rule.
              MAM-2.14.2 04/2021 Added Paragraph number and changed from guidance to Rule.
              MAM-2.14.3 04/2021 Changed guidance to Rule.
              MAM-3.10.1 07/2021 Amended references in Paragraph.

          • Superseded Requirements

            • MAM-A.2.4

              This Module supersedes the following provisions contained in circulars or other regulatory instruments:

              Circular/ other references Provision Subject
                   
                   
                   
                   
                   
                   
                   
              November 2010

        • MAM-A.3 MAM-A.3 Interaction with Other Modules

          • MAM-A.3.1

            All market participants must comply with all the other Modules in Volume 6 in addition to other applicable laws, rules and regulations.

            November 2010

        • MAM-A.4 MAM-A.4 Division of Responsibilities

          • MAM-A.4.1

            While dealing with cases relating to market abuse and manipulation, a clear division of responsibilities between CBB as the securities regulator and the licensed exchanges or the licensed market operators or licensed clearing houses or depositories as a self regulatory organisation (SRO) is required:

            (a) To maximise the regulatory effectiveness;
            (b) To permit flexibility to the licensed exchanges or the licensed market operators in their functioning
            (c) To achieve greater efficiency and transparancy in the enforcement of the laws, rules and regulations;
            (d) To minimise the regulatory cost; and
            (e) To maintain market integrity and investor confidence.
            November 2010

          • MAM-A.4.2

            As a regulator, the CBB's role is as follows:

            (a) Regulatory supervision, including the licensing, supervision, inspection, investigation and enforcement and regulatory oversight on the licensed exchanges, licensed market operators, licensed clearing houses and depositories and other SROs.
            (b) Maintaining and promoting fairness, efficiency and transparency within the capital market;
            (c) Acting as an enforcement agency with powers to investigate and take administrative, civil or criminal actions as it may deem appropriate;
            (d) Approving the rules, by-laws and internal regulations of the licensed exchanges or the licensed market operators, licensed clearing houses or depositories, whereby any change in the rules, by-laws and regulations of the SROs would need prior approval of the CBB.
            November 2010

          • MAM-A.4.3

            The licensed exchange or the licensed market operator or clearing house or depository established as an SRO must comply with the requirements laid down under the CBB Law, rules and regulations, this Module and the other applicable laws and regulations.

            November 2010

          • MAM-A.4.4

            As an SRO, the main objective of the exchange or the operator or the clearing house or depository should include steps to:

            (a) Promote fairness and investor protection;
            (b) Promote fair access to market facilities and information;
            (c) Promote the provision of timely and accessible relevant market data;
            (d) Promote the efficient regulation of its members;
            (e) Develop rules that are designed to set standards of behaviour for its members and to promote investor protection;
            (f) Take disciplinary actions for contraventions by markets and listed companies through an SRO's Disciplinary Action Committee(s);
            (g) Identify unlawful transactions and take preventative actions;
            (h) Maintain fairness of price discovery mechanism and ensure prices are determined by the genuine forces of demand and supply;
            (i) Monitor the trading and market on a continuous basis;
            (j) Report any suspected transactions or suspected market behaviour or suspected cases of market abuse or market manipulation.
            November 2010

          • Role of Other CBB Licensees

            • MAM-A.4.5

              All capital market service providers and listed companies in general, and members of the SROs in particular, must have the necessary infrastructure and systems to identify and report any irregular transactions or suspected cases of market abuse or market manipulation which they come across in the normal course of business to the CBB in the format given in paragraph MAM-A.4.6

              November 2010

          • Market Abuse Reporting Format

            • MAM-A.4.6

              Persons subject to the obligations to report irregular transactions to the CMSD shall report in the following standard format:

              Description of the transaction(s)
              Details of the securities, including the code of the security (ISIN Number); the market(s) concerned; the original order's entry date/time, price and size; the times and sizes of the transaction(s); the type and characteristics of the order, etc.
              Reasons for Suspicion
              Reasons for suspecting that the transaction(s) might constitute insider dealing/market abuse/ market manipulation
              Identities of persons carrying out transaction(s)
              Names, addresses, telephone number, location, account number, client Identification code used by the firm, etc.
              Identities of any other persons known to be involved in the transaction(s)
              Names, addresses, telephone number, location, relation to person carrying out the transaction, position held, role played, etc.
              Capacity in which the person performing the transaction(s) acts
              e.g. broker, underwriter, agent, investment/fund manager, auditor, insider.
              Any information which may be of significance (along with a list of any accompanying documents/evidence)
              Details of the person making notification
              Name of person, name of firm, position held within firm, contact details, etc.
              Signed ........... (person making report)

              Dated ........... (date of report)
              November 2010

            • MAM-A.4.8

              Where the information specified to be reported is not available at the time of reporting, the report shall include at least the reasons why the reporting persons suspect that the transactions might constitute insider dealing or market manipulation. All remaining information shall be provided to the CMSD as soon as it becomes available.

              Persons making suspicious transactions reports therefore, do not need to have all the required information before contacting the CMSD. If the case is one which (the persons subject to the reporting obligation consider) needs to be brought to the attention of the CMSD urgently, then the person(s) concerned shall make the first contact quickly. This can be done by telephone if appropriate, giving the basic details and reasons for suspicion, followed by written confirmation. The other information can be supplied subsequently.

              November 2010

      • MAM-B MAM-B Scope of Application

        • MAM-B.1 MAM-B.1 Scope

          • MAM-B.1.1

            This Module shall apply to:

            (a) Any behaviour or conduct occurring within Bahrain; or any transaction or expected transaction done by or on behalf of any person(s) within Bahrain in relation to securities offered, issued or listed in Bahrain or elsewhere;
            (b) Any behaviour or conduct occurring outside Bahrain or any transaction or expected transaction done by or on behalf of any person(s) outside Bahrain in relation to securities offered, listed or issued in Bahrain;
            (c) Any behaviour or conduct occurring within Bahrain; or any transaction or expected transaction done by or on behalf of any person(s) within Bahrain in relation to:
            (i) Futures contracts, whether traded on a futures market in Bahrain or elsewhere; or
            (ii) Leveraged foreign exchange trading contracts, whether in Bahrain or elsewhere; and
            (d) Any behaviour or conduct occurring outside Bahrain; or any transaction or expected transaction done by or on behalf of any person(s) outside Bahrain in relation to:
            (i) Futures contracts traded on a futures market in Bahrain;
            (ii) Leveraged foreign exchange trading contracts in Bahrain; or
            (iii) Leveraged foreign exchange trading contracts that are accessible from Bahrain.
            November 2010

          • MAM-B.1.2

            This Module is applicable to all market participants and relevant persons, including but not limited to issuers of securities or any person acting on their behalf, licensed exchanges, licensed market operators, licensed clearing houses, depositories, investment firms, business trusts, collective investment undertakings, listed companies, any person acting for or on behalf of listed companies, shareholders of listed companies, share registrars, lead managers, underwriters, professional advisors, listing agents, auditors, financial analysts and any other person who engages or encourages others to engage in any acts of commission or omission covered by the scope of this Module, irrespective of whether such person is a market particpant or not.

            November 2010

        • MAM-B.2 MAM-B.2 Definitions

          For the purpose of this Module, the following definitions shall apply:

          November 2010

          • MAM-B.2.1

            "A Person Associated with another Person":

            (1) Any reference in this Module to a person associated with another person shall be construed as a reference to:
            (a) Where the other person is a company:
            (i) A director or secretary of the company;
            (ii) A related company; or
            (iii) A director or secretary of such related company;
            (b) Where the matter to which the reference relates is the extent of a power to exercise, or to control the exercise of, the voting power attached to voting shares in a company, a person with whom the other person has, or proposes to enter into, an agreement, arrangement, understanding or undertaking, whether formal or informal, or express or implied:
            (i) By reason of which either of those persons may exercise, directly or indirectly, control the exercise of, or substantially influence the exercise of, any voting power attached to a share in the company;
            (ii) With a view to controlling or influencing the composition of the board of directors, or the conduct of affairs, of the company; or
            (iii) Under which either of those persons may acquire from the other of them shares in the company or may be required to dispose of such shares in accordance with the directions of the other of them;
            except that in relation to a matter relating to shares in a company, a person may be an associate of the company and the company may be an associate of a person;
            (c) A person with whom the other person is acting, or proposes to act, in concert in relation to the matter to which the reference relates;
            (d) Where the matter to which the reference relates is a matter, other than the extent of a power to exercise, or to control the exercise of, the voting power attached to voting shares in a company:
            (i) Subject to paragraph (2) a person who is a director of a company of which the other person is a director; or
            (ii) A trustee of a trust in relation to which the other person benefits or is capable of benefiting otherwise than by reason of transactions entered into in the ordinary course of business in connection with the lending of money;
            (e) A person with whom the other person is, according to any subsidiary legislation made under this Module, to be regarded as associated in respect of the matter to which the reference relates;
            (f) A person with whom the other person is, or proposes to become, associated, whether formally or informally, in any other way in respect of the matter to which the reference relates; or
            (g) Where the other person has entered into, or proposed to enter into a transaction or has done, or proposes to do so, any other act or thing, with a view to becoming associated with a person as referred to in sub-paragraph (a), (b), (c), (d), (e) or (f), that last-mentioned person.
            (2) Where, in any proceedings under this Module, it is alleged that a person referred to in paragraph (1) (d) (i) was associated with another person at a particular time, the first-mentioned person shall not be considered to be so associated in relation to a matter to which the proceedings relate unless the person alleging the association proves that the first-mentioned person at that time knew or ought reasonably to have known the material particulars of that matter.
            (3) A person shall not be considered to be associated with another person by virtue of paragraph (1) (b), (c), (e) or (f) by reason only of one or more of the following:
            (a) That one of those persons furnishes advice to, or acts on behalf of, the other person in the proper performance of the functions attaching to his professional capacity or to his business relationship with the other person;
            (b) That one of those persons, a customer, gives specific instructions to the other, whose ordinary business includes dealing in securities, trading in futures contracts or leveraged foreign exchange trading, to acquire shares on the customer's behalf in the ordinary course of that business;
            (c) That one of those persons has sent, or proposes to send, to the other a take-over offer, or has made or proposes to make, offers under a take-over announcement, within the meaning of the Take-overs, Mergers, Acquisitions and Share Repurchases (TMA) Module in relation to shares held by the other;
            (d) That one of those persons has appointed the other, otherwise than for valuable consideration given by the other or by an associate of the other, to vote as a proxy or representative at a meeting of members, or of a class of members of a company.
            November 2010

          • MAM-B.2.2

            "Beneficial Owner" the term "beneficial owner" of securities for the purposes of this Module refers to any person who, even if not the recorded owner of the securities, has or shares the underlying benefits of ownership. These benefits include the power to direct the voting or the disposition of the securities, or to receive the economic benefit of ownership of the securities. A person is also considered to be the "beneficial owner" of securities if that person has the right to acquire such securities within a certain period of time, either by option or other agreement. Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through issuers in which they have a "controlling interest", which means the direct or indirect power to direct the management and policies of the issuer, or any other entity in question.

            November 2010

          • MAM-B.2.3

            "Capital Market Service provider" means any person licensed or authorised or involved in providing any activity specified under Article 80 of the CBB Law.

            November 2010

          • MAM-B.2.4

            "Connected Persons" in relation to an individual means:

            (a) The individual's spouse and his/her son, adopted son, stepson, daughter, adopted daughter, step-daughter, father, step-father, mother, step-mother, brother, step-brother, sister or step-sister, under his/her guardianship or control; or
            (b) A firm or company in which the individual or any of the persons mentioned in sub-paragraph (a) has control of not less than 10% of the voting power in the firm or company, whether such control is exercised individually or jointly; Connected persons in relation to a firm or company means another firm or company in which the first-mentioned firm or company has control of not less than 10% of the voting power in that other firm or company.
            November 2010

          • MAM-B.2.5

            "CMSD" means the Capital Markets Supervision Directorate of the Central Bank of Bahrain.

            November 2010

          • MAM-B.2.6

            "Dealing in Securities" includes (whether as principal or agent) making or offering to make with any person, or inducing or attempting to induce any person to enter into or to offer to enter into an any agreement for or with a view to acquiring, disposing of, subscribing for, or underwriting securities.

            November 2010

          • MAM-B.2.7

            "Director and Senior Management" includes any member of senior management, regardless of title, including:

            (a) The issuer's directors;
            (b) Senior management, including the General Manager, Chief Executive Officers, Presidents, Heads of Finance, Heads of Business Departments;
            (c) Partners with unlimited liability, in the case of a limited partnership with share capital;
            (d) Nominees to serve in any of the aforementioned positions; and
            (e) Founders, if the issuer has been established for fewer than two years.
            November 2010

          • MAM-B.2.8

            (a) "Fraud" includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another person or his agent to deal in securities, whether or not there is any wrongful gain or avoidance of any loss, and shall also include:
            (i) A knowing misrepresentation of the truth or concealment of material fact in order that another person may act to his detriment;
            (ii) A suggestion as to a fact which is not true by one who does not believe it to be true;
            (iii) An active concealment of a fact by a person having knowledge or belief of the fact;
            (iv) A promise made without any intention of performing it;
            (v) A representation made in a reckless and careless manner whether it be true or false;
            (vi) Any such act or omission as any other law specifically declares to be fraudulent;
            (vii) Deceptive behaviour by a person depriving another of informed consent or full participation;
            (viii) A false statement made without reasonable ground for believing it to be true;
            (ix) The act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or anything derived from it other than the market price;
            and "fraudulent" shall be construed accordingly.

            Nothing contained in this paragraph shall apply to any general comments made in good faith in regard to:

            (a) The economic policy of the government;
            (b) The economic situation of the country;
            (c) Trends in the securities market; or
            (d) Any other matter of a like nature.
            November 2010

          • MAM-B.2.9

            "Insider" means any person who has obtained inside information;

            (a) By virtue of his employment or profession;
            (b) Being an officer or shareholder of the issuer of the securities; or
            (c) Through illegal means.

            A person may be an insider if he is already aware that such information is classified as inside information even though none of the above applies to him.

