• Central Bank of Bahrain Volume 7—Collective Investment Undertakings

    • Part A

      Table of Contents
       
        Module Title Module
      Code
      Date last
      changed
       
      Introduction User's Guide UG Jul 17 PDF Version
      Executive Summary ES Jul 17 PDF Version
      High Level Standards Authorisation / Registration Requirements ARR Jan 20 PDF Version
      Relevant Persons RP Jan 20 PDF Version
      Corporate Governance CG Apr 12 PDF Version
      Liquidation / De-registration Requirements LDR Apr 12 PDF Version
      Classification of Undertakings Bahrain Domiciled Retail CIUs BDR Oct 17 PDF Version
      Bahrain Domiciled Expert CIUs BDE Oct 17 PDF Version
      Bahrain Domiciled Exempt CIUs BDX Apr 12 PDF Version
      Bahrain Domiciled Real Estate Investment Trusts (B-REITs) BRT Jan 18 PDF Version
      Overseas Domiciled CIUs ODC Oct 17 PDF Version
      Shari'a Compliant CIUs SCC Apr 12 PDF Version
      Private Investment Undertakings PIU Oct 13 PDF Version
      Reporting Requirements CBB Reporting CRR Jul 17 PDF Version
      Enforcement & Redress Enforcement EN Apr 16 PDF Version

      • Introduction

        • UG UG User's Guide

          • UG-A UG-A Introduction

            • UG-A.1 UG-A.1 Purpose

              • Executive Summary

                • UG-A.1.1

                  The Central Bank of Bahrain ('the CBB'), in its capacity as the regulatory and supervisory authority for all financial institutions in Bahrain, issues regulatory instruments that licensees and other specified persons are legally obliged to comply with. These regulatory instruments are contained in the CBB Rulebook. Much of the Rulebook's substantive content was previously issued by the Bahrain Monetary Agency ('the BMA'), and was carried forward when the CBB replaced the BMA in September 2006.

                  April 2012

                • UG-A.1.2

                  The Rulebook is divided into 7 Volumes, covering different areas of financial services activity. These Volumes are being progressively issued. Volumes 1 and 2, covering conventional bank licensees and Islamic bank licensees respectively, were issued in July 2004 and January 2005; Volume 3, covering insurance licensees, was issued in April 2005, Volume 4, covering investment business firms was issued in April 2006. Volume 5 covering specialised licensees, is being issued in phases, part of which were issued in 2010 and 2011. Volume 6 (capital markets), has also been issued in phases, starting in April 2007. Volume 7 covering collective investment undertakings is being issued in April 2012. The Volume 7 content has been drawn from Module CIU which was previously included under Volume 6.

                  April 2012

                • UG-A.1.3

                  This User's Guide provides guidance on (i) the status and application of the Rulebook, with specific reference to Volume 7 (Collective Investment Undertakings); (ii) the structure and design of the Rulebook; and (iii) its maintenance and version control.

                  April 2012

                • UG-A.1.4

                  Volume 7 (Collective Investment Undertakings) covers the types of CIUs authorised or registered by the CBB. It contains authorisation/registration requirements; and corporate governance requirements. Collectively, these requirements are aimed at providing an appropriate level of protection to investors in such CIUs.

                  April 2012

              • Legal Basis

                • UG-A.1.5

                  This Module contains the CBB's Directive (as amended from time to time) regarding the User's Guide for Volume 7 of the CBB Rulebook, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive is this Module is applicable to all CBB licensees that are relevant persons, as defined in Module RP.

                  April 2012

                • UG-A.1.6

                  Relevant persons that are not CBB licensees (because they are not undertaking regulated services within Bahrain) but whose activities fall within the scope of this Module, are also subject to the requirements of this Module with respect to the CIU(s) concerned.

                  April 2012

                • UG-A.1.7

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • UG-A.2 UG-A.2 Module History

              • Evolution of Module

                • UG-A.2.1

                  This Module was first issued in April 2012, as part of the initial release of the contents of Volume 7 (Collective Investment Undertakings). Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

                  April 2012

                • UG-A.2.2

                  A list of recent changes made to this Volume is provided below:

                  Module Ref. Change Date Description of Changes
                  UG-3.2 and Annex 01/2013 Amended as CBB Rulebook only now available on CBB Website.
                  UG-1.3.4 10/2016 Add a paragraph to clarify reference to 'he' 'his' 'she' and 'her'.
                  UG-1.1.2 07/2017 Amended paragraph.
                       
                       

                • UG-A.2.3

                  Guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • UG-1 UG-1 Rulebook Status and Application

            • UG-1.1 UG-1.1 Legal Basis

              • General

                • UG-1.1.1

                  Volume 7 (Collective Investment Undertakings) of the CBB Rulebook is issued by the CBB pursuant to the Central Bank of Bahrain and Financial Institutions Law 2006 ('the CBB Law'). The CBB Law provides for two formal rulemaking instruments: Regulations (made pursuant to Article 37) and Directives (made pursuant to Article 38).

                  April 2012

              • CBB's Rulemaking Instruments

                • UG-1.1.2

                  Regulations are made pursuant to Article 37 of the CBB Law. These instruments have general application throughout the Kingdom and bind all persons ordinarily affected by Bahraini legislative measures.

                  Amended: July 2017
                  April 2012

                • UG-1.1.3

                  Because Regulations have wide general application, they are subject to two important safeguards: (i) the CBB is under a duty to consult with interested parties and to review and consider their comments; and (ii) the finalised Regulations only become effective after they are published in the Official Gazette.

                  April 2012

                • UG-1.1.4

                  Directives are made pursuant to Article 38 of the CBB Law. These instruments do not have general application in the Kingdom, but are rather addressed to specific licensees (or categories of licensees), approved persons or registered persons. Directives are binding on those to whom they are addressed.

                  April 2012

                • UG-1.1.5

                  Unlike Regulations, there is no duty on the CBB to either consult with addressees or publicise a Directive by publishing it in the Official Gazette (save that an addressee must obviously have actual or constructive notice of a Directive). However, as a matter of general policy, the CBB also consults on Rulebook content issued by way of a Directive.

                  April 2012

                • UG-1.1.6

                  All of the content of the CBB Rulebook has the legal status of at least a Directive, issued pursuant to Article 38 of the CBB Law. Certain of the requirements contained in the CBB Rulebook may also have the status of a Regulation, in which case they are also separately issued pursuant to Article 37 of the CBB Law and published in the Official Gazette. Where this is the case, then the Rulebook cross-refers to the Regulation in question and specifies the requirements concerned.

                  April 2012

                • UG-1.1.7

                  In keeping with the nature of these regulatory instruments, Regulations are used to supplement the CBB Rulebook, either where explicitly required under the CBB Law, or where a particular requirement needs to have general applicability, in addition to being applied to licensees, approved persons or registered persons.

                  April 2012

            • UG-1.2 UG-1.2 Status of Provisions

              • UG-1.2.1

                The contents of the CBB Rulebook are categorised either as Rules or as Guidance. Rules have a binding effect. Guidance is not binding: rather, it is material that helps inform a particular Rule or set of Rules, or provides other general information.

                April 2012

              • UG-1.2.2

                Where relevant, compliance with Guidance will generally lead the CBB to assess that the rule(s) to which the Guidance relates has been complied with. Conversely, failure to comply with Guidance will generally be viewed by the CBB as tending to suggest breach of a Rule.

                April 2012

              • UG-1.2.3

                The categorisation of each Paragraph within the Rulebook is identified by its text format, as follows:

                •   Rules are in bold, font size 12. The Paragraph reference number is also highlighted in a coloured box.
                •   Guidance is in normal type, font size 11.
                April 2012

              • UG-1.2.4

                Where there are differences of interpretation over the meaning of a Rule or Guidance, the CBB reserves the right to apply its own interpretation.

                April 2012

              • UG-1.2.5

                Rule UG-1.2.4 does not prejudice the rights of an authorised person to make a judicial appeal, should it believe that the CBB is acting unreasonably or beyond its legal powers.

                April 2012

              • UG-1.2.6

                All Rulebook content has the formal status of at least a Directive. Some Rulebook content may also have the status of Regulations. Rulebook content that is categorised as a Rule is therefore legally mandatory and must be complied with by those to whom the content is addressed.

                April 2012

              • UG-1.2.7

                Breaches of Rules constitute breaches of the CBB Law. If a licensee or person breaches a Rule to which they are subject, they are liable to enforcement action by the CBB and, in certain cases, criminal proceedings by the Office of the Public Prosecutor.

                April 2012

              • UG-1.2.8

                The CBB's enforcement powers and processes are set out in Module EN.

                April 2012

            • UG-1.3 UG-1.3 Application

              • UG-1.3.1

                Volume 7 of the CBB Rulebook applies only to CIUs, and to relevant persons of CIUs.

                April 2012

              • UG-1.3.2

                A few Rules and Guidance have general applicability (and thus also have the formal status of a Regulation): for instance, no person may establish a Bahrain domiciled CIU, unless the CIU is either authorised or registered, as required under Volume 7.

                April 2012

              • UG-1.3.3

                Each Module in Volume 7 contains a Scope of Application Chapter, setting out which Rules and Guidance apply to which particular type of CIU for the Module concerned. In addition, each Rule (or Section containing a series of Rules) is drafted such that its application is clearly highlighted for the user. Finally, each Module, in its Purpose Section, specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module's requirements.

                April 2012

              • UG-1.3.4

                All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.

                Added: October 2016

            • UG-1.4 UG-1.4 Effective Date

              • UG-1.4.1

                Volume 7 (Collective Investment Undertakings) of the CBB Rulebook was first issued in April 2012. Its contents have immediate effect, subject to any specific transition arrangements that may be specified.

                April 2012

              • UG-1.4.2

                Module ES (Executive Summary) contains details of the implementation and transition arrangements for Volume 7 (Collective Investment Undertakings).

                April 2012

          • UG-2 UG-2 Rulebook Structure and Format

            • UG-2.1 UG-2.1 Rulebook Structure

              • Rulebook Volumes

                • UG-2.1.1

                  The Rulebook is divided into 7 Volumes, covering different areas of financial services activity, as follows:

                  Volume 1 Conventional Banks
                  Volume 2 Islamic Banks
                  Volume 3 Insurance
                  Volume 4 Investment Business
                  Volume 5 Specialised Activities
                  Volume 6 Capital Markets
                  Volume 7 Collective Investment Undertakings
                  April 2012

                • UG-2.1.2

                  Volume 5 (Specialised Activities), covers money changers; financing companies; representative offices; administrators; trust service providers and micro-finance institutions.

                  April 2012

              • Rulebook Contents (Overview)

                • UG-2.1.3

                  Except for Volumes 5, 6 and 7, the basic structure of each Rulebook is the same. Each Volume starts with a contents page and an introduction containing a User's Guide and Executive Summary. Subsequent material is organised underneath the following headings:

                  •   High-level Standards;
                  •   Business Standards;
                  •   Reporting Requirements;
                  •   Enforcement and Redress; and, where appropriate,
                  •   Sector Guides.
                  April 2012

                • UG-2.1.4

                  Volume 5 is organised by the Category of specialised firm concerned, Volume 6 by subject area (authorised exchanges; issuers of securities etc), whilst Volume 7 is categorised by type of CIU.

                  April 2012

                • UG-2.1.5

                  The material in Volumes 1-4 is contained in Modules, each covering a specific area of requirements (e.g. capital). In turn, each Module is divided into Chapters, Sections and Paragraphs, as detailed below.

                  April 2012

                • UG-2.1.6

                  Each Volume has its own appendix Volume containing relevant reporting and authorisation forms; a glossary; and any supplementary information. In all cases, the main Volume is called 'Part A' and the appendix Volume is called 'Part B'.

                  April 2012

            • UG-2.2 UG-2.2 Volume Structure

              • Modules

                • UG-2.2.1

                  Rulebook Volumes are subdivided into Modules, arranged in groups according to their subject matter, underneath the headings listed in Paragraph UG-2.1.3 above.

                  April 2012

                • UG-2.2.2

                  Each Module in a Volume is referenced using a two or three-letter code, which is usually a contraction or abbreviation of its title. These codes are used for cross-referencing within the text.

                  April 2012

              • Chapters

                • UG-2.2.3

                  Each Module consists of Chapters, categorised into two types:

                  •   Standard introductory Chapters (referenced with a letter: e.g. UG-A); and
                  •   Chapters containing the substantive content of the Module (referenced with a number: e.g. CA-1, ML-2, etc.)
                  April 2012

                • UG-2.2.4

                  The introductory Chapters summarise the purpose of the Module, its history (in terms of changes made to its contents) and, where relevant, lists previously issued circulars and regulations that were replaced by the Rulebook Module. A separate introductory Chapter also prescribes the scope of application of the Module's requirements.

                  April 2012

              • Sections and Paragraphs

                • UG-2.2.5

                  Chapters are further sub-divided into Sections: these extend the Chapter numbering (e.g. FC-1.1, FC-1.2, FC-1.3 etc). In turn, Sections are sub-divided into Paragraphs; these extend the Chapter and Section numbering (e.g. FC-1.1.1, FC-1.1.2, FC-1.1.3 etc.). Where appropriate, sub-Section headings may be used, to guide the reader through a Section; sub-Section headings are italicised and unnumbered, and act purely as an indicator (without limitation) as to the contents of the Paragraphs that follow.

                  April 2012

              • Table of Contents

                • UG-2.2.6

                  Each Volume's contents page lists all the Modules contained within it (Part A) and the information contained in the relevant appendix Volume (Part B).

                  April 2012

                • UG-2.2.7

                  The contents page of each Module lists the Chapters and Sections it contains, and the latest version date of each Section in issue.

                  April 2012

            • UG-2.3 UG-2.3 Format and Page Layout

              • Headers

                • UG-2.3.1

                  The top of each page in the Rulebook identifies the Volume, Module and Chapter in question.

                  April 2012

              • Footers

                • UG-2.3.2

                  The bottom of each page in the Rulebook (on the left hand side) identifies the Module in question, its Section and page number. Page numbering starts afresh for each Section: the total number of pages in each Section is shown as well as the individual page number. The bottom right hand side shows an end-calendar quarter issue date. The contents page for each Module, and each Section in a Module, are each given their own issue date. In addition, the Module contents page lists the latest issue date for each Section in that Module. The contents page thus acts as a summary checklist of the current issue date in force for each Section. Further explanation is provided in Section UG-3.1 below.

                  April 2012

              • Defined terms

                • UG-2.3.3

                  Defined terms used in the Rulebook are underlined. Each Volume has its own glossary listing defined terms and giving their meaning. Definitions of terms used apply only to the Volume in question. It is possible for the same term to be used in a different Volume with a different meaning.

                  April 2012

              • Cross-references

                • UG-2.3.4

                  Any cross-references given in a text state the Module code, followed (where appropriate) by the numbering convention for any particular Chapter, Section or Paragraph being referred to. For example, the cross-reference FC-1.2.3 refers to the third Paragraph in the second Section of the first Chapter of the Financial Crime Module. Many references will be quite general, referring simply to a particular Module, Chapter or Section, rather than a specific Paragraph.

                  April 2012

              • Text format

                • UG-2.3.5

                  Each Paragraph is assigned a complete reference to the Module, Chapter, and Section, as well as its own Paragraph number, as explained in Paragraph UG-2.3.4 above. The format of the Paragraph reference and text indicates its status as either a Rule or Guidance, as explained in Paragraph UG-1.2.4 above.

                  April 2012

                • UG-2.3.6

                  When cross-referring to specific Paragraphs, and it is important to make clear the status of the Paragraph in question as a Rule or Guidance, then the words 'Rule' or 'Guidance' may be used instead of 'Paragraph', followed by the reference number (e.g. 'As required by Rule FC-1.1.1, licensees must. .).

                  April 2012

          • UG-3 UG-3 Rulebook Maintenance and Access

            • UG-3.1 UG-3.1 Rulebook Maintenance

              • Quarterly Updates

                • UG-3.1.1

                  Any changes to the Rulebook are generally made on a quarterly cycle (the only exception being when changes are urgently required), in early January, April, July and October. When changes are made to a Module, the amended Sections are given a new version date, in the bottom right-hand page.

                  April 2012

                • UG-3.1.2

                  The contents page for each amended Module is also updated: the table of contents is changed to show the new version date for each amended Section (in the 'Date Last Changed' column), and the contents page itself is also given its own new version date in the bottom right-hand corner. The Module contents pages thus act as a checklist for hard-copy users to verify which are the current version dates for each Section in that Module.

                  April 2012

                • UG-3.1.3

                  A summary of any changes made to a Module is included in the Module History Section of each Module. The table summarises the nature of the change made, the date of the change, and the Module components and relevant pages affected. The Module History can thus be used to identify which pages were updated within individual Sections.

                  April 2012

                • UG-3.1.4

                  Hard-copy users of the CBB Rulebook can check that they have the latest copy of each Module's contents pages, by referring to the overall table of contents for each Volume. The Volume table of contents lists the date each Module was last changed; users can use this table to check the date showing in the bottom right-hand corner of each Module's contents page.

