• MIR-1 MIR-1 Legal Basis and Regulated Activities

    • MIR-1.1 MIR-1.1 Legal Basis and Regulated Activities

      • MIR-1.1.1

        Article (1) of the CBB Law defines "Financial Institutions" as: Banks, insurance companies, companies dealing in securities, portfolios and investment funds, financing companies, money exchange companies, money brokers and mediators, insurance brokers, mediators of the securities market, consultancy firms dealing in the financial service industry, credit rating firms, Bahrain securities market, capital markets, and precious metals and strategic commodities markets, financial sector support institutions, including institutions licensed to provide financial regulated activities according to Islamic Shari'a principles".

        In addition, Article (1) defines "Financial Sector Support Institutions" as: "institutions licensed for operating clearance houses, settlement payments, cheques and financial papers, and institutions which are wholly or partly set up by financial institutions in cooperation with the Central Bank, in order to provide regulated activities of a purely financial nature to the financial regulated activities industry".

        Article (1) defines "Market Maker" as: "Any person licensed by the Central Bank to sell and buy in the Stock Exchange to encourage trading in this market".

        Adopted January 2010

      • MIR-1.1.2

        The CBB defines the securities businesses in line with Article (80) of the CBB Law, which states that "Companies trading in securities are those companies whose objectives include one or more of the following activities:

        1. Promoting and underwriting securities or financing investments therein;
        2. Participating in incorporating of securities companies or increasing the capitals thereof.
        3. Forming and managing securities portfolios.
        4. Depositing, clearance and settlement of securities.
        5. Brokering in securities transactions.
        6.Providing advisory services related to securities.
        7. Any other regulated activities as approved by the Central Bank."

        For the purpose of this Module, the abovementioned regulated activities that may be undertaken shall be only those activities within the parameters of the regulated business of the SRO, of which the licensee is a member and which may include, but not be limited to the activities below:

        "advising on corporate finance" means giving advice:
        (a) To any entity concerning compliance with or in respect of laws or regulatory requirements (including the listing rules of a securities exchange) relating to the raising of funds by any entity;
        (b) To the person making an offer or invitation to the public:
        (i) To subscribe for or purchase securities; or
        (ii) To sell or otherwise dispose of securities, concerning that offer or invitation; or
        (c) Concerning the arrangement, reconstruction, merger or takeover of a corporation or any of its assets or liabilities.
        "agreement" includes arrangement;
        "dealing in securities" means (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 any agreement for or with a view to acquiring, disposing of, subscribing for, or underwriting securities;
        "Portfolio management" means undertaking on behalf of a client (whether on a discretionary authority granted by the customer or otherwise):
        (a) The management of a portfolio of securities or futures contracts; or
        (b) Foreign exchange trading or leveraged foreign exchange trading for the purpose of managing the client's funds;
        "offer" or "offering" includes invitation;
        "on a margin basis", means financial institutions entering into the contract or arrangement referred to therein by providing to the investor or his agent money, securities, property or other collateral which represents only a part of the value of the contract or arrangement to be entered into by him;
        "providing depositing, clearance and settlement of securities" means providing or agreeing to provide any service where the person providing the service has, under an arrangement with another person (the client), possession or control of securities of the client and carries out one or more of the following functions for the client:
        (a) Settlement of transactions relating to the securities;
        (b) Collecting or distributing dividends or other pecuniary benefits derived from ownership or possession of the securities;
        (c) Paying tax or other costs associated with the securities;
        (d) Exercising rights, including without limitation voting rights, attached to or derived from the securities;
        (e) Any other function necessary or incidental to the safeguarding or administration of the securities, but does not include:-
        (i) The regulated activities of a corporation which is a depository, as defined in Article (94) of the Law;
        (ii) The provision of regulated activities to a related corporation or associated person, so long as none of the securities is:-
        (A) Held on trust for another person by the related corporation or associated person;
        (B) Held as a result of any custodial regulated activities undertaken by the related corporation or associated person to another person; or
        (C) Beneficially owned by any person other than the related corporation or associated person;
        (iii) The provision of regulated activities by a nominee corporation which are solely incidental to the business of a nominee corporation; or
        (iv) Any other conduct as the CBB may prescribe;
        "securities financing" means to directly or indirectly facilitate, by providing any credit facility, advance or loan:
        (a) The subscription for securities or purchase of listed or to be listed on a securities exchange or such other securities as the CBB may prescribe; and
        (b) Where applicable, the continued holding of those securities, whether or not those securities are pledged as security for the credit facility, advance or loan, but does not include the provision of any credit facility, advance or loan:-
        (i) That forms part of an arrangement to underwrite or sub-underwrite securities;
        (ii) To facilitate an acquisition of securities in accordance with the terms of a prospectus, to offer securities;
        (iii) To a licensed member undertaking regulated activities to deal in securities or provide securities financing, or a financial institution, to facilitate acquisitions or holdings of securities;
        (iv) By a listed company to its directors or employees to facilitate acquisitions or holdings'of its own securities;
        (v) By a member of a group of listed companies to another member of the group to facilitate acquisitions or holdings of securities by that other member; or
        (vi) By an individual to a company in which he holds 10% or more of its issued share capital to facilitate acquisitions or holdings of securities;
        "trading in futures contracts" means (whether as principal or agent):-
        (a) 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 any agreement for or with a view to the purchase or sale of a futures contract; or
        (b) Soliciting or accepting any order for, or otherwise dealing in, a futures contract.
        Amended: July 2016
        Amended: April 2013
        Adopted January 2010