            All persons who have access or come into possession of material inside information before its public release are considered insiders. Such persons include controlling shareholders, "directors and senior management", officers and employees, and frequently should also include any officials of the CBB and the Exchange who have access to such information, outside attorneys, accountants, auditors, underwriters, investment bankers, public relations advisers, advertising agencies, consultants and other independent contractors. The husbands, wives, immediate families and those under the control of insiders may also be regarded as insiders. Where acquisition or other negotiations are concerned, the above relationships apply to other parties to the negotiations as well. Further, for purposes of this Module, insiders include "tippees" who come into possession of material inside information.

            November 2010

          • MAM-B.2.10

            "Inside Information" means information that;

            (a) Is precise in nature relating directly or indirectly to one or more of the securities or the issuer thereof;
            (b) Has not been made public;
            (c) If made public, is likely to have a significant impact on the price of those securities or their derivatives;
            (d) Is, directly or indirectly, related to derivatives of commodities which the traders expect to be disclosed according to the market regulations.
            November 2010

          • MAM-B.2.11

            "Insider Trading" refers not only to the purchase or sale of an issuer's equity and debt securities, but also to the purchase or sale of puts, calls or other options with respect to such securities. Such trading is deemed to be done by an insider whenever he has any beneficial interest, direct or indirect, in such securities or options, regardless of whether they are actually held in his name. Included in the concept of "insider trading" is "tipping", or revealing inside information to outside individuals, to enable such individuals to trade in the issuer's securities on the basis of undisclosed information.

            November 2010

          • MAM-B.2.12

            "Information" includes:

            (a) Matters of supposition and other matters that are insufficiently definite to warrant being made known to the public;
            (b) Matters relating to the intentions, or the likely intentions, of a person;
            (c) Matters relating to negotiations or proposals with respect to:
            (i) Commercial dealings;
            (ii) Dealing in securities; or
            (iii) Trading in futures contracts;
            (d) Information relating to the financial performance of a company or an issuer, or otherwise;
            (e) Information that a person proposes to enter into, or had previously entered into one or more transactions or agreements in relation to securities or has prepared or proposes to issue a statement relating to such securities; and
            (f) Matters relating to the future.
            November 2010

          • MAM-B.2.13

            "Information Disclosed Widely Enough" for the purposes of this Module, information is disclosed widely enough if:

            (a) It consists of readily observable matter;
            (b) Without limiting the generality of paragraph (a):
            (i) It has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in securities of a kind whose price or value might be affected by the information; and
            (ii) Since it was so made known, a reasonable period for it to be disseminated among such persons has elapsed; or
            (c) It consists of deductions, conclusions or inferences made or drawn from either or both of the following:
            (i) Information referred to in paragraph (a);
            (ii) Information made known as referred to in paragraph (b) (i);
            (d) It is disclosed in the manner and within the timeframe stipulated by the CBB rules and regulations.
            November 2010

          • MAM-B.2.14

            "Market Information" means any published information about trading or non-trading in certain types of securities, their number, prices, range of price for trading or the identity of those involved or who may be involved, in any capacity, such as trading.

            November 2010

          • MAM-B.2.15

            "Materiality" information is material if its omission or mis-statement could influence the economic decisions of the users taken on the basis of the financial statements. For the purpose of this Module, a reasonable person would be taken to expect information to have a material effect on the price or value of securities if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the first-mentioned securities.

            November 2010

          • MAM-B.2.16

            "Manipulation" includes any deliberate/reckless act or attempt or act, expression, omission or concealment or influence to interfere with the free and fair functioning of the market or to introduce misinformation or misleading appearance in the market, or to impede judgement of investors and market participants.

            November 2010

          • MAM-B.2.17

            "Permanent Insider" means members of the Board of Directors of a company, its senior management, the Issuer itself, and such other persons as decided by the Issuer's Board to have access to inside information relating to the Issuer from time-to-time

            November 2010

          • MAM-B.2.18

            "Profit" includes the avoidance of any loss.

            November 2010

          • MAM-B.2.19

            "Purchase" in relation to securities, includes, in the case of an option contract under which a party acquires an option or right from another party, acquiring the option or right under the contract, or taking an assignment of the option or right, whether or not on another's behalf.

            November 2010

          • MAM-B.2.20

            "Related Company" means where a company:

            (a) Is the holding company of another company;
            (b) Is a subsidiary of another company; or
            (c) Is a subsidiary of the holding company of another company,

            that first-mentioned company and that other company shall for the purposes of this Module be deemed to be related to each other.

            November 2010

          • MAM-B.2.21

            "Rumour" includes an unverified statement or account or explanation of events, circulating from person to person, whose veracity or authenticity or trueness is not immediately verifiable.

            November 2010

          • MAM-B.2.22

            "Securities" means shares or bonds issued by shareholding companies, government debt instruments and the following financial instruments:

            (a) Shares in companies and other securities equivalent to shares in companies or other entities, and depositary receipts in respect of shares;
            (b) Bonds or other forms of debt, including depositary receipts in respect of such securities;
            (c) Warrants;
            (d) Units, rights or interests (however described) of the participants in a collective investment scheme;
            (e) Options, futures and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event);
            (f) Options, futures and any other derivative contract relating to commodities that can be physically settled;
            (g) Units to Real Estate Investment Trusts (REITs);
            (h) Index tracking products including Islamic indices;
            (i) Any other financial instrument approved as a financial instrument by the CBB for the purpose of trading such instrument on an exchange; and
            (j) Islamic securities, being those financial instruments that are Shari'a compliant.
            November 2010

          • MAM-B.2.23

            "Sell" in relation to securities, includes, in the case of an option contract under which a party acquires an option or right from another party:

            (a) Grant or assign the option or right; or
            (b) Take, or cause to be taken, such action as releases the option or right, whether or not on another's behalf.
            November 2010

          • MAM-B.2.24

            "Trading and Procuring Trading in Securities" for the purposes of this Module, trading in securities that is ordinarily permitted on the securities market or future market shall be taken to be permitted on that securities market or futures market, even though trading in any such securities on that securities market or futures market is suspended.

            For the purposes of this Module, but without limiting the meaning that the expression "procure" has apart from this paragraph, if a person incites, induces, or encourages an act or omission by another person, the first-mentioned person is taken to procure the act or omission by the other person.

            November 2010

          • MAM-B.2.25

            "Temporary Insider" means any person who is an insider, but not a permanent insider.

            November 2010

          • MAM-B.2.26

            "Person" means unless the context requires otherwise, a natural or legal person.

            November 2010

      • MAM-1 MAM-1 Accepted Market Practices

        • MAM-1.1 MAM-1.1 Accepted Market Practices

          • MAM-1.1.1

            Accepted market practices are those practices that are reasonably expected on one or more financial markets and are accepted by the CBB.

            November 2010

          • MAM-1.1.2

            Accepted market practices in no way constitute safe harbours similar to those provided by section MAM-4.1 (which deals with price stabilization).

            November 2010

        • MAM-1.2 MAM-1.2 Criteria for Assessment of a Market Practice

          • MAM-1.2.1

            When assessing whether a market practice is acceptable, the CBB will take at least the following criteria into account:

            (a) The level of transparency of the relevant market practice to the whole market;
            (b) The disclosure requirement of the relevant market practice by the market participants;
            (c) The need to safeguard the operation of market forces and the interplay of supply and demand, or safeguard the interest of the securities holders;
            (d) The degree to which the relevant market practice has an impact on market liquidity and efficiency;
            (e) The degree to which the relevant practice takes into account the trading mechanism of the relevant market and enables market participants to react properly and in a timely manner to the new market situation created by that practice;
            (f) The risk inherent in the relevant practice for the integrity of directly or indirectly, related markets, whether regulated or not, in the relevant securities within Bahrain;
            (g) The outcome of any inspection or investigation of the relevant market practice by the CBB, by any other authority or market operator with which the CBB cooperates, by any other authority or market undertaking acting on behalf or on the authority of the CBB, or by the courts acting on a referral from the CBB, in particular whether the relevant market practice breached rules or regulations designed to prevent market abuse, or codes of conduct, be it on the market in question or on directly or indirectly related markets within Bahrain;
            (h) The structural characteristics of the relevant market including whether it is regulated or not, the types of financial instruments traded and the type of market participants, including the extent of non-professional investor participation in the relevant market

            Having regard to (c) above, the CBB takes account in its assessment of how the relevant practice will affect market conditions, with particular reference to daily weighted average prices or daily closing prices.

            November 2010

          • MAM-1.2.2

            The CBB periodically reviews accepted market practices, in particular taking into account significant changes to the relevant market environment, such as changes to trading rules or to market infrastructure.

            November 2010

          • MAM-1.2.3

            Where an organization representing companies making public offers of securities, investment service providers, investors or market operators seeks the CBB's acceptance of a market practice, the CBB shall consult the other organizations concerned before deciding whether to accept or reject such practice.

            November 2010

          • MAM-1.2.4

            The CBB will also consult other competent authorities in respect of existing practices, notably on markets that are comparable in terms of structures, volumes or types of transaction.

            November 2010

          • MAM-1.2.5

            Where inspections or investigations of specific cases have already started, the consultation procedure referred to above may be delayed until the end of such inspections or investigations and possible related sanctions.

            November 2010

          • MAM-1.2.6

            A market practice that was accepted following the consultation procedure shall not cease to be accepted without using the same procedure. Where appropriate, a CBB instruction shall specify the arrangements for implementing the market practice accepting procedure.

            November 2010

        • MAM-1.3 MAM-1.3 Market Abuse

          • MAM-1.3.1

            For the purposes of this Module, market abuse is behaviour or conduct (whether by one person alone or by two or more persons jointly or in concert):

            (a) Which occurs in relation to securities traded on a market to which this Module applies;
            (b) Which satisfies any one or more of the conditions set out in paragraph MAM-1.3.2; and
            (c) Which is likely to be regarded by a regular user of that market who is aware of the behaviour or conduct as a failure on the part of the person or persons concerned to observe the standard of behaviour or conduct reasonably expected of a person in his or their position in relation to the market.
            November 2010

          • MAM-1.3.2

            The conditions referred to in paragraph MAM-1.3.1 (b) are that:

            (a) The behaviour or conduct is based on information which is not generally available to those using the market but which, if available to a regular user of the market, would or would be likely to be regarded by him as relevant when deciding the terms on which dealings or transactions in securities of the kind in question should be effected;
            (b) The behaviour or conduct is likely to give a regular user of the market a false or misleading impression as to the supply of, or demand for, or as to the price or value of, securities of the kind in question;
            (c) A regular user of the market would, or would be likely to, regard the behaviour or conduct as behaviour or conduct which would, or would be likely to, distort the market in securities of the kind in question.
            November 2010

          • MAM-1.3.3

            For the purposes of this Module, the behaviour or conduct which is to be regarded as occurring in relation to securities, includes behaviour or conduct which:

            (a) Occurs in relation to anything which is the subject matter, or whose price or value is expressed by reference to the price or value of those securities; or
            (b) Occurs in relation to securities whose subject matter is those securities.
            November 2010

          • MAM-1.3.4

            Information which can be obtained by research or analysis conducted by, or on behalf of users of a market, is to be regarded for the purposes of this Module as being generally available to them.

            November 2010

          • MAM-1.3.5

            Behaviour or conduct does not amount to market abuse if it conforms with a rule which includes a provision to the effect that behaviour or conduct conforming with the rule does not amount to market abuse.

            November 2010

          • MAM-1.3.6

            Any reference in this Module to a person engaged in market abuse is a reference to a person engaged in market abuse whether alone or with one or more other persons.

            November 2010

          • MAM-1.3.7

            In this Module; "behaviour or conduct" includes action or inaction; "regular user" in relation to a particular market means a reasonable person who regularly deals on that market in securities of the kind in question.

            November 2010

          • MAM-1.3.8

            The types of behaviour or conduct that amount to market abuse include:

            (a) Abuse of information:
            (i) Insider dealing;
            (ii) Improper disclosure;
            (iii) Misuse of information.
            (b) Market manipulation:
            (iv) Manipulating transactions;
            (v) Manipulating devices;
            (vi) Dissemination;
            (vii) Misleading behaviour and distortion.
            November 2010

      • MAM-2 MAM-2 Prohibited Conduct in Possession of Inside Information

        • MAM-2.1 MAM-2.1 Prohibited Conduct with respect to Possession of Inside Information

          • MAM-2.1.1

            Pursuant to Article 100 of the CBB Law a person who is in possession of inside information, as an insider shall not use such information to:

            1) Deal in any securities to which that information relates;
            2) Encourage any person to deal in any securities to which that information relates;
            3) Disclose inside information to any other person, otherwise than in the proper performance of the functions of his employment, office or profession;
            4) Violate the rules governing the publishing of market information.
            November 2010

        • MAM-2.2 MAM-2.2 Prohibited Conduct of Permanent Insiders

          • MAM-2.2.1

            Without prejudice to rule MAM-2.1, where:

            (a) A person who is a Permanent Insider to a company possesses information concerning that company that is not disclosed widely enough; and
            (b) The Permanent Insider knows or ought reasonably to know that:
            (i) The information is not disclosed widely enough; and
            (ii) If it were disclosed widely enough, it might have a material effect on the price or value of those securities of that company;

            rules MAM-2.2.2, MAM-2.2.3 AND MAM-2.2.4 shall apply.

            November 2010

          • MAM-2.2.2

            The Permanent Insider must not (whether as principal or agent):

            (a) Subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such securities referred to in rule MAM-2.2.1; or
            (b) Procure another person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities referred to in rule MAM-2.2.1.
            November 2010

          • MAM-2.2.3

            Where trading in the securities referred to in rule MAM-2.2.1 is permitted on the securities market of a licensed exchange, the Permanent Insider must not, directly or indirectly, communicate the information, or cause the information to be communicated to another person if the Permanent Insider knows, or ought reasonably to know, that the other person would or would be likely to:

            (a) Subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such securities; or
            (b) Procure a third person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities.
            November 2010

          • MAM-2.2.4

            In any proceedings for a contravention of rules MAM-2.2.2 and MAM-2.2.3 against a Permanent Insider to a company referred to in rules MAM-2.2.1, MAM-2.2.2 and MAM-2.2.3, where the prosecution or plaintiff proves that the Permanent Insider was at the material time:

            (a) In possession of information concerning the company to which he was connected; and
            (b) The information was not disclosed widely enough;
            it shall be presumed, until the contrary is proved that the permanent insider knew at the material time that:
            (i) The information was not disclosed widely enough; and
            (ii) If the information were disclosed widely enough, it might have a material effect on the price or value of securities of that company.
            November 2010

        • MAM-2.3 MAM-2.3 Prohibited Conduct by Other Persons in Possession of Inside Information

          • MAM-2.3.1

            Without prejudice to section MAM-2.1, where:

            (a) A person who is not a Permanent Insider (referred to in this section as the insider) possesses information that is not disclosed widely enough; and
            (b) The insider knows that:
            (i) The information is not disclosed widely enough; and
            (ii) If it were disclosed widely enough, it might have a material effect on the price or value of those securities;

            rules MAM-2.3.2 and MAM-2.3.3 shall apply.