                  April 2012

                • UG-3.1.5

                  The website version of the Rulebook acts at all times as the definitive version of the Rulebook. Any changes are automatically posted to the CBB website, together with a summary of those changes. Licensees are in addition e-mailed every quarter, to notify them of any changes (if any). Hard-copy users are invited to print off the updated pages from the website to incorporate in their Rulebook in order to keep it current.

                  April 2012

              • Changes to Numbering

                • UG-3.1.6

                  In order to limit the knock-on impact of inserting or deleting text on the numbering of text that follows the change, the following conventions apply:

                  (a) Where a new Paragraph is to be included in a Section, such that it would impact the numbering of existing text that would follow it, the Paragraph retains the numbering of the existing Paragraph immediately preceding it, but with the addition of an "A"; a second inserted Paragraph that follows immediately afterwards would be numbered with a "B", and so on.

                  For example, if a new Paragraph needs to be inserted after UG-3.1.6, it would be numbered UG-3.1.6A; a second new Paragraph would be numbered UG-3.1.6B, and so on. This convention avoids the need for renumbering existing text that follows an insertion. The same principle is applied where a new Section or a new Chapter needs to be inserted: for example, UG-3.1A (for a new Section), and UG-3A (for a new Chapter); and
                  (b) Where a Paragraph is deleted, then the numbering of the old Paragraph is retained, and the following inserted in square brackets: '[This Paragraph was deleted in April 2006.]' (The date given being the actual end-calendar quarter date of the deletion.) The same principle is applied with respect to Sections and Chapters.
                  April 2012

                • UG-3.1.7

                  Where many such changes have built up over time, then the CBB may reissue the whole Section, Paragraph, Chapter or even Module concerned, consolidating all these changes.

                  April 2012

            • UG-3.2 UG-3.2 Rulebook Access

              • Availability

                • UG-3.2.1

                  The Rulebook is available on the CBB website.

                  Amended: January 2013
                  April 2012

              • Queries

                • UG-3.2.2

                  Questions regarding the administration of the Rulebook (e.g. website availability, the updating of material etc) should be addressed to the Rulebook Section of the Licensing & Policy Directorate:

                  Rulebook Section
                  Licensing & Policy Directorate
                  Central Bank of Bahrain
                  P.O. Box 27
                  Manama
                  Kingdom of Bahrain

                  Tel: +973-17 547 413
                  Fax: +973-17 530 228
                  E-mail: rulebook@cbb.gov.bh
                  Web: www.cbb.gov.bh

                  Questions regarding interpretation of the policy and requirements contained in the Rulebook should be addressed to the licensee's regular supervisory point of contact within the CBB.

                  Amended: January 2013

          • Annex CBB Rulebook Order Form [This form was deleted in January 2013]

            Deleted: January 2013

        • ES ES Executive Summary

          • ES-A ES-A Introduction

            • ES-A.1 ES-A.1 Purpose

              • Executive Summary

                • ES-A.1.1

                  The purpose of this Module is to:

                  (a) Provide an overview of the structure of Volume 7 (Collective Investment Undertakings); and
                  (b) Outline the transition rules for the implementation of Volume 7.
                  April 2012

                • ES-A.1.2

                  Volume 7 (Collective Investment Undertakings) sets out the Central Bank of Bahrain's ('CBB') regulatory framework governing collective investment undertakings ('CIUs'). Volume 7 sets out requirements relevant to all CIUs that are domiciled in the Kingdom of Bahrain ('Bahrain domiciled CIUs'). It also prescribes requirements relating to CIUs that are domiciled in an overseas jurisdiction ('overseas domiciled CIUs') and offered to investors in the Kingdom of Bahrain.

                  April 2012

                • ES-A.1.3

                  CIUs are defined in Section ARR-1.2 as undertakings the sole object of which is the collective investment of capital raised from the public or through private placement, including investment seeded by the operator, in financial instruments and other assets and which operates on the basis of risk-spreading as appropriate; and the holdings of which may be re-purchased or redeemed out of those undertakings' assets. The definition of CIUs further specifies the various legal forms that a CIU may take.

                  April 2012

                • ES-A.1.4

                  The definition of CIUs includes closed-ended funds as well as open-ended funds, and includes funds formed under statute (as investment companies), as well as contract law and trust law (respectively referred to, as common funds and as unit trusts).

                  April 2012

                • ES-A.1.5

                  Module ARR distinguishes between CIUs that are classified as retail CIUs, which may be offered to all types of investors, and expert CIUs, which may only be offered to expert investors (as defined in this Module). Retail CIUs are subject to more restrictive investment rules, aimed at protecting the general retail investor. Module CIU also defines a category of exempt CIUs. CIUs that fall under this category are largely exempt from the requirements contained in this Module; however, they may only be offered to a very restricted investor base ('accredited investors'). Additionally, Module ARR addresses the requirements for Bahrain Domiciled Real Estate Investment Trusts (B-REITs). Furthermore, the registration of private investment undertakings (PIUs), which may only be offered to high net worth investors and institutional investors, is subject to the terms and conditions outlined in Module PIU.

                  Amended: October 2016
                  April 2012

                • ES-A.1.6

                  Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs must be authorised by the CBB prior to being offered to investors. Bahrain domiciled exempt CIUs need only register with the CBB before being offered to investors.

                  Amended: July 2017
                  April 2012

                • ES-A.1.7

                  Overseas domiciled retail CIUs and expert CIUs also require CBB authorisation before being offered to investors in the Kingdom of Bahrain. However, for CIUs domiciled in recognised jurisdictions, retail CIUs are required to register with the CBB, and expert CIUs are required to be filed with the CBB, rather than seeking authorisation, on the basis that they have already been adequately vetted in their home jurisdiction. Overseas domiciled exempt CIUs are required to register with the CBB before being offered, except for those domiciled in a recognised jurisdiction, where they need to be filed with the CBB.

                  Amended: July 2015
                  April 2012

                • ES-A.1.8

                  Volume 7 replaces previous circulars and other regulatory instruments relating to CIUs, issued over a number of years (see Rule ES-A.2.4). It updates these previous requirements, which were effectively geared towards the retail investor, and provides for a greater range of CIUs to be offered, through its provisions regarding expert CIUs and exempt CIUs.

                  April 2012

              • Legal Basis

                • ES-A.1.9

                  This Module contains the CBB's Directive (as amended from time to time) relating to transition rules, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). This directive is applicable to all CBB licensees that are relevant persons, as defined in Module RP.

                  April 2012

                • ES-A.1.10

                  Relevant persons that are not CBB licensees (because they are not undertaking regulated services within Bahrain) but whose activities fall within the scope of Volume 7, are also subject to the requirements of Volume 7 with respect to the CIU(s) concerned.

                  April 2012

                • ES-A.1.11

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • ES-A.2 ES-A.2 Module History

              • Evolution of Module

                • ES-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • ES-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • ES-A.2.3

                  A list of recent changes made to this Module subsequent to the [April 2012] revision is provided below:

                  Module Ref. Change Date Description of Changes
                  ES-A.1.7 07/2015 Clarified guidance allowing for filing process for expert CIUs and overseas domiciled exempt CIUs from recognised jurisdictions.
                  ES-A.1.5 10/2016 Amendment to registration of PIUs
                  ES-A.1.6 07/2017 Amended paragraph.
                  ES-1.1.1 07/2017 Deleted 'resident' with respect to investors.

              • Superseded Requirements

                • ES-A.2.4

                  Volume 7 supersedes the requirements contained in Module CIU in Volume 6 (Capital Markets).

                  April 2012

          • ES-1 ES-1 Structure

            • ES-1.1 ES-1.1 Structure of Volume 7 (Collective Investment Undertakings)

              • ES-1.1.1

                The contents of Volume 7 applies to all Collective Investment Undertakings, thereafter referred to in the Module as CIUs, that are:

                (a) Domiciled in the Kingdom of Bahrain (irrespective of the jurisdiction in which they are offered); and
                (b) Domiciled in an overseas jurisdiction, but offered to investors in Bahrain.
                Amended: July 2017
                April 2012

              • ES-1.1.2

                The structure of Volume 7 (Collective Investment Undertakings) is as follows:

                Chapter Heading Type of CIU
                ARR Authorisation/Registration Requirements Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                RP Relevant Persons Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                CG Corporate Governance Bahrain Domiciled CIUs
                LDR Liquidation/De-registration Requirements Bahrain Domiciled CIUs
                BDR Bahrain Domiciled Retail CIUs Bahrain Domiciled Retail CIUs
                BDE Bahrain Domiciled Expert CIUs Bahrain Domiciled Expert CIUs
                BDX Bahrain Domiciled Exempt CIUs Bahrain Domiciled Exempt CIUs
                BRT Bahrain Domiciled Real Estate Investment Trusts (B-REITs) Bahrain Domiciled Expert CIUs
                Bahrain Domiciled Exempt CIUs
                ODC Overseas Domiciled CIUs Overseas Domiciled CIUs
                SCC Sharia Compliant CIUs Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                PIU Private Investment Undertakings (PIUs) Private Investment Undertakings (PIUs)
                CRR CIU Reporting Requirements Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                EN Enforcement Bahrain Domiciled CIUs
                April 2012

          • ES-2 ES-2 Transition Rules

            • ES-2.1 ES-2.1 Implementation by Existing CIUs

              • ES-2.1.1

                All Bahrain domiciled CIUs authorised/registered by the CBB and all overseas domiciled CIUs authorised/registered by the CBB prior to April 2012, are required to meet the provisions of Volume 7 by 31st December 2012.

                April 2012

              • ES-2.1.2

                Where a Bahrain domiciled CIU was structured as a series of separate offerings, before the issuance of Volume 7 in April 2012, such as an umbrella fund with a series of sub-funds, whereby each is a separate offering and financially independent of others established within the same legal vehicle, each sub-fund is to be treated as a separate CIU.

                April 2012

              • ES-2.1.3

                The operator of the Bahrain domiciled CIU in question — together with the directors or trustees of the CIU (as appropriate) — are required to ensure that each sub-fund or separate offering complies with the applicable Rules prescribed in Volume 7.

                April 2012

      • High Level Standards

        • ARR ARR Authorisation / Registration Requirements

          • AU-A AU-A Introduction

            • ARR-A.1 ARR-A.1 Purpose

              • Executive Summary

                • ARR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) approach to authorising, registering and acknowledging filing of CIUs in the Kingdom of Bahrain. It also outlines the CBB fees for CIUs.

                  Amended: July 2015
                  April 2012

              • Legal Basis

                • ARR-A.1.2

                  This Module contains the CBB's Directive and Resolution (as amended from time to time) regarding authorisation, registration and filing requirements applicable to collective investment undertakings and is issued under the powers available to the CBB under Articles 38 and 180 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). Module ARR includes the requirements contained in Resolution No (1) of 1987 with respect to determining fees payable to the CBB by CIUs.

                  Amended: July 2015
                  April 2012

                • ARR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • ARR-A.2 ARR-A.2 Module History

              • Evolution of Module

                • ARR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • ARR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • ARR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  ARR-2.3, ARR-3.3, ARR-4.3 07/2013 Amended due date and collection process for annual fee.
                  ARR-2.3.6, ARR-3.3.6, ARR-4.3.6 10/2013 Amended to allow payment of fee by way of wire transfer.
                  ARR-A.1.1, ARR-A.1.2, ARR-1.1.2, ARR-1.1.6, ARR-1.1.7, ARR-1.1.9, ARR-5.1.2, ARR-5.1.4, ARR-5.2 07/2015 Amended to reflect the process for filing for exempt and expert CIUs.
                  ARR-1.1.2; ARR-1.1.3; ARR-1.1.4; ARR-1.1.6; ARR-5.1.2; ARR-5.1.3 07/2017 Deleted 'resident' with respect to investors.
                  ARR-2.2.4; ARR-3.2.4; ARR-4.2.5 07/2017 Amended paragraphs.
                  ARR-2.2.5; ARR-3.2.5; ARR-4.2.6 07/2017 Amended paragraphs to reflect application validity deadline.
                  ARR-2.2.6; ARR-3.2.6; ARR-4.2.7 07/2017 Deleted paragraphs.
                  ARR-1.1.7, ARR-2.2.1, ARR-3.2.1, ARR-4.2.1, ARR-5.2.5 01/2020 Amended Paragraphs to reflect online forms/applications.

              • Superseded Requirements

                • ARR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • ARR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • ARR-B ARR-B Definitions

            • ARR- B.1 ARR- B.1 Definitions

              • ARR-B.1.1

                Collective investment undertakings ('CIUs') are undertakings:

                (a) The sole object of which is the collective investment of capital raised from the public or through private placement, including investments seeded by the operator, in financial instruments and other assets and which operates on the basis of risk-spreading as appropriate; and
                (b) The holdings of which may be re-purchased or redeemed out of those undertakings' assets, as appropriate.
                April 2012

              • ARR-B.1.2

                For the purposes of this Module, holdings mean the unit of measurement of the beneficial interest of participants in a CIU, by whatever name it is called (including 'units' and, in the case of investment trusts or companies, in the form of shares or units). Each holding (which may be in fractions of a holding) represents a right to the assets of the CIU.

                April 2012

              • ARR-B.1.3

                The definition recognises both open-ended funds and closed-ended funds: unit trusts, investment trusts, mutual funds, SICAV and collective investment schemes are all examples of CIUs. As further specified in Paragraph ARR-B.1.8, CIUs may be constituted under contract law (as common funds managed by management companies); trust law (as unit trusts); or under statute (as investment companies).

                April 2012

              • ARR-B.1.4

                Closed-ended funds are CIUs with a limited number of holdings. Where the fund vehicle is a company, holdings can take the form of shares. New holdings are rarely issued after the fund is launched and are not normally redeemable until the fund is liquidated. Typically, an investor can acquire or dispose of holdings in a closed-ended fund by buying or selling them on a secondary market, from a market intermediary or another investor, rather than by dealing with the CIU itself.

                April 2012

              • ARR-B.1.5

                The following arrangements do not fall within the definition given in Rule ARR-B.1.1 above:

                (a) A contract of insurance, insurance linked investment products or investments managed as part of a takaful contract of insurance;
                (b) Unrestricted investment accounts offered by Islamic bank licensees;
                (c) Restricted investment accounts offered by Islamic bank licensees prior to the effective date of Volume 7;
                (d) Unilateral arrangements to hold or manage assets on a discretionary basis;
                (i) For a licensee to hold or manage assets on a discretionary basis; and
                (ii) To hold or manage assets on behalf of a client on a non-discretionary basis (i.e. at the discretion of the client and not the bank or other licensees).
                (e) Arrangements entirely between bodies corporate who are members of the same group, or entirely between family members;
                (f) Pension, annuity and other employee benefit products, organised and managed for the benefit of employees or for another corporate body, which are governed by separate laws of the Kingdom of Bahrain (e.g. GOSI);
                (g) Structured products;
                (h) Cash savings schemes;
                (i) Special Purpose Vehicles used to issue debt securities; and
                (j) The issue of securities by companies whether publicly or by private placements for the purpose of raising their own capital.
                April 2012

              • ARR-B.1.6

                Where a person is in any doubt as to whether a particular product or structure falls within the definition of a CIU given in Rule ARR-B.1.1, such matter must be referred to the Directorate of Financial Institutions Supervision at the CBB.

                April 2012

              • ARR-B.1.7

                Bahrain domiciled CIUs are undertakings where:

                (a) The legal form of the CIU is established under the laws of the Kingdom of Bahrain; and
                (b) The CIU documents and contractual agreements are governed by the Laws of the Kingdom of Bahrain, unless otherwise agreed with the CBB.
                April 2012

              • ARR-B.1.8

                Bahrain domiciled CIUs may be constituted either as:

                (a) Common CIUs, established under the law of contract;
                (b) Trusts, established under the Financial Trusts Law; or
                (c) Corporates established under the Bahrain Commercial Companies Law.
                April 2012

              • ARR-B.1.9

                Each Bahrain domiciled CIU must have its separate legal vehicle.

                April 2012

              • ARR-B.1.10

                Bahrain domiciled CIUs are classified as retail CIUs, expert CIUs or exempt CIUs. Specific definitions of each classification may be found in this Module.

                April 2012

              • ARR-B.1.11

                Overseas domiciled CIUs are undertakings that are established in and regulated by:

                (a) Recognised jurisdictions listed under Chapter ARR-6; or
                (b) Other jurisdictions acceptable to the CBB.
                April 2012

              • Retail CIUs

                • ARR-B.1.12

                  Retail CIUs are CIUs that may be offered to all types of investors.

                  April 2012

                • ARR-B.1.13

                  The requirements in Volume 7 are framed such that retail CIUs are subject to relatively detailed requirements, including restrictions on the types of financial instruments or other assets that may be held by the CIU, in order to limit risks to the general investor.

