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  • MAE-5.3 MAE-5.3 Authorisation of Approved Persons

    • Prior Approval Requirements and Process

      Contents:

      •    MAE-5.3.1
      •    MAE-5.3.2
      •    MAE-5.3.3
      •    MAE-5.3.4
      •    MAE-5.3.5
      •    MAE-5.3.6
      •    MAE-5.3.7

      • MAE-5.3.1

        Licensees must obtain the CBB's prior written approval for any person wishing to undertake a controlled function in a licensee. The approval from the CBB must be obtained prior to their appointment.

        Amended: April 2016
        Amended: April 2013

      • MAE-5.3.2

        Controlled functions are those functions occupied by board members and persons in executive positions and include:

        (a) Board members;
        (b) Chief Executive or General Manager;
        (c) Head of function;
        (d) Compliance Officer; and
        (e) Money Laundering Reporting Officer (MLRO).
        Amended: April 2016
        Amended: April 2013

      • MAE-5.3.2A

        For the purpose of this Module, the following positions are considered as head of function:

        (a) Head of listing;
        (b) Head of trading;
        (c) Head of market control;
        (d) Head of member affairs;
        (e) Head of risk management; and
        (g) Head of other functions.
        Added: April 2016

      • MAE-5.3.2B

        Whether a person is head of function will depend on the nature, scale and complexity of the function and is not determined by the presence or absence of the word in their job title.

        Added: April 2016

      • MAE-5.3.2C

        Licensees must maintain adequate segregation of responsibilities in their staffing arrangements, to protect against the misuse of systems or errors. The segregation of responsibilities must ensure avoidance of any conflict of interest and maintain a Chinese Wall such critical controlled functions.

        Added: April 2016

      • MAE-5.3.3

        The Chief Executive Officer or General Manager, Compliance Officer and Money Laundering Reporting Officer must be resident in Bahrain.

        Amended: April 2013

      • MAE-5.3.4

        All persons wishing to undertake any of the controlled functions shall be subject to the fit and proper requirements in this Section.

        Amended: April 2016
        Amended: April 2013

      • MAE-5.3.5

        In accordance with Subparagraph MAE-5.3.2(d), every licensed exchange must appoint a compliance officer. The compliance officer is responsible for discharging the obligations of the licensee.

        Amended: April 2013

      • MAE-5.3.6

        In accordance with Paragraph MAE-5.3.5:

        (a) The Compliance Officer should be competent and knowledgeable regarding the CBB Law, rules and regulations, as well as the various applicable Volume 6 Modules;
        (b) The Compliance Officer shall: ;
        (i) Monitor the transactions undertaken by the member, its representatives, or participants;
        (ii) Identify disorderly transactions or conduct that may involve market abuse or disruption;
        (iii) Identify and monitor transactions undertaken by insiders dealing through or with the member;
        (iv) Identify any breach of CBB Law, rules and regulations; and
        (v) Identify any breach of the rules of the SRO.
        Added: April 2013

      • MAE-5.3.7

        The Compliance Officer shall on the identification of any breach referred to in Paragraph MAE-5.3.6(b), report such breach to the CBB without delay for the investigation and prosecution of market abuse and shall provide full assistance to the latter in investigating and prosecuting market abuse occurring on or through the licensed exchange.

        Amended: April 2013

      • MAE-5.3.7A

        The request for CBB approval must be made by submitting to the CBB a duly completed Form 3 (Application for Approved Person status) and Curriculum Vitae after verifying that all the information contained in the Form 3, including previous experience, is accurate. Form 3 is available under Volume 6 Part B Authorisation Forms MAE Forms of the CBB Rulebook.

        Added: April 2016

      • MAE-5.3.7B

        When the request for approved person status forms part of a license application, the Form 3 must be marked for the attention of the Director, Licensing Directorate. When the submission to undertake a controlled function is in relation to an existing licensee, the Form 3 must be marked for the attention of the Director, Capital Markets Supervision. In the case of the MLRO, Form 3 should be marked for the attention of the Director, Compliance Directorate.