            November 2010

          • MAM-2.3.2

            The insider must not (whether as principal or agent):

            (a) Subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell any such securities; or
            (b) Procure another person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities.
            November 2010

          • MAM-2.3.3

            Where trading in the securities referred to in rule MAM-2.3.1 is permitted on the securities market of a licensed exchange, the insider must not, directly or indirectly, communicate the information or cause the information to be communicated to another person if the insider knows, or ought reasonably to know, that the other person would or would be likely to:

            (a) Subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell any such securities; or
            (b) Procure a third person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell, any such securities.
            November 2010

        • MAM-2.4 MAM-2.4 Not Necessary to Prove Intention to Use

          • MAM-2.4.1

            Without prejudice to the criminal law proceedings, for the avoidance of doubt, in any proceedings against a person for a contravention of sections MAM-2.1, MAM-2.2 or MAM-2.3 it is not necessary for the prosecution or plaintiff to prove that the accused person or defendant intended to use the information referred to in rules MAM-2.2.1 (a) or MAM-2.3.1 (a) in contravention of sections MAM-2.1, MAM-2.2 or MAM-2.3 as the case may be.

            November 2010

          • MAM-2.4.2

            Without prejudice to the criminal law proceedings, in any proceedings against a person for a contravention of sections MAM-2.1, MAM-2.2 or MAM-2.3, it is not necessary for the prosecution or plaintiff to prove the absence of facts or circumstances which if they existed would, by virtue of rules MAM-2.5 to MAM-2.15 or any other CBB regulations, preclude the act from constituting a contravention of sections MAM-2.1, MAM-2.2 or MAM-2.3 as the case may be.

            November 2010

        • MAM-2.5 MAM-2.5 Exception for Redemption of Units in a Collective Investment Scheme

          • MAM-2.5.1

            Sections MAM-2.2 or MAM-2.3 shall not apply in respect of the redemption of units in a collective investment scheme by a trustee or manager under a trust deed relating to that collective investment scheme in accordance with a buy-back covenant contained or deemed to be contained in the trust deed at a price that is required by the trust deed to be calculated, so far as is reasonably practicable, by reference to the underlying value of the assets less:

            (a) Any liabilities of that collective investment scheme to which the units relates; and
            (b) Any reasonable charge for purchasing the units.
            November 2010

          • MAM-2.5.2

            The exception provided under rule MAM-2.5.1 will not be applicable to fund managers or trustees who are identified as insiders for the selling of underlying securities of a collective investment scheme for the purpose of redemption of units.

            November 2010

        • MAM-2.6 MAM-2.6 Exception for Underwriters

          • MAM-2.6.1

            Sections MAM-2.2 and MAM-2.3 shall not apply in respect of:

            (a) Subscribing for, or purchasing securities under an underwriting agreement or a sub-underwriting agreement;
            (b) Entering into an agreement referred to in paragraph (a); or
            (c) Selling securities subscribed for or purchased under an agreement referred to in paragraph (a).
            November 2010

          • MAM-2.6.2

            Sections MAM-2.2 and MAM-2.3 shall not apply in respect of the communication of information in relation to securities:

            (a) To a person solely for the purpose of procuring the person to enter into an underwriting agreement in relation to any such securities; or
            (b) By a person who may be required under an underwriting agreement to subscribe for, or purchase any such securities if the communication is made to another person solely for the purpose of procuring the other person to do either or both of the following:
            (i) Enter into a sub-underwriting agreement in relation to any such securities;
            (ii) Subscribe for, or purchase any such securities.
            November 2010

          • MAM-2.6.3

            Exception for underwriters specified under rules MAM-2.6.1 and MAM-2.6.2 will not be applicable to underwriters or their representatives who are identified as insiders for the dealings in the secondary market.

            November 2010

        • MAM-2.7 MAM-2.7 Attribution of Knowledge within Companies

          • MAM-2.7.1

            For the purposes of this Module:

            (a) A company is taken to possess any information which an officer of the company possesses and which came into his possession in the course of the performance of duties as such an officer; and
            (b) If an officer of a company knows or ought reasonably to know any matter or thing because he is an officer of the company, it is to be presumed, until the contrary is proved, that the company knows or ought reasonably to know that matter or thing.
            November 2010

          • MAM-2.7.2

            A company does not contravene sections MAM-2.2 or MAM-2.3 by entering into a transaction or agreement at any time merely because of information in the possession of an officer of the company if:

            (a) The decision to enter into the transaction or agreement was taken on its behalf by a person other than that officer;
            (b) It had in operation at that time arrangements that could reasonably be expected to ensure that the information was not communicated to the person who made the decision and that no advice with respect to the transaction or agreement was given to that person by a person in possession of the information; and
            (c) The information was not communicated and no such advice was given.
            November 2010

        • MAM-2.8 MAM-2.8 Attribution of Knowledge with Partnerships and Limited Liability Partnership

          • MAM-2.8.1

            For the purposes of this Module:

            (a) A partner of a partnership or a limited liability partnership (as the case may be) is taken to possess any information:
            (i) Which another partner of the partnership or limited liability partnership (as the case may be) possesses and which came into such other partner's possession in his capacity as a partner of the partnership or limited liability partnership (as the case may be); or
            (ii) Which an employee of the partnership or a manager of a limited liability partnership (as the case may be) possesses and which came into the possession of such an employee or manager in the course of the performance of his duties as such an employee or manager; and
            (b) If a partner or employee of a partnership or a partner, manager or employee of a limited liability partnership (as the case may be) knows or ought reasonably to know any matter or thing in his capacity as such a partner, manager, or employee, it is to be presumed that every partner of the partnership or limited liability partnership (as the case may be) knows or ought reasonably to know that matter or thing.
            November 2010

          • MAM-2.8.2

            The partners of a partnership or limited liability partnership (as the case may be) do not contravene sections MAM-2.2 or MAM-2.3 by entering into a transaction or agreement at any time merely because one or more (but not all) of the partners, or a manager or managers, or an employee or employees, of the partnership or limited liability partnership (as the case may be) are in actual possession of information if:

            (a) The decision to enter into the transaction or agreement was taken on behalf of the partnership or limited liability partnership by any one or more of the following persons:
            (i) A partner who is taken to have possessed the information merely because another partner, or a manager or employee of the partnership or limited liability partnership, was in possession of the information;
            (ii) An employee of the partnership or limited liability partnership or a manager of the limited liability partnership who was not in possession of the information;
            (b) The partnership or limited liability partnership had in operation at that time arrangements that could reasonably be expected to ensure that the information was not communicated to the person or persons who made the decision and that no advice with respect to the transaction or agreement was given to that person or any of those persons by a person in possession of the information; and
            (c) The information was not so communicated and no such advice was so given.
            November 2010

          • MAM-2.8.3

            A partner of a partnership or limited liability partnership (as the case may be) does not contravene sections MAM-2.2 or MAM-2.3 by entering into a transaction or agreement otherwise than on behalf of the partnership or limited liability partnership merely because he is taken to possess information that is in the possession of another partner, a manager, or an employee of the partnership.

            November 2010

        • MAM-2.9 MAM-2.9 Exception for Knowledge of Person's Own Intentions Or Activities

          • MAM-2.9.1

            An individual does not contravene sections MAM-2.2 or MAM-2.3 by entering into a transaction or agreement in relation to securities merely because he is aware that he proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to those securities.

            November 2010

        • MAM-2.10 MAM-2.10 Exception for Companies and its Officers, etc.

          • MAM-2.10.1

            A company does not contravene sections MAM-2.2 or MAM-2.3 by entering into a transaction or agreement in relation to securities merely because it is aware that it proposes to enter into or has previously entered into, one or more transactions or agreements in relation to those securities.

            November 2010

          • MAM-2.10.2

            Subject to rule MAM-2.10.3, a company does not contravene section MAM-2.3 by entering into a transaction or agreement in relation to securities merely because an officer of the company is aware that the company proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to those securities.

            November 2010

          • MAM-2.10.3

            Rule MAM-2.10.2 shall not apply unless the officer of the company mentioned in that rule became aware of the matters referred to in that rule in the course of the performance of duties as such an officer.

            November 2010

          • MAM-2.10.4

            Subject to rule MAM-2.10.5, a person does not contravene sections MAM-2.2 or MAM-2.3 by entering into a transaction or agreement on behalf of a company in relation to securities merely because he is aware that the company proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to those securities.

            November 2010

          • MAM-2.10.5

            Rule MAM-2.10.4 shall not apply unless the person became aware of the matters referred to in that rule in the course of the performance of duties as an officer of the company or in the course of acting as an agent of the company.

            November 2010

        • MAM-2.11 MAM-2.11 Unsolicited Transactions by the Holder of a CBB License

          • MAM-2.11.1

            The holder of a CBB license who acts as a broker to deal in securities or trade in futures contracts, or a representative of such a holder does not contravene sections MAM-2.2 or MAM-2.3 by subscribing for, purchasing or selling, or entering into an agreement to subscribe for, purchase or sell, securities that are traded on the stock market or futures market if:

            (a) The licensed person entered into the transaction or agreement concerned on behalf of another person (referred to in this section as the principal) under a specific instruction by the principal to enter into that transaction or agreement which was not solicited by the licensed person;
            (b) The licensed person has not given an advice to the principal in relation to the transaction or agreement or otherwise sought to procure the principal's instructions to enter into the transaction or agreement; and
            (c) The principal is not an associate of the licensed person.
            November 2010

          • MAM-2.11.2

            Nothing in this section shall affect the application of sections MAM-2.2 or MAM-2.3 in relation to the principal.

            November 2010

        • MAM-2.12 MAM-2.12 Parity of Information

          • MAM-2.12.1

            In any proceedings against a person for a contravention of sections MAM-2.2 or MAM-2.3 because the person entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the first-mentioned person's possession, it is a defence if the court is satisfied that:

            (a) The information came into the first-mentioned person's possession solely as a result of the information having been disclosed widely enough; or
            (b) The other party to the transaction or agreement knew, or ought reasonably to have known of the information before entering into the transaction or agreement.
            November 2010

          • MAM-2.12.2

            In any action against a person for a contravention of sections MAM-2.2 or MAM-2.3 because the person communicated information, or caused information to be communicated, to another person, it is a defence if the court is satisfied that:

            (a) The information came into the first-mentioned person's possession solely as a result of the information having been disclosed widely enough; or
            (b) The other person knew, or ought reasonably to have known, of the information before the information was communicated.
            November 2010

        • MAM-2.13 MAM-2.13 Defences

          • MAM-2.13.1

            In line with Article 101 of the CBB Law: "The mere trading by any person with inside information in securities, or encouraging others to trade therein, shall not be considered as a violation to this chapter if,

            (1) He did not, at the time, expect that he will make a profit due to the inside information;
            (2) He reasonably believed at the time of dealing that the information had been disclosed widely enough that none of those taking part in the dealing would be prejudiced by not being aware of the said information;
            (3) He would have acted as he did even if such information was not available to him."

            This defence will be available only in cases where the person has reasonable or sufficient grounds to believe that the information had been "Information disclosed widely enough" as referred to in this Module.

            November 2010

          • MAM-2.13.2

            In line with Article 102 of the CBB Law: "A person with inside information shall not be violating this chapter if he proves that he did not expect, at the time of disclosure, any person to trade in such securities based on such information, or that he did expect such trading but never thought that such person would make profits because the disclosed information was an inside information."

            This defence will be available only for cases where the disclosure of information is made in the proper performance of the functions, office or profession.

            November 2010

          • MAM-2.13.3

            In line with Article 103 of the CBB Law: "A person shall not be violating this chapter by virtue of dealing in securities or encouraging another person to deal, if he proves that he had acted in good faith in the course of his business as a licensed mediator or his employment with a mediator."

            This defence will be available only in cases where the person has acted in his capacity as an investment firm licensee or an underwriter and the transactions are covered by the exceptions provided under sections MAM-2.6 or MAM-2.11.

            November 2010

          • MAM-2.13.4

            In line with Article 104 of the CBB Law: "An individual is not guilty of inside dealing by virtue of dealing in securities or encouraging another person to deal if he proves that:

            (1) The information, which he had as an insider, was market information;
            (2) It was reasonable that any person in their position would have acted similarly despite having such information as an insider at the time. In determining the appropriateness of such action, a special consideration shall be given to the content of the information, the circumstances in which it was first acquired and in what capacity did he act at the time of dealing."

            This defence will be available only if the individual proves that there was parity of information available as per section MAM-2.12.

            November 2010

          • MAM-2.13.5

            In line with Article 105 of the CBB Law: "A person shall not be guilty of inside dealing by virtue of dealing in securities or encouraging another person to deal if he proves that:

            (1) The securities were, at the time of dealing, under consideration or negotiation, or that the dealing took place during the course of a series of such negotiations;
            (2) The dealing was intended to facilitate the negotiation of securities or execute a series of negotiations of such securities;
            (3) The dealing was completed in accordance with the Central Bank's price policies."

            The first two defences mentioned in this rule will be available only for exceptions specified in section MAM-2.9 or MAM-2.10. The third defence mentioned in this rule will be available only for price stabilization transactions undertaken by a market maker who should also be a Category 1 Investment Firm Licensee.

            November 2010

        • MAM-2.14 MAM-2.14 Restrictions on Insider's Trading

          • Trading by Permanent Insiders

            • MAM-2.14.1

              Permanent Insiders must schedule their trading of securities issued by the company in such a manner that their trading will not undermine confidence in the securities market.

              Amended: April 2021
              November 2010

          • Trading After Publication of Financial Statements

            Following the publication of financial statements by a company, Permanent Insiders of that company must refrain from trading and wait until the commencement of the following day's trading session, or after 24 hours, whichever is less, after the publication of the financial statements have been released in the local newspapers.

