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  • OFS-2 OFS-2 Offering of Securities

    • OFS-2.1 OFS-2.1 Permission Requirements

      • OFS-2.1.1

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

        January 2014

      • OFS-2.1.2

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

        January 2014

    • OFS-2.2 OFS-2.2 Methods of Offering

      • OFS-2.2.1

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

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

    • OFS-2.3 OFS-2.3 Public Offering

      • OFS-2.3.1

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

        January 2014

      • Corporate Governance

        • OFS-2.3.2

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

          January 2014

        • OFS-2.3.3

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

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

        • OFS-2.3.4

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

          January 2014

        • OFS-2.3.5

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

          Amended: October 2017
          January 2014

      • Underwriting

        • OFS-2.3.6

          The CBB may approve an issue without an underwriter where:

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

        • OFS-2.3.7

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

          January 2014

        • OFS-2.3.8

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

          January 2014

        • OFS-2.3.9

          Where the issue is underwritten the:

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

        • OFS-2.3.10

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

          January 2014

        • OFS-2.3.11

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

          January 2014

      • Book Building

        • OFS-2.3.12

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

          January 2014

        • OFS-2.3.13

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

          Amended: October 2017
          January 2014

        • OFS-2.3.14

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

          January 2014

        • OFS-2.3.15

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

          January 2014

        • OFS-2.3.16

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

          January 2014

        • OFS-2.3.17

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

          January 2014

        • OFS-2.3.18

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

          Added: October 2017

        • OFS-2.3.19

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

          Added: October 2017

    • OFS-2.4 OFS-2.4 Private Placement

      • OFS-2.4.1

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

        January 2014

      • OFS-2.4.2

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

        January 2014

      • OFS-2.4.3

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

        January 2014

      • OFS-2.4.4

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

        January 2014

      • OFS-2.4.5

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

        January 2014

      • OFS-2.4.6

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

        January 2014

      • OFS-2.4.7

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

        January 2014

      • OFS-2.4.8

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

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

    • OFS-2.5 OFS-2.5 Rights Offering

      • OFS-2.5.1

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

        January 2014

      • OFS-2.5.2

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

        January 2014

      • OFS-2.5.3

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

        January 2014

      • OFS-2.5.4

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

        January 2014

      • OFS-2.5.5

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

        January 2014

      • OFS-2.5.6

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

        January 2014

      • OFS-2.5.7

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

        January 2014

      • OFS-2.5.8

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

        January 2014

      • OFS-2.5.9

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

        January 2014

      • OFS-2.5.10

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

        January 2014

      • OFS-2.5.11

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

        January 2014

      • OFS-2.5.12

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

        January 2014

      • OFS-2.5.13

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

        January 2014

      • OFS-2.5.14

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

        January 2014

    • OFS-2.6 OFS-2.6 Employee Stock Option Plan

      • OFS-2.6.1

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

        January 2014

      • OFS-2.6.2

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

        January 2014

      • OFS-2.6.3

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

        January 2014

      • OFS-2.6.4

        The employee stock option plan must contain provisions relating to:

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

      • OFS-2.6.5

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

        January 2014

      • OFS-2.6.6

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

        January 2014

      • OFS-2.6.7

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

        Amended: October 2017
        January 2014

      • Transitional Arrangement

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

        Deleted: July 2018

        • OFS-2.6.7A

          [This Paragraph was deleted in July 2018].

          Deleted: July 2018

      • OFS-2.6.8

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

        January 2014

      • OFS-2.6.9

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

        January 2014

      • OFS-2.6.10

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

        January 2014

      • OFS-2.6.11

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

        January 2014

      • OFS-2.6.12

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

        January 2014

      • OFS-2.6.13

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

        January 2014

      • OFS-2.6.14

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

        January 2014