        Amended: April 2018
        Added: April 2016

      • MAE-5.3.7C

        When submitting Form 3, licensees must ensure that the Form 3 is:

        (a) Submitted to the CBB with a covering letter signed by an authorised representative of the licensee, seeking approval for the proposed controlled function;
        (b) Submitted in original form;
        (c) Submitted with a certified copy of the applicant's passport, original or certified copies of educational and professional qualification certificates (and translation if not in Arabic or English) and the Curriculum Vitae; and
        (d) Signed by an authorised representative of the licensee and all pages stamped on with the licensee's seal.
        Added: April 2016

      • MAE-5.3.7D

        For existing licensees applying for the appointment of a Board Director or the Chief Executive/General Manager, the authorised representative should be the Chairman of the Board or a Director signing on behalf of the Board. For all other controlled functions, the authorised representative should be the Chief Executive/General Manager.

        Added: April 2016

    • Fit and Proper Requirements

      • MAE-5.3.8

        Licensees seeking an approved person authorisation for an individual, must satisfy the CBB that the individual concerned is 'fit and proper' to undertake the controlled function in question.

        Amended: April 2016
        Added: April 2013

      • MAE-5.3.8A

        Each applicant applying for approved person status and those individuals occupying approved person positions must comply with the following conditions:

        (a) Has not previously been convicted of any felony or crime that relates to his/her honesty and/or integrity unless he/she has subsequently been restored to good standing;
        (b) Has not been the subject of any adverse finding in a civil action by any court or competent jurisdiction, relating to fraud;
        (c) Has not been adjudged bankrupt by a court unless a period of 10 years has passed, during which the person has been able to meet all his/her obligations and has achieved economic accomplishments;
        (d) Has not been disqualified by a court, regulator or other competent body, as a director or as a manager of a corporation;
        (e) Has not failed to satisfy a judgement debt under a court order resulting from a business relationship;
        (f) Must have personal integrity, good conduct and reputation;
        (g) Has appropriate professional and other qualifications for the controlled function in question, 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; and
        (h) Has sufficient experience to perform the duties of the controlled function.
        Added: April 2016

      • MAE-5.3.8B

        In assessing the conditions prescribed in Rule MAE-5.3.8A, the CBB will take into account the criteria contained in Paragraph MAE-5.3.8C. The CBB reviews each application on a case-by-case basis, taking into account all relevant circumstances. A person may be considered 'fit and proper' to undertake one type of controlled function but not another, depending on the function's job size and required levels of experience and expertise. Similarly, a person approved to undertake a controlled function in one licensee may not be considered to have sufficient expertise and experience to undertake nominally the same controlled function but in a much bigger licensee.

        Added: April 2016

      • MAE-5.3.8C

        In assessing a person's fitness and propriety, the CBB will also consider previous professional and personal conduct (in Bahrain or elsewhere) including, but not limited to, the following:

        (a) The propriety of a person's conduct, whether or not such conduct resulted in a criminal offence being committed, the contravention of a law or regulation, or the institution of legal or disciplinary proceedings;
        (b) A conviction or finding of guilt in respect of any offence, other than a minor traffic offence, by any court or competent jurisdiction;
        (c) Any adverse finding in a civil action by any court or competent jurisdiction, relating to misfeasance or other misconduct in connection with the formation or management of a corporation or partnership;
        (d) Whether the person, or any body corporate, partnership or unincorporated institution to which the applicant has, or has been associated with as a director, controller, manager or company secretary been the subject of any disciplinary proceeding, investigation or fines by any government authority, regulatory agency or professional body or association;
        (e) The contravention of any financial services legislation;
        (f) Whether the person has ever been refused a license, authorisation, registration or other authority;
        (g) Dismissal or a request to resign from any office or employment;
        (h) Whether the person has been a Director, partner or manager of a corporation or partnership which has gone into liquidation or administration or where one or more partners have been declared bankrupt whilst the person was connected with that partnership;
        (i) The extent to which the person has been truthful and open with supervisors; and
        (j) Whether the person has ever entered into any arrangement with creditors in relation to the inability to pay due debts.
        Added: April 2016

      • MAE-5.3.8D

        With respect to Paragraph MAE-5.3.8C, the CBB will take into account the length of time since any such event occurred, as well as the seriousness of the matter in question.

