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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010MAM-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 2010Trading 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 2010MAM-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 2010Scope 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 2010MAM-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 2010MAM-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 2010Changes 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 2010Obligations 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 2010MAM-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 2010MAM-2.15.5
Any violations of this Module or the requirement of a licensed exchange shall be reported immediately to the CBB.
November 2010Annual 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 2010Written 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 2010MAM-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 2010MAM-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 2010Obligations 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 2010MAM-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 2010Obligations 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 2010MAM-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 2010MAM-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