            November 2010

            • MAM-2.14.2

              Following the publication of financial statements by a company, Permanent Insiders of that company must refrain from trading and wait until the commencement of the following day's trading session, or after 24 hours, whichever is less, after the publication of the financial statements have been released in the local newspapers.

              Amended: April 2021
              November 2010

          • Scope of the Restriction on Trading

            • MAM-2.14.3

              The restrictions on trading must be applied to the listed company's Permanent Insiders. A Permanent Insider must also be responsible for compliance with the restriction on trading when the management of the securities of the Permanent Insider has been assigned to another party.

              Amended: April 2021
              November 2010

            • MAM-2.14.4

              The restriction on trading shall not be applied in cases where:

              (a) Buying securities by subscribing or obtaining them directly from the company or its group in a public issue;
              (b) Receiving securities in consideration of redemption, merger, demerger, or as compensation in accordance with a public tender offer, or in another comparable manner;
              (c ) Receiving shares as dividends (bonus shares), or another form of payout from retained earnings;
              (d) Receiving securities as compensation for work or other performance or service;
              (e) Receiving securities as inheritance under a will, as a present, or as a result of partition of an estate, or by means of similar acquisition.
              November 2010

        • MAM-2.15 MAM-2.15 Obligations of Insiders, Listed Companies and Brokerage Firms

          • Creation of Register

            • MAM-2.15.1

              Permanent Insiders shall provide to the listed company their basic personal data and information for the purpose of creating a register of such details. The register must be maintained at its headquarters in Bahrain and be made available for investigation and inspection to the CBB at all times. The register shall be maintained and kept by the listed company for a minimum period of 5 years.

              November 2010

          • Changes in Declared Information

            • MAM-2.15.2

              Any changes in personal data and information or change in beneficial ownership or holdings of securities shall be notified to the listed company by the end of the next business day following the date the change took place.

              November 2010

          • Obligations of Listed Companies

            • MAM-2.15.3

              Listed companies shall organize regular supervision (at least annually) of the Permanent Insiders to verify the information declared to the company and the trading of the Permanent Insiders.

              November 2010

            • MAM-2.15.4

              Listed companies shall, where necessary, case-by-case, verify the trading of securities of a Permanent Insider more diligently, for example if a Permanent Insider deals with a large volume of securities or is trading frequently.

              November 2010

            • MAM-2.15.5

              Any violations of this Module or the requirement of a licensed exchange shall be reported immediately to the CBB.

              November 2010

          • Annual Verification

            • MAM-2.15.6

              The register data shall be verified at least once a year before the Annual General Meeting by the internal auditor of the company. The result of such verification shall be forwarded to the CBB not more than 10 days after the date of the company's AGM.

              November 2010

          • Written Guidelines and Instructions

            • MAM-2.15.7

              All listed companies must have their own written guidelines on Permanent Insiders in line with the Module and the requirements of the listed exchange. The company may define other instructions or restrictions, as it deems fit according to its situation.

              November 2010

            • MAM-2.15.8

              The listed company's written guidelines on Permanent Insiders should be submitted to the licensed exchange for approval before being officially implemented. The company shall make its approved guidelines available to its Permanent Insiders, and to ordinary shareholders or any other interested parties.

              November 2010

            • MAM-2.15.9

              Each listed company shall appoint an officer of the company to maintain and manage the register and requirements imposed by this Module and the licensed exchange.

              November 2010

          • Obligations of Capital Markets Service Providers

            • MAM-2.15.10

              Capital Markets Service Providers shall lay down internal guidelines on the prevention of abuse of Inside Information, and compliance with this Module, and the requirements of a licensed exchange in respect of their staff, directors, proprietors and partners dealing in securities of any company listed or to be listed.

              November 2010

            • MAM-2.15.11

              Capital Markets Service Providers are prohibited from entering any order by any Permanent Insider, if there is any suspicion that this Module or the requirements of a licensed exchange may be violated.

              November 2010

          • Obligations of Licensed Exchanges

            • MAM-2.15.12

              The licensed exchanges shall have appropriate systems and procedures to prevent the abuse of inside information and to ensure prompt disclosure by listed companies of price sensitive information, in order to limit the possibility of abuse of inside information.

              November 2010

            • MAM-2.15.13

              Licensed exchanges shall have appropriate functions and systems to monitor trading and the market on a continuous basis and detect the possible cases of contravention of this Module, including abuse of inside information.

              November 2010

            • MAM-2.15.14

              Licensed exchanges shall report the detected suspected transactions, or suspected market behaviour or conduct, or suspected cases of market abuse to the CBB's Capital Markets Supervision (CMS) Directorate for further investigation.

              November 2010

      • MAM-3 MAM-3 Prohibited Market Conduct

        • MAM-3.1 MAM-3.1 Prohibited Market Conduct

          • MAM-3.1.1

            Article 106 of the CBB Law states that a person is guilty of market manipulation if he engages or encourages to engage in any conduct that may give a false or misleading impression as to the supply of or demand for, or the price or value of any securities or that may give an unrealistic picture of the market regarding the volume and/or prices of any securities. In application of this Article 106 of the CBB Law, the CBB will consider that a person is guilty of market manipulation if he engages or encourages to engage in any act of commission or omission of the prohibited market behaviour or conduct listed in rule MAM-3.1.2.

            November 2010

          • MAM-3.1.2

            No person shall directly or indirectly:

            (a) Engage or encourage others to engage in any behaviour or conduct that may give a false or misleading impression as to the supply of or demand for, or the price or value of any securities.
            (b) Engage or encourage others to engage in any behaviour or conduct that may give an unrealistic picture of the market regarding the volume and/or prices of any securities.
            (c) Create or do anything that is intended or likely to create a false or misleading appearance:
            (i) Of active trading in any securities on a securities market;
            (ii) With respect to the market for, or the price of, such securities; or
            (iii) By engaging or encouraging others to engage in any act of conducting or attempting to conduct a manoeuver with the intention to impede normal functioning of a market.
            (d) Maintain, inflate, depress, stabilize, or cause fluctuations in the market price of any securities, or the trading volume of any securities by means of a purchase or sale of any securities that do not involve a change in the beneficial ownership of those securities, or by any fictitious transaction or device.
            (e) Engage or encourage others to engage in any fraudulent or misleading or manipulative practice, such as to:
            (i) Employ any device, scheme or artifice to defraud;
            (ii) buy, sell, intermediate or otherwise deal in securities in a fraudulent manner;
            (iii) Obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
            (iv) Engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser; or
            (v) Induce, fraudulently, other persons to deal in securities, or trade in futures contracts.
            (f)Use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a licensed exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the CBB Law or the rules and regulations made thereunder, including the rules and regulations of licensed exchanges.
            (g)Manipulate or publish or cause to publish or report or cause to report by a person dealing in securities any information which is not true or which he does not believe to be true prior to or in the course of dealing in securities.
            (h) Indulge in price manipulation or any act or omission amounting to manipulation of the price or volume of a security.
            (i) Make a statement, promise, forecast or any other action, or disseminate information that is false or misleading and has or is likely to have an impact on the price or volume of securities.
            (j) Employ manipulative or deceptive devices or practices.
            (k) Disseminate information about illegal transactions.
            (i) Fail, intentionally or recklessly, to notify the licensed exchange or the CBB of such information as is required to be disclosed as per the CBB Law, rules and regulations, Modules on listing requirements, Disclosure Standards and AML/CFT of CBB's Rulebook Volume 6.
            (m) Indulge in manipulative or fraudulent or unfair trade practices in securities.
            (n) Advance or agree to advance any money to any person thereby inducing any other person to offer to buy any security in any issue only with the intention of manipulating or securing the minimum subscription to such issue.
            (o) Enter into a transaction in securities without the intention of performing it, or without the intention of change of ownership of such security.
            (p) Sell, deal or pledge stolen or counterfeit securities, whether in physical or dematerialized form.
            (q) Provide clients with such information relating to a security that cannot be verified by the clients before their dealing in such security.
            (r) Encourage clients to deal in securities solely with the object of enhancing his brokerage or commission.
            (s) Indulge in buying or selling securities in advance of a substantial client order, or whereby a futures or option position is taken about an impending transaction in the same or related futures or options contract.
            (t) Plant false or misleading news or rumours, or deceitful information which may induce sale or purchase of securities.
            November 2010

        • MAM-3.2 MAM-3.2 False Trading and Market Rigging Transactions

          • MAM-3.2.1

            Without prejudice to the provisions of the rule MAM-3.1.2 above, a person who:

            (a) Effects, takes part in, is concerned in or carries out directly or indirectly, any transaction of purchase or sale of any securities, being a transaction that does not involve any change in the beneficial ownership of the securities;
            (b) Makes or causes to be made an offer to sell any securities at a specified price where he has made or caused to be made or proposes to make or to cause to be made, or knows that a person associated with him has made or caused to be made or proposes to make or to cause to be made, an offer to purchase the same number, or substantially the same number of securities at a price that is substantially the same as the first-mentioned price; or
            (c) Makes or causes to be made an offer to purchase any securities at a specified price where he has made or caused to be made or proposes to make or to cause to be made, or knows that a person associated with him has made or caused to be made or proposes to make or to cause to be made, an offer to sell the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price,

            shall be deemed to have created a false or misleading appearance of active trading in securities on a securities market.

            November 2010

          • MAM-3.2.2

            In any proceedings against a person for a contravention of rule MAM-3.1.2 (c) and (d) because of an act referred to in rule MAM-3.2.1, it is a defence if the defendant establishes that the purpose or purposes for which he did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a securities market.

            November 2010

          • MAM-3.2.3

            For the purposes of rule MAM-3.1.2 (c) and (d) and rule MAM-3.2.1, a purchase or sale of securities does not involve a change in the beneficial ownership if a person who had an interest in the securities before the purchase or sale, or a person associated with the first-mentioned person in relation to those securities, has an interest in the securities after the purchase or sale.

            November 2010

          • MAM-3.2.4

            In any proceedings against a person for a contravention of rule MAM-3.2.1 in relation to a purchase or sale of securities that did not involve a change in the beneficial ownership of those securities, it is a defence if the defendant establishes that the purpose or purposes for which he purchased or sold the securities was not, or did not include, the purpose of creating a false or misleading appearance with respect to the market for, or the price of, securities.

            November 2010

          • MAM-3.2.5

            The reference in rule MAM-3.2.1 to a transaction of purchase or sale of securities includes:

            (a) A reference to the making of an offer to purchase or sell securities; and
            (b) A reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to purchase or sell securities.
            November 2010

        • MAM-3.3 MAM-3.3 Fraudulent Dealings

          • Fraudulently Inducing Persons to Deal in Securities

            • MAM-3.3.1

              Without prejudice to the provisions of rule MAM-3.1.2 (e), no person shall:

              (a) By making or publishing, by any means, any statement, promise or forecast that he knows or ought reasonably to have known to be misleading, false or deceptive;
              (b) By any dishonest concealment of material facts;
              (c) By the reckless making or publishing of any statement, promise or forecast that is misleading, false or deceptive; or
              (d) By recording or storing in, or by means of, any mechanical, electronic or other device information that he knows to be false or misleading in a material particular;

              induce or attempt to induce another person to deal in securities.

              November 2010

            • MAM-3.3.2

              In any proceeding against a person for a contravention of rule MAM-3.3.1 constituted by recording or storing information as mentioned in rule MAM-3.3.1 (d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to another person.

              November 2010

            • MAM-3.3.3

              In any proceedings against a person for a contravention of rule MAM-3.3.1, the opinion of any registered or public accountant as to the financial position of any company at any time or during any period in respect of which he has made an audit or examination of the affairs of the company according to recognised audit practice shall be admissible, for any party to the proceedings, as evidence of the financial position of the company at any time or during that period, notwithstanding that the opinion is based in whole or in part on book-entries, documents or vouchers or on written or verbal statements by other persons.

              November 2010

          • Employment of Manipulative and Deceptive Devices or Practices

            • MAM-3.3.4

              Without prejudice to the provisions of rule MAM-3.1.2 (e), no person shall, directly or indirectly, in connection with the subscription, purchase or sale of any securities:

              (a) Employ any device, practice, scheme or artifice to defraud;
              (b) Engage in any act or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person;
              (c) Make any statement he knows to be false in a material particular; or
              (d) Omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
              November 2010

        • MAM-3.4 MAM-3.4 Dissemination of Information about Illegal Transactions

          • MAM-3.4.1

            Without prejudice to the provisions of section MAM-3.1, no person shall circulate or disseminate, or authorise or be concerned in the circulation or dissemination of, any statement or information to the effect that the price of any securities will, or is likely, to rise or fall or be maintained by reason of a transaction entered into, or to be entered into, or other act or thing done or to be done in relation to such securities which to his knowledge, was entered into or done in contravention of section MAM-3.1, or if entered into or done would be in contravention of section MAM-3.1, if:

            (a) The person, or a person associated with the person, has entered into or purports to enter into any such transaction or has done or purports to do any such act or thing; or
            (b) The person, or a person associated with the person, has received, or expects to receive, directly or indirectly, any consideration or benefit for circulating or disseminating, or authorising or being concerned in the circulation or dissemination, the statement or information.
            November 2010

        • MAM-3.5 MAM-3.5 False or Misleading Statements

          • MAM-3.5.1

            Without prejudice to the provisions of rule MAM-3.1.2 (e) and (f), no person shall make a statement, or disseminate information, that is false or misleading in a material particular and is likely:

            (a) To induce other persons to subscribe for securities;
            (b) To induce the sale or purchase of securities by other persons; or
            (c) To have the effect of raising, lowering, maintaining or fixing the market price of securities;

            if, when he makes the statement or disseminates the information:

            (a) He does not care whether the statement or information is true or false; or
            (b) He knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.
            November 2010

        • MAM-3.6 MAM-3.6 Price Manipulation

          • MAM-3.6.1

            Without prejudice to the provisions of rule MAM-3.1.2, no person shall effect, take part in, be concerned in or carry out, directly or indirectly, two or more transactions in securities, being transactions that have, or are likely to have, the effect of raising, lowering, maintaining or fixing the price of securities on a securities market, with intent to induce other persons to subscribe for, purchase or sell securities of the company or of a related company.