        Added: April 2016

      • MAE-5.3.9

        Approved persons undertaking a controlled function must act prudently, and with honesty, integrity, care, skill and due diligence in the performance of their duties. They must avoid any conflict of interest arising whilst undertaking a controlled function and shall be subject, among all accepted market conducts, to the insider trading rules.

        Added: April 2013

      • MAE-5.3.10

        In determining where there may be a conflict of interest arising, factors that may be considered will include whether:

        (a) A person has breached any fiduciary obligations to the licensed exchange or terms of employment;
        (b) A person has undertaken actions that would be difficult to defend, when looked at objectively, as being in the interest of the licensed exchange; and
        (c) A person has failed to declare a personal interest that has a material impact in terms of the person's relationship with the licensed exchange in general, and interest in holding any listed securities or futures contracts in particular.
        Added: April 2013

      • MAE-5.3.11

        [This Paragraph was deleted in April 2016.]

        Deleted: April 2016
        Added: April 2013

      • MAE-5.3.12

        [This Paragraph was deleted in April 2016.]

        Deleted: April 2016
        Added: April 2013

      • MAE-5.3.13

        [This Paragraph was moved to Paragraph MAE-5.3.7B in April 2016.]

        Amended: April 2016
        Added: April 2013

    • Assessment of Application

      Contents:

      •    MAE-5.3.14
      •    MAE-5.3.15

      • MAE-5.3.14

        The CBB shall review and assess the application for approved person status to ensure that it satisfies all the conditions required in Paragraph MAE-5.3.8A and the criteria outlined in Paragraph MAE-5.3.8C.

        Amended: April 2016
        Added: April 2013

      • MAE-5.3.14A

        For purposes of Paragraph MAE-5.3.14, licensees should give the CBB a reasonable amount of notice in order for an application to be reviewed. The CBB shall respond within 15 business days from the date of meeting all required conditions and regulatory requirements, including but not limited to, receiving the application complete with all the required information and documents, as well as verifying references.

        Added: April 2016

      • MAE-5.3.15

        The CBB reserves the right to refuse an application for approved person status if it does not satisfy the conditions provided for in Paragraph MAE-5.3.8A and the criteria outlined in Paragraph MAE-5.3.8C. A notice of such refusal is issued by registered mail to the licensee concerned, setting out the basis for the decision.

        Amended: April 2016
        Added: April 2013

    • Appeal Process

      • MAE-5.3.16

        Licensees or the nominated approved persons may, within 30 calendar days of the notification, appeal against the CBB's decision to refuse the application for approved person status. The CBB shall decide on the appeal and notify the licensee of its decision within 30 calendar days from submitting the appeal.

        Amended: April 2016
        Added: April 2013

      • MAE-5.3.17

        Where notification of the CBB's decision to grant a person approved person status is not issued within 15 business days from the date of meeting all required conditions and regulatory requirements, including but not limited to, receiving the application complete with all the required information and documents, licensees or the nominated approved persons may appeal to the Executive Director, Financial Institutions Supervision of the CBB provided that the appeal is justified with supporting documents. The CBB shall decide on the appeal and notify the licensee of its decision within 30 calendar days from the date of submitting the appeal.

        Amended: April 2016
        Amended: April 2013

    • Notification Requirements and Process

      Contents:

      •    MAE-5.3.18
      •    MAE-5.3.19
      •    MAE-5.3.20

      • MAE-5.3.18

        A licensed exchange must immediately notify the CBB when an approved person ceases to hold a controlled function together with an explanation as to the reasons why. In such cases, their approved person status is automatically withdrawn by the CBB.

        Amended: April 2013

      • MAE-5.3.18A

        Licensees must immediately notify the CBB in case of any material change to the information provided in a Form 3 submitted for an approved person.

