• OFS-3 OFS-3 Capital Market Advisory Services Provider

    • OFS-3.1 OFS-3.1 Capital Market Advisory Services Provider

      • OFS-3.1.1

        For the purpose of this Module, a Capital Market Advisory Services Provider (appointed advisor) means any person who provides or involves himself with any activity or services stipulated under Article 80 of the CBB Law.

        January 2014

      • Definition of Advisors

        • OFS-3.1.2

          For the purpose of this Module, in addition to any other designation by the CBB, a Capital Market Advisory Services Provider may be classified as follows:

          (a) Auditors;
          (aa) Financial Advisors;
          (b) Custodian;
          (c) Independent Reporting Accountant;
          (d) Independent Valuer;
          (e) Issue Agent;
          (f) Lead Manager;
          (g) Legal Advisor;
          (h) Paying Agent;
          (i) Receiving Bank;
          (j) Securities Depositor and ownership transfer agent;
          (k) Trustee;
          (l) Shari'a Advisor;
          (m) Promoter;
          (n) Listing Agent;
          (o) Underwriter; or
          (p) Any other person designated as a Capital Market Advisory Service Provider by the CBB from time to time.
          Amended: October 2017
          January 2014

    • OFS-3.2 OFS-3.2 General Eligibility

      • Incorporation, Licensing and Acceptance

        • OFS-3.2.1

          The appointed advisor must be either incorporated in the Kingdom of Bahrain and licensed by the CBB or authorised to provide this service by the CBB.

          January 2014

        • OFS-3.2.2

          The Memorandum and Articles of Association and/or the by-laws of the advisor must allow it to provide such service.

          January 2014

        • OFS-3.2.3

          Where applicable, the appointed advisor must be incorporated in, be a member, associate or registered with the relevant local, and/or international professional body of a jurisdiction which is a signatory to the IOSCO MMoU.

          January 2014

      • Ability to Provide the Service

        • OFS-3.2.4

          In addition to incorporation and licensing, the CBB will review the ability of the advisor to provide the service. The CBB will consider the following in such determination:

          (a) Historical records and prior performance;
          (b) Maintenance of systems and controls set-up by the advisor; and
          (c) Number of suitably experienced and qualified employees.

          Moreover, advisors' fees and charges should be fixed reasonably in order to ensure that the costs associated with raising capital or initial public offerings are competitive.

          Amended: October 2017
          January 2014

      • Controlled Functions

        • OFS-3.2.5

          All persons proposed to undertake any of the controlled functions must be subject to the provisions and requirements related to these functions, particularly in respect of anti-money laundering and financial crime, the compliance function and any person directly involved in the preparation of the prospectus or offering documents.

          January 2014

        • OFS-3.2.6

          All persons proposed to undertake any controlled functions and any other persons recruited or employed by the capital market advisory service provider must meet the relevant examination and qualification requirements of the CBB, 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.

          Amended: April 2016
          January 2014

        • OFS-3.2.7

          Capital market advisory services providers must maintain and keep records of agreements, contracts, correspondence and other information to demonstrate their compliance with the requirements of this Module. These records must be kept for at least 10 years.

          January 2014

      • Appointment, Change, Termination

        • OFS-3.2.8

          Any appointment of an advisor must be made in the form of a written agreement, contract and/or official letter issued by the issuer or lead manager as applicable.

          January 2014

        • OFS-3.2.9

          The acceptance of the appointment by the advisor must be made in the form of an official written confirmation.

          January 2014

        • OFS-3.2.10

          The name of the appointed advisors must be prominently disclosed in the offering document and in all advertising materials.

          January 2014

        • OFS-3.2.11

          A person appointed to act as an appointed advisor shall not cease to act as such until another has taken office with CBB approval.

          January 2014

        • OFS-3.2.12

          An issuer must notify the CBB in writing immediately of the appointment or dismissal or replacement of an advisor that had been appointed. In the case of a dismissal, the reasons for dismissal must be provided.

          January 2014

      • Transparency and Disclosure

        • OFS-3.2.13

          Where a prospectus or offering document includes a statement purporting to be made by, or based on a statement made by an expert, the prospectus or offering document must not be issued unless:

          (a) The expert has, before the approval and registration of the prospectus or offering document, as the case may be, provided his written consent to the issue thereof; and
          (b) There appears in the prospectus or offering document, a statement that the expert has given such consent.
          January 2014

        • OFS-3.2.14

          The appointed advisor must provide a statement regarding its due diligence with regard to its appointed responsibility and this statement must be included in the prospectus or offering document.

          January 2014

        • OFS-3.2.15

          The appointed advisor must disclose in the prospectus and/or offering documents, whether it has any capital of the issuer under option, or agreed conditionally or unconditionally to be put under option, including:

          (a) The title and amount of securities covered by the options;
          (b) The exercise price;
          (c) The purchase price, if any; and
          (d) The expiration date of the options.
          January 2014

        • OFS-3.2.16

          Where options have been granted, or agreed to be granted to all the holders of shares or debt securities, or of any class thereof, or to any appointed advisor, or to employees under the employees' share benefit plan, a general disclosure of such fact may be made.