            November 2010

          • MAM-3.6.2

            A reference to rule MAM-3.6.1 (a) or (b) to transactions in securities includes:

            (a) A reference to the making of an offer to purchase or sell such securities; and
            (b) A reference to the making of an invitation, however expressed, that directly or indirectly invites a person to offer to purchase or sell such securities.
            November 2010

        • MAM-3.7 MAM-3.7 Continuous Disclosure

          • MAM-3.7.1

            This rule shall apply to:

            (a) An entity the securities of which are listed for quotation on a licensed exchange;
            (b) A trustee of a business trust, where the securities of the business trust are listed for quotation on a securities exchange; or
            (c) A responsible person of a Collective Investment undertaking or business trust, where the units of the Collective Investment scheme are listed for quotation on a securities exchange.

            if the entity, trustee or responsible person is required by the licensed exchange under the listing rules or any other requirement of the licensed exchange to notify the licensed exchange of information on specified events or matters as they occur or arise for the purpose of the licensed exchange making that information available to a securities market operated by the licensed exchange.

            November 2010

          • MAM-3.7.2

            The persons specified in rule MAM-3.7.1 shall not intentionally, recklessly or negligently fail to notify the licensed exchange of such information, as is required to be disclosed by the licensed exchange under the listing rules or any other requirement of the licensed exchange.

            November 2010

          • MAM-3.7.3

            A contravention of rule MAM-3.7.2 shall not be an offence unless the failure to notify is intentional or reckless.

            November 2010

        • MAM-3.8 MAM-3.8 Fraudulent and Manipulative Practices in Offering Or Issuing Securities

          • MAM-3.8.1

            Without prejudice to section MAM-3.1, no person shall either directly or indirectly:

            (a) Obtain or participate in a subscription for any offering or issue of securities or use the proceeds thereof, in a fraudulent or manipulative manner, or in contravention of the CBB Law, the Offering Module or other applicable laws, rules and regulations; or
            (b) Induce or compel any person to surrender any rights attached to a security, including voting rights or the ability to appoint a proxy, either as a pre-condition for subscription of such security or otherwise;
            (c) Manipulate or fraudulently secure a minimum subscription of any offering or issue of securities, either by accepting a subscription in contravention of the Anti-Money Laundering (AML) and Combating Financial Crime (CFC) Laws and regulations, or by accepting incomplete subscription forms or otherwise.
            (d) Make a reference to the CBB's or any other authority's approval for the purpose of marketing of or obtaining subscription for any offering or issue of securities, or give a misleading appearance that such an approval or no-objection relates to financial soundness of any project or merits of any offering or issue of securities.
            November 2010

        • MAM-3.9 MAM-3.9 Prohibited Conduct — Futures Contract and Leveraged Foreign Exchange Trading

          • False Trading — Futures Contracts and Leveraged Foreign Exchange Trading

            • MAM-3.9.1

              Without prejudice to section MAM-3.1, no person shall create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in any futures contract on a futures market or in connection with leveraged foreign exchange trading, or a false or misleading appearance with respect to the market for, or the prices of futures contracts on a futures market or foreign exchange, in connection with leveraged foreign exchange trading.

              November 2010

          • Bucketing

            • MAM-3.9.2

              Without prejudice to section MAM-3.1 no person shall:

              (a) Knowingly execute, or hold himself out as having executed, an order for the purchase or sale of a futures contract on a futures market, without having effected a bona fide purchase or sale of the futures contract in accordance with the business rules, practices and procedures of the licensed exchange;
              (b) Knowingly execute, or hold himself out as having executed, an order to make a purchase or sale of foreign exchange in connection with leveraged foreign exchange trading, without having effected a bona fide purchase or sale in accordance with the order.
              November 2010

          • Manipulation of Price of Futures Contract and Cornering

            • MAM-3.9.3

              Without prejudice to section MAM-3.1 no person shall, directly or indirectly:

              (a) Manipulate or attempt to manipulate the price of a futures contract that may be dealt in on a futures market, or of any commodity which is the subject of such futures contract; or
              (b) Corner, or attempt to corner, any commodity which is the subject of a futures contract.
              November 2010

          • Fraudulently Inducing Persons to Trade in Futures Contracts

            • MAM-3.9.4

              Without prejudice to section MAM-3.1 no person shall:

              (a) By making or publishing any statement, promise or forecast that he knows or ought reasonably to have known to be false, misleading or deceptive;
              (b) By any dishonest concealment of material facts;
              (c) By the reckless making or publishing of any statement, promise or forecast that is false, misleading or deceptive; or
              (d) By recording or storing in, or by means of hard copy or any mechanical, electronic or other device information that he knows to be false or misleading in a material particular;

              induce or attempt to induce another person to trade in a futures contract or engage in leveraged foreign exchange trading.

              November 2010

            • MAM-3.9.5

              In any proceedings against a person for a contravention of rule MAM-3.9.4, constituted by recording or storing information as mentioned in rule MAM-3.9.4 (d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to another person.

              November 2010

          • Employment of Fraudulent or Deceptive Devices and Practices

            • MAM-3.9.6

              Without prejudice to section MAM-3.1 no person shall directly or indirectly, in connection with any transaction involving trading in a futures contract or leveraged foreign exchange trading:

              (a) Employ any device, scheme or artifice to defraud;
              (b) Engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person;
              (c) Make any false statement of a material fact; or
              (d) Omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
              November 2010

          • Dissemination of Information about Illegal Transactions

            • MAM-3.9.7

              Without prejudice to section MAM-3.1 no person shall circulate, disseminate, or authorise or be concerned in the circulation of dissemination of, any statement or information to the effect that the price of a class of futures contracts or foreign exchange in connection with leveraged foreign exchange trading will, or is likely to, rise or fall or be maintained because of the market operations of one or more persons which, to his knowledge, are conducted in contravention of section MAM-3.1 if:

              (a) The person, or a person associated with the person, has conducted such market operations; or
              (b) The person, or a person associated with the person, has received, or expects to receive, directly or indirectly, any consideration or benefit for circulating or disseminating or authorising or being concerned in the circulation or dissemination, the statement or information.
              November 2010

        • MAM-3.10 MAM-3.10 Methods of Market Abuse and Manipulation

          • MAM-3.10.1

            A person who engages or encourages others to engage in market manipulation by his acts of commission or omission will be liable for penalties under the CBB Law, irrespective of the methods used for market manipulation. Methods of market abuse and market manipulation may include but not be limited to the methods mentioned in rules MAM-3.10.2 to MAM-3.10.38.

            (a) Abuse of information:
            Amended: July 2021
            November 2010

          • Insider Dealing

            • MAM-3.10.2

              Frontrunning: Frontrunning (or trading ahead) occurs when a broker times the purchase or sale of shares of a security for his own account so as to benefit from the price movement that follows execution of large customer orders. Frontrunning involves a trader taking a position in a security to profit from advance non-public knowledge of an imminent order that may affect the market price of that security.

              November 2010

            • MAM-3.10.3

              Tailgating: When a broker or adviser buys or sells a security for an informed client(s) and then immediately makes the same transaction in his or her own account.

              November 2010

            • MAM-3.10.4

              Spreading False Information to Purchase at Bargain Prices: An unlawful practice occurring mainly on the internet. A small group of informed people attempt to push down a stock by spreading false information and rumours. If they are successful, they can purchase the stock at bargain prices.

              November 2010

          • Improper Disclosure

            • MAM-3.10.5

              Concealing Ownership: This is a transaction or a series of transactions which is designed to conceal the ownership of a security via the breach of disclosure requirements through the holding of the instrument in the name of a colluding party (or parties). The disclosures are misleading in respect of the true underlying holding of the instrument. (This practice does not cover cases where there are legitimate reasons for securities to be held in the name of a party other than the beneficial owner; e.g. nominee holdings. Nor do all failures to make a required disclosure necessarily constitute market manipulation.)

              November 2010

            • MAM-3.10.6

              Touting: The practice refers to any person who is paid directly or indirectly, to recommend the sale of any security, without disclosing this fact and the amount of compensation to be received. Once someone is paid to recommend a security, this information should be provided to the market. Touting is also an unlawful practice in the securities market, since it does not follow the principle of full disclosure to the market and gives an unfair advantage to some investors over others.

              November 2010

          • Misuse of Information

            • MAM-3.10.7

              Pump and Dump: This practice involves taking a long position in a security and then undertaking further buying activity and/or disseminating misleading positive information about the security with a view to increasing the price of the security. Other market participants are mislead by the resulting effect on price and are attracted into purchasing the security. The manipulator then sells out at the inflated price. Pump and dump is a scheme that attempts to boost the price of a stock through brokers recommendations, internet forums, or cold calling based on false, misleading or greatly exaggerated statements, and the perpetrators of this scheme, who already have an established position in the company's stock, sell their positions after the hype has led to a higher share price.

              November 2010

            • MAM-3.10.8

              Trash and Cash: Trash and cash (or "slur and slurp") is the opposite of pump and dump. A party will take a short position in a security; undertake further selling activity and/or spread misleading negative information about the security with the purpose of driving down its price. The manipulator then closes their position after the price has fallen.

              November 2010

            • MAM-3.10.9

              Influencing Market Price without Controlling the Available Supply or Demand: An individual may not control the supply of a security or the asset underlying a derivative contract, but may use various other means to manipulate the price, such as disseminating false information about the relevant company or taking advantage of a congested market. False information about the company or the derivative or cash market, which influences the price of the company's shares or of the asset underlying a derivative contract may be disseminated in publicly filed financial statements, press releases, or through some other medium.

              November 2010

            • MAM-3.10.10

              Boiler Room Sales: Boiler rooms use banks of telephones to make cold calls to as many potential investors as possible using high-pressure selling techniques to persuade investors to purchase "house stocks"- stocks that the firm buys or sells as a market maker or has in its inventory. Boiler room operators typically sell worthless shares or thinly traded stocks of "microcap" or "small cap" companies.

              November 2010

            • MAM-3.10.11

              Cybersmear: Cybersmear is a practice in which individuals post malicious messages about businesses in online forums, to manipulate the stock or to hurt a company they have a grievance against.

              November 2010

            • MAM-3.10.12

              Scalping: Scalping is the fraudulent trading practice that occurs when a person buys shares of thinly-traded, small-cap companies, recommending the companies to the general public, and then selling the majority of his shares when the increased demand generated by his favourable recommendations drove up the stock price.

              November 2010

            • MAM-3.10.13

              False Market: A market where prices are manipulated and impacted by erroneous information, preventing the efficient negotiation of prices. These types of markets will often be marred by volatile swings because the true value of the market is clouded by the misinformation.

              November 2010

            • MAM-3.10.14

              Short and Distort (Bear Raid): An unlawful practice employed by unethical investors who short-sell a stock and then spread unsubstantiated rumours and other kinds of unverified bad news in an attempt to drive down the equity's price and realize a profit.

              November 2010

            • MAM-3.10.15

              Long and Distort: An unlawful practice employed by unethical investors who buy a stock and then spread unsubstantiated rumours and other kinds of unverified good news in an attempt to drive up the equity's price and realize a profit.

              November 2010

            • MAM-3.10.16

              Stock Basher: An individual, either acting alone or on behalf of someone else, who attempts to devalue a stock by spreading false or exaggerated claims against a public company. After the stock's price has dropped, the basher, or the basher's employer, will then purchase the stock at a lower price than that he or she believes it is intrinsically worth.

              (b) Market Manipulation:
              November 2010

          • Manipulating Transactions

            • MAM-3.10.17

              Painting the Tape: This practice involves engaging in a transaction or series of transactions which are shown on a public display facility to give the impression of activity or price movement in a security. This may include an unlawful practice in which traders buy and sell a specific security among themselves, creating the illusion of high trading volume and significant investor interest, which can attract unsuspecting investors who might then buy the stock and enable the traders to profit. Or, an unlawful action by a group of market manipulators buying and/or selling a security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures in unsuspecting investors as they perceive an unusual volume.

              November 2010

            • MAM-3.10.18

              Wash Sales: This is the practice of entering into arrangements for the sale or purchase of a security where there is no change in beneficial interests or market risk, or where the transfer of beneficial interest or market risk is only between parties who are acting in concert or collusion. (Repo transactions and stock lending/borrowing or other transactions involving transfer of securities as collateral do not constitute wash trades.) Wash sales include an unlawful transaction a trader makes by simultaneously buying and selling a security through two different brokers, thereby creating the illusion of activity. The trader sometimes would use a relative to conclude such manipulative transactions.

              November 2010

            • MAM-3.10.19

              Improper Matched Orders: Transactions where both buy and sell orders are usually entered at the same time, with the exact same price and quantity by different but colluding parties.

              November 2010

            • MAM-3.10.20

              Marking the Close: Marking the close (or ramping) involves deliberately buying or selling securities or derivatives contracts at the close of the market in an effort to alter the closing price of the security or derivatives contract. This practice may take place on any individual trading day but is particularly associated with dates such as future/option expiry dates or quarterly/annual portfolio or index reference/valuation points.

              November 2010

            • MAM-3.10.21

              Cornering the Market: Securing such control of the bid or demand-side of both the derivative and the underlying asset that leads to a dominant position. This position can be exploited to manipulate the price of the derivative and/or the asset. With regards to derivatives, in a corner, a market participant or group of participants accumulates a controlling position in an asset in the cash, derivative and other markets. The market participant or group of participants then requires those holding short positions to settle their obligations under the terms of their contracts, either by making delivery or by purchasing the asset from the manipulator or by offsetting in the derivatives market opposite the manipulator at prices distorted by the manipulators.

              In the context of a futures contract and leveraged foreign trading corners or attempts to corner, any commodity which is the subject of a futures contract.

              November 2010

            • MAM-3.10.22

              Abusive Squeeze: This involves a party or parties with a significant influence over the supply of, or demand for, or delivery mechanisms for a security and/or the underlying product of a derivative contract exploiting a dominant position in order materially to distort the price at which others have to deliver, take delivery or defer delivery of the security/product in order to satisfy their obligations.

              November 2010

            • MAM-3.10.23

              Capping and Pegging: This practice involves activity on both the stock market and the derivatives market. A trader writes an option, which obliges the trader to sell to (in the case of a call option) or buy from (in the case of a put option) the option holder a specified number of shares covered by the option in order to affect the share price in a direction that will make the option unprofitable to exercise.