                  April 2012

              • Expert CIUs

                • ARR-B.1.14

                  Expert CIUs are CIUs that may be offered only to expert investors, and impose a minimum initial investment of USD10,000 (or its equivalent in any other currency).

                  April 2012

                • ARR-B.1.15

                  Expert CIUs are subject to less restrictive requirements than retail CIUs: specifically, expert CIUs have greater investment flexibility, notably in terms of asset classes and risk concentration limits. They therefore potentially offer higher risks and are only suitable for expert investors, who are better able to assess those risks than less sophisticated investors.

                  April 2012

                • ARR-B.1.16

                  The minimum initial investment requirement specified in Rule ARR-B.1.14 means that the first payment made by an investor into the CIU must be at least USD 10,000 (or its equivalent in any other currency). Subsequent investments may be for smaller amounts.

                  April 2012

                • ARR-B.1.17

                  Expert investors are:

                  (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD100,000 or more;
                  (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD100,000; or
                  (c) Governments, supranational organisations, central banks or other national monetary authorities, local authorities and state organisations.
                  April 2012

              • Exempt CIUs

                • ARR-B.1.18

                  Exempt CIUs are lightly regulated CIUs that may be offered only to accredited investors, and impose a minimum initial investment of USD 100,000 (or its equivalent in any other currency).

                  April 2012

                • ARR-B.1.19

                  Exempt CIUs are only regulated to the extent that:

                  (a) They must be registered with the CBB prior to being offered to investors;
                  (b) May only be offered to accredited investors; and
                  (c) Are subject only to high-level disclosure and reporting requirements.

                  They are not subject to any restrictions on their investment policies, as a result of which they may exhibit high risk characteristics, such as high levels of leverage and the taking of large speculative positions. As such, exempt CIUs may only be offered to a highly restricted investor base (i.e. those defined as accredited investors).

                  April 2012

                • ARR-B.1.20

                  The minimum initial investment requirement specificed in Rule ARR-B.1.18 means that the first investment made by an investor into the CIU must be at least USD 100,000 (or its equivalent in any other currency). Subsequent investments may be for smaller amounts. Subsciptions on commitment basis must be at the least of USD100,000 (or its equivalent in any other currency).

                  April 2012

                • ARR-B.1.21

                  Accredited investors are:

                  (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD1,000,000 or more;
                  (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD1,000,000; or
                  (c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest in financial instruments (such as state pension funds).
                  April 2012

                • ARR-B.1.22

                  Note that the definition of accredited investors, compared to that of expert investors, not only imposes higher liquid asset thresholds, but also prevents local authorities, as well as state organisations whose main activity is not related to investing in financial instruments, from investing in exempt CIUs. Investors that satisfy the definition of accredited investor also satisfy the definition of expert investor.

                  April 2012

          • ARR-1 ARR-1 General Requirements

            • ARR-1.1 ARR-1.1 General Requirements

              • ARR-1.1.1

                No person may establish a Bahrain domiciled CIU, unless the CIU is either authorised or registered, as required under this Module.

                April 2012

              • ARR-1.1.2

                No person may offer CIU holdings to investors in the Kingdom of Bahrain, unless the CIU concerned is either authorised, registered or filed, as required under this Module.

                Amended: July 2017
                Amended: July 2015
                April 2012

              • ARR-1.1.3

                For the purposes of this Module, 'offering' CIU holdings means, by way of business, soliciting investors to purchase holdings, by whatever means. (These may include, but are not limited to, advertising in print or other media, or use of the telephone, face-to-face contact, e-mail or internet). Such activity would be viewed as offering holdings to investors in Bahrain, where it could reasonably be viewed as addressed to investors in Bahrain (e.g. advertising in Bahrain print media, or addressing communications to investors in Bahrain).

                Amended: July 2017
                April 2012

              • ARR-1.1.4

                The activity of offering CIU holdings to investors resident in Bahrain is a regulated activity (that of dealing in financial instruments). As such, it requires the appropriate CBB license to be held (see CBB Rulebook Volumes 1, 2 and 4). It is therefore not possible to offer CIU holdings to investors in Bahrain, on a 'cross-border' basis from outside Bahrain. Where an overseas operator of a CIU wishes to offer an overseas domiciled CIU to investors in Bahrain, they must themselves hold the appropriate CBB license or appoint an appropriate CBB licensee as their distributor.

                Amended: July 2017
                April 2012

              • ARR-1.1.5

                Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs must be authorised by the CBB prior to being established. Bahrain domiciled exempt CIUs are required only to register with the CBB.

                April 2012

              • ARR-1.1.6

                Overseas domiciled CIUs must be authorised by the CBB prior to being offered to investors in the Kingdom of Bahrain, unless they are domiciled in a recognised jurisdiction, in which case retail CIUs are required to register with the CBB, and expert CIUs are required to be filed with the CBB. Overseas domiciled exempt CIUs domiciled in recognised jurisdictions are required to be filed with the CBB, while those domiciled in other jurisdictions are required to be registered with the CBB.

                Amended: July 2017
                Amended: July 2015
                April 2012

              • ARR-1.1.7

                Applicants for authorisation/registration or filing of CIUs must fill in either Application Form 1 (CIU Application Form) or Application Form 3 (ODC Filing Form), as applicable, online on the CBB website under E-services/online Forms. Forms, other than Form 1 and Form 3, must be submitted under cover of a letter signed by an authorised signatory of the applicant, marked for the attention of the Director of Financial Institutions Supervision Directorate of the CBB.

                Amended: January 2020
                Amended: July 2015
                Added: April 2012

              • ARR-1.1.8

                The CBB expects the authorised signatory of the applicant to be the CEO or a person of similar standing.

                April 2012

              • ARR-1.1.9

                Form 1 CIU Application Form and Form 3 ODC Filing Form are available under Authorisation Forms, Part B of Volume 7 (Collective Investment Undertakings) of the CBB Rulebook.

                Amended: July 2015
                April 2012

          • ARR-2 ARR-2 Bahrain Domiciled Retail CIUs

            • ARR-2.1 ARR-2.1 Authorisation Requirements

              • ARR-2.1.1

                Bahrain domiciled retail CIUs must be authorised by the CBB prior to being offered to investors.

                April 2012

              • ARR-2.1.2

                An application for authorisation may only be made by the operator of the CIU.

                April 2012

              • ARR-2.1.3

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint the CIU's proposed fund administrator/custodian or a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal councel, prior to submision to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification for any issues.

                April 2012

              • ARR-2.1.4

                In the cases where the operator is not a CBB licensee, an application for authorisation under Rule ARR-2.1.1 will only be considered if:

                (a) The operator:
                (i) Is duly authorised to operate similar CIUs in its home jurisdiction;
                (ii) Is supervised by an overseas regulatory authority acceptable to the CBB;
                (iii) Has a sound track record and/or experienced management team;
                (iv) Is financially sound according to home country regulatory requirements; and
                (v) Is a reputable financial institution.
                (b) The operator has identified appropriate institutions licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements; and
                (c) The operator has submitted an acceptably worded undertaking to the CBB, stating that it will abide by the CBB Law and the provisions of Volume 7.
                April 2012

              • ARR-2.1.5

                Operators are expected to maintain the criteria listed in Paragraph ARR-2.1.4 on an ongoing basis. Operators who are CBB licensees are also expected to maintain the applicable criteria listed in Paragraph ARR-2.1.4.

                April 2012

            • ARR-2.2 ARR-2.2 Authorisation Process

              • ARR-2.2.1

                Applicants for authorisation under Rule ARR-2.1.1 must fill in the Application Form 1 (CIU Application Form) online, available on the CBB website under E-services/online Forms. The applicant must upload scanned copies of supporting documents as directed by the CBB.

                Amended: January 2020
                Added: April 2012

              • ARR-2.2.2

                The application for authorisation must identify a representative in their capacity as the person responsible for submitting the application for the CIU. This person must be:

                (a) An officer of the operator of the CIU; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • ARR-2.2.3

                In addition to the operator's contact details, an alternative contact may be provided, such as the the lawyer in-charge of submitting the application.

                April 2012

              • ARR-2.2.4

                The CBB will acknowledge applications made under Rule ARR-2.1.1 within 5 business days of receipt and provide formal feedback on the application within 20 business days of receipt of full set of documents. This feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2017
                April 2012

              • ARR-2.2.5

                The Validity of the application will be for 120 days from the date of the CBB's acknowledgement letter, failing which the CBB reserves the right to cancel the application and request the submission of a new one.

                Amended: July 2017
                April 2012

              • ARR-2.2.6

                [This Paragraph was deleted in July 2017].

                Deleted: July 2017
                April 2012

              • ARR-2.2.7

                If the CBB confirms the application has been satisfactorily completed, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                April 2012

              • Granting of Authorisation

                • ARR.2.2.8

                  To be granted authorisation, an applicant must demonstrate compliance with the applicable requirements of Module BDR of Volume 7. Should an authorisation be granted, the CBB will notify the applicant in writing of the fact. The authorisation may be subject to additional conditions being met.

                  April 2012

                • ARR.2.2.9

                  The CIU must be launched within a period not exceeding 6 months from the date of authorisation.

                  April 2012

                • ARR.2.2.10

                  Subsequent to granting authorisation, the operator is required to submit the following:

                  (a) The final prospectus (and simplified prospectus, if applicable) together with all the signed contractual agreements of the CIU, and the authenticated Memorandum and Articles of Association of the fund company (if applicable), or any other constitutional documents, within one month from the date of authorisation; and
                  (b) A written confirmation to the CBB stating that the CIU has been launched, within a period not exceeding 6 months from the date of authorisation.
                  April 2012

                • ARR.2.2.11

                  Should for any reason the CIU not be launched within the specified timeframe of 6 months, the operator must seek the CBB's approval for an extension to launch the CIU and confirm in writing to the CBB once the CIU is launched.

                  April 2012

                • ARR.2.2.12

                  The CBB will normally only exempt a CIU from the above 6 months rule if exceptional unforeseen circumstances have intervened and delayed the start of the CIU's operations, (for instance, due to a sudden downturn in markets), provided that this would not prejudice the interests of potential investors.

                  April 2012

              • Refusal of Authorisation

                • ARR.2.2.13

                  The CBB may refuse to grant authorisation if in its opinion:

                  (a) The requirements of this Module are not met;
                  (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  April 2012

                • ARR.2.2.14

                  Where the CBB proposes to refuse an application for authorisation, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision. The application for appeal must be made to an Executive Director or more senior official of the CBB.

                  April 2012

            • ARR-2.3 ARR-2.3 CBB Fees

              • Application Fees

                • ARR-2.3.1

                  Each application for authorisation made under Rule ARR-2.1.1 must be accompanied by a non-refundable BD 100 processing fee at the time of submitting the formal application to the CBB.

                  April 2012

              • Annual Fees

                • ARR-2.3.2

                  Each Bahrain domiciled retail CIU authorised by the CBB is subject to an annual fee of BD 2,000. In the case of umbrella funds, each sub-fund is also charged BD 2,000 a year. The fee is payable on the 15th January of the year for which the annual fee is due.

                  Amended: July 2013
                  April 2012

                • ARR-2.3.3

                  For newly authorised CIUs, the first annual license fee is payable when the authorisation letter is issued by the CBB. The amount payable is the annual fee of BD 2,000 on a monthly prorata basis as determined by the CBB.

                  April 2012

                • ARR-2.3.4

                  Where authorisation is revoked, (whether at the initiative of the operator or the CBB), no refund will be paid for any months remaining in the calendar year in question.

                  April 2012

                • ARR-2.3.5

                  All annual fees are collected by direct debit and all operators/trustees of CIUs must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • ARR-2.3.6

                  If a CIU or newly established CIU does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the CIU.

                  Added: October 2013

          • ARR-3 ARR-3 Bahrain Domiciled Expert CIUs

            • ARR-3.1 ARR-3.1 Authorisation Requirements

              • ARR-3.1.1

                Bahrain domiciled expert CIUs must be authorised by the CBB prior to being offered to investors.

                April 2012

              • ARR-3.1.2

                An application for authorisation may only be made by the operator of the CIU.

                April 2012

              • ARR-3.1.3

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint the CIU's proposed fund administrator/custodian or a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal councel prior to submission to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification for any issues.

                April 2012

              • ARR-3.1.4

                In cases where the operator is not a CBB licensee, an application for authorisation under Rule ARR-3.1.1 will only be considered if:

                (a) The operator:
                (i) Is duly authorised to operate similar CIUs in its home jurisdiction;
                (ii) Is supervised by an overseas regulatory authority acceptable to the CBB;
                (iii) Has a sound track record and/or experienced management team;
                (iv) Is financially sound according to its home regulatory requirements; and
                (v) Is a reputable financial institution.
                (b) The operator has identified appropriate institutions licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements; and
                (c) The operator has submitted an acceptably worded undertaking to the CBB, stating that it will abide by the CBB Law and the provisions of this Module.
                April 2012

              • ARR-3.1.5

                Operators are expected to maintain the criteria listed in Paragraph ARR-3.1.4 on an ongoing basis. Operators who are CBB licensees are also expected to maintain the applicable criteria listed in Paragraph ARR-3.1.4.

                April 2012

            • ARR-3.2 ARR-3.2 Authorisation Process

              • ARR-3.2.1

                Applicants for authorisation under Rule ARR-3.1.1 must fill in the Application Form 1 (CIU Application Form) online, available on the CBB website under E-services/online Forms. The applicant must upload scanned copies of supporting documents as directed by the CBB.

                Amended: January 2020
                Added: April 2012

              • ARR-3.2.2

                The application for authorisation must identify a representative in their capacity as the person responsible for submitting the application for the CIU. This person must be:

                (a) An officer of the operator of the CIU; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • ARR-3.2.3

                In addition to the operator's contact details, an alternative contact may be provided, such as the lawyer in-charge of submitting the application.

                April 2012

              • ARR-3.2.4

                The CBB will acknowledge applications made under Rule ARR-3.1.1 within 5 business days of receipt and provide formal feedback on the application within 20 business days of receipt of full set of documents. This feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2017
                April 2012

              • ARR-3.2.5

                The Validity of the application will be for 120 days from the date of the CBB's acknowledgement letter, failing which the CBB reserves the right to cancel the application and request the submission of a new one.

                Amended: July 2017
                April 2012

              • ARR-3.2.6

                [This Paragraph was deleted in July 2017].

                Deleted: July 2017
                April 2012

              • ARR-3.2.7

                If the CBB confirms the application to be satisfactorily completed, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                April 2012

              • Granting of Authorisation

                • ARR-3.2.8

                  To be granted authorisation, an applicant must demonstrate compliance with the applicable requirements in Module BDE of Volume 7. Should authorisation be granted, the CBB will notify the applicant in writing of the fact. The authorisation may be subject to additional conditions being met.

                  April 2012

                • ARR-3.2.9

                  The CIU must be launched within a period not exceeding six months from the date of authorisation.

                  April 2012

                • ARR-3.2.10

                  Subsequent to granting authorisation, the operator is required to submit the following:

                  (a) The final prospectus (and simplified prospectus, if applicable) together with the all signed contractual agreements of the CIU, and the authenticated Memorandum and Articles of Association of the fund company (if applicable), or any other constitutional documents, within one month from the date of authorisation; and
                  (b) A written confirmation to the CBB stating that the CIU has been launched, within a period not exceeding 6 months from the date of authorisation.
                  April 2012

                • ARR-3.2.11

                  Should for any reason the CIU not be launched within the specified timeframe of 6 months, the operator must seek the CBB's approval for an extension to launch the CIU and confirm in writing to the CBB once the CIU is launched.

                  April 2012

                • ARR-3.2.12

                  The CBB will normally only exempt a CIU from the above 6 months rule if exceptional unforeseen circumstances have intervened and delayed the start of the CIU's operations, (for instance, due to a sudden downturn in markets), provided that this would not prejudice the interests of potential investors.

                  April 2012

              • Refusal of Authorisation

                • ARR-3.2.13

                  The CBB may refuse to grant authorisation if in its opinion:

                  (a) The requirements of this Module are not met;
                  (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  April 2012

                • ARR-3.2.14

                  Where the CBB proposes to refuse an application for authorisation, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision. The application for appeal must be made to an Executive Director or more senior official of the CBB.

                  April 2012

            • ARR-3.3 ARR-3.3 CBB Fees

              • Application Fees

                • ARR-3.3.1

                  Each application for authorisation made under Rule ARR-3.1.1 must be accompanied by a non-refundable BD100 processing fee at the time of submitting the formal application to the CBB.

                  April 2012

              • Annual Fees

                • ARR-3.3.2

                  Each Bahrain domiciled expert CIU authorised by CBB is subject to an annual fee of BD2,000. In the case of umbrella funds, each sub-fund is also charged BD2,000 a year. The fee is payable on the 15th January of the year for which the annual fee is due.

                  Amended: July 2013
                  April 2012

                • ARR-3.3.3

                  For newly authorised CIUs, the first annual license fee is payable when the authorisation letter is issued by the CBB. The amount payable is the annual fee of BD2,000 on a monthly prorata basis as determined by the CBB.