          January 2014

        • OFS-3.2.17

          The information provided in Rule OFS-3.2.15 must also be disclosed where there is authorised but unissued capital, or an undertaking to increase the capital in connection with warrants, convertible obligations or other outstanding equity-linked securities, or subscription rights granted or to be granted to any appointed advisor. Such information must indicate:

          (a) The amount of outstanding equity-linked securities and of such authorised capital or capital increase and where appropriate, the duration of the authorisation;
          (b) The categories of advisors having preferential subscription rights for such additional portions of capital;
          (c) The terms, arrangements and procedures for the share issue corresponding to such portions; and
          (d) That no subscription is made by the issuer in contravention of Subparagraph OFS-1.5.2(s).
          January 2014

        • OFS-3.2.18

          In regard to the implementation of the granting of capital in Paragraphs OFS-3.2.15 and OFS-3.2.17:

          (a) The General Assembly of the securities holders must approve a separate resolution of the rights or options through a majority of disinterested securities holders;
          (b) It must be implemented, exercised and/or allocated separately from the process of the related offering of securities, i.e. either before or after the offering period; and
          (c) For issuers under formation, the implementation, exercising and or allocation of the required securities must take place only after the publication of the issuer's incorporation order in the Official Gazette.
          January 2014

      • Independency and Avoidance of Conflict of Interest

        • OFS-3.2.19

          An appointed advisor must be independent of the issuer. An appointed advisor will not be considered independent by the CBB if:

          (a) He owns an interest of 5% or more of equity securities of the issuer or any other company within the issuer's group;
          (b) He has a business relationship with, or financial interest in the issuer or any other entity in the issuer's group that would give the appointed advisor, or the appointed advisor's group a material interest in the outcome of the transaction;
          (c) He provides and has provided in the previous 2 years any service, assurance, or guidance in any event to the issuer, other than the offering or listing in which he is appointed as an appointed advisor, or to another entity in the issuer's group; or
          (d) A director, partner or employee of the appointed advisor or another entity in the appointed advisor's group has a material interest in the issuer or any other entity in the issuer's group.
          Amended: July 2018
          January 2014

        • OFS-3.2.20

          When an appointed advisor undertakes business other than the capital market advisory services, or undertakes two or more of the capital market advisory services, the appointed advisor must ensure that the performance of such business is subject to the avoidance of any conflict of interest.

          January 2014

      • Confidentiality and Prohibition of Insider Trading

        • OFS-3.2.21

          Appointed advisors are subject to confidentiality requirements which must be explicitly stated in the respective agreements, contracts and/or letters.

          January 2014

        • OFS-3.2.22

          All advisors must abide by the rules relating to the Prohibition of Market Abuse and Manipulation contained in Module MAM of Volume 6 CBB Rulebook, as well as the relevant rules of the licensed exchange regarding the prevention of insider trading, in their capacity as a temporary insider.

          January 2014

      • Reporting and Notification to the CBB

        • OFS-3.2.23

          An appointed advisor is responsible, in addition to the reporting and disclosure requirements stipulated under this Module, for immediate notification to the CBB of any offence involving money laundering, fraud, theft, or other dishonest conduct related to the offer or listing, irrespective of whether such conduct is reported to the CBB by the issuer and/or the lead manager.

          January 2014

      • Declaration and Accountability

        • OFS-3.2.24

          An appointed advisor is required to provide the CBB with a declaration confirming his acceptance to the accountability and enforceability of the CBB Law, rules and regulations, and all other applicable laws, rules and regulations, and in particular to the CBB Law Articles 82, 84, 85, 106, 166, 167 and 168.

          January 2014

      • CBB Approval

        • OFS-3.2.25

          The CBB shall decide on the eligibility of the appointed advisor(s) on a case by case basis, taking into consideration, the nature and complexity of the offering, as well as, the nature of involvement and commitment of the appointed advisor(s).

          January 2014

    • OFS-3.3 OFS-3.3 Role and Responsibilities of the Appointed Advisors

      • OFS-3.3.1

        An appointed advisor is required to fufill the applicable role and responsibilities as laid out in this Section and contained in the agreement signed between the issuer and advisor.

        January 2014

      • Role and Responsibilities of the Lead Manager

        • OFS-3.3.2

          All issuers must engage a CBB licensee to act as a lead manager or to fulfil the obligations of a lead manager as defined in this Section.

          January 2014

        • OFS-3.3.3

          The lead manager is in addition to Paragraph OFS-3.2.24 required by the CBB to act with appropriate care and skill and perform the following:

          (a) Prepare and file the application for approval of a securities offering to the CBB;
          (b) Report to the CBB on the due diligence undertaken in respect of the issue and the issuer;
          (c) Make a declaration that is provided to the CBB and included in the offering document, that the offering document does not contain information that is false or misleading, in its opinion does not prejudice the interests of present or future investors and does not omit any material information;
          (d) Make a declaration that is provided to the CBB and included in the offering document that the offering document is in accordance with all the CBB Law, other rules and regulations and this Module;
          (e) The lead manager's declaration under (d) is only acceptable to the CBB, if it is attached with a duly signed and fully completed offering prospectus checklist prescribed under Appendix OFS-7; and
          (f) Where the issue is not underwritten, the lead manager must provide the CBB with the method of price determination and price stabilisation for a period of one year or such other period as the CBB may determine.
          January 2014

        • OFS-3.3.4

          For the purposes of Rule OFS-3.3.3, the outstanding underwriting commitments of a lead manager should not exceed reasonable limits including in relation to its capital and capital adequacy requirements.

          January 2014

        • OFS-3.3.5

          The lead manager is expected to also assist the issuer with the appointment of other advisors.