              November 2010

            • MAM-3.10.24

              Manipulative Naked Short Sales: A short sale is generally the sale of a stock the seller does not own. In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due. Selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security's price is a manipulative activity.

              November 2010

            • MAM-3.10.25

              Pooling and Churning: "Pooling and Churning" can involve wash sales or pre-arranged trades executed in order to give an impression of active trading, and therefore investor interest in the stock.

              November 2010

            • MAM-3.10.26

              Interpositioning: Interpositioning involves a 2-step process that allows the brokerage firm to generate a profit for the brokerage firm from the spread between two opposite trades. Interpositioning can take various forms. In one form, the broker purchases stock for the brokerage firm's proprietary account from the customer sell order; and then fills the customer buy order by selling from the brokerage firm's proprietary account at a higher price — thus locking in a riskless profit for the brokerage firm's proprietary account. A second form of interpositioning involves the broker selling stock into the customer buy order, and then filling the customer sell order by buying for the brokerage firm's proprietary account at a lower price — again, locking in a riskless profit for the brokerage firm's proprietary account. In both forms of interpositioning, the broker participates on both sides of the trade, thereby capturing the spread between the purchase and sale prices, disadvantaging at least one of the parties to the transaction.

              November 2010

            • MAM-3.10.27

              Late Trading: This involves purchasing mutual fund shares at the closing price after the market closes. This is an investment technique involving short-term "in and out" trading of mutual fund shares, which has a detrimental effect on the long-term shareholders. The technique is designed to exploit market inefficiencies when the "net asset value" of the mutual fund shares; which is set at the market close, does not reflect the current market value of the stocks held by the mutual fund. When a "market timer" buys mutual fund shares at the stale NAV, it realizes a profit when it sells those shares the next trading day or thereafter. That profit dilutes the value of shares held by long term investors. Late Trading (or market timing) includes: (a) frequent buying and selling of shares of the same mutual fund; or (b) buying or selling mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Market timing, while not illegal per se, can harm other mutual fund shareholders because it can dilute the value of their shares, if the market timer is exploiting pricing inefficiencies, or disrupt the management of the mutual funds' investment portfolio and can cause the targeted mutual fund to incur costs borne by other shareholders to accommodate frequent buying and selling of shares by the market timer.

              November 2010

            • MAM-3.10.28

              Holding the Market: The practice of placing active or pending orders for a security into a market where the price is dropping rapidly in an attempt to "hold" the price of the security steady, or create a floor in the security. This practice is unlawful except when a broker or other party is mandated to keep the price of a security steady as part of Price Stabilization or a buy-back programme. This is only done in rare cases where there is not enough market depth to hold the price.

              November 2010

            • MAM-3.10.29

              Ghosting: An unlawful practice whereby two or more market makers or brokers collectively attempt to influence and change the price of a stock. Ghosting is used to affect stock prices so the manipulators can profit from the price movement.

              November 2010

            • MAM-3.10.30

              Freeriding: An unlawful practice in which an underwriting syndicate member withholds part of a new securities issue and later sells it at a higher price. This practice involves the unlawful activity of buying a stock and selling it before paying for the purchase.

              November 2010

            • MAM-3.10.31

              Bucketing: A brokerage that makes trades on a client's behalf and promises a certain price and/or confirms execution of an order to a client without actually executing it. The brokerage however, waits until a different price arises and then makes the trade, keeping the difference as profit in an attempt to make a short-term profit.

              November 2010

            • MAM-3.10.32

              Portfolio Pumping. The unlawful act of bidding up the value of a fund's holdings right before the end of a quarter, when the fund's performance is measured. This is done by placing a large number of orders on existing holdings, which drives up the value of the securities within the Portfolio.

              November 2010

          • Manipulating Devices

            • MAM-3.10.33

              Advancing the Bid: Increasing the bid for a security to increase its price artificially, creating the impression of strength or the illusion that stock activity was causing the increase.

              November 2010

            • MAM-3.10.34

              Placing Orders without Intention to Execute: This involves the entering of orders, especially into electronic trading systems, which are higher/lower than the previous bid/offer. The intention is not to execute the order but to give a misleading impression that there is demand for or supply of the security at that price. The orders are then withdrawn from the market before they are executed. (A variant on this type of market manipulation is to place a small order to move the bid/offer price of the security and being prepared for that order to be executed if it cannot be withdrawn in time.) These manipulative orders are entered in the pre-open sessions and also during the normal trading sessions.

              November 2010

            • MAM-3.10.35

              Excessive Bid-ask Spreads: This conduct is carried out by intermediaries which have market power, such as specialists or market makers acting in cooperation, in such a way intentionally to move the bid-ask spread to and/or to maintain it at artificial levels and far from fair values, by abusing their market power, i.e. the absence of other competitors.

              November 2010

          • Misleading Behaviour and Distortion

            • MAM-3.10.36

              Short and Extort: This practice occurs when short sellers state, for example posting messages on message boards, they would stop shorting the stock if they were given money or free shares.

              November 2010

            • MAM-3.10.37

              Spoofing: Spoofing (or small lot bailing) is a fraudulent trading practice that occurs when a person uses a displayed limit order to manipulate prices, entering quotes followed by virtually simultaneous cancellations, obtaining an improper trading advantage. The order is placed with the intention of briefly triggering a market movement from which the participant or others may benefit by trading the opposite side of the original manipulative order.

              November 2010

            • MAM-3.10.38

              Overtrading: An unethical practice employed by some brokers to increase their commissions by excessively trading in a client's account. It is also referred to as "churn and burn", "twisting" and "churning".

              November 2010

        • MAM-3.11 MAM-3.11 Motives and Parties Involved in Market Manipulation

          • MAM-3.11.1

            Any manipulative behaviour or conduct prohibited under this Module will attract a penalty specified in Article 106 of the CBB Law and other enforcement actions by the CBB, irrespective of the objective of such manipulative market behaviour or conduct.

            However, the CBB would investigate into the intentions behind the market behaviour or conduct and the objectives of the market behaviour or conduct of the various parties while dealing with suspected market behaviour or conduct cases.

            (a) Some examples of such motives include:
            (i) Influencing the price or value of a security or a derivative contract, so that the manipulator can:
            •   Buy at a lower price;
            •   Sell at a higher price;
            •   Influence takeover bids, or other large transactions; or
            •   combat competitive transactions;
            (ii) Influencing the price of a derivative contract or the underlying asset;
            (iii) Influencing the subscription price in public or non-public offerings;
            (iv) Influencing the price/conversion ratio in connection with the merger of companies;
            (v) Influencing the price of a security in connection with take-over offers;
            (vi) Influencing someone to subscribe for, purchase, or sell assets or rights to assets, or to abstain from doing so;
            (vii) Influencing the accounts/balance sheet of institutional investors;
            (viii) Influencing the limit for triggering forced sale by creditors; and
            (ix) Influencing the impression of financial advice or placements.
            (b) Any person who violates, or aides or abets any violation of the provisions of this Module will be liable for penalty and other enforcement actions under the CBB Law, irrespective of the status or position of the person involved. Those in a position to effect a manipulation include:
            (i) Issuers of securities;
            (ii) Participants in the securities market, derivatives market or underlying cash market, including investors and institutions;
            (iii) Market intermediaries;
            (iv) Financial analysts;
            (v) Any other person;
            (vi) Any combination of the above acting in cooperation with one another; and
            (vii) Any person aiding or abetting the person(s) involved in prohibited behaviour or conduct.
            November 2010

        • MAM-3.12 MAM-3.12 Error Trades

          • MAM-3.12.1

            Every licensed exchange and market operator should have policies and systems for error trades which should be transparent and applied consistently and fairly, so that the brokerage firms and their representatives are made accountable for providing correct information with regards to the investor's and transaction details at the time of entering the orders into the trading systems of the licensed exchanges or market operators.

            November 2010

          • MAM-3.12.2

            All transaction information after execution in the Automated Trading System of licensed exchanges must not be changed except when there is a misallocation of the Investor Account. Such change can only be made subject to the prior approval of the licensed exchange and any change after the settlement period can be made only after obtaining the CBB's Capital Markets Supervision Directorate's written approval.

            November 2010

          • MAM-3.12.3

            A repeated pattern of error trades could be indicative of possible manipulation or other abuse market activity and the licensed exchanges should have adequate systems in place to detect such activities and report to the CBB.

            November 2010

          • MAM-3.12.4

            If there is an error trade which is caused by mistake or lapse on the part of a brokerage firm, the cost for correcting such error trade shall be borne by the respective brokerage firm.

            November 2010

        • MAM-3.13 MAM-3.13 Defences

          • MAM-3.13.1

            A person shall not be guilty of violation of section MAM-3.1 if he proves that his reasons for engaging in the alleged behaviour or conduct were legitimate and that he had acted in conformity with the accepted market practices in the market concerned, or that he had acted in conformity with any price stabilization rules or market making rules made/approved by the Central Bank, or if he believed on reasonable grounds that his behaviour or conduct did not violate Article 106 of the CBB Law, and that he had taken all reasonable precautions and exercised all due diligence to avoid behaving in any way against the said Article.

            November 2010

      • MAM-4 MAM-4 Exemption for Price Stabilization

        • MAM-4.1 MAM-4.1 Exemption for Price Stabilization

          • MAM-4.1.1

            Price stabilization action taken by a designated market maker who is also a Category 1 Investment Firm Licensee acting as or on behalf of the Price Stabilization Manager in Bahrain in respect of an initial public offering, shall not be considered as market manipulation or abuse of inside information, if and only if, the conditions mentioned in section MAM-4.2 are satisfied.

            November 2010

          • MAM-4.1.2

            For the purposes of sections MAM-4.1 and MAM-4.2, unless the context otherwise requires:

            (a) ''Closing Date" in relation to an offer, means the date specified in the offer document as the last date for the submission of applications for subscription or purchase of the securities being offered.
            (b) "Dealer' means a Category 1 Investment Firm Licensee acting on behalf of a Price Stabilization Manager.
            (c) "Issuer" in relation to an offer, means the person who issues the securities being offered or, where the securities have been issued, the person making the offer.
            (d) "Offer" means an offer to the public for subscription or purchase of securities in conjunction with the listing of such securities on a licensed exchange, or on both a securities exchange and an overseas securities exchange, as the case may be, where the securities are not previously listed on any licensed exchange or overseas securities exchange.
            (e) "Offer Price" in relation to an offer, means the price of the securities being offered, or where the securities are offered in more than one tranche at different prices, the highest price offered, after deducting any concession, commission, brokerage, transaction fee or levy.
            (f) "Over-Allotment" in relation to an offer, means the allotment or sale of a number of the relevant securities in excess of the number of the securities available for subscription or purchase under the offer.
            (g) "Relevant Securities" in relation to an offer, means the securities which are, or when issued will be, uniform in all respects with the securities being offered under the offer and includes the securities being offered under the offer.
            (h) 'Stabilizing Action" in relation to an offer, means the action taken in Bahrain or elsewhere by a stabilizing manager, or by a Category 1 Licensee on behalf of the stabilizing manager:
            (i) Where the securities being offered under the offer are debentures, to buy or to offer or agree to buy, any relevant securities; or
            (ii) In any other case, to buy or offer or agree to buy any relevant securities on the securities market;
            In order to stabilize or maintain the market price of such securities in Bahrain or elsewhere.
            (i) "Stabilizing Manager" in relation to an offer, means a person:
            (i) Who is appointed in writing by the issuer of an offer to take stabilizing action in respect of the offer; and
            (ii) Whose appointment under paragraph (i) is notified to the licensed exchange on which the relevant securities are or are intended to be listed before the closing date of the offer.
            November 2010

        • MAM-4.2 MAM-4.2 Conditions for Exemption for Stabilizing Action

          • MAM-4.2.1

            In order to be eligible for exemption under rule MAM-4.1.1, the stabilizing action taken must be in respect of an offer of securities where:

            (a) The relevant securities are or are intended to be listed on a licensed exchange or on both a licensed exchange and an overseas securities exchange, as the case may be;
            (b) The price stabilization scheme, the total value of securities and the maximum number of securities that the price stabilization manager can buy or sell are approved by the CBB at the time of permitting the issue or listing of relevant securities;
            (c) The offer document states:
            (i) That stabilizing action may be taken in respect of the relevant securities;
            (ii) The maximum period during which stabilizing action may be taken;
            (iii) The total nominal value or number, as the case may be, of the securities which are the subject of an over-allotment option, if applicable; and
            (iv) The total nominal value or number, as the case may be, of the relevant securities that the stabilizing manager may buy to undertake stabilizing action, which shall not exceed the value or number approved by the CBB, as the case may be;
            (d) A public announcement has been made, through the licensed exchange on which the relevant securities are or are intended to be listed, on the business day of that licensed exchange immediately following the closing date of the offer, stating:
            (i) That such securities may be subject to stabilizing action;
            (ii) The maximum period during which stabilizing action may be taken;
            (iii) The total nominal value or number, as the case may be, of the securities which are the subject of an over-allotment option, if applicable; and
            (iv) The total nominal value or number, as the case may be, of the relevant securities that the stabilizing manager may buy to undertake stabilizing action, which shall not exceed the value or number approved by the CBB, as the case may be; and
            (e) The offer is on cash terms and is to be, is or has been, made at a specified price payable in any currency acceptable to the CBB.
            November 2010

          • MAM-4.2.2

            The stabilizing manager shall:

            (a) Take stabilizing action only after he is reasonably satisfied that the price of the relevant securities is not false or misleading; and
            (b) Shall continue with the stabilizing action only after he is reasonably satisfied that the price of the relevant securities has not become false or misleading other than by reason of any stabilizing action.
            November 2010

          • MAM-4.2.3

            No stabilizing action shall be taken before the following date:

            (a) Where the relevant securities are debt securities, the date on which the earliest public announcement of the offer which states the offer price is made through the licensed exchange on which the relevant securities are or are intended to be listed;
            (b) In any other case;
            (i) The date of commencement of trading in the securities being offered on the licensed exchange or the overseas securities exchange, as the case may be; or
            (ii) Where the relevant securities are offered on both the licensed exchange and the overseas exchange, the earlier of the dates of commencement of trading in the securities on these exchanges.
            November 2010

          • MAM-4.2.4

            No stabilizing action shall be taken:

            (a) Where the relevant securities are debt securities, after the earlier of the following dates:
            (i) The date of expiry of the period of 30 calendar days from the date of commencement of trading in the securities being offered on the licensed exchange or the overseas securities exchange, or the date of expiry of the period of 60 calendar days from the date on which the earliest public announcement of the offer which states the offer price is made through the licensed exchange on which the relevant securities are or are intended to be listed, whichever is the earlier;
            (ii) The date on which the stabilizing manager has bought, whether on the securities exchange, the overseas securities exchange or both, the total nominal value or number, as the case may be, of the relevant securities that the stabilizing manager may buy to undertake stabilizing action as stated in the offer document under rule MAM-4.2.1 (c).
            (b) In any other case, after the earlier of the following dates:
            (i) The date of expiry of the period of 30 calendar days from the date of commencement of trading in the securities being offered on the securities exchange or the overseas securities exchange;
            (ii) The date that the stabilizing manager has bought, whether on the securities exchange, the overseas securities exchange or both, the total nominal value or number, as the case may be, of the relevant securities that the stabilizing manager may buy to undertake stabilizing action as stated in the offer document under rule MAM-4.2.1 (c).
            November 2010

          • MAM-4.2.5

            No stabilizing action may be taken in respect of an offer of securities (other than debt securities) at a price higher than the offer price, or the price determined on the basis indicated in the offering document at the time of obtaining the CBB's permission for the issue or listing.