                  April 2012

                • ARR-3.3.4

                  Where authorisation is revoked, (whether at the initiative of the operator or the CBB), no refund is paid for any months remaining in the calendar year in question.

                  April 2012

                • ARR-3.3.5

                  All annual fees are collected by direct debit and all operators/trustees of CIUs must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • ARR-3.3.6

                  If a CIU or newly established CIU does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the CIU.

                  Added: October 2013

          • ARR-4 ARR-4 Bahrain Domiciled Exempt CIUs

            • ARR-4.1 ARR-4.1 Registration Requirements

              • ARR-4.1.1

                Bahrain domiciled exempt CIUs must be registered with the CBB prior to their being offered to investors.

                April 2012

              • ARR-4.1.2

                Bahrain domiciled exempt CIUs are not subject to the CBB's authorisation or on-going supervisory requirements. The registration requirement is to allow the CBB to monitor developments in the financial services sector.

                April 2012

              • ARR-4.1.3

                An application for registration may only be made by the operator of the CIU.

                April 2012

              • ARR-4.1.4

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint the CIU's proposed fund administrator/custodian or a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal councel prior to submision to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the registration process, when seeking clarification of any issues.

                April 2012

              • ARR-4.1.5

                In cases where the operator is not a CBB licensee, an application for registration under Rule ARR-4.1.1 will only be considered, if:

                (a) The operator:
                (i) Is duly authorised to operate similar CIUs in its home jurisdiction (if applicable);
                (ii) Is supervised by an overseas regulatory authority acceptable to the CBB (if applicable);
                (iii) Has a sound track record and/or experienced management team;
                (iv) Is financially sound according to its home regulatory requirements; and
                (v) Is a reputable financial institution.
                (b) The operator has identified appropriate institutions licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements contained in this Module; and
                (c) The operator has submitted an acceptably worded undertaking to the CBB, stating that it will abide by the CBB Law and the provisions of this Module (if applicable).
                April 2012

              • ARR-4.1.6

                Operators are expected to maintain the criteria listed in Paragraph ARR-4.1.5 on an ongoing basis. Operators who are CBB licensees are also expected to maintain the applicable criteria listed in Paragraph ARR-4.1.5.

                April 2012

            • ARR-4.2 ARR-4.2 Registration Process

              • ARR-4.2.1

                Applicants for registration under Rule ARR-4.1.1 must fill in the Application Form 1 (CIU Application Form) online, available on the CBB website under E-services/online Forms. The applicant must upload scanned copies of supporting documents as directed by the CBB.

                Amended: January 2020
                Added: April 2012

              • ARR-4.2.2

                The application for registration must identify a representative in their capacity as the person responsible for submitting the application for the CIU. This person must be:

                (a) An officer of the operator of the CIU; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • ARR-4.2.3

                In addition to the operator's contact details, an alternative contact may be provided, such as the lawyer in-charge of submitting the application.

                April 2012

              • ARR-4.2.4

                The CBB's review of applications for registration are mainly limited to satisfying itself that the exemption conditions specified in the Bahrain domiciled exempt CIUs Chapter of this Module are likely to be complied with. CBB does not review the proposed structure or operations in detail, although it reserves the right to seek appropriate confirmations or additional information from the applicant.

                April 2012

              • ARR-4.2.5

                The CBB will acknowledge applications made under Rule ARR-4.1.1 within 5 business days of receipt and provide formal feedback on the application within 15 business days of receipt of full set of documents. This feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2017
                April 2012

              • ARR-4.2.6

                The Validity of the application will be for 120 days from the date of the CBB's acknowledgement letter, failing which the CBB reserves the right to cancel the application and request the submission of a new one.

                Amended: July 2017
                April 2012

              • ARR-4.2.7

                [This Paragraph was deleted in July 2017].

                Deleted: July 2017
                April 2012

              • ARR-4.2.8

                If the CBB confirms the application to be satisfactorily completed, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                April 2012

              • Granting of Registration

                • ARR-4.2.9

                  To be registered, an applicant must demonstrate compliance with the exemption conditions specified in Module BDX of Volume 7. Should the application for registration be accepted, the CBB will notify the applicant in writing of the fact. The registration may be subject to additional conditions being met.

                  April 2012

                • ARR-4.2.10

                  The CIU must be launched within a period not exceeding six months from the date of registration.

                  April 2012

                • ARR-4.2.11

                  Subsequent to registration, the operator is required to submit the following:

                  (a) The final prospectus (and simplified prospectus, if applicable) together with all the signed contractual agreements of the CIU, and the authenticated Memorandum and Articles of Association of the fund company (if applicable), or any other constitutional documents, within one month from the date of registration; and
                  (b) A written confirmation to the CBB stating that the CIU has been launched, within a period not exceeding 6 months from the date of registration.
                  April 2012

                • ARR-4.2.12

                  Should for any reason the CIU not be launched within the specified timeframe of 6 months, the operator must seek the CBB's approval for an extension to launch the CIU and confirm in writing to the CBB once the CIU is launched.

                  April 2012

                • ARR-4.2.13

                  The CBB will normally only exempt a CIU from the above 6 months rule if exceptional unforeseen circumstances have intervened and delayed the start of the CIU's operations, (for instance, due to a sudden downturn in markets), provided that this would not prejudice the interests of potential investors.

                  April 2012

              • Refusal of Registration

                • ARR-4.2.14

                  The CBB may refuse to register a Bahrain domiciled exempt CIU, if in its opinion:

                  (a) The exemption requirements in the Bahrain domiciled exempt CIU Chapter of this Module are unlikely to be met;
                  (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  April 2012

                • ARR-4.2.15

                  Where the CBB proposes to refuse an application for registration, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision. The application for appeal must be made to an Executive Director or more senior official of the CBB.

                  April 2012

            • ARR-4.3 ARR-4.3 CBB Fees

              • Application Fees

                • ARR-4.3.1

                  Each application for registration made under Rule ARR-4.1.1 must be accompanied by a non-refundable BD100 processing fee at the time of submitting the formal application.

                  April 2012

                • ARR-4.3.2

                  Each Bahrain domiciled exempt CIU registered by CBB is subject to an annual fee of BD2,000. In the case of umbrella funds, each sub-fund is also charged BD2,000 a year. The fee is payable on the 15th January of the year for which the annual fee is due.

                  Amended: July 2013
                  April 2012

                • ARR-4.3.3

                  For newly registered CIUs, the first annual license fee is payable when the registration letter is issued by the CBB. The amount payable is the annual fee of BD2,000 on monthly prorata basis as determined by the CBB.

                  April 2012

                • ARR-4.3.4

                  Where the CIU is de-registered, (whether at the initiative of the operator or the CBB), no refund is paid for any months remaining in the calendar year in question.

                  April 2012

                • ARR-4.3.5

                  All annual fees are collected by direct debit and all operators/trustees of CIUs must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • ARR-4.3.6

                  If a CIU or newly established CIU does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the CIU.

                  Added: October 2013

          • ARR-5 ARR-5 Overseas Domiciled CIUs

            • ARR-5.1 ARR-5.1 Classification of Overseas Domiciled CIUs

              • ARR-5.1.1

                The CBB classifies overseas domiciled CIUs as retail, expert or exempt, based on the risk profile of the CIU. As a result of the classification, the CBB may impose a higher minimum investment amount than that prescribed in the offering memorandum.

                April 2012

              • Overseas Domiciled Retail/Expert CIUs

                • ARR-5.1.2

                  Overseas domiciled retail CIUs and Overseas Domiciled expert CIUs, domiciled in a recognised jurisdiction, (see Chapter ARR-6), are required to be registered/filed with the CBB, respectively, prior to being offered to investors in the Kingdom of Bahrain.

                  Amended: July 2017
                  Amended: July 2015
                  April 2012

                • ARR-5.1.3

                  Overseas domiciled retail CIUs and Overseas Domiciled expert CIUs, which are not domiciled in a recognised jurisdiction, (see Chapter ARR-6), must be authorised by the CBB prior to being offered to investors in the Kingdom of Bahrain.

                  Amended: July 2017
                  April 2012

              • Overseas Domiciled Exempt CIUs

                • ARR-5.1.4

                  Overseas domiciled exempt CIUs are required to be registered with the CBB, unless they are domiciled in a recognised jurisdiction, in which case exempt CIUs are only required to be filed with the CBB.

                  Amended: July 2015
                  April 2012

            • ARR-5.2 ARR-5.2 Authorisation, Registration and Filing Process

              • ARR-5.2.1

                Only CBB licensees that are licensed either as conventional bank licensees (Volume 1 of the CBB Rulebook), Islamic bank licensees (Volume 2) or investment firm licensees (Volume 4 — Categories 1 and 2 only), may offer overseas domiciled CIUs in Bahrain.

                April 2012

              • ARR-5.2.2

                Applications for authorisation, registration or filing may only be made by the CBB licensee that is proposing to offer the CIU to investors in Bahrain.

                Amended: July 2015
                April 2012

              • ARR-5.2.3

                In authorising, registering or acknowledging filing of overseas domiciled CIUs which are Shari'a compliant, the CBB expects such CIUs to meet the requirements outlined in Module SCC of Volume 7.

                Amended: July 2015
                April 2012

              • ARR-5.2.4

                Alternatively, the CBB may accept other specific arrangements as having equivalent effect for purposes of Paragraph ARR-5.2.3.

                Amended: July 2015
                April 2012

              • ARR-5.2.5

                Applicants for registration or authorisation of an overseas domiciled CIU must fill in the Application Form 1 (CIU Application Form) online, available on the CBB website under E-services/online Forms. Likewise, an application for filing of an overseas domiciled expert or exempt CIU from a recognised jurisdiction must fill in the Application Form 3 (ODC Filing Form) online, available on the CBB website under E-services/online Forms. The applicants must upload scanned copies of supporting documents as directed by the CBB. 

                Amended: January 2020
                Amended: July 2015
                Added: April 2012

              • ARR-5.2.6

                The application for authorisation, registration or filing must identify a representative in their capacity as the person responsible for submitting the application. This person must be:

                (a) A senior officer at the CBB licensee that is proposing to offer the CIU to investors in Bahrain; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                Amended: July 2015
                April 2012

              • ARR-5.2.7

                The CBB's review of applications for registration is mainly limited to satisfying itself that the applicant satisfies the conditions specified in the relevant Rules pertaining to the category of scheme it falls under (i.e. retail CIU, expert CIU or exempt CIU). This may require seeking confirmation of the CIU's regulatory status from its home regulator, and reviewing the CIU's documentation (such as promotional material and its prospectus). The CBB does not however review the proposed structure or operations in detail, although it reserves the right to seek appropriate confirmations or additional information/documentation from the applicant.

                April 2012

              • ARR-5.2.8

                The CBB's review of applications for authorisation is mainly limited to satisfying itself that the CIU for which authorisation is sought has an equivalent structure to Bahrain domiciled CIUs falling under the same category. The CBB reserves the right to seek appropriate confirmations or additional information/documentations from the applicant.

                April 2012

              • ARR-5.2.8A

                The CBB's review of applications for filing is mainly limited to satisfying itself that the applicant has done its due diligence to ensure the suitability of the CIU to the profile of the targeted investors (i.e. expert or accredited investors). The supporting documents are submitted to the CBB for filing purposes only. The CBB rely solely on the due diligence process undertaken by the applicants, however, the CBB reserves the right to seek appropriate confirmations or additional information/documentation from the applicant.

                Added: July 2015

              • ARR-5.2.9

                The CBB expects the CBB licensee applying for authorisation, registration or filing of an overseas domiciled CIU to satisfy itself that the CIU's operator is a licensed and/or authorised entity eligible to undertake the activity of operating CIUs. The CBB reserves the right to seek information pertaining to the operator's regulatory status, including requesting a copy of its license and/or authorisation.

                Amended: July 2015
                April 2012

              • ARR-5.2.10

                The CBB provides feedback on an authorisation/registration application within 15 business days of the application being received by the CBB. The feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2015
                April 2012

              • ARR-5.2.11

                Should further information/documents be required, then the applicant has 45 calendar days from the date of the CBB's feedback in which to complete the authorisation/registration application, failing which the CBB reserves the right to cancel the application.

                Amended: July 2015
                April 2012

              • ARR-5.2.12

                When all outstanding information/documents are submitted, the CBB will provide a formal feedback on the submitted information/documents within 15 business days of receipt.

                April 2012

              • ARR-5.2.13

                If the CBB confirms the authorisation/registration application to be complete, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                Amended: July 2015
                April 2012

              • ARR-5.2.13A

                The CBB provides feedback on a filing application within 3 business days of the application being received by the CBB. The feedback will confirm whether the application is complete, or whether further information/documents are required.

                Added: July 2015

              • ARR-5.2.13B

                Should further information/documents be required, then the applicant has 5 business days from the date of the CBB's feedback in which to complete the filing application, failing which the CBB reserves the right to cancel the application.

                Added: July 2015

              • ARR-5.2.13C

                When all outstanding information/documents are submitted, the CBB will provide a formal feedback on the submitted information/documents within 3 business days of receipt.

                Added: July 2015

              • ARR-5.2.13D

                If the CBB confirms the filing application to be complete, then the CBB will take a final decision within 2 business days of the CBB's confirmation that the application is complete.

                Added: July 2015

              • Granting of Registration or Authorisation/Acknowledging Filing

                • ARR-5.2.14

                  To be authorised, registered or acknowledged, an applicant must demonstrate that it will comply with the conditions specified in Module ODC of Volume 7 pertaining to the category of scheme it falls under (i.e. retail CIU, expert CIU or exempt CIU). Should the application be accepted, the CBB will notify the applicant in writing of the fact. The authorisation, registration or acknowledgement of filing may be subject to additional conditions being met.

                  Amended: July 2015
                  April 2012

              • Decision to Refuse Authorisation, Registration of Filing

                • ARR-5.2.15

                  The CBB may refuse to authorise, register or acknowledge filing of an overseas domiciled CIU, if in its opinion:

                  (a) The conditions in the relevant Rules (as appropriate) are not met;
                  (b) False or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  Amended: July 2015
                  April 2012

                • ARR-5.2.16

                  Where the CBB proposes to refuse an application for authorisation, registration or filing it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision.

                  Amended: July 2015
                  April 2012

          • ARR-6 ARR-6 Recognised Jurisdictions

            • ARR-6.1 ARR-6.1 Recognised Jurisdictions

              • ARR-6.1.1

                Recognised jurisdictions for the purposes of this Module are:

                Jurisdiction Fund Type
                Australia A retail fund established and registered under the Managed Investment CIU provisions of the Corporations Act (Chapter 5 C) 2001 where the Australian Securities and Investments Commission ('ASIC') has approved the constitution of the CIU.
                Bermuda An "investment fund" authorised by the Bermuda Monetary Authority as defined under section 3 of the Investment Funds Act 2006.
                Canada A mutual fund which has been authorised by any of the 13 respective Canadian provincial regulatory authorities in accordance with National Instrument 81-101 and National Instrument 81-102 issued by the Canadian Securities Administrators (CSA).
                Cayman Islands A mutual fund that is licensed by the Cayman Islands Monetary Authority under the Mutual Funds Law (2003 Revision) and the Mutual Funds (Amendment) Regulations 2006.
                European Economic Area A UCITS compliant fund or CIU, authorised by the relevant EEA State's regulator as a UCITS fund or CIU. EEA Member States are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
                GCC Countries Any fund incorporated in a GCC member state, authorised and supervised by the central bank or other appropriate regulatory authority, to a standard equivalent to those in this Module. GCC Member States (besides Bahrain) are Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
                Guernsey Any authorised CIU (within the meaning of the Collective Investment CIUs (Class A) Rules 2002, as amended by the Collective Investment CIUs (Class A) Rules 2000 (Amendment) Rules 2003), managed in and authorised under the law of Guernsey.
                Ireland The following CIUs, in addition to any UCITs compliant fund or CIU (see EEA Member States above): non-UCIT funds licensed by the Financial Regulator under the Investment Funds, Companies and Miscellaneous Provisions Act 2005.
                Isle of Man Any CIU which is an authorised CIU within the meaning of the Financial Supervision Act 1988 (an Act of Tynwald) (as last amended by the Corporate Service Providers Act 2000), where the CIU is managed in and authorised under the law of the Isle of Man.
                Jersey Any CIU which is a recognised fund within the meaning of the Collective Investment Funds (Recognised Funds) (Rules) (Jersey) Order 2003, managed in and authorised under the law of Jersey.
                Luxembourg The following CIUs, in addition to any UCITs compliant fund or CIU (see EEA Member States above): (a) Undertaking for Collective Investments (UCIs) as registered under Part II of the Law of 1988 Relating to Undertakings for Collective Investment; and (b) Funds registered under the Law Of 13th February, 2007 Relating To Specialised Investment Funds.
                New Zealand A unit trust authorised under the Unit Trusts Act 1960 and in accordance with the interpretation of section 2 of that act.
                Singapore A collective investment CIU authorised by the Monetary Authority of Singapore under section 286 of the Securities and Futures Act, and whose units may be offered to the general public.
                South Africa A collective investment CIU which is registered with the Financial Services Board under the Collective Investment CIUs Control Act (Act 45 of 2002) of 2002 ("CISCA").
                Switzerland A securities fund which corresponds to a UCITs fund in accordance with the Swiss Investment Fund Act and where the manager is licensed by the Swiss Federal Banking Commission.
                United Kingdom The following CIUs, in addition to any UCITs compliant fund or CIU (see EEA Member States above):
                (a) Unit trust CIUs authorised under section 243 of the Financial Services and Markets Act 2000 (FSMA), authorised open ended investment companies incorporated by virtue of regulations made under section 262 of FSMA in respect of which an authorisation order is in force; and
                (b) Authorised Qualified Investor CIUs whether in the form of a unit trust or an investment company with variable capital.
                United States of America A collective investment CIU registered under the Investment Company Act of 1940, which has also registered the offering of its securities under the Securities Act of 1933 and where the registration statement has become effective in accordance with the Securities and Exchange Commission's Regulations and the Operator is registered with the SEC.
                April 2012

        • RP RP Relevant Persons

          • RP-A RP-A Introduction

            • RP-A.1 RP-A.1 Purpose

              • Executive Summary

                • RP-A.1.1

                  This Module sets out the requirements of the Central Bank of Bahrain's (CBB) with respect to the combination, appointment and responsibilities of Relevant Persons to CIUs.