          January 2014

        • OFS-3.3.6

          Where the lead manager is also acting as a listing agent or sponsor in relation to a planned listing, the lead manager is also responsible for:

          (a) Advising the issuer on its suitability for listing;
          (b) Ensuring the applicant, as well as the listing documents, meet admission requirements;
          (c) Preparing the application and listing documents for listing;
          (d) If the securities listing application for obtaining the CBB approval is made separately from the application for the offering of securities, ensuring that in the case of the listing documents the requirements related to the declaration under Subparagraph OFS-3.3.3 (d) and prospectus checklist under Subparagraph OFS-3.3.3 (e) are also applied;
          (e) Ensuring that the issuer is sufficiently set up to comply with the continuing listing obligations under the licensed exchange's listing rules including meeting the corporate governance requirements;
          (f) Ensuring the CBB is informed of all matters which should be brought to its attention; and
          (g) Notifying the CBB of any amendments to the application or listing documents after submission.
          January 2014

        • OFS-3.3.7

          The lead manager must inform the CBB where:

          (a) It is no longer able to satisfy the criteria for approval;
          (b) Any of the approved executives of the lead manager are convicted of an offence involving fraud, theft or other dishonesty, or are the subject of a bankruptcy proceeding; or
          (c) It resigns as a lead manager, listing agent or sponsor. In this case, the lead manager must provide written notification to both the CBB and the relevant issuer.
          January 2014

      • E-Subscription

        • OFS-3.3.8

          In line with Articles 83 and 178 of the CBB Law and the dematerialisation of securities requirements under Paragraph OFS-1.5.5, issuers and lead managers must put in place appropriate technical infrastructure and other arrangements to encourage subscribers to use e-subscription facilities.

          Amended: April 2016
          January 2014

    • OFS-3.4 OFS-3.4 Role and Responsibilities of Auditor and Independent Reporting Accountant on Financial Projections

      • OFS-3.4.1

        Newly-established issuers or small and medium enterprises who cannot provide financial statements, or historical records must include projected financial statements in the prospectus or offering document.

        January 2014

      • OFS-3.4.2

        Other than for newly-established issuers, financial projections, forecasts, or estimates of future operating results are not required to be included in offering documents, unless otherwise stated in this Module or by the CBB. However, if the issuer decides to disclose such information, it has to justify its projections adequately. The issuer should provide an explanation as to how the projections were calculated, taking into account all assumptions and risks.

        January 2014

      • OFS-3.4.3

        Where the projections of financial statements, or forecasted financial information are disclosed in the prospectus or offering document, the projections must be reviewed and reported on by an independent reporting accountant or other expert and such report must be set out in the offering document, in accordance with the International Standards on Assurance Engagement (ISAE), or any other applicable international standards required from time-to-time and the declaration required under Paragraph OFS-3.2.24 must be in line with this standard.

        January 2014

      • OFS-3.4.4

        The issuer, lead manager and the independent reporting accountant must ensure that sufficient details on the bases and assumptions of the projections are disclosed to enable the investor to assess the reliability of the projections and the effect of any changes to the assumptions used. The bases and assumptions must:

        (a) Provide useful information to investors to assist them in forming a view as to the reasonableness and reliability of the projections;
        (b) Draw the investors' attention to, and where possible quantify, those uncertain factors which could materially affect the achievement of the projections;
        (c) Avoid generalisations and all-embracing assumptions (general asumptions, where applicable, could be made) and those relating to the general accuracy of the projections; and
        (d) Be clearly stated and reviewed for reasonableness by the directors who are responsible for the projections, bases and assumptions.
        January 2014

      • OFS-3.4.5

        The following requirements are applicable in respect of profit/cash flow projections:

        (a) The projections must be realistic and achievable to provide investors with information on the issuer's prospects;
        (b) The projections must be compiled with utmost care and objectivity; and
        (c) Where the projections are subject to high probability of variation, the issuer must provide a sensitivity analysis based on any one of the key variables such as sales price, volume of sales, production costs, production capacity, operating expenses and financing costs.
        January 2014

      • OFS-3.4.6

        In addition to the above, owing to the specific nature of profit/cash flow projections, the issuer must take note of the following:

        (a) A projection, being a representation of financial information based on a set of assumptions which are uncertain and hypothetical, must be qualified as to its achievability for those reasons;
        (b) The qualifications of projected financial information must draw attention to the fact that the presentation is based on hypothetical assumptions, and that actual events may differ from those assumed and may materially affect the financial information projected; and
        (c) Notwithstanding the uncertainties and hypothetical assumptions associated with projections, the projections must be prepared with care, skill and objectivity so as to represent the stated assumptions and not to purport unreasonable hypotheses and assumptions.
        Amended: July 2018
        January 2014

      • Eligibility

        • OFS-3.4.7

          The independent reporting accountant is required to adhere to the independence and other standards applicable to auditors, in addition to the general eligibility under Section OFS-3.2.

          January 2014

    • OFS-3.5 OFS-3.5 Role and Responsibilities of Trustees and Custodians

      • OFS-3.5.1

        Borrowing corporations and issuers of debt securities (hereinafter referred to as borrowing corporations) must appoint trustees to whom the ownership of the trust property must be transferred.

        January 2014

      • Eligibility

        • OFS-3.5.2

          A Bahrain domiciled trustee must be established and authorised in accordance with the Bahrain Trust Law of 2006. In the case of overseas domiciled trustees, they must be registered in their own jurisdiction and be acceptable to the CBB.

          January 2014

      • Appointment of Trustee

        • OFS-3.5.3

          Every issuer of debt securities must make provision in those debt securities, or in a trust deed relating to those debt securities, for the appointment of a trustee corporation as trustee for the holders of the debt securities within a maximum of one month from the allotment date.