            November 2010

          • MAM-4.2.6

            Subject to rule MAM-4.2.7 the stabilizing manager shall not effect or cause to be effected, directly or indirectly, any sell order of the relevant securities prior to the date of commencement of each stabilizing action or during the period in which stabilizing action is permitted under this Module.

            November 2010

          • MAM-4.2.7

            Nothing in rule MAM-4.2.6 shall prohibit:

            (a) The stabilizing manager; or
            (b) An associate of the stabilizing manager, in the associate's capacity as a dealer;

            from executing any sell order of the relevant securities for a person who is not an associate of the issuer of the offer of securities.

            November 2010

          • MAM-4.2.8

            The stabilizing manager shall:

            (a) Keep a register in such form as the securities exchange on which the relevant securities are listed may require; and
            (b) Record in the register the particulars of each transaction to buy the relevant securities entered into in connection with the stabilizing action, including the price, quantity and name of the dealer, before the end of the day on which the transaction is entered into.
            November 2010

          • MAM-4.2.9

            Where the register referred to in rule MAM-4.2.8 is kept in Bahrain, it shall be made available by the stabilizing manager for inspection by the CBB, or the licensed exchange on which the relevant securities are listed, within such time as may be stipulated by the CBB or that licensed exchange, as the case may be.

            November 2010

          • MAM-4.2.10

            Where the register referred to in rule MAM-4.2.8 is kept outside Bahrain:

            (a) It shall be capable of being brought into Bahrain and made available by the stabilizing manager for inspection by the CBB, or the licensed exchange on which the relevant securities are listed, within such time as may be stipulated by the CBB or that licensed exchange, as the case may be;
            (b) If it is not capable of being brought into Bahrain, a copy of the register certified to be a true copy by the stabilizing manager shall be brought into Bahrain and made available by the stabilizing manager for inspection by the CBB or the licensed exchange on which the relevant securities are listed, within such time as may be stipulated by the CBB or that licensed exchange, as the case may be.
            November 2010

          • MAM-4.2.11

            The stabilizing manager shall:

            (a) Before the closing date of the offer of securities, inform the licensed exchange on which the relevant securities are or are intended to be listed of the name of any dealer, whether in Bahrain or elsewhere, appointed by the stabilizing manager to take the stabilizing action; and
            (b) Inform that licensed exchange of any subsequent change of dealer immediately upon such change.
            November 2010

          • MAM-4.2.12

            Where, pursuant to any stabilizing action, a transaction to buy any relevant securities (other than debt securities) has been effected, the stabilizing manager shall make a public announcement through the licensed exchange on which the relevant securities are listed of the number of the securities bought by the stabilizing manager and the price range, no later than 12 noon on the first full trading day of that licensed exchange immediately following the day on which the transaction was effected, whether in Bahrain or elsewhere.

            November 2010

          • MAM-4.2.13

            The stabilizing manager shall make a public announcement through the licensed exchange on which the relevant securities are listed of the cessation of any stabilizing action, whether in Bahrain or elsewhere, no later than the start of the trading day of that licensed exchange immediately following the day of cessation of the stabilizing action.

            November 2010

          • MAM-4.2.14

            No stabilizing action in respect of an offer shall be taken after the public announcement of the cessation referred to in rule MAM-4.2.13.

            November 2010

      • MAM-5 MAM-5 Penalty for Contravention

        • MAM-5.1 MAM-5.1 Penalty for Contravention

          • MAM-5.1.1

            Without prejudice to any greater penalty prescribed under the Penal Code or any other law, any person who contravenes any of the provisions of this Module shall be liable for penalties and enforcement actions stipulated under various provisions of the CBB Law including, but not limited to, criminal sanctions, fines, imprisonment, suspension of license, public censure, freezing of accounts, cease and desist order and specific directives.

            November 2010

          • MAM-5.1.2

            The CBB's investigation and enforcement proceedings and procedures, as set out in the Market Surveillance, Investigation and Enforcement (MIE) Module will be applicable for contraventions of this Module.

            November 2010

    • MIE — Market Surveillance, Investigation & Enforcement

      • MIE-A MIE-A Introduction

        • MIE-A.1 MIE-A.1 Purpose

          • Executive Summary

            • MIE-A.1.1

              The Central Bank of Bahrain’s (CBB) statutory regulatory objectives include maintaining and promoting the fairness, efficiency, competitiveness, transparency and orderliness of the securities markets in the Kingdom of Bahrain. The CBB believes that investor confidence in the fairness of markets enhances liquidity and efficiency of the markets and for this purpose, it is essential that the laws and standards governing the markets are rigorously and credibly enforced. In this respect, the CBB is making continuous efforts to ensure that the rules are strongly and fairly enforced, with proscribed behaviour clearly and unambiguously defined.

              Amended: July 2021

          • The CBB's Enforcement Responsibilities

            • MIE-A.1.2

              The CBB's key enforcement-related aims are to protect investors and maintain market integrity and confidence. The CBB's regulatory framework needs to address stray cases of non-compliance to ensure that such contraventions of relevant laws, rules and regulations:

              •  do not cause potential loss to the investing public;
              •  do not disrupt the financial sector in general and the capital market in particular;
              •  do not adversely impact the Kingdom's credibility as an international financial centre;
              •  do not encourage non-compliance or contravention of rules; and
              •  do not unfairly disadvantage the market participants who comply with all laws, rules and regulations.

            • MIE-A.1.3

              The Market Surveillance, Investigation and Enforcement Module (MIE Module) sets out the CBB's regulatory framework governing the mechanisms and proceedings relating to detection and investigation of breaches of laws, rules and regulations and the appropriate enforcement actions. The process of enforcing the laws and regulations generally involves three main steps:

              •  Market Surveillance: identifying that a potential breach of the relevant laws or regulations has taken place and identification of those responsible for the potential breach;
              •  Investigation: once there is a suspected case of a breach of relevant laws or standards, the CBB may conduct investigations or enquiries to find out what has happened, and whether there is any evidence of a breach; and
              •  Enforcement: taking necessary steps to protect the public interest and if appropriate, to punish those responsible for the breach.

          • The CBB's Approach to Enforcement

            • MIE-A.1.4

              The CBB's approach is to provide a strong and facilitative regulatory framework along with an effective enforcement of regulatory requirements. While the CBB favours an open and pragmatic approach to supervision within the boundaries set by the law and the CBB's regulations, it ensures effective enforcement of regulatory requirements.

            • MIE-A.1.5

              The CBB seeks to clearly lay down the rules that will be applied transparently and consistently to ensure that the bona fide investors and market participants are not inconvenienced in their normal course of business, by enabling them to take all reasonable precautions and exercise due diligence to avoid their engagement in prohibited market conducts.

            • MIE-A.1.6

              The CBB is guided by the following principles of regulation and enforcement:

              •  Firmness — firm and appropriate action against those who harm investors or damage market integrity, regardless of their position or status.
              •  Fairness — treat everyone fairly. The requirements of procedural fairness and natural justice are important in CBB's decision-making processes.
              •  Consistency — try to ensure that consistency is maintained in decisions or actions whilst having regard to the specific circumstances of each case.
              •  Proportionality — try to ensure that decisions or actions are proportionate, or balanced. For example, take tough action against serious misconduct but more lenient action against less serious conduct.

            • MIE-A.1.7

              The CBB's enforcement actions are aimed at achieving the following:

              •  Prevention — it is better to stop improper conduct before it happens. To achieve this, the CBB encourages market participants to foster a culture of compliance. The investing public can also help by learning how to look after their own rights and interests.
              •  Remedying what has happened — if a breach has already occurred, the CBB will take appropriate steps in terms of applicable laws, rules and regulations to remedy it and look at each situation in light of its particular circumstances and consider what might be appropriate courses of action. It is important to note that, although the CBB is required to act in the public interest, the CBB cannot seek compensation for those who have suffered loss as a result of a breach, or directly assist them in their attempts to seek compensation through the courts.
              •  Punishing wrongdoers and deterring others — in general, punishment is usually appropriate for those who engage in wrongdoing. Punishment serves a number of purposes. Firstly, it is an effective tool to deter wrongdoers from engaging in further wrongdoing. Punishment may also deter others from engaging in wrongdoing. Thus, it has a deterrent effect that minimises misconduct. To maximise the deterrent effect, the CBB generally publicises its enforcement sanctions wherever appropriate. Note that the CBB cannot represent or bind other authorities or regulators that may have an interest in the matter.
              •  Effectiveness of action — the CBB must set priorities and make the best use of the limited resources available. Therefore, the costs and benefits of any action that the CBB proposes to take must be considered.
              •  Cooperation with other regulators — the CBB cooperates with other domestic and overseas regulators in situations where it may be more appropriate for a regulatory body other than the CBB to take action.
              •  A balancing act — each of the CBB's enforcement actions involves a careful balancing of a number of complex issues. These issues will also vary from case-to-case. In balancing them and making a decision, the CBB will always endeavour to act firmly, fairly and impartially, keeping in mind at all times the CBB's principles of regulations and aims described under paragraphs MIE-A.1.6 and MIE-A.1.7.

          • Legal Basis

            • MIE-A.1.8

              Article 38 (a) of Chapter 8 of Part 1 of the CBB Law mandates the Governor of the CBB to issue necessary directives to ensure the implementation of the CBB Law and regulations and the achievement of the objectives of the CBB. Article 38 (b) provides the CBB with the power to issue necessary directives to ensure the implementation of CBB laws and regulations that aim to formulate the understanding and implementation of the CBB Law and regulations.

              Amended: July 2021

            • MIE-A.1.9

              Article 96 of Chapter 2 of Part 4 of the CBB Law states that: "Subject to the rules and laws of evidence and electronic transactions, any computer data, electronic files, recorded telephone calls, telex and facsimile correspondence may be used as evidence in disputes relating to securities".

              Amended: July 2021

            • MIE-A.1.10

              Chapter 1 of Part 5 of the CBB Law (Articles 97-105) defines insiders, inside information and market information, prohibits abuse of inside information, and provides defences. Particularly, Article 99 provides the CBB with the power to issue regulations concerning the necessary procedures and controls of publishing market information. Article 100 states that: "A person who is in possession of inside information, as an insider shall not use such information to:

              (1) Deal in any securities to which that information relates.
              (2) Encourage any person to deal in any securities to which that information relates.
              (3) Disclose inside information to any other person, otherwise than in the proper performance of the functions of his employment, office or profession.
              (4) Violate the rules governing the publishing of market information."
              Amended: July 2021

            • MIE-A.1.11

              Chapter 2 of Part 5 of the CBB Law (Articles 106 and 107) deals with Violation of Market Dealings. Article 106 states that: "In the application of this law a person is guilty of market manipulation if he:

              (1) Is engaged, or encourages others to engage, in any conduct that may give a false or misleading impression as to the supply of or demand for, or the price or value of any securities.
              (2) Is engaged, or encourages others, to engage in any conduct that may give an unrealistic picture of the market regarding the volume and prices of any securities."
              Amended: July 2021

            • MIE-A.1.12

              Chapter 1 of Part 7 of the CBB Law (Articles 111-115) provides the CBB with the power to obtain information and reports, conduct inspections and to participate in judicial investigations with the Ministry of Justice and Islamic Affairs.

              Amended: July 2021

            • MIE-A.1.13

              Part 8 of the CBB Law (Articles 116-120) provides for restrictions on disclosure of confidential information.

            • MIE-A.1.14

              Part 9 of the CBB Law (Articles 121-132) provides for the appointment of investigators, obtaining information, documents and explanations in possession of a third party, entering and inspecting specific premises to obtain relevant information, documents and explanations, retaining the information, penalties and administrative proceedings, and assistance in investigations by overseas authorities.

            • MIE-A.1.15

              Part 11 of the CBB Law (Articles 160-172) provides for penalties for various contraventions and violations of the provisions of the CBB Law.

            • MIE-A.1.16

              Article 167 of Part 11 of the CBB Law specifically provides penalty for the offence of abuse of inside information and states that "Without prejudice to any greater penalty prescribed in the Penal Code or under any law, a person who contravenes Article 100 of this Law, while he is fully aware, shall be liable to imprisonment for a term not exceeding six months and a fine not exceeding Bahraini Dinars (10,000), or either penalty".

              Amended: July 2021

            • MIE-A.1.17

              Article 168 of Part 11 of the CBB Law specifically provides penalty for the offence of market manipulation and states that: "Without prejudice to any greater penalty prescribed under the Penal Code or any other law, a person who contravenes Article 106 of this law is guilty of an offence of market manipulation and shall be liable to imprisonment for a term not exceeding six months and a fine not exceeding Bahraini Dinars ten thousand (10,000), or either penalty".

              Amended: July 2021

            • MIE-A.1.18

              Article 175 of Part 12 of the CBB Law provides that neither the CBB nor any of its employees shall be responsible for any procedure, action or forbearance that resulted in inflicting damages to others if such procedure, action or forbearance was performed in good faith in the course of execution of the duties and responsibilities of the CBB and within its authorities as specified in the Law and the regulations and by-laws issued in implementing it.