                  April 2012

              • Legal Basis

                • RP-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding relevant persons under Volume 7 of the CBB Rulebook. It is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). This Directive is applicable to all CBB licensees that are relevant persons.

                  April 2012

                • RP-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • RP-A.2 RP-A.2 Module History

              • Evolution of Module

                • RP-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • RP-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • RP-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  RP-12.4.1 07/2015 Amended to reflect the process for filing for exempt and expert CIUs.
                  RP-12.6.2 07/2015 Added requirement for placement agent to retain supporting documentation ensuring suitability of the CIU for the targeted category of investors.
                  RP-3.6.5 10/2016 This paragraph has been deleted in October 2016.
                  RP-1.1.1; RP-1.3.7; RP-12.1.1; RP-12.2.1 07/2017 Deleted 'resident' with respect to investors.
                  RP-1.2.4 01/2020 Amended Paragraph.

              • Superseded Requirements

                • RP-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • RP-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • RP-1 RP-1 Appointment of Relevant Persons

            • RP-1.1 RP-1.1 General Requirements

              • RP-1.1.1

                A relevant person for the purpose of Volume 7, is the:

                (a) Operator;
                (b) Trustee (if applicable);
                (c) Fund Manager;
                (d) Custodian;
                (e) Fund Administrator;
                (f) Registrar/Transfer Agent;
                (g) Placement Agent;
                (h) Investment Advisor (if applicable);
                (i) External Auditor; and
                (j) CBB Licensee acting as a Placement Agent offering overseas domiciled CIU holdings to investors in the Kingdom of Bahrain.
                Amended: July 2017
                April 2012

              • RP-1.1.2

                Throughout this Module, reference to relevant persons (a) to (i) is made in relation to Bahrain domiciled CIUs. Reference to relevant person (j) is made in relation to overseas domiciled CIUs; however, the CBB expects overseas domiciled CIUs to have in place relevant persons similar to (a) to (i) appointed in their home jurisdiction.

                April 2012

              • Combination of Relevant Persons

                • RP-1.1.3

                  Where relevant persons functions are combined and the CIU is structured as a Common CIU or Corporate, the following combination of relevant persons must be observed:

                  Relevant Person Operator Fund Manager Custodian Fund Admin. Registrar/Transfer Agent Placement Agent Inv. Advisor External Auditor
                    (a) (c) (d) (e) (f) (g) (h) (I)
                  Operator   yes no no no yes yes no
                  Fund Manager yes   no no no yes no no
                  Custodian no no   yes yes no no no
                  Fund Admin. no no yes   yes no no no
                  Registrar/Transfer Agent no no yes yes   no no no
                  Placement Agent yes yes no no no   yes no
                  Investment Advisor yes no no no no yes   no
                  External Auditor no no no no no no no  
                  April 2012

                • RP-1.1.4

                  Where relevant persons functions are combined and the CIU is structured as a trust, the following combination of relevant persons must be observed:

                  Relevant Person Trustee Fund Manager Custodian Fund Admin. Registrar/Transfer Agent Placement Agent Inv. Advisor External Auditor
                    (b) (c) (d) (e) (f) (g) (h) (i)
                  Trustee   no yes yes yes no no no
                  Fund Manager no   no no no yes no no
                  Custodian yes no   yes yes no no no
                  Fund Admin. yes no yes   yes no no no
                  Registrar/Transfer Agent yes no yes yes   no no no
                  Placement Agent no yes no no no   yes no
                  Investment Advisor no no no no no yes   no
                  External Auditor no no no no no no no  
                  April 2012

                • RP-1.1.5

                  In applying Rules RP-1.1.3 and RP-1.1.4 above, relevant persons who are related parties or from the same group will not be considered independent from each other, and as such will not be permitted to act in the capacity intended.

                  April 2012

                • RP-1.1.6

                  Bahrain domiciled CIUs must appoint separate entities to act as each of the relevant persons listed under Rule RP-1.1.1, as appropriate.

                  April 2012

                • RP-1.1.7

                  The appointment of relevant persons (a), (c), (d), (e), (f), (g) and (i) is mandatory for Bahrain domiciled CIUs. In the case of CIUs structured as trusts, the appointment of relevant person (b) in place of (a) is mandatory in addition to (c), (d), (e), (f), (g) and (i). The appointment of relevant person (h) is optional for all Bahrain domiciled CIUs.

                  April 2012

            • RP-1.2 RP-1.2 Operator/Trustee

              • RP-1.2.1

                The initial appointment of the operator/trustee of a Bahrain domiciled CIU will be approved by the CBB as part of the process of authorisation/registration outlined in Module ARR.

                April 2012

              • RP-1.2.2

                The list of documents required to be submitted along with the initial appointment are listed in Form 1 CIU Application Form.

                April 2012

              • RP-1.2.3

                Termination of the approved operator/trustee is not permitted by the CBB, without obtaining for the proposed replacement, the necessary prior written approval of the CBB and submitting the documents listed under Rule RP-1.2.4.

                April 2012

              • RP-1.2.4

                The documents that must be submitted to the CBB in support of an application for a subsequent appointment of an operator/trustee include, but are not limited to, the following:

                (a) Board Resolutions from the BODs of the existing and proposed operator/trustee satisfying the Rule RP-1.2.3;
                (b) A copy of the license certificate of the proposed operator/trustee (if a non CBB Licensee);
                (c) A 'no-objection' letter from the home regulatory authority of the proposed operator/trustee (if a non CBB Licensee);
                (d) The audited financial statements of the proposed operator/trustee for the last 3 years (if a non CBB Licensee); and
                (e) A Form 1 CIU Application form, duly completed by the proposed operator/trustee.
                Amended: January 2020
                Added: April 2012

            • RP-1.3 RP-1.3 Other Relevant Persons

              • RP-1.3.1

                All relevant persons of a Bahrain domiciled CIU must be appointed by the operator/trustee of the CIU, after it conducts an assessment and is satisfied as to the suitablitly of the relevant person to undertake that role, prior to entering into an agreement with the operator/trustee of the CIU.

                April 2012

              • RP-1.3.2

                The CBB will consider the suitability of the relevant persons of a CIU initially, as part of the registration/authorisation process.

                April 2012

              • RP-1.3.3

                The list of documents required to be submitted along with the initial appointment are listed in Form 1 CIU Application Form.

                April 2012

              • RP-1.3.4

                Appointments subsequent to granting authorisation of a Bahrain domiciled retail CIU or Bahrain domiciled expert CIU must be approved by the CBB, prior to the termination of the agreement with the existing relevant person.

                April 2012

              • RP-1.3.5

                The documents that must be submitted to the CBB in support of an application for a subsequent appointment of a relevant person include, but are not limited, to the following:

                (a) A Board Resolution from the BOD of the CIU approving the appointment;
                (b) The draft contractual agreement with the relevant person;
                (c) The draft amendment to the prospectus;
                (d) A copy of license certificate for non-CBB licensee relevant persons; and
                (e) The audited financial statements for the last 3 years for the fund manager only, in case the fund manager is a non-CBB licensee.
                April 2012

              • RP-1.3.6

                Appointments subsequent to granting approval for registration of a Bahrain domiciled exempt CIU must be notified to the CBB 3 months prior to the effective termination date of the agreement with the existing relevant person.

                April 2012

              • RP-1.3.7

                Overseas domiciled CIUs must appoint an eligible CBB licensee to offer their holdings to prospective investors in Bahrain.

                Amended: July 2017
                April 2012

          • RP-2 RP-2 Market Conduct of Relevant Persons

            • RP-2.1 RP-2.1 General Requirements

              • RP-2.1.1

                Relevant persons must maintain proper standards of market conduct, in relation to their role with respect to a CIU, in addition to any applicable legal and regulatory requirements, such as those imposed on them by virtue of their license and/or authorisation.

                April 2012

              • RP-2.1.2

                To demonstrate compliance with Rule RP-2.1.1 above, relevant persons must, in relation to their role with respect to a CIU:

                (a) Observe high standards of integrity and fair dealing, including being honest and straightforward in their dealings with clients;
                (b) Take all reasonable steps to identify, and prevent or manage, potential or actual conflicts of interest that could harm the interests of CIU participants (such steps must include, wherever appropriate, declaring such conflicts);
                (c) Act with due skill, care and diligence;
                (d) Act impartially and refrain from any action which may be to the advantage of one CIU and/or its participants, at the expense of another CIU and/or its participants;
                (e) Observe in full any obligations of confidentiality, including with respect to client information. This requirement does not override lawful disclosures;
                (f) Observe proper standards of market conduct, and avoid action that would generally be viewed as improper;
                (g) Take reasonable care to safeguard the assets of the CIU for which they are responsible, and ensure that those assets are kept separate from their own assets and are separately identifiable from the assets of other CIUs with which they are involved;
                (h) Pay due regard to the legitimate interests and information needs of the clients and communicate with them in a fair and transparent manner;
                (i) Act in an open and co-operative manner with the CBB and other regulatory/supervisory bodies under whose authority they come under. They should take reasonable care to ensure that their activities comply with the requirements of Volume 7, all applicable Laws and Regulations (including the Commercial Companies Law), the prospectus of the CIU, and the provisions of the contractual agreements signed with the CIU;
                (j) Take all reasonable steps to rectify any failure to comply with the obligations specified in Sup-paragraph (i), and to notify the CBB of such a breach as soon as it becomes aware of the fact;
                (k) Maintain adequate human, financial and other resources sufficient to run the CIU in an orderly manner;
                (l) Keep accurate accounts and records for each CIU for which it holds assets;
                (m) Take reasonable care to ensure that their affairs are managed effectively and responsibly, with appropriate systems and controls in relation to the size and complexity of their operations. Their systems and controls, as far as is reasonably practical, should also be sufficient to manage the level of risk inherent in their business; and
                (n) Ensure that when outsourcing functions, such outsourcing is properly controlled and that ultimate responsibility for the proper discharge of those functions is retained by the relevant person concerned.
                April 2012

              • RP-2.1.3

                Bahrain domiciled CIUs must, in their terms of engagement with all relevant persons, provide for them to report to the CBB in writing without delay, if they become aware of any of the following:

                (a) The information provided to the CIU's participants or the CBB does not truly reflect the financial situation of the CIU;
                (b) There has been a material breach of the requirements of this Volume 7, the CIU documents, or any directions issued by the CBB;
                (c) There exist circumstances that may materially affect the ability of the CIU to fulfill its obligations to the CIU participants;
                (d) There are material defects in the financial systems, controls or accounting records of the CIU;
                (e) There are material inaccuracies in any reporting provided to the CBB; or
                (f) In the case of the external auditor, if they are likely to qualify any opinion they are to provide in relation to the financial statements of the CIU.
                April 2012

              • RP-2.1.4

                A relevant person of a Bahrain domiciled CIU is presumed by the CBB to be liable for losses suffered by a participant because of that relevant person's unjustifiable failure to perform their/its obligations required under the CIU documents or Volume 7. CBB rules do not permit relevant persons to rely on disclaimers (written or otherwise) that have the effect of restricting their liability beyond what is reasonable and customary in the fund management industry

                April 2012

              • RP-2.1.5

                All relevant persons of Bahrain domiciled CIUs must act in an open and co-operative manner with the CBB and provide it with any information/documentation upon the CBB's request.

                April 2012

          • RP-3 RP-3 Operator

            • RP-3.1 RP-3.1 Definition

              • RP-3.1.1

                An operator of a CIU is the person undertaking the functions of establishing, operating, including full oversight of the corporate governance on the CIU, or winding up of a CIU.

                April 2012

            • RP-3.2 RP-3.2 Required Country of Domicile

              • RP-3.2.1

                Operators must be domiciled in a reputable jurisdiction acceptable to the CBB.

                April 2012

              • RP-3.2.2

                In the case that the operator is not a CBB licensee, it must appoint a locally domiciled CIU representative, being the custodian or the fund administrator, to act as a liaison with the CBB and the CIU participants. Such appointment must be stated in the prospectus.

                April 2012

            • RP-3.3 RP-3.3 Required Type of License

              • RP-3.3.1

                The operator of a Bahrain domiciled CIU must be acceptable to the CBB.

                April 2012

              • RP-3.3.2

                Operators must hold an appropriate license from the CBB or from a regulatory authority, acceptable to the CBB and permitting the entity to establish and operate CIUs.

                April 2012

            • RP-3.4 RP-3.4 Duties

              • RP-3.4.1

                The minimum duties of operators of CIUs authorised or registered under Module ARR, which must be executed through the appointed Board of the CIU, as appropriate, include but are not limited to the following:

                (a) Take all steps as may reasonably be required for the purposes of registering/authorising, establishing, operating and winding up the CIU;
                (b) Maintain all the documents pertaining to the CIU, consistent, current and updated, in line with applicable laws and regulations, and as approved by or notified to the CBB, as appropriate;
                (c) Make available to the CIU participants, on a prompt basis, copies of the following documents, including but not limited to:
                (i) The instrument;
                (ii) The prospectus or equivalent document;
                (iii) All contractual agreements related to the CIU; and
                (iv) All annual and semi-annual financial reports issued by the CIU.
                (d) Ensure compliance of the CIU with the requirements of Volume 7, the instrument constituting the CIU, and its prospectus;
                (e) Take all reasonable steps to rectify any failure to comply with the obligations specified above, and to notify the CBB of any breach as soon as it becomes aware of the fact;
                (f) Not withdraw as operator of the CIU except upon the appointment of a new operator and subject to the prior approval of the CBB;
                (g) Ensure compliance of the relevant persons with the terms and conditions of the contractual agreements signed with the CIU;
                (h) Ensure that all applicable anti-money laundering laws are complied with;
                (i) Liaise with the CBB as necessary from time to time for the purposes of its general oversight of the CIU;
                (j) Be diligent in appointing directors who are fit and proper and approved by the CBB;
                (k) Ensure that proper corporate governance is in place for the CIU in line with Module CG;
                (l) Avoid any conflict of interest in all aspects and address any conflict of interest among the other relevant persons to the CIU;
                (m) Consider whether CIU participants should be given voting and/or other participatory rights; and
                (n) Ensure that all reports submitted to the CBB and CIU participants, by relevant persons are accurate and submitted on a timely basis. Such reports include but are not limited to:
                (i) The semi-annual and annual financial statements of the CIU(s) for each financial year;
                (ii) In case of CIUs structured as corporate/contractual, the annual financial statements of the fund company(ies) for each financial year; and
                (iii) Form CIU (QS), Quarterly Statistical Return.
                April 2012

            • RP-3.5 RP-3.5 Reporting Requirements

              • RP-3.5.1

                The operator of a Bahrain domiciled CIU is responsible for all reporting requirements to the CBB and to other parties, as required in Module CRR. Such reporting requirements include but are not limited to:

                (a) Reporting any breach to the requirements of Volume 7, the CIU documents, or any directions issued by the CBB; and
                (b) Reporting any material amendments to the CIU documents on a timely basis.
                April 2012

            • RP-3-6 RP-3-6 Other Requirements

              • RP-3.6.1

                Operators must promptly provide the CBB, upon request, with any additional information relevant to the CIU.

                April 2012

              • RP-3.6.2

                Operators of Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs must obtain the CBB's prior written approval for any additional investment in the CIU, other than the seed capital prescribed in the prospectus.

                April 2012

              • RP-3.6.3

                Operators of Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs who have introduced seed capital/investment into a CIU authorised under Module ARR must not seek partial redemption, full redemption or buy back the seed capital/investment without the prior written approval of the CBB.