          January 2014

      • Independence

        • OFS-3.5.4

          A trustee corporation must not be appointed, hold office or act as trustee for the holders of debt securities of a borrowing corporation if that trustee corporation is:

          (a) A shareholder who beneficially holds shares in the borrowing corporation;
          (b) Beneficially entitled to monies owned by the borrowing corporation to it;
          (c) A corporation that has entered into a guarantee in respect of the principal debt secured by those debt securities or in respect of interest thereon; or
          (d) A corporation that is related to:
          (i) Any corporation referred to in Subparagraphs (a), (b) or (c); or
          (ii) The borrowing corporation.
          January 2014

        • OFS-3.5.5

          The trustee must be independent of the issuer, or any of the issuer's related party, subsidiaries and/or associates, and must exercise the powers and duties as defined in the Trust Law of 2006 and the trust deed, without interference or guidance from the issuer.

          January 2014

        • OFS-3.5.6

          An issuer may remove a trustee after obtaining CBB approval if he exceeds the limits or is otherwise in contravention of the trust deed, or if he violates the provisions of the Trust Law of 2006.

          January 2014

      • Contents of a Trust Deed

        • OFS-3.5.7

          Where a corporation or any other entity makes an offer or invitation in respect of debt securities, the debt securities or the relevant trust deed must contain a limitation on the amount that the borrowing corporation may borrow, pursuant to those debt securities or that deed and must contain covenants by the borrowing corporation, or if the debt securities do not or the trust deed does not expressly contain those covenants, they or it are deemed to contain covenants by the borrowing corporation, to the following effect:

          (a) That the borrowing corporation will use its best endeavours to carry on and conduct its business in a proper and efficient manner;
          (b) That the trustee or any auditor or director appointed by the trustee shall:
          (i) Be entitled to require the borrowing corporation to make available for its or his inspection the whole of the accounting or other records of the borrowing corporation; and
          (ii) Give to it or him such information as it or he requires with respect to all matters relating to the accounting or other records of the borrowing corporation; and
          (c) That the borrowing corporation must, on the application of persons holding at least 10% in nominal value of the issued debt securities give notice:
          (i) To each of the holders of those debt securities at his address as specified in the register of debt securities;
          (ii) By an advertisement in at least two local daily newspapers, one each published in the Arabic and English languages addressed to all holders of those debt securities; and
          (iii) Call a meeting of the holders of those debt securities to consider the accounts and balance sheet which were last submitted to the trustee for the holders of the debt securities by the borrowing corporation, and to give to the trustee directions in relation to the exercise of the trustee's powers. Such meeting is to be held at a time and place specified in the notice and advertisement under the chairmanship of a person nominated by the trustee, or such other person as appointed on behalf of the holders of those debt securities present at the meeting.
          Amended: July 2018
          January 2014

        • OFS-3.5.8

          Trust deeds for convertible securities must not include any provisions for:

          (a) The extension or shortening of tenure of the convertibles; and
          (b) Changes to the number of shares received for the conversion of each convertible security, or changes to the pricing mechanism for the conversion of the convertible security, except where these changes are adjustments pursuant to capitalisation issues, rights issues, or consolidation or sub-division of shares or capital reduction exercises.
          January 2014

        • OFS-3.5.9

          Any changes in the terms of convertible securities must be clearly determined and disclosed in the trust deed and offering document/listing document/circular, or any other documents issued in relation to the proposal.

          January 2014

        • OFS-3.5.10

          Once determined, the terms and conditions of the convertible securities may not be altered unless approved by the holders of the securities and the CBB.

          January 2014

      • Retirement of Trustees

        • OFS-3.5.11

          A trustee for the holders of debt securities must not cease to be the trustee until a corporation qualified for appointment as trustee for the holders of debt securities has been appointed and has taken office as such. The holders of the securities and the CBB must be informed immediately of this event.

          January 2014

        • OFS-3.5.12

          Where provision has been made in the debt securities or in the relevant trust deed for the appointment of a successor to a trustee for the holders of the debt securities upon retirement or otherwise, the successor may be appointed in accordance with such provision.

          January 2014

        • OFS-3.5.13

          Where no provision has been made in the debt securities or in the relevant trust deed for the appointment of a successor to a retiring trustee, the borrowing corporation may appoint a successor which is qualified for appointment.

          January 2014

        • OFS-3.5.14

          Notwithstanding anything in any debt securities or trust deed, a borrowing corporation may, with the consent of an existing trustee for the holders of the debt securities, appoint as successor to the existing trustee any corporation which is qualified for such appointment.

          January 2014

        • OFS-3.5.15

          Where the trustee for the holders of the debt securities has ceased to exist or to be qualified, or fails or refuses to act or is disqualified, the court may, on the application of the borrowing corporation or the CBB, appoint any corporation qualified to be the trustee for the holders of the debt securities in place of the trustee which has ceased to exist or to be qualified, which has failed or refused to act as trustee, or which is disqualified.

          January 2014

        • OFS-3.5.16

          Where a successor is appointed to be a trustee in place of any trustee, the successor must immediately after the appointment submit to the holders of the securities and the CBB notice of such appointment.