              Amended: July 2021

        • MIE-A.2 MIE-A.2 Module History

          • Evolution of Module

            • MIE-A.2.1

              This Module was first issued in October 2009. Any material changes that are subsequently made to this Module are annotated with the calendar quarter date in which the change is made; Chapter UG-3 provides further details on Rulebook maintenance and version control.

            • MIE-A.2.2

              [This Paragraph has been deleted in July 2021].

              Deleted: July 2021

            • MIE-A.2.3

              [This Paragraph has been deleted in July 2021].

              Deleted: July 2021

            • MIE-A.2.4

              [This Paragraph has been deleted in July 2021].

              Deleted: July 2021

            • MIE-A.2.5

              [This Paragraph has been deleted in July 2021].

              Deleted: July 2021

          • Superseded Requirements

            • MIE-A.2.6

              This Module supersedes the following provisions contained in circulars or other regulatory instruments:

              Circular/ other references Provision Subject
                   
                   
                   
                   
                   
                   
                   

        • MIE-A.3 MIE-A.3 Interaction with Other Modules

          • MIE-A.3.1

            All market participants must comply with all the other Modules in Volume 6 in addition to other applicable laws, rules and regulations.

        • MIE-A.4 MIE-A.4 Division of Responsibilities

          • MIE-A.4.1

            While dealing with cases relating to contravention of the CBB Law, rules and regulations, or other applicable laws, rules and regulations, a clear division of responsibilities between the CBB as the securities regulator and the licensed exchanges or the licensed market operators as a self-regulatory organization (SRO) is required:

            (a) To achieve greater efficiency and transparency in the enforcement of the laws, rules and regulations;
            (b) To maximise the regulatory effectiveness;
            (c) To permit flexibility to the licensed exchanges or the licensed market operators in their functioning;
            (d) To minimise the regulatory cost; and
            (e) To maintain market integrity and investor confidence.
            Amended: July 2021

          • MIE-A.4.2

            As a regulator, CBB's role is as follows:

            (a) Regulatory supervision, including the licensing, inspection, investigation and enforcement and regulatory oversight on the licensed exchanges, licensed market operators, licensed clearing houses and depositories and other SROs and other capital market service providers;
            (b) Maintaining and promoting fairness, efficiency and transparency within the capital market;
            (c) Acting as an enforcement agency with powers to investigate and take administrative, civil or criminal actions as it may deem appropriate;
            (d) Approving the rules, by-laws and business rules of the licensed exchanges or the licensed market operators, licensed clearing houses or depositories, whereby any change in the rules, by-laws and regulations of the SROs would need prior approval of the CBB; and
            (e) Ensuring that the licensed exchanges and licensed market operators, licensed clearing houses and depositories, members of SROs and other capital market service providers have appropriate systems and procedures for detection of unlawful transactions and contraventions of the CBB Law, rules and regulations and report the same to the CBB at the earliest stage possible.
            Amended: July 2021

          • MIE-A.4.3

            The licensed exchange or the licensed market operator or licensed clearing house or central depository established as an SRO must comply with the requirements laid down under the CBB Law, rules and regulations, this Module and the other applicable laws and regulations.

          • MIE-A.4.4

            As an SRO, the main objective of the exchange or the operator or the clearing house would be to:

            (a) Actively perform market surveillance as a front-line regulator;
            (b) Promote fairness and investor protection;
            (c) Promote fair access to market facilities and information;
            (d) Promote the provision of timely and accessible market information;
            (e) Promote the efficient regulation of its members;
            (f) Maintain fairness of price discovery mechanism and ensure prices are determined by the genuine forces of supply and demand;
            (g) Monitor the trading and market on a continuous basis;
            (h) Report any irregular transactions or irregular market behaviour or suspected cases of market abuse or market manipulation, or any contravention of the CBB Law, rules and regulations;
            (i) Identify irregular transactions and take appropriate enforcement actions;
            (j) Take disciplinary action for contraventions by market participants and listed companies through an SRO's Disciplinary Action Committee(s).

          • MIE-A.4.5

            Apart from the obligations of the licensed exchanges and market operators under the Markets & Exchanges (MAE) Module, and the obligations of the licensed clearing houses and depositories under the Clearing, Settlement and Central Depository (CSD) Module, these SROs shall:

            (a) Provide such assistance to the CBB in the manner required by the CBB for the purposes of the CBB's market surveillance, investigation and enforcement functions;
            (b) Provide such reports as the CBB may require for the purposes of this Module;
            (c) Conduct inspections or investigations as the CBB may require the SRO to do and submit its Inspection and Investigation Report, along with the facts, documents and evidence supporting the outcome of such inspection or investigation;
            (d) Implement the decisions or measures or actions decided by the CBB, both at the market level and at the level of the individual security or issuer, or member or market participant level in the manner required by the CBB;
            (e) Promptly implement such enforcement actions determined by the CBB against the members and issuers, through the SROs Disciplinary Action Committees.

          • Role of Other Capital Market Service Providers

            • MIE-A.4.6

              All capital market service providers in general, and members of the SROs in particular, must have the necessary infrastructure and systems to identify and report any irregular transactions or suspected cases of market abuse or market manipulation, or suspected cases of contravention of the CBB Law, rules and regulations, or any other relevant laws, rules and regulations, which they come across in the normal course of business, to the CBB in the format given in paragraph MIE-A.4.7. This reporting shall be done immediately on becoming aware of such incidences or contraventions, or suspected cases.

          • Reporting of Irregular Transactions

            • MIE-A.4.7

              Persons subject to the obligations to report irregular transactions to the Capital Markets Supervision Directorate (CMSD) shall report in the following standard format:

              Description of the transaction(s)
              Details of the securities, including the code of the security (ISIN Number); the market(s) concerned; the original order's entry date/time, price and size; the times and sizes of the transaction(s); the type and characteristics of the order, etc.
              Reasons for Suspicion
              Reasons for suspecting that the transaction(s) might constitute insider dealing/market abuse/ market manipulation
              Identities of persons carrying out transaction(s)
              Names, addresses, telephone number, location, account number, client identification code used by the firm, etc.
              Identities of any other persons known to be involved in the transaction(s)
              Names, addresses, telephone number, location, relation to person carrying out transaction, position held, role played, etc.
              Capacity in which the person performing the transaction(s) acts
              e.g. broker, underwriter, agent, investment/fund manager, auditor, insider.
              The ownership of securities before and after the execution of the transaction (of the concerned parties carrying out the transactions).
              Any information which may be of significance (along with a list of any accompanying documents/evidence)
              Details of the person making notification
              Name of person, name of firm, position held within firm, contact details, etc.
              Signed ........... (person making report)

              Dated ........... (date of report)
              Amended: July 2021

            • MIE-A.4.8

              Where the information specified to be reported is not available at the time of reporting, the report shall include at least the reasons why the reporting persons suspect that the transactions might constitute contravention of the CBB Law, rules and regulations. All remaining information shall be provided to the CMSD as soon as it becomes available.

              Persons making reports therefore, do not need to have all the required information before reporting to the CMSD. If the case is one which (the persons subject to the reporting obligation consider) needs to be brought to the attention of the CMSD urgently, then the person(s) concerned shall make the first contact quickly. This can be done by telephone if appropriate, giving the basic details and reasons for suspicion, followed by written confirmation. The other information may be supplied subsequently.

          • Records of Telephone Conversations and Electronic Communications

            • MIE-A.4.9

              In addition to meeting the book-keeping and record-keeping requirements as per the applicable laws, rules and regulations, all capital market service providers must maintain records of telephone conversations and electronic communications, including facsimile, email and other instant messaging devices relating to their activities in the securities market and particularly the following activities:

              (a) Receiving client orders;
              (b) Executing client orders;
              (c) Arranging for client orders to be executed;
              (d) Carrying out transactions on behalf of the capital market service provider, or another person in the capital market service provider group, and which are part of the capital market service provider's trading activities, or the trading activities of another person in the capital market service provider group;
              (e) Executing orders that result from decisions by the capital market service provider to deal on behalf of its client;
              (f) Placing orders with other entities for execution that result from decisions by the capital market service provider to deal on behalf of its client;

              that are required to be maintained by the capital market service provider as per the CBB rules, regulations and directives.

              Amended: July 2021

            • MIE-A.4.10

              All capital market service providers must take reasonable steps to retain and protect the records referred to in rule MIE-A.4.9:

              (a) Apart from complying with various requirements relating to record keeping, as per CBB Law, rules and regulations and other applicable laws, rules and regulations, the recordings of telephone conversations and electronic communications, including facsimile, email and other instant messaging devices relating to their activities in the securities market must be retained for a period of at least twelve months from the date the record was created;
              (b) [This subparagraph was deleted in July 2021];
              (c) In a medium that allows the storage of the information in a way accessible for future reference by the CBB, and so that the following conditions are met:
              (i) The CBB must be able to access the records readily and take copies;
              (ii) It must be possible for any corrections or other amendments, and the contents of the records prior to such corrections and amendments to be easily ascertained;
              (iii) It must not be possible for the records to be otherwise manipulated or altered.
              Amended: July 2021

      • MIE-B MIE-B Scope of Application

        • MIE-B.1 MIE-B.1 Scope of Application

          • Scope

            • MIE-B.1.1

              This Module shall apply to:

              (a) Any conduct or behaviour occurring within Bahrain; or any transaction or expected transaction done by or on behalf of any person(s) within Bahrain in relation to securities offered, issued or listed in Bahrain or elsewhere;
              (b) Any conduct or behaviour occurring outside Bahrain or any transaction or expected transaction done by or on behalf of any person(s) outside Bahrain in relation to securities offered, listed or issued in Bahrain;
              (c) Any conduct or behaviour occurring within Bahrain; or any transaction or expected transaction done by or on behalf of any person(s) within Bahrain in relation to:
              (i) Futures contracts, whether traded on a futures market in Bahrain or elsewhere; or
              (ii) Leveraged foreign exchange trading contracts, whether in Bahrain or elsewhere; and
              (d) Any conduct or behaviour occurring outside Bahrain; or any transaction or expected transaction done by or on behalf of any person(s) outside Bahrain in relation to:
              (i) Futures contracts traded on a futures market in Bahrain;
              (ii) Leveraged foreign exchange trading contracts in Bahrain; or
              (iii) Leveraged foreign exchange trading contracts that are accessible from Bahrain.

            • MIE-B.1.2

              This Module contains the CBB's Directive relating to Market Surveillance, Investigation and Enforcement and is issued under the powers available to the CBB under Article 38 of the CBB Law, read with the abovementioned provisions of the CBB Law. The Directive under this Module is applicable to all market participants and relevant persons, including but not limited to issuers of securities or any person acting on their behalf, licensed exchanges, licensed market operators, licensed clearing houses, depositories, crypto-asset licensees, investment firms, collective investment undertakings, business trusts, listed companies, any person acting for or on behalf of listed companies, shareholders of listed companies, share registrars, lead managers, underwriters, professional advisors, listing agents, auditors, financial analysts, credit rating agencies and any other person who engages or encourages others to engage in any acts of commission or omission covered by the scope of this Module, irrespective of whether such person is a market participant or not. These rules are issued by way of a legally-binding Directive.

              Amended: July 2021

        • MIE-B.2 [This Section has been deleted in July 2021].

      • MIE-1 MIE-1 Market Surveillance

        • MIE-1.1 MIE-1.1 Market Surveillance

          • Market Surveillance

            • MIE-1.1.1

              The CBB's surveillance function is focused on identifying potential breaches of the relevant laws, rules and regulations and those responsible for the potential breaches. The surveillance function includes the following:

              a) Policy formulation for introducing surveillance systems that bring integrity, safety and stability to the securities market in the Kingdom of Bahrain;
              b) Gather and analyze information for the purpose of spotting abnormal situations in the market;
              c) Detect potential contraventions of relevant laws, rules and regulations and identify those responsible for such contraventions;
              d) Prepare initial analysis report;
              e) Take interim enforcement actions, if warranted;
              f) Pursue preventative action, if required, and avoid market disruptions at the earliest possible time.
              g) [This Subparagraph has been deleted in July 2021].
              Amended: July 2021

            • MIE-1.1.2

              The Market Surveillance, Department of the Capital Markets Supervision Directorate within the CBB is responsible for the market surveillance function relating to the securities market in the Kingdom of Bahrain.

              Amended: July 2021

            • MIE-1.1.3

              The CBB may apply, adopt, determine and implement various measures, mechanisms and requirements, as may be required from time-to-time.

            • MIE-1.1.4

              Licensed exchanges and market operators, licensed clearing houses and depositories, members of SROs and other capital market service providers must have appropriate systems and procedures for the detection of potential cases of unlawful transactions and contraventions of the CBB Law, rules and regulations and report to the CBB at the earliest stage possible.

              Amended: July 2021

        • MIE-1.2 MIE-1.2 Information Gathering

          • MIE-1.2.1

            The CBB may exercise its powers under Part 7 and Part 9 of the CBB Law for obtaining information, data, documents and explanations from:

            (a) Self-Regulatory Organizations (SROs), including licensed exchanges, licensed clearing houses and depositories, and related parties;
            (b) Members of SROs and related parties;
            (c) Listed companies and issuers of securities;
            (d) Any other person who is in the possession of information or documents relevant for the purpose of conducting specific preliminary investigations by the CBB.
            Amended: July 2021

          • Type of Information

            • MIE-1.2.2

              For the purpose of this Module, information includes:

              (a) Any books, records or registers required to be maintained by a capital market service provider (including members of SROs, listed companies and issuers of securities) and related parties under the CBB Law, rules and regulations and any other law, rules and regulations;
              (b) Information, books, records or documents known to or in the possession of a capital market service provider (including members of SROs, listed companies and issuers of securities) and related party;
              (c) [This Subparagraph has been deleted in July 2021];
              (d) [This Subparagraph has been deleted in July 2021]
              (e) Information, books, records or documents maintained by or known to or in the possession of any other relevant person.
              Amended: July 2021

            • MIE-1.2.3

              In this Module, a reference to disclosing information includes, in relation to information that is contained in a document, a reference to producing the document.

            • MIE-1.2.4

              As per Articles 111 and 112 of the CBB Law, the CBB may demand any information, documents, statistics or reports from any licensee, listed co