                April 2012

              • RP-3.6.4

                Operators of Bahrain domiciled exempt CIUs must notify the CBB prior to committing to any additional investment in the CIU, other than the seed capital prescribed in the prospectus.

                April 2012

              • RP-3.6.5

                [This Paragraph has been deleted in October 2016].

                Deleted: October 2016
                April 2012

              • RP-3.6.6

                Operators of Bahrain domiciled exempt CIUs must keep the seed capital/investment invested in the CIU for at least a one year period, prior to seeking redemption of the same. In case of Bahrain domiciled exempt CIUs with no redemption windows, the invested seed capital/investment must be maintained for the duration of the CIU.

                April 2012

              • RP-3.6.7

                Operators of Bahrain domiciled exempt CIUs who have introduced seed capital/investment into a CIU registered under Module ARR must not seek partial redemption, full redemption or buy back the seed capital/investment without the prior written notification to the CBB.

                April 2012

              • RP-3.6.8

                Operators of Bahrain domiciled CIUs who have made investments into a CIU, other than the investment prescribed in the prospectus, or have partially redeemed, fully redeemed or bought back the seed capital/investment, must notify CIU participants of the fact, on a timely basis.

                April 2012

              • RP-3.6.9

                Operators of Bahrain domiciled CIUs must seek CBB's prior approval as soon as reasonably practicable as to any intention to merge, transfer or wind-up a CIU.

                April 2012

              • RP-3.6.10

                Operators of Bahrain domiciled CIUs must notify the CBB immediately upon deciding to suspend / resume dealings in a CIU.

                April 2012

          • RP-4 RP-4 Trustee

            • RP-4.1 RP-4.1 Definition

              • RP-4.1.1

                The trustee is the entity to whom the legal title of the trust property/assets is transferred to, in order for the trustee to exercise the duties and powers specified in the trust instrument with a view to achieving the purpose of the trust and protecting the rights of the investors.

                April 2012

            • RP-4.2 RP-4.2 Required Country of Domicile

              • RP-4.2.1

                The trustee must be domiciled in the Kingdom of Bahrain.

                April 2012

            • RP-4.3 RP-4.3 Required Type of License

              • RP-4.3.1

                Trustees must hold an appropriate Trust Service Providers License from the CBB under CBB Rulebook Volume 5, or CBB Rulebook Volumes 1, 2 or Volume 4 provided that they have specific approval from the CBB to undertake such activity.

                April 2012

              • Form of Appointment

                • RP-4.3.2

                  The agreement appointing the trustee must be in the form of a Trust Deed/Instrument.

                  April 2012

            • RP-4.4 RP-4.4 Duties

              • RP-4.4.1

                The minimum duties of trustees of CIUs authorised or registered under Module ARR include but are not limited to the following:

                (a) Take all steps as may reasonably be required for the purposes of registering/authorising, establishing, operating and winding up the CIU;
                (b) Maintain all the documents pertaining to the CIU, consistent, current and updated, in line with applicable laws and regulations, and as approved by or notified to the CBB, as appropriate;
                (c) Make available to the CIU participants, on prompt basis, copies of the following documents, including but not limited to:
                (i) The instrument;
                (ii) The prospectus or equivalent document;
                (iii) All contractual agreements related to the CIU; and
                (iv) All annual and semi-annual financial reports issued by the CIU;
                (d) Ensure compliance of the CIU with the requirements of Volume 7, the instrument constituting the CIU, and its prospectus;
                (e) Take all reasonable steps to rectify any failure to comply with the obligations specified above, and to notify the CBB of any breach as soon as it becomes aware of the fact;
                (f) Not withdraw as trustee of the CIU except upon the appointment of a new trustee and subject to the prior approval of the CBB;
                (g) Ensure compliance of the relevant persons with the terms and conditions of the contractual agreements signed with the CIU;
                (h) Ensure that all applicable anti-money laundering laws are complied with;
                (i) Liaise with the CBB as necessary from time to time for the purposes of its general oversight of the CIU;
                (j) Be diligent in appointing Directors, who are fit and proper and approved by the CBB;
                (k) Ensure that proper corporate governance is in place for the CIU in line with Module CG;
                (l) Avoid any conflict of interest in all aspects and address any conflict of interest among the other relevant persons of the CIU;
                (m) Ensure that the legal title of any assets belonging to the CIU are transferred under its ownership; and
                (n) Ensure that all reports submitted to the CBB and CIU participants, by relevant persons are accurate and submitted on a timely basis. Such reports include but are not limited to:
                (i) 'The semi-annual and annual financial statements of the CIU(s) for each financial year;
                (ii) 'In case of CIUs structured as corporates/contractual, the annual financial statements of the fund company(ies) for each financial year ; and
                (iii) 'Form CIU (QS), Quarterly Statistical Return.
                April 2012

            • RP-4.5 RP-4.5 Reporting Requirements

              • RP-4.5.1

                The trustee of Bahrain domiciled CIU is responsible for all reporting requirements to the CBB and to other parties, as required in Module CRR. Such reporting requirements include but are not limited to:

                (a) Reporting any breach to the requirements Volume 7, the CIU documents, or any directions issued by the CBB; and
                (b) Reporting any material amendments to the CIU documents on a timely basis.
                April 2012

            • RP-4.6 RP-4.6 Other Requirements

              • RP-4.6.1

                Trustees must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

              • RP-4.6.2

                Trustees of Bahrain domiciled CIUs must seek CBB's prior approval as soon as reasonably practicable as to any intention to merge, transfer or wind-up a CIU.

                April 2012

              • RP-4.6.3

                Trustees of Bahrain domiciled CIUs must notify the CBB immediately upon deciding to suspend/resume dealings in a CIU.

                April 2012

          • RP-5 RP-5 Fund Manager

            • RP-5.1 RP-5.1 Definition

              • RP-5.1.1

                A fund manager is a person mandated to allocate and/or manage financial instruments and any other assets held by a CIU.

                April 2012

            • RP-5.2 RP-5.2 Required Country of Domicile

              • RP-5.2.1

                Fund managers must be domiciled in any reputable jurisdiction acceptable to the CBB.

                April 2012

            • RP-5.3 RP-5.3 Required Type of License

              • RP-5.3.1

                The fund manager of a Bahrain domiciled CIU must be acceptable to the CBB.

                April 2012

              • RP-5.3.2

                Fund managers must hold an appropriate license or equivalent from the CBB or from a regulatory authority acceptable to the CBB and permitting the entity to manage financial instruments and any other assets held by a CIU.

                April 2012

              • RP-5.3.3

                Subsequent to the operator's review and assessment of the suitability of fund managers, the CBB will take into account an institution's financial soundness, relevant experience with respect to CIUs, and regulatory track record.

                April 2012

              • Form of Appointment

                • RP-5.3.4

                  The agreement appointing the fund manager must be signed between the fund manager and the fund company or trustee, as appropriate.

                  April 2012

            • RP-5.4 RP-5.4 Duties

              • RP-5.4.1

                The minimum duties of fund managers of CIUs authorised or registered under Module ARR include but are not limited to the following:

                (a) Manage and/or allocate the investments and re-investments of the assets in accordance with the investment objectives and strategy, adhering to all limitations set out in fund management agreement and prospectus;
                (b) Continuously carry out and review the investment objectives of the CIU, and advise the directors of the CIU's investment program, strategy and overall performance on a prompt and regular basis;
                (c) If required, the fund manager may appoint suitable investment advisors to assist in certain areas where the fund manager lacks the relevant expertise;
                (d) If required, the fund manager may appoint suitable advisers to assist the CIU in any legal, regulatory, financial or other matters that require professional advice or assistance in managing the CIU or administering the affairs of the CIU;
                (e) Negotiate all borrowing arrangements in line with the prescribed Rules in Volume 7, observing the limits prescribed in the prospectus of the CIU and supervising the implementation of such arrangements;
                (f) Select brokers and dealers for execution of portfolio transactions;
                (g) Determine how any voting rights of securities held by the CIU should be exercised;
                (h) Give instructions to the custodian of the CIU concerning any acquisition, disposal of or other dealing in any investments or other assets of the CIU; and
                (i) Ensuring that all investments carried out on behalf of Shari'a Compliant CIUs are in line with Shari'a principles and vetted by the Shari'a Supervisory Board/Advisors.
                April 2012

            • RP-5.5 RP-5.5 Reporting Requirements

              • RP-5.5.1

                Fund managers must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

            • RP-5.6 RP-5.6 Other Requirements

              • RP-5.6.1

                Fund managers must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

          • RP-6 RP-6 Custodian

            • RP-6.1 RP-6.1 Definition

              • RP-6.1.1

                A custodian is a person mandated to hold and safeguard financial instruments and other assets for the account of a CIU.

                April 2012

            • RP-6.2 RP-6.2 Required Country of Domicile

              • RP-6.2.1

                For Bahrain domiciled CIUs, the custodian must be domiciled in the Kingdom of Bahrain.

                April 2012

              • RP-6.2.2

                In applying Rule RP-6.2.1, the CBB will allow 'hub and spoke' arrangements, provided that:

                (a) A suitably licensed office is maintained in Bahrain, through which the CBB can access the CIU's records;
                (b) The overseas office belongs to the same group as the Bahrain custodian, and regulated by a reputable regulatory authority acceptable to the CBB;
                (c) The custodian retains ultimate responsibility for the CIU's assets; and
                (d) Suitable outsourcing arrangements have been put in place.
                April 2012

            • RP-6.3 RP-6.3 Required Type of License

              • RP-6.3.1

                A custodian must hold an appropriate license from the CBB permitting it to provide custody services, in accordance with the CBB Rulebook.

                April 2012

              • Form of Appointment

                • RP-6.3.2

                  The agreement appointing the custodian must be signed between the custodian and the fund company or trustee, as appropriate.

                  April 2012

            • RP-6.4 RP-6.4 Duties

              • RP-6.4.1

                The minimum duties of the custodian of CIUs authorised or registered under Module ARR include, but are not limited to the following:

                (a) To open, maintain, and control CIU subscription and trading cash accounts with licensed banks in all relevant markets;
                (b) To open and maintain CIU securities accounts with authorised institutions;
                (c) To ensure that all assets belonging to a CIU, including cash accounts, are segregated from other accounts of the custodian or its clients;
                (d) To directly collect and receive all income and other payments, distributions and entitlements pertaining to a CIU;
                (e) To make all payments and settlements on behalf of and for the interest of the CIU, in line with the scheme documents, including the prospectus;
                (f) To safeguard all of the assets belonging to a CIU;
                (g) To ensure that all assets belonging to a CIU are held in the name of the CIU or, where relevant market practices and/or legal requirements dictate, held on behalf of the CIU, provided that proper legal arrangements are in place;
                (h) To execute any corporate actions;
                (i) To maintain all records and documentation relating to all transactions made on behalf of the CIU; and
                (j) To reconcile the CIU records pertaining to assets held, with statements obtained from sub-custodians, brokers and agents, on a regular and timely basis.
                April 2012

            • RP-6.5 RP-6.5 Reporting Requirements

              • RP-6.5.1

                Custodians must comply with all reporting requirements as stipulated in the relevant legal agreements.

                April 2012

              • RP-6.5.2

                Custodians must report to the CBB immediately when they become aware of any breach of the CIU's prospectus.

                April 2012

              • RP-6.5.3

                Custodians must provide the fund manager and fund administrator with a statement of assets pertaining to the CIU, on intervals, as agreed between the parties.

                April 2012

            • RP-6.6 RP-6.6 Other Requirements

              • RP-6.6.1

                Custodians must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

              • RP-6.6.2

                Custodians must not be participants in a Bahrain domiciled CIU to which they are contractually engaged to offer custody services to.

                April 2012

              • RP-6.6.3

                Custodians may not engage in stock lending of CIU assets unless permitted by the prospectus.

                April 2012

          • RP-7 RP-7 Fund Administrator

            • RP-7.1 RP-7.1 Definition

              • RP-7.1.1

                Fund administrators are persons who undertake the administration of financial instruments and other assets held by a CIU. Their activities include but are not limited to the following:

                (a) Fund accounting services;
                (b) Client enquiries;
                (c) Valuation and pricing (including tax returns);
                (d) Regulatory compliance monitoring;
                (e) Record keeping for issuance and redemption of units in a CIU; and
                (f) General record-keeping.
                April 2012

            • RP-7.2 RP-7.2 Required Country of Domicile

              • RP-7.2.1

                Fund administrators must be domiciled in the Kingdom of Bahrain.

                April 2012

            • RP-7.3 RP-7.3 Required Type of License

              • RP-7.3.1

                Fund administrators must hold an appropriate license from the CBB permitting the entity to administer the books and records of financial instruments and any other assets held by a CIU.

                April 2012

              • RP-7.3.2

                In applying Rule RP-7.3.1, the CBB will allow 'hub and spoke' arrangements, provided that:

                (a) A suitably licensed office is maintained in the Kingdom of Bahrain, through which the CBB can access the CIU's records;
                (b) The overseas office belongs to the same group as the Bahrain fund administrator, and regulated by a reputable regulatory authority acceptable to the CBB;
                (c) The fund administrator retains ultimate responsibility for the CIU's administration activities; and
                (d) Suitable outsourcing arrangements have been put in place.
                April 2012

              • Form of Appointment

                • RP-7.3.3

                  The agreement appointing the fund administrator must be signed between the fund administrator and the fund company or trustee, as appropriate.

                  April 2012

            • RP-7.4 RP-7.4 Duties

              • RP-7.4.1

                The minimum duties of the fund administrators of CIUs authorised or registered under Module ARR, include but are not limited to the following:

                (a) Fund accounting services for the CIU and fund company (if applicable);
                (b) Handling of client enquiries;
                (c) Valuation and pricing (including tax returns);
                (d) Regulatory compliance monitoring, including but not limited to the CIU's compliance with the investment strategy and guidelines provided in the prospectus when calculating the Net Asset Value (NAV);
                (e) Record-keeping services;
                (f) Calculation of the NAV at each valuation point;
                (g) Preparation of semi-annual and annual accounts for the CIU, and the annual accounts of the fund company (if applicable);
                (h) Calculation of dividends, service providers' fees, performance fees (if any), and other distributions;
                (i) Liaising with the CIU's external auditor in finalising the audit and review procedure;
                (j) Preparing the Quarterly Statistical Report(Form CIU-QS); and
                (k) Maintaining records of meetings of the CIU's Board of Directors.
                April 2012

            • RP-7.5 RP-7.5 Reporting Requirements

              • RP-7.5.1

                Fund administrators must comply with all reporting requirements as stipulated in the relevant contractual agreements. Such reports should include but are not limited to the following:

                (a) Reporting of the NAV to the operator, fund manager and registrar, as prescribed in the prospectus;
                (b) Reporting of the CIU's annual financial statements (within 4 months of the financial year-end of the CIU) and semi-annual financial statements (within 2 months of the relevant 6-month period) to the operator, fund manager, and registrar and to the CBB;
                (c) Reporting of the fund company's annual financial statements (within 3 months of the financial year-end of the CIU) to the operator, fund manager and CBB;
                (d) Reporting of all necessary reports of the CIU, including but not limited to the NAV report, cash accounts statements, assets valuation reports, foreign exchange profit and loss report, dividend report and trial balance, to the fund manager;
                (e) In the case retail CIU or expert CIUs, report to the CBB, fund manager and operator, if:
                (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date.
                (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIU; or
                (iii) The total NAV falls below 50% of the total NAV of the CIU relative to the previous valuation day.
                (f) Report to the CBB any case in which the investment strategy limits / guidelines are breached;
                (g) Report to the CBB Form CIU (QS) within the deadline required in Module CRR;
                (h) Report to the CBB immediately, any suspension in the determination of the NAV of the CIU, the reasons for this suspension, and tentative time to recommence determination of the NAV; and
                (i) Meet any reporting requirement as required by the MOIC in accordance with the Bahrain Commercial Companies Law.
                April 2012

              • RP-7.5.2

                Fund administrators must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

            • RP-7.6 RP-7.6 Other Requirements

              • RP-7.6.1

                Fund administrators must not be participants in a Bahrain domiciled CIU to which they are engaged to offer fund administration services to.

                April 2012

          • RP-8 RP-8 Registrar/Transfer Agent

            • RP-8.1 RP-8.1 Definition

              • RP-8.1.1

                The registrar/transfer agent is an entity engaged by the CIU to maintain the CIU participants' records, including purchases, sales and account balances.

                April 2012

            • RP-8.2 RP-8.2 Required Country of Domicile

              • RP-8.2.1

                The registrar/transfer agent must be domiciled in the Kingdom of Bahrain.

                April 2012

            • RP-8.3 RP-8.3 Required Type of License

              • RP-8.3.1

                A registrar/transfer agent must be acceptable to the CBB and must hold an appropriate license permitting the entity to provide registry services to a CIU, in accordance with the CBB Rulebook.

