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  • 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