        Added: April 2016

      • MAE-5.3.19

        The licensed exchange shall provide for the composition and duties of the board of directors or any committee of a licensed exchange after obtaining CBB approval.

        Amended: April 2013

      • MAE-5.3.20

        In this section "committee" includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of a licensed exchange.

        Amended: April 2013

    • Amendment of Authorisation

      • MAE-5.3.21

        A licensed exchange must seek prior CBB approval before an approved person may move from one controlled function to another within the same licensee.

        Added: April 2013

      • MAE-5.3.22

        In such instances, a new application should be completed and submitted to the CBB. Note that a person may be considered 'fit and proper' for one controlled function, but not for another, if for instance the new role requires a different set of skills and experience. Where an approved person is moving to a controlled function in another licensed exchange, the first licensee should notify the CBB of that person's departure, and the new licensee should submit a request for approval under this Section.

        Added: April 2013

    • Cancellation of Authorisation and Power of CBB to Remove Approved Person

      • MAE-5.3.23

        Where the CBB is satisfied that an approved person:

        (a) Has wilfully contravened or wilfully caused that licensed exchange to contravene the CBB Law, rules and regulations;
        (b) Has without reasonable excuse, failed to ensure compliance by the licensed exchange, or a person associated with that licensee with the CBB Law rules and regulations;
        (c) Has failed to discharge the duties or functions of his office or employment;
        (d) Is an undischarged bankrupt, whether in Bahrain or elsewhere;
        (e) Has been convicted whether in Bahrain or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly;

        the CBB may if it thinks it is necessary in the interests of or for the protection of investors, by notice in writing direct that a licensee remove the approved person from his office or employment, and that licensee shall comply with such notice.

        Added: April 2013

      • MAE-5.3.24

        Without prejudice to any other matter that the CBB may consider relevant, the CBB may in determining whether an approved person has failed to discharge the duties or functions of his office or employment for the purposes of paragraph MAE-5.3.23 (c), have regard to such criteria as the CBB may prescribe or specify in directions issued by notice in writing, after consultation with the licensed exchange and/or licensed clearing house, as the case may be.

        Added: April 2013

      • MAE-5.3.25

        Subject to Paragraph MAE-5.3.26, the CBB shall not direct a licensee to remove an approved person from his office or employment without giving the approved person an opportunity to be heard.

        Added: April 2013

      • MAE-5.3.26

        The CBB may direct a licensee to remove an approved person from his office or employment under Paragraph MAE-5.3.23 on any of the following grounds, without giving the approved person an opportunity to be heard:

        (a) The approved person is an undischarged bankrupt whether in Bahrain or elsewhere;
        (b) The approved person has been convicted whether in Bahrain or elsewhere, of an offence:
        (i) Involving fraud or dishonesty, or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and
        (ii) Punishable with imprisonment for a term of 3 months or more.
        Added: April 2013

    • Criteria to Determine Failure to Discharge Duties or Functions by Approved Persons

      • MAE-5.3.27

        The CBB may, in determining whether approved persons have taken reasonable steps to discharge their duties, have regard to whether or not the approved person:

        (a) Ensured the proper functioning of the licensed exchange;
        (b) Ensured the compliance of the licensed exchange with any relevant laws or regulations of any jurisdiction in which it is incorporated, or in which it provides its regulated activities;
        (c) Set out and ensured compliance with written policies on all operational areas of the licensed exchange, including its financial policies, accounting and internal controls, internal auditing and compliance with all laws and rules governing the operations of the licensed exchange in general;
        (d) Identified, monitored and addressed the risks associated with the business of the licensed exchange;
        (e) Ensured that the regulated activities of the licensed exchange were subject to adequate internal audit;
        (f) Oversaw the financial undertakings or exposure of thelicensed exchange to risks of any nature by setting out proper delegation limits and risk management controls; and
        (g) Ensured:
        (i) That the licensed exchange maintained written records of the steps taken by it to monitor compliance with its policies, the limits on discretionary powers and its accounting and provided relevant procedures; and
        (ii) That every report, return or statement submitted by the licensed exchange to the CBB was complete and accurate.
        Added: April 2013