      • MIR-1.1.3

        The regulated activities under sub-Articles 80 (1) and 80 (2) of the CBB Law is covered under the Offering of Securities Module (OFS) under this Volume.

        Amended: July 2016
        Adopted January 2010

      • MIR-1.1.4

        The CBB Law Article (89) requires that "All trading in securities listed on the Exchange shall be conducted through a mediator who is licensed by the Central Bank and registered as a member of the Exchange".

        Adopted January 2010

      • MIR-1.1.5

        The CBB Law Article (94) "Deposit of Securities" states that "No person may engage in depositing of securities without an authorisation from the Central Bank. "Deposit of Securities" means to register the ownership of the securities of a depositor in the name of a depository under a securities deposit agreement and in accordance with the form issued for this purpose by the depository. The Central Bank shall issue the rules governing the Deposit of Securities".

        Adopted January 2010

      • MIR-1.1.6

        The CBB Law Article (113) states that:

        "(a) The Central Bank may request in writing from any licensee's partner any reports that may be necessary under this law.
        (b) The person who prepares such reports referred to in the previous paragraph must be:
        1. Nominated, appointed or approved by the Central Bank.
        2. Duly qualified to prepare such reports".
        Amended: April 2013
        Adopted January 2010

      • MIR-1.1.7

        This Module contains the prior approval requirements for approved persons under Resolution No (23) of 2015.

        Added: April 2016

      • MIR-1.1.8

        Article 110 provides that the Central Bank shall issue terms and conditions for the provision of any pledge, insurance, collateral or title transfer collateral to beneficiaries according to a market contract. Such terms and conditions is stipulated in detail under Resolution No. (59) of 2011 in respect of Procedures Related to Pledging and Lien of Securities and the Discharge and Lifting of Such Pledge and Liens.

        Added: July 2016

      • MIR-1.1.9

        Resolution No. (30) of 2015 in respect of amending Resolution No. (59) of 2011 for the purpose of extending the requirements related to the pledging and lien of securities and the discharge and lifting of such pledge and liens on securities issued by closed joint stock companies.

        Added: July 2016

      • MIR-1.1.10

        This Module contains Resolution No (1) of 2007 (issued under Article 180 of the CBB Law) amended by Resolution No (26) of 2010 and further amended by Resolution No (1) of 2016 with respect to determining fees categories due for licensees and services provided by the CBB.

        Added: July 2016