          January 2014

      • Roles and Responsibilities of the Trustees

        • OFS-3.5.17

          A trustee for the holders of debt securities must:

          (a) Exercise reasonable diligence to ascertain whether or not the assets of the borrowing corporation and of each of its guarantor corporations which are or may be available, whether by way of collateral or security or otherwise, are sufficient or are likely to be or become sufficient to discharge the principal debt as and when it becomes due;
          (b) Satisfy itself that each prospectus relating to the debt securities does not contain any matter which is inconsistent with the terms of the debt securities or with the relevant trust deed;
          (c) Ensure that the borrowing corporation complies with the CBB Law, rules and regulations and any other laws, rules and regulations related to the debt securities as applicable;
          (d) Exercise reasonable diligence to ascertain whether or not the borrowing corporation and each of its guarantor corporations have committed any breach of the covenants, terms and provisions of the debt securities or the trust deed;
          (e) Except where it is satisfied that the breach will not materially prejudice the collateral or the security, if any, for the debt securities or the interests of the holders of the debt securities, take all steps and take all such actions as it is empowered to do to cause the borrowing corporation and any of its guarantor corporations to remedy any breach of those covenants, terms and provisions;
          (f) Where the borrowing corporation or any of its guarantor corporations fails when so required by the trustee to remedy any breach of the covenants, terms and provisions of the debt securities or the trust deed, place the matter before a meeting of holders of the debt securities and submit such proposals for the protection of their interest as the trustee considers necessary or appropriate and obtain the directions of the holders in relation thereto; and
          (g) Where the borrowing corporation submits to those holders a compromise or arrangement, give to them a statement explaining the effect of the compromise or arrangement and, if it or he thinks fit, recommend to them an appropriate course of action to be taken by them in relation thereto.
          January 2014

        • OFS-3.5.18

          Where a trustee for the holders of the debt securities after due enquiry, at any time is of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available, whether by way of collateral or security or otherwise, are insufficient, or likely to become insufficient, to discharge the principal debt as and when it becomes due, it must apply to the CBB for an order under Paragraph OFS-3.5.19.

          January 2014

        • OFS-3.5.19

          The CBB, on receiving an application under Paragraph OFS-3.5.18 may:

          (a) After giving the borrowing corporation an opportunity to make representations in relation to the application, and by order in writing served on the corporation at its registered office in Bahrain, impose such restrictions on the activities of the borrowing corporation, including restrictions on advertising for deposits or loans and on borrowing by the corporation as proposed by the trustee and/or issuer or the CBB considers necessary for the protection of the interests of the holders of the debt securities; or
          (b) If the CBB so requires, direct the trustee to apply to the court for an order; and the trustee shall act in accordance with the court order.
          January 2014

        • OFS-3.5.20

          Where:

          (a) After due enquiry, the trustee is at any time of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available, whether by way of collateral or security or otherwise, are insufficient or likely to become insufficient to discharge the principal debt as and when it becomes due; or
          (b) The borrowing corporation has contravened an order made by the CBB under Paragraph OFS-3.5.19.

          the trustee may apply to the court for an order.

          January 2014

      • Powers of the Trustee to Apply to Court

        • OFS-3.5.21

          A trustee for the holders of debt securities may apply to the court:

          (a) For directions in relation to any matter arising in connection with the performance of the functions of the trustee; or
          (b) To determine any question in relation to the interests of the holders of debt securities.
          January 2014

        • OFS-3.5.22

          Prior to making any application to the CBB or to the court, a trustee must consider the nature and kind of collateral or security given when the offer or invitation in respect of the debt securities was made to the public, and if no security was given must consider the position of the holders of the debt securities as unsecured creditors of the borrowing corporation.

          January 2014

        • OFS-3.5.23

          A trustee may rely upon any certificate or report given or statement made by any legal advisor, auditor or officer of the borrowing corporation or guarantor corporation, if it reasonably believes that such legal advisor, auditor or officer was competent to give or make the certificate, report or statement.

          January 2014

      • Obligations of the Issuer or Borrowing Corporation

        • OFS-3.5.24

          The directors of the borrowing corporation must:

          (a) At the end of a period not exceeding 3 months (being a day after the date of the issue of the relevant prospectus); and
          (b) At the end of each succeeding period thereafter, being a period of 3 months or such shorter time as the trustee may, in any special circumstances allow,

          prepare a report that relates to that period and complies with the requirements of Paragraph OFS-3.5.25, and within one month after the end of each such period submit a report relating to that period to the trustee with a copy being submitted to the CBB.

          January 2014

        • OFS-3.5.25

          The report referred to in Paragraph OFS-3.5.24, must be signed by not less than two of the directors on behalf of all of them and must set out in detail any matters adversely affecting the collateral or security, or the interests of the holders of the debt securities and, without affecting the generality of Paragraph OFS-3.5.24, state:

          (a) Whether or not the limitations on the amount that the corporation may borrow have been exceeded;
          (b) Whether or not the borrowing corporation and each of its guarantor corporations have observed and performed all the covenants and provisions binding upon them respectively by or pursuant to the debt securities or any trust deed;
          (c) Whether or not any event has happened which has caused or could cause the debt securities or any provision of the relevant trust deed to become enforceable and, if so, particulars of that event;
          (d) Whether or not any circumstances affecting the borrowing corporation, originator, group companies or its guarantor corporation(s) or any of them have occurred which materially affect any collateral or security or charge included in or created by the debt securities or any trust deed and, if so, particulars of those circumstances;
          (e) Whether or not there has been any major change in the nature of the business of the borrowing corporation or any of its group companies, originator or any of its guarantor corporation(s) since the debt securities were first issued which has not previously been reported upon as required by Section OFS-3.5 and, if so, particulars of that change; and
          (f) Where the borrowing corporation has deposited money with or lent money to or assumed any liability of a corporation which is related to the borrowing corporation, particulars of:
          (i) The total amounts so deposited or lent and the extent of any liability so assumed during the period covered by the report; and
          (ii) The total amounts owing to the borrowing corporation in respect of money so deposited or lent and the extent of any liability so assumed as at the end of the period covered by the report, distinguishing between deposits, loans and assumptions of liabilities which are secured and those which are unsecured, but not including any deposit with or loan to or any liability assumed on behalf of a corporation if that corporation has guaranteed the repayment of the debt securities of the borrowing corporation, and has secured the guarantee by a charge over its assets in favour of the trustee for the holders of the debt securities of the borrowing corporation.
          January 2014