                April 2012

              • Form of Appointment

                • RP-8.3.2

                  The agreement appointing the registrar/transfer agent must be signed between the registrar/transfer agent and the fund company or trustee, as appropriate.

                  April 2012

            • RP-8.4 RP-8.4 Duties

              • RP-8.4.1

                The minimum duties of the registrar/transfer agent of a CIU authorised or registered under Module ARR, include but are not limited to the following:

                (a) Maintain a register of the CIU participants of a CIU;
                (b) Preserve the confidentiality of the register at all times;
                (c) Facilitate the issuance, transfer, execute the allotment, redemption, conversion and/or redemption of holdings in a CIU;
                (d) Record in the register of a CIU the following information:
                (i) Name of the CIU participant;
                (ii) Official identification of the CIU participant (including the type and number);
                (iii) Address and contact details of the CIU participant;
                (iv) Number of units held by the CIU participant;
                (v) Number(s) of the certificate(s) issued to each CIU participant;
                (vi) Date of issuance or transfer of units to the CIU participant;
                (vii) Record of redemption of units; and
                (viii) Record of cancellation of units.
                (e) Obtain confirmation from the custodian and fund administrator that they have received all payments from all applicants, before facilitiating the issuance of units;
                (f) Execute the issuance and dispatching of certificates (or confirmations) as appropriate; and
                (g) Obtain and safe-keep all signed application forms, along with "know your client" documents for each CIU participant, in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable Laws and Regulations.
                April 2012

            • RP-8.5 RP-8.5 Reporting Requirements

              • RP-8.5.1

                Registrars/Transfer Agents must report the NAV to the CIU participants, as prescribed in the prospectus.

                April 2012

              • RP-8.5.2

                Registrars/Transfer Agents must make available the CIU's annual financial statements (within 4 months of the financial year-end of the CIU) and semi-annual financial statements (within 2 months of the relevant 6-month period) to the CIU participants.

                April 2012

              • RP-8.5.3

                Registrars/Transfer Agents are required to notify the CIU participants of the following events:

                (a) When the fund manager shifts from investments into cash and cash equivalents, together with the reason and the expected time by which the stipulated limits will be met; and
                (b) Once the CIU resumes investing in accordance with the investment limits stipulated in the prospectus.
                April 2012

              • RP-8.5.4

                Registrars/Transfer Agents must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

            • RP-8.6 RP-8.6 Other Requirements

              • RP-8.6.1

                Registrars/Transfer Agents must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

          • RP-9 RP-9 Placement Agent

            • RP-9.1 RP-9.1 Definition

              • RP-9.1.1

                A placement agent is an entity that acts as agent on behalf of the CIU in placing units of the CIU.

                April 2012

            • RP-9.2 RP-9.2 Required Country of Domicile

              • RP-9.2.1

                A placement agent must be based in a reputable jurisdiction acceptable to the CBB.

                April 2012

            • RP-9.3 RP-9.3 Required Type of License

              • RP-9.3.1

                Placement agents placing units in/from the Kingdom of Bahrain must hold an appropriate license from the CBB under CBB Rulebook Volumes 1, 2, or 4 (Categories 1 and 2 only).

                April 2012

              • RP-9.3.2

                Where the placement agent is not a CBB licensee, it must appoint a sub-placement agent licensed by the CBB, in line with the requirements in Rule RP-9.3.1, to market the CIU in Bahrain.

                April 2012

              • RP-9.3.3

                Placement agents based in a jurisdiction outside the Kingdom of Bahrain and placing units in other jurisdictions, must be appropriately licensed and/or authorised by a regulatory authority, acceptable to the CBB, permitting the entity to market financial instruments in those jurisdictions.

                April 2012

              • Form of Appointment

                • RP-9.3.4

                  The agreement appointing the placement agent must be signed between the placement agent and the fund company or trustee, as appropriate.

                  April 2012

            • RP-9.4 RP-9.4 Duties

              • RP-9.4.1

                The minimum duties of the placement agent of CIUs authorised or registered under Module ARR include but are not limited to the following:

                (a) To ensure that all investors wishing to subscribe for the units of a CIU are eligible to subscribe for such units;
                (b) To ensure that all investors of a Bahrain domiciled expert CIU meet the definition of expert investors as defined in Volume 7;
                (c) To ensure that all investors of a Bahrain domiciled exempt CIU meet the definition of accredited investors as defined in Volume 7;
                (d) To provide a copy of the prospectus and subscription forms of a CIU to potential investors;
                (e) To ensure that investors submit duly completed subscription forms, together with all required documentation;
                (f) To obtain written confirmation from each CIU participant, stating that they satisfy the definition of an expert investor or accredited investor (as appropriate) and confirming that they understand the higher risks involved in an expert CIU or exempt CIU;
                (g) To ensure that a CIU is marketed by qualified individuals who are able to clearly explain to investors the risks and rewards associated with investing in the CIU, in a manner that is clear, fair and not misleading;
                (h) To ensure compliance with all applicable local Laws and Regulations of the jurisdictions where the units of the CIU are being placed, including but not limited to Laws and Regulations relating to public and private offerings of units and securities laws and regulations of those jurisdictions;
                (i) To comply at all times with all the Laws of the Kingdom of Bahrain and the Regulations and directives issued by the CBB from time to time, including those set to prevent and prohibit money laundering and the financing of terrorism;
                (j) To comply with all applicable anti money laundering and "know your client" Laws and Regulations in the jurisdictions where the units of the CIU are placed; and
                (k) Where placement agents appoint sub-placement agents, such sub-agents must be eligible to undertake this activity, notwithstanding that the placement agent will be held accountable for such appointment.
                April 2012

            • RP-9.5 RP-9.5 Reporting Requirements

              • RP-9.5.1

                Placement agents must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

              • RP-9.5.2

                A placement agent must report to the fund company's Board of directors/trustees, any issues related to anti-money laundering and terrorist financing.

                April 2012

            • RP-9.6 RP-9.6 Other Requirements

              • RP-9.6.1

                Placement agents must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

          • RP-10 RP-10 Investment Advisor

            • RP-10.1 RP-10.1 Definition

              • RP-10.1.1

                An investment advisor is the person undertaking the function of advising the fund manager on the merits of buying, selling, or subscribing for a particular asset or exercising any right conferred by the asset.

                April 2012

            • RP-10.2 RP-10.2 Required Country of Domicile

              • RP-10.2.1

                Investment advisors must be based in any reputable jurisdiction acceptable to the CBB.

                April 2012

            • RP-10.3 RP-10.3 Required Type of License

              • RP-10.3.1

                For investments advisors providing services to CIUs investing in financial instruments, the investment advisor must hold an appropriate license from the CBB, or equivalent from a regulatory authority recognised by CBB, permitting the entity to engage in investment advisory activities.

                April 2012

              • RP-10.3.2

                For CIUs investing in assets other than financial instruments, the investment advisor need not be a regulated entity provided that it has relevant expertise in the asset class the fund is investing into.

                April 2012

              • Form of Appointment

                • RP-10.3.3

                  The agreement appointing the investment advisor must be signed between the investment advisor and the fund company, trustee, or fund manager, as appropriate.

                  April 2012

            • RP-10.4 RP-10.4 Duties

              • RP-10.4.1

                The minimum duties of the investment advisor of CIUs authorised or registered under Module ARR include, but are not limited to the following:

                (a) Provide independent/prudent advice as required, to the fund manager with respect to the investments of the CIU, after conducting the appropriate due diligence; and
                (b) Refrain from participating in the investment decision-making process of the CIU.
                April 2012

            • RP-10.5 RP-10.5 Reporting Requirements

              • RP-10.5.1

                Investment advisors must comply with any reporting requirements stipulated in the relevant legal agreements.

                April 2012

            • RP-10.6 RP-10.6 Other Requirements

              • RP-10.6.1

                Investment advisors must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

          • RP-11 RP-11 External Auditor

            • RP-11.1 RP-11.1 Definition

              • RP-11.1.1

                An external auditor is the entity responsible for the audit of the books and records of the CIU and fund company (if applicable).

                April 2012

            • RP-11.2 RP-11.2 Required Country of Domicile

              • RP-11.2.1

                External auditors must be Bahrain-based entities.

                April 2012

            • RP-11.3 RP-11.3 Required Type of License

              • RP-11.3.1

                The external auditor must be acceptable to the CBB, and separate and independent from all other relevant persons.

                April 2012

              • Form of Appointment

                • RP-11.3.2

                  The agreement appointing the external auditor must be in the form of an engagement letter between the external auditor and the fund company/trustee (as appropriate).

                  April 2012

            • RP-11.4 RP-11.4 Duties

              • RP-11.4.1

                The minimum duties of the external auditor of a CIU authorised or registered under Module ARR include but are not limited to the following:

                (a) To audit the books and records of the CIU, including the annual financial statements of the CIU, in accordance with IFRS or AAOIFI (as appropriate);
                (b) To review the semi-annual financial statements of the CIU;
                (c) If the CIU is structured as a contractual or corporate CIU, to audit the annual financial statements of the fund company; and
                (d) To review the calculation of the NAV in line with the frequency stipulated in the prospectus but not less than once a year.
                April 2012

            • RP-11.5 RP-11.5 Reporting Requirements

              • RP-11.5.1

                External auditors must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

              • RP-11.5.2

                External auditors must report any material weaknesses in accounting and internal control systems that come to their notice, to the Board of Directors of the fund company/trustees and to the CBB, in a timely and on a prompt basis.

                April 2012

            • RP-11.6 RP-11.6 Other Requirements

              • RP-11.6.1

                External auditors must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

          • RP-12 RP-12 Placement Agent for Overseas Domiciled CIUs

            • RP-12.1 RP-12.1 Definition

              • RP-12.1.1

                A placement agent offering overseas domiciled CIU holdings to investors in the Kingdom of Bahrain is an entity that acts as agent on behalf of the CIU in placing units of the CIU.

                Amended: July 2017
                April 2012

            • RP-12.2 RP-12.2 Required Country of Domicile

              • RP-12.2.1

                Placement agents offering overseas domiciled CIU holdings to investors in the Kingdom of Bahrain must be domiciled in the Kingdom of Bahrain.

                Amended: July 2017
                April 2012

            • RP-12.3 RP-12.3 Required Type of License

              • RP-12.3.1

                Placement agents must hold an appropriate license from the CBB under CBB Rulebook Volumes 1, 2, or 4 (Categories 1 and 2 only), permitting them to market financial instruments.

                April 2012

              • Form of Appointment

                • RP-12.3.2

                  The agreement appointing the placement agent must be signed between the placement agent and the fund manager of the overseas domiciled CIU, or an agent representing the overseas domiciled CIU, as appropriate. However, it is the duty of the placement agent to ensure that the contractual agreement is signed with the appropriate entity, notwithstanding that a binding agreement must be in place with the issuer of the overseas domiciled CIU.

                  April 2012

            • RP-12.4 RP-12.4 Duties

              • RP-12.4.1

                The minimum duties of the placement agent of overseas domiciled CIUs authorised, registered or filed under Module ARR include, but are not limited to the following:

                (a) To ensure that the CIU is regulated in its home jurisdiction, and is legally separate from its operator;
                (b) To ensure that the CIU's operator and fund manager are eligible regulated entities;
                (c) To ensure that the CIU has in place relevant persons appointed in their home jurisdiction, similar to those listed in under Rule RP-B.2.1;
                (d) To ensure that all investors wishing to subscribe for the units of a CIU are eligible to subscribe for such units;
                (e) To ensure that all investors of an overseas domiciled expert CIU meet the definition of expert investors as defined in this Module;
                (f) To ensure that all investors of an overseas domiciled exempt CIU meet the definition of accredited investors as defined in this Module;
                (g) To obtain written confirmation from each CIU participant, stating that they satisfy the definition of an expert investor or accredited investor (as appropriate) and confirming that they understand the higher risks involved in an expert CIU or exempt CIU;
                (h) To provide a copy of the prospectus and the subscription agreement of the CIU to potential investors;
                (i) To ensure that investors submit duly executed subscription forms, together with all required documentation;
                (j) To ensure that a CIU is marketed by qualified individuals who are able to clearly explain to investors the risks and rewards associated with investing in the CIU, in a manner that is clear, fair and not misleading;
                (k) To be responsible for addressing any client complaints and/or enquiries and to provide any such other information supplementary to the prospectus as may be reasonably required by existing or potential investors;
                (l) To ensure that the units subscribed for by clients are appropriately identified as clients' holdings in the books and records of the issuer; and
                (m) To comply at all times with all the laws of the Kingdom of Bahrain and the regulations and directives issued by the CBB from time to time, including those set to prevent and prohibit money laundering and the financing of terrorism.
                Amended: July 2015
                April 2012

            • RP-12.5 RP-12.5 Reporting Requirements

              • RP-12.5.1

                Placement agents must comply with any reporting requirements to the CIU participants, stipulated in the relevant legal agreements.

                April 2012

              • RP-12.5.2

                Placement agents must ensure that the CIUs' prospectus (and simplified prospectus where applicable) are kept up-to-date. Most recent copies of the prospectus (and simplified prospectus where applicable) must be circulated to existing investors and made available to the CBB within 30 calendar days of any revision.

                April 2012

              • RP-12.5.3

                Placement agents must distribute to investors the annual reports of CIUs and any other reports specified in the CIUs' prospectus, within the time scales specified by their home regulator and in accordance with the accounting standards acceptable by the home regulator.

                April 2012

              • RP-12.5.4

                Placement agents must notify the CBB and the CIU participants in a timely manner of any intention to merge, transfer, wind up or suspend dealings in an overseas domiciled CIU.

                April 2012

              • RP-12.5.5

                Placement agents must file with the CBB Form CIU (QS), the CIU Quarterly Statistical Return, within the deadline specified on the return.

                April 2012

            • RP-12.6 RP-12.6 Other Requirements

              • RP-12.6.1

                Placement agents must provide the CBB, upon request, with any additional information relevant to overseas domiciled CIUs, on a prompt basis.

                April 2012

              • RP-12.6.2

                The placement agent must keep all documents supporting the due diligence process undertaken to ensure suitability of the CIU to the targeted category of investors within its premises. Such documents must be available to the CBB upon request.

                Added: July 2015

        • CG CG Corporate Governance

          • CG-A CG-A Introduction

            • CG-A.1 CG-A.1 Purpose

              • Executive Summary

                • CG-A.1.1

                  Bahrain domiciled CIUs must maintain an adequate framework for the governance and operation of the CIU to ensure that the CIU is governed effectively and in the best interests of the CIU's participants.

                  April 2012

                • CG-A.1.2

                  The main aim of the framework should be to ensure that when faced with a conflict of interest, the CIU respects all applicable rules and contractual obligations from an objective perspective, without favouring CIU insiders (including relevant persons) at the expense of the interests of the CIU's participants.

                  April 2012

              • Legal Basis

                • CG-A.1.3

                  This Module contains the CBB's Directive (as amended from time to time) regarding corporate governance applicable to collective investment undertakings and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • CG-A.1.4

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • CG-A.2 CG-A.2 Module History

              • Evolution of Module

                • CG-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • CG-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • CG-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       
                  April 2012

              • Superseded Requirements

                • CG-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • CG-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • CG-1 CG-1 Governing Body

            • CG-1.1 CG-1.1 General Requirements

              • CG-1.1.1

                The governing body of a Bahrain domiciled CIU is the Board of Directors, appointed by the operator or trustee, as appropriate.

                April 2012

              • CG-1.1.2

                Bahrain domiciled CIUs are in addition required to comply with any legal requirements imposed by virtue of the legal form used to create the CIU.

                April 2012

              • CG-1.1.3

                The Board is responsible for oversight of the management and performance of the CIU, however, ultimate accountability for ensuring that proper and continued corporate governance is in place for the CIU, must remain with the operator/trustee of the CIU, as appropriate.

                April 2012

              • CG-1.1.4

                The Board must not delegate its oversight responsibilities.

                April 2012

          • CG-2 CG-2 Members of the Board of Directors

            • CG-2.1 CG-2.1 Appointment and Removal of Directors

              • CG-2.1.1

                The operator/trustee of the CIU must obtain the CBB's prior approval before a person is formally appointed to the Board. The request for CBB approval must be made by submitting to the CBB a Form 2 CIU Board Member Form with a covering letter, and enclosing the following documentation:

                (a) A board resolution from the operator/trustee ratifying the appointment;
                (b) A current CV of the proposed board member; and
                (c) A certified and valid passport copy of the proposed board member.
                April 2012

              • CG-2.1.2

                The operator/trustee must be diligent in verifying that all the information contained in the submitted documents, including previous experience, is accurate.

                April 2012

              • CG-2.1.3

                The operator/trustee must immediately notify the CBB in case of any material change to the information provided in the request for appointment of a board member.