        • OFS-3.5.26

          The trustee must demand that the borrowing corporation and each of its guarantor corporation(s) which has guaranteed the repayment of the monies raised by the issue of debt securities to:

          (a) Furnish in writing to the trustee, within 30 days after the creation of a charge, with the particulars of any charge created by the corporation or the guarantor corporation, as the case requires; and
          (b) When the amount to be advanced on the collateral or the security of the charge is indeterminate, furnish the trustee in writing within 10 days after the advance, particulars of the amount or amounts actually advanced.
          Amended: April 2014
          January 2014

        • OFS-3.5.27

          Where any such advance referred to in Subparagraph OFS-3.5.26(b) is merged in a current account with bankers or trade creditors, it shall be sufficient for particulars of the net amount outstanding in respect of any such advance to be furnished every 3 months.

          January 2014

        • OFS-3.5.28

          The trustees must submit to the CBB a report addressing the requirements stipulated under Paragraph OFS-3.5.17 on a regular basis but not later than each occurrence of the payment of periodic interest or income or when the trustee deems necessary to keep the CBB informed about the compliance with those requirements.

          January 2014

        • OFS-3.5.29

          The directors of every borrowing corporation and of every guarantor corporation must cause to be made out and submitted to the CBB and trustee:

          (a) A profit and loss account for the first 3 months of every financial year of the corporation and a balance sheet as at the end of that period, not less than 3 months after the expiration of the period of 6 months; and
          (b) A profit and loss account for every financial year of the corporation and a balance sheet as at the end of that period, not later than 3 months after the end of that financial year.
          January 2014

        • OFS-3.5.30

          Where:

          (a) The directors of a borrowing corporation do not submit to the trustee the report as required by Paragraph OFS-3.5.25; or
          (b) The directors of a borrowing corporation or the directors of a guarantor corporation do not submit with the trustee the balance sheets and profit and loss accounts as required by Paragraph OFS-3.5.29, within the time prescribed;

          the trustee must immediately notify the CBB of this fact.

          January 2014

      • Obligations of Guarantor

        • OFS-3.5.31

          For the purpose of the preparation of a report that, by this Module, is required to be signed by or on behalf of the directors, or persons approved by the CBB of a borrowing corporation or any of them, that borrowing corporation may, by notice in writing, require any of its guarantor corporations to furnish it with any information relating to that guarantor corporation which is, by this Module, required to be contained in that report.

          January 2014

        • OFS-3.5.32

          The guarantor corporation must furnish the borrowing corporation with that information required under Paragraph OFS-3.5.31 before the specified date, being a date not earlier than one month after the notice is given.

          January 2014

    • OFS-3.6 OFS-3.6 Role and Responsibilities of the Underwriter

      • Eligibility

        • OFS-3.6.1

          Any person acting as an underwriter to any offering, must be licensed or otherwise authorised by the CBB to undertake such activity.

          January 2014

        • OFS-3.6.2

          For the purpose of this Module, the definition, role and requirements related to the underwriter also apply to co-underwriters.

          January 2014

        • OFS-3.6.3

          The CBB may investigate the financial suitability of a proposed underwriter and may reject the appointment of the underwriter and/or the application for offering if it is not satisfied as to the underwriter's ability to meet its commitment under the proposed underwriting agreement and its potential impact in its capital adequacy.

          January 2014

      • Firm Commitment Underwriting

        • OFS-3.6.4

          Where an underwriter has been appointed and the securities are not fully subscribed during the offering period, the underwriter must purchase the balance of the securities through a firm commitment underwriting arrangement.

          January 2014

        • OFS-3.6.5

          The firm commitment underwriting arrangement must be detailed in an underwriting agreement, which must be submitted to the CBB as part of the offering of securities application.

          January 2014

        • OFS-3.6.6

          For the purpose of this Module, the total of all the underwriting undertakings of the underwriter, the company that controls it, its subsidiary, a subsidiary of the company that controls it and a company affiliated with it, are calculated as one underwriting undertaking.

          January 2014

        • OFS-3.6.7

          The underwriter may appoint or form an underwriting group for any underwritten issue.

          January 2014

        • OFS-3.6.8

          The underwriter must comply with the CBB Law, rules and regulations, including Volume 6 of the CBB Rulebook, and the issuer's Memorandum and Articles of Association, particularly in respect of the eligibility of the expected subscribers to acquire the issuer's securities and related disclosure requirements.

          Amended: October 2017
          January 2014

        • OFS-3.6.9

          After the approval of the offering documents (including the underwriting agreement) neither the issuer nor any advisor or person acting on its behalf, nor the underwriter or any person acting on its behalf, has the right to change any provision or commitments stipulated in the underwriting agreement.

          January 2014

        • OFS-3.6.10

          All commitments, terms and conditions stipulated in the underwriting agreement must be enforced and implemented without any change or alterations, including the relevant timeframes.

          January 2014

        • OFS-3.6.11

          The CBB may consider amendments to an underwriting agreement where the stability of the financial sector and/or capital market will be adversely affected by the agreement's current provisions. In this regard, the CBB must be provided with a supporting application signed by both the issuer and the underwriter, before considering such amendment.

          January 2014

      • Firm Commitment Underwriting

        • OFS-3.6.12

          A firm commitment underwriting arrangement is required for all public offerings. However, the CBB may accept other underwriting arrangements other than firm commitment underwriting, in the following cases:

          (a) Offering of securities below the average market price during the last six months; or
          (b) Offering of securities at the flat par value.
          January 2014

        • OFS-3.6.13

          A firm commitment underwriting arrangement may also be done through a bought-out deal wherein the underwritten issue is bought entirely by the underwriter to resell to investors.

          January 2014

        • OFS-3.6.14

          In case of issues which are exempted from firm commitment underwriting arrangements (non-public offers), the CBB may accept partial underwriting commitment arrangements, or best-efforts underwriting.

          January 2014

      • Disclosure

        • OFS-3.6.15

          The name of the underwriter and the terms of the underwriting agreement must be prominently disclosed in the offering document and in the application for approval.

          January 2014

        • OFS-3.6.16

          A summary of the underwriting agreement or arrangements must be provided in the prospectus or offering document, including but not limited to the cost of underwriting and other related fees and charges.

          January 2014

        • OFS-3.6.17

          The underwriter is required to provide sufficient and adequate information to the CBB and disclose the same in the prospectus or offering documents as to the method, bases, mechanism, assumptions, and all other related information used to reach the offering price.

          January 2014

        • OFS-3.6.18

          In cases where the offering price is determined by the underwriter jointly with any other advisor or third party, the name and role of such advisor or person must be provided to the CBB and disclosed in the prospectus or offering document.

          January 2014

        • OFS-3.6.19

          The underwriting agreement must be provided as a document available for inspection to the subscriber.

          January 2014

        • OFS-3.6.20

          For purposes of Paragraph OFS-3.6.17 and item 25.1(b) under Section 17 of Appendix OFS-1, relating to the pricing of securities and bases or methods for determining the issue or offer price and for prospectus disclosure purposes, the bases used for determining the pricing of securities must be elaborated on and general statements must be avoided.

          Added: October 2017

        • OFS-3.6.21

          For purposes of Paragraph OFS-3.6.20, factors that are commonly cited in pricing determination which should be elaborated may include, but are not limited to, prevailing market performance and condition (e.g. price earnings ratio, dividend yield, etc.), financial and operating performance (e.g. earnings per share, etc.), consolidated net tangible assets per share and/or net assets per share (or liabilities as to the case may be), earnings potential, assessment of management, market valuation of companies in related businesses, intellectual property and technology, etc. Where appropriate, cross-references should be made to the relevant and specific sections of the prospectus.

          Added: October 2017

    • OFS-3.7 OFS-3.7 Role and Responsibilities of the Paying Agent

      • OFS-3.7.1

        The paying agent must be licensed by the CBB to undertake this activity.

        January 2014

      • OFS-3.7.2

        For an issue of debt securities, the issuer must appoint and maintain a paying agent, or where appropriate, a central depository in Bahrain until all outstanding obligations relating to those securities have been met, unless the issuer itself performs these functions.

        January 2014

      • OFS-3.7.3

        The paying agent must provide facilities for obtaining new debt securities, in accordance with the terms and conditions of the debt securities, to replace those debt securities which have been damaged, lost, stolen, or destroyed, and for all other purposes provided for in the terms and conditions of the debt securities, trust deed and/or offering documents.

        January 2014

      • OFS-3.7.4

        The paying agent must undertake responsibility for timely disbursement of funds made available by the issuer or the trustee, as the case may be, to investors in accordance with the terms of the security and the timelines stipulated by the CBB.

        January 2014

      • OFS-3.7.5

        The paying agent must notify the CBB immediately when the issuer, originator and/or guarantor delays in meeting any required payments, whether in whole or in part.

        January 2014

      • OFS-3.7.6

        The paying agent or any other party must not issue a new certificate mentioned under Rule OFS-3.7.3, without mandating the certificate holder to publish in a local newspaper and the market that such certificate has been damaged, lost, stolen, or destroyed. A new certificate may only be issued 15 calendar days from the date of the above mentioned publication date.

        January 2014

    • OFS-3.8 OFS-3.8 Role and Responsibilities of the Shari'a Advisor

      • OFS-3.8.1

        The Shari'a advisor must review the key aspects of the issue of Islamic securities, including documentation, structuring, investment, as well as any operational matters in relation to the Islamic securities and ensure compliance with applicable Shari'a principles.

        January 2014

      • OFS-3.8.2

        The Shari'a advisor must produce and sign a Shari'a pronouncement report or declaration that the issue is in compliance with the principles of Shari'a and include the report in the offering documentation which is submitted to the CBB.

        January 2014

      • OFS-3.8.3

        The Shari'a advisor must be of good reputation and character and must possess the necessary qualifications and expertise in relevant Islamic jurisprudence. He must possess a minimum of three years experience in Islamic finance.

        January 2014

      • OFS-3.8.4

        The Shari'a advisor must be independent of the issuer. The issuer must not restrict the activities of the Shari'a advisor in any way. In a case where restrictions are imposed, these must be disclosed by the Shari'a advisor to the CBB.

        January 2014

    • OFS-3.9 OFS-3.9 Role and Responsibilities of the Legal Advisor

      • OFS-3.9.1

        A legal advisor must be appointed for every offering of securities and its name must be included in the offering document and in any advertisement or announcement.

        January 2014

      • OFS-3.9.2

        The lead manager may appoint a legal advisor to assist in carrying out legal due diligence, the results of which must be included in the declaration by the lead manager (See Appendix OFS-8).

        January 2014

    • OFS-3.10 OFS-3.10 Role and Responsibilities of the Receiving Bank

      • OFS-3.10.1

        A receiving bank must be licensed or otherwise authorised by the CBB.

        January 2014

      • OFS-3.10.2

        For any offering made in or from Bahrain (overseas issuers), co-receiving banks may be exempted from the requirements under Rule OFS-3.10.1.

        January 2014

      • OFS-3.10.3

        The issuer, lead manager, and the receiving bank must designate a separate bank account for each issue of securities. The name(s) of the designated bank(s) must be provided in detail in the offering document.

        January 2014

      • OFS-3.10.4

        The receiving bank must notify the CBB immediately upon its appointment and must receive the CBB's approval before entering into an agreement or contract with the issuer or lead manager.

        January 2014

      • OFS-3.10.5

        The receiving bank must not activate the designated bank account or receive any payment from the subscribers other than during the date, time and working hours stipulated in the prospectus or offering document. Where there is a change, amendment or alteration to the date, time or working hours, a copy of the CBB's prior approval issued separately to this extent must be received in advance by the receiving bank before implementing such change or alteration.

        January 2014

      • OFS-3.10.6

        The receiving bank must not activate the subscription bank account, or accept any subscription form or payment, or continue to accept receiving such forms and payment without ensuring that for each application and payment a final printed copy of the offering document was made available to the subscriber.

        January 2014

      • OFS-3.10.7

        The receiving bank is responsible for the accuracy and completeness of all information provided in the subscription form in accordance with the Know Your Client requirements under Module AML or other relevant standard and has the authority to reject any form which is not complete or which contains inaccurate information. The receiving bank in cooperation and coordination with the issuer or lead manager is responsible for the avoidance of any duplicate applications for the same beneficiary (subscriber).

        January 2014

      • OFS-3.10.8

        The receiving bank must adhere to the laws, rules and regulations related to anti-money laundering and financial crime.

        January 2014

      • OFS-3.10.9

        The receiving bank must not transfer the issue's total proceeds in whole or part to the Board of Directors of the issuer, without receiving the CBB's approval on the allotment and the receiving bank is required to notify and provide the CBB with a bank certificate or transfer notice upon the transfer of such proceeds.

        January 2014

      • OFS-3.10.10

        The receiving bank must not charge the subscriber for any additional costs, fees, or charges other than those costs, fees, or charges stipulated in the offering document. Such costs, fees, or charges must be provided and displayed for the subscribers in a clear and readable place in the offering document.

        January 2014

      • OFS-3.10.11

        The receiving bank must be responsible for meeting the refunding and dispatching deadline with respect to the subscription money and shall ensure that all required arrangements are in place before entering into an agreement or contract with the issuer or lead manager.

        January 2014

      • OFS-3.10.12

        Where the refunding and dispatching deadline could not be met due to negligence or without prior approval of the CBB, the receiving bank, jointly with the issuer and lead manager, is liable to pay to the subscriber interest or penalty on the subscription money equal to BIBOR for any day or part thereof after the deadline.

        January 2014

      • OFS-3.10.13

        Receiving banks should lay down technical infrastructure and other arrangements for promoting the electronic subscription and receipt of moneys (e-subscription) in Bahrain.

        January 2014

    • OFS-3.11 OFS-3.11 Role and Responsibilities of the Securities Ownership Transfer Agent

      • OFS-3.11.1

        If the issued securities are not dematerialised, all issuers of securities must appoint a securities ownership transfer agent to perform the required function of the issuer in respect of the creation, maintenance and update of the securities register in terms of this Module.

        January 2014

      • OFS-3.11.2

        The securities ownership transfer agent must comply with the CBB Law, rules and regulations including those relating to Anti-Money Laundering and Financial Crime and must be subject to an audit according to control and inspection procedures stipulated by the CBB. In addition, the securities ownership transfer agent must provide the issuer with a declaration that the shareholder list is up to date and is accurate.

      • OFS-3.11.3

        All securities ownership transfer agents must provide the CBB on request as well as on a quarterly basis, a summary of the list of securities holders they maintain in the form required by the CBB.

      • OFS-3.11.4

        Securities ownership transfer agents shall be responsible for any loss or damage to the securities holder due to any inaccurate information or entries made in the securities holders register.

    • OFS-3.12 OFS-3.12 Role and Responsibilities of Other Experts or Advisors

      • OFS-3.12.1

        Where an offer of securities is made in or accompanied by a prospectus or offering document which includes a statement purporting to be made by, or based on a statement made by an expert, the prospectus or offering document must not be issued unless:

        (a) The expert has given and has not before the registration of the prospectus or offering document, as the case may be, withdrawn his written consent to the issue thereof with the statement included in the form and context in which it is included; and
        (b) There appears in the prospectus or offering document, as the case may be, a statement that the expert has given and has not withdrawn his consent.

      • OFS-3.12.2

        Every person making the offer must cause a true copy of every written consent referred to under Paragraph OFS-3.12.1 to be deposited within a maximum 7 calendar days after the registration of the offering document at the registered office of the issuer in Bahrain or, if the issuer has no registered office in Bahrain, at the address in Bahrain specified in the offering document for that purpose.

      • OFS-3.12.3

        The CBB may require a declaration from any appointed expert as per their role and responsibility in the preparation of any offering document as per Article 85 of the CBB Law.