                April 2012

              • CG-2.1.4

                The operator/trustee must immediately notify the CBB when it becomes aware of any of the following events, affecting one of the board members:

                (a) The conviction by a court, whether in Bahrain or elsewhere, for a crime affecting honesty;
                (b) A declaration of bankruptcy by a court;
                (c) A court ruling that the board member's legal capacity is totally or partially impaired; or
                (d) A sanction by a professional body of a fine, suspension, expulsion or censure.
                April 2012

              • CG-2.1.5

                The operator/trustee of the CIU must immediately notify the CBB when a board member resigns from his position, or if his membership is terminated, together with an explanation as to the reasons why.

                April 2012

              • CG-2.1.6

                The operator/trustee must ensure that the Memorandum and Articles of Association or Trust Deed, as appropriate, of Bahrain domiciled CIUs, adequately set out procedures for the appointment, removal and retirement of directors.

                April 2012

              • CG-2.1.7

                These should, amongst other things, include procedures for removing directors in case of non-attendance or other failure to discharge properly their responsibilities as directors. The CBB expects board members who fail to attend at least three-quarters of all board meetings in any twelve-month period to step down, unless the board is able to satisfy the CBB that there are valid reasons for the director concerned to remain a board member.

                April 2012

            • CG-2.2 CG-2.2 Fit and Proper Criteria

              • CG-2.2.1

                As individuals, directors on the board of a Bahrain domiciled CIU must hold qualifications and have relevant experience to undertake this function.

                April 2012

              • CG-2.2.2

                The acceptable level of qualifications and experience will be considered by the CBB on a case by case basis.

                April 2012

              • CG-2.2.3

                The operator/trustee must ensure that the board of directors of a CIU demonstrate that it has, when taken as a whole, the necessary expertise required to fulfil the functions of the board.

                April 2012

              • CG-2.2.4

                In assessing the fit and proper criteria for directors, the operator/trustee should take into account the following:

                (a) The relevant experience needed to demonstrate sound business decision-making;
                (b) A good understanding of the industry and its regulatory environment;
                (c) Holding of a relevant professional qualification; and
                (d) A minimum length of service (at least 5 years at director or senior management level) in the industry.
                April 2012

          • CG-3 CG-3 Board Composition and Meetings

            • CG-3.1 CG-3.1 Composition of the Board of Directors

              • CG-3.1.1

                Except as provided under Paragraph CG-3.1.2, the board of a CIU must comprise at least 3 members at all times, appointed from and representing the operator.

                April 2012

              • CG-3.1.2

                If the CIU is structured as a trust, the board must comprise of at least 3 members at all times, to be appointed by the trustee, of which the majority must be from and representing the trustee. The remaining members must be nominated by the fund manager.

                April 2012

              • CG-3.1.3

                The members of the board of a CIU:

                (a) Must hold senior positions at the operator/trustee;
                (b) Must be senior in position to individual members managing the CIU; and
                (c) Must not be involved in the investment management function of the CIU.
                April 2012

              • CG-3.1.4

                The board must ensure that collectively it has sufficient expertise to understand the important issues relating to the nature, operation and control of the CIU.

                April 2012

              • CG-3.1.5

                To fulfil its responsibilities outlined in Chapter CG-5, the board must periodically assess its composition, size and members' contribution to the CIU.

                April 2012

            • CG-3.2 CG-3.2 Meetings and Attendance

              • CG-3.2.1

                The board of a Bahrain domiciled CIU must meet at regular intervals, but not less than four times a year, taking into account the CIU's size and complexity, to review the performance and operations of the CIU and to discharge its responsibilities effectively.

                April 2012

              • CG-3.2.2

                Board members must attend as a minimum three quarters of all board meetings called for a CIU and attendance by proxy will not be permitted.

                April 2012

              • CG-3.2.3

                Participation in board meetings by means of video or telephone conferencing is regarded as attendance and may be recorded as such.

                April 2012

              • CG-3.2.4

                Board rules must require members to step down if they are not actively participating in board meetings.

                April 2012

            • CG-3.3 CG-3.3 Meeting of CIU Participants

              • CG-3.3.1

                If the CIU participants have a right to call for a general meeting of CIU participants, the instrument constituting the CIU must state how the meeting may be convened, and the board must call for such meeting at the CIU participants' request.

                April 2012

              • CG-3.3.2

                If a general meeting of CIU participants is called, the board must ensure that:

                (a) Each CIU participant is given at least 14 calendar days written notice before the meeting;
                (b) The notice specifies the place, day and time of the meeting; and
                (c) The terms and resolutions to be proposed, as well as a copy of the notice, are sent to the CIU's fund administrator, custodian and to the CBB.
                April 2012

          • CG-4 CG-4 Record Keeping Requirements

            • CG-4.1 CG-4.1 Record of Board Meetings

              • CG-4.1.1

                The board must maintain adequate records of its meetings, such that key decisions and how they are arrived at can be traced. Such records must be maintained by the CIU fund administrator.

                April 2012

          • CG-5 CG-5 Roles and Responsibilities of the Board

            • CG-5.1 CG-5.1 General Requirements

              • CG-5.1.1

                The board must establish and maintain a statement of its responsibilities, defining its functions and tasks. This statement must be clearly communicated to board members.

                April 2012

              • CG-5.1.2

                The board must have effective policies and processes in place, in line with the requirements of the Commercial Companies Law, to prevent, avoid and manage its members' potential or actual conflicts of interest, including matters such as:

                (a) Related party transactions;
                (b) The misuse of assets belonging to the CIU; and
                (c) The use of privileged information for personal advantage (including insider trading).
                April 2012

              • CG-5.1.3

                Board members should also absent themselves from any discussion or decision-making that involves a subject where they are incapable of providing objective advice, or which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

                April 2012

              • CG-5.1.4

                The board and its members must act with honesty, integrity, due skill, care and diligence, and in the best interests of the CIU and CIU participants.

                April 2012

              • CG-5.1.5

                In assessing compliance with Rule CG-5.1.4, the CBB will take into account all actions of the board and its members. The interest of the CIU includes the CIU's continued compliance with all relevant rules and regulations. The interest of CIU participants includes the current and future value of the assets of a CIU, transparency, disclosure of information and ensuring that the CIU fulfils its obligations under its prospectus and treats all participants fairly and pays equal regard to the interests of all CIU participants.

                April 2012

              • CG-5.1.6

                The board must ensure that it is supplied with information in a timely manner in a form and of a quality appropriate to enable it to discharge its duties.

                April 2012

              • CG-5.1.7

                There should also be agreed upon procedures by the board, for directors to take independent advice if necessary at the CIU's expense.

                April 2012

            • CG-5.2 CG-5.2 Approval and Review of Prospectus and Constitutional Documents

              • CG-5.2.1

                The board is responsible for the correctness of the information contained in the CIU prospectus.

                April 2012

              • CG-5.2.2

                The board must collectively approve the CIU's prospectus, the subscription documents, the CIU's documents and its material contracts.

                April 2012

              • CG-5.2.3

                The approval referred to in Paragraph CG-5.2.2 will usually be given at the initial board meeting of the CIU.

                April 2012

              • CG-5.2.4

                The board is responsible for committing the CIU to any obligations under the various material contracts entered into by the CIU.

                April 2012

              • CG-5.2.5

                The board must clearly set out and review on a regular basis the authority of directors to commit the CIU to its contractual obligations. In doing so, the Board must:

                (a) Stipulate in writing which directors (or which combination of directors) can commit the CIU to its contractual obligations; and
                (b) Ensure that there are always at least two directors (or two combinations of directors, not dependent on each other) who have the requisite authority to commit the CIU to a contractual obligation.
                April 2012

              • CG-5.2.6

                In order to fulfil the responsibility outlined above, the board is expected to conduct reviews on a periodic basis and whenever material changes or revisions are made, of the CIU's prospectus and subscription documents and of the material contracts, to ensure that they are up to date.

                April 2012

            • CG-5.3 CG-5.3 Monitoring Adherence to the Overall Investment Policy and Restrictions

              • CG-5.3.1

                The board must periodically monitor the CIU's compliance with its investment policies and restrictions, stated in the prospectus.

                April 2012

              • CG-5.3.2

                In fulfilling the requirements of Paragraph CG-5.3.1, the CBB expects that the board requests from the fund manager, reports on the CIU's compliance with its investment policies and restrictions as stated in the prospectus. The frequency and format of such reports should be pre-agreed with the fund manager and reviewed at each board meeting.

                April 2012

              • CG-5.3.3

                The board must ensure that the fund manager has systems and procedures in place to detect and remedy investment policy breaches. Such systems and procedures must include provisions for timely reporting of breaches to the board and the CBB, and prompt rectification.

                April 2012

            • CG-5.4 CG-5.4 Review of Investment Performance

              • CG-5.4.1

                The board must regulary review the performance of the fund manager and the investment performance of the CIU, and compare the performance of the CIU to its investment objectives, stated in the prospectus.

                April 2012

              • CG-5.4.2

                In fulfulling the requirements of Paragraph CG-5.4.1, the CBB expects that the board requests copies of all relevant investment reports from relevant persons on a timely basis. Such reports should explain how the performance was achieved and what risk profile was adopted to generate returns.

                April 2012

            • CG-5.5 CG-5.5 Monitoring NAV Calculation Process

              • CG-5.5.1

                The board must have the ultimate responsibility for monitoring the valuation of the CIU assets, which must be undertaken by the fund administrator or an acceptable valuator who is expert in the asset class, as appropriate.

                April 2012

              • CG-5.5.2

                The board is responsible for the oversight of the entire NAV calculation process, including but not limited to the pricing of illiquid and exotic instruments.

                April 2012

              • CG-5.5.3

                The board must ensure that there is adequate segregation of duties in the NAV determination process.

                April 2012

              • CG-5.5.4

                In complying with the Rule CG-5.5.3, the board must delegate the calculation, determination and production of the NAV to a suitable independent, competent and experienced fund administrator.

                April 2012

              • CG-5.5.5

                The board must establish robust controls to manage conflicts of interest in the NAV evaluation process, if they arise.

                April 2012

              • CG-5.5.6

                The board must approve any documented valuation procedures, including valuation practices and controls, in advance of the CIU's launch and on a regular basis thereafter. Such procedures must be disclosed in the CIU's prospectus.

                April 2012

              • CG-5.5.7

                Valuation procedures should clearly explain the role of each party in the valuation process, identify the sources for pricing of each instrument type and address the management and reporting of exceptions.

                April 2012

              • CG-5.5.8

                The board must set procedures for reporting any issues that may arise in connection to the valuation (for example, stale pricing, liquidity, difficult trading markets, illiquid assets).

                April 2012

              • CG-5.5.9

                The board is responsible for the decision to suspend and resume the NAV calculation. However, any such decision must be satisfactorily supported by relevant documentation.

                April 2012

            • CG-5.6 CG-5.6 Monitoring Marketing and CIU Participant Relations

              • CG-5.6.1

                The board must request and review the plans set by the fund manager with respect to promoting the CIU, the target client base, the existing client base and its break-down by type of investor, the legal capacity of the CIU, the restrictions (if any) on marketing the CIU in certain jurisdictions.

                April 2012

              • CG-5.6.2

                In fulfulling this responsibility, the CBB expects that the board requests a quarterly report from the fund manager, summarizing the following:

                (a) Gross and net subscriptions, to monitor the size of the CIU against its theoretical capacity; and
                (b) A summary of CIU participants correspondence, highlighting key issues being raised such as concerns about performance or administration.
                April 2012

              • CG-5.6.3

                The board must ensure that the prospectus or trust deed of a CIU, as appropriate, does not allow any discretionary waivers with respect to a CIU, and that all CIU participants are treated equally and fairly.

                April 2012

            • CG-5.7 CG-5.7 Anti-Money Laundering (AML) Responsibilities

              • CG-5.7.1

                The board must understand the nature of the AML regulations which apply with respect of the CIU and must establish and regularly review procedures to monitor the AML measures for a CIU.

                April 2012

              • CG-5.7.2

                The board must obtain regular feedback from the placement agent(s), or sub-placement agent(s) to ascertain that formal AML procedures in place are being adhered to, and that any suspicious findings were raised and investigated accordingly. All suspicious findings and the results of the subsequent investigation must be promptly reported to the board and to the concerned authority.

                April 2012

              • CG-5.7.3

                The board must be responsible for the following with respect to the AML policies and procedures:

                (a) The AML policies and procedures adopted by the placement agent(s) or sub-placement agent(s) must be in compliance with the AML laws and regulations which apply to the CIU; and
                (b) Any changes in the applicable AML laws and regulations are promptly addressed and suitable procedures are adopted.
                April 2012

              • CG-5.7.4

                The board must ensure that the following procedures are applied with respect to CIU subscriptions and redemption monies:

                (a) The AML policy must ensure that, until the AML procedures are completed satisfactorily, any new subscription monies remain in the subscriptions bank account and are not transferred into the CIU's account;
                (b) The AML policy must ensure that the prospectus requires that redemptions are paid into the account from which the original investment was wired. In the event that the redeeming investor requests that redemption proceeds be paid into an account different from that which the investment was paid, the redeeming investor would normally be asked to confirm in writing reason(s) for the request; and
                (c) In the event that a subscription has been accepted without receipt of the full AML documentation, the custodian must retain the subscription proceeds until the outstanding documentation has been completed and provided.
                April 2012

            • CG-5.8 CG-5.8 Review of the Appointment and Performance of Other Service Providers

              • CG-5.8.1

                The board must regularly review the performance of the relevant persons of a CIU to ensure that they carry out their roles and responsibilities towards the CIU effectively.

                April 2012

              • CG-5.8.2

                In fulfulling the requirements of Paragraph CG-5.8.1, the CBB expects the Board to ensure that there is no conflict of interest among the relevant persons of a CIU and that each relevant person adheres to its responsibilities with respect to the CIU in accordance with the prospectus and in the best interest of CIU participants.

                April 2012

            • CG-5.9 CG-5.9 Provision of Information to CIU Participants

              • CG-5.9.1

                The board must oversee the process of disclosure of information to all CIU participants.

                April 2012

              • CG-5.9.2

                The board must ensure that all information, including that which the CIU's prospectus states, be provided to CIU participants in a fair, transparent, comprehensive and timely manner.

                April 2012

            • CG-5.10 CG-5.10 Compliance with Listing Rules and Continuing Obligations

              • CG-5.10.1

                The board must ensure that in the case that a CIU is listed on a licensed exchange, the CIU is compliant with the requirements and regulations of that exchange.

                April 2012

            • CG-5.11 CG-5.11 Reporting to the CBB

              • CG-5.11.1

                The board must be aware of any material breach that may affect the overall operation of the CIU, including but not limited to any breach to the investment policy of a CIU and report it to the CBB on a prompt and timely manner, in writing.

                April 2012

              • CG-5.11.2

                The board must report to the CBB, on a prompt basis, any event that may directly or indirectly impact the CIU.

                April 2012

              • CG-5.11.3

                In the event that the fund manager foresees, due to adverse market conditions, that it is in the best interest of CIU participants to shift from investments into cash and cash equivalents, the board is required to:

                (a) Immediately notify the CBB and the registrar stating the reason and the expected time by which the stipulated limits will be met; and
                (b) Immediately notify the CBB and the registrar once the CIU resumes investing in accordance with the investment limits stipulated in the prospectus.
                April 2012

              • CG-5.11.4

                The board must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis.

                April 2012

        • LDR LDR Liquidation/De-Registration

          • LDR-A LDR-A Introduction

            • LDR-A.1 LDR-A.1 Purpose

              • Executive Summary

                • LDR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) approach to liquidation/De-registration of CIUs. Furthermore, it distinguishes between the voluntary liquidation/De-registration of a CIU and instances where the CBB may revoke an authorization or registration of a CIU.

                  April 2012

              • Legal Basis

                • LDR-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding liquidation/de-registration requirements applicable to collective investment undertakings and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • LDR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • LDR-A.2 LDR-A.2 Module History

              • Evolution of Module

                • LDR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • LDR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • LDR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       
                       
                  April 2012

              • Superseded Requirements

                • LDR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • LDR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • LDR-1 LDR-1 Voluntary Liquidation of a CIU

            • LDR-1.1 LDR-1.1 General Requirements

              • LDR-1.1.1

                A Bahrain domiciled CIU must continue to meet its contractual and regulatory obligations to CIU participants and creditors, throughout the process of liquidation.

                April 2012

              • LDR-1.1.2

                A Bahrain domiciled CIU must continue to comply with all applicable CBB requirements, until such time as it is formally notified by the CBB that it has been formally removed from the CBB's register of authorised/registered CIUs. Such requirements include the settlement of CBB annual fees once they fall due, in case the liquidation process is not fully concluded by the end of 31st December of the year of liquidation.

                April 2012

              • LDR-1.1.3

                The CBB reserves the right, to impose any further directions, it considers necessary to effect the fair and orderly liquidation of a CIU.

                April 2012

            • LDR-1.2 LDR-1.2 Notification

              • LDR-1.2.1

                Any intention to liquidate a Bahrain domiciled CIU must first be notified to the CBB by the operator together with reasons for having such intent. Notification must be made before entering into any other legally binding commitment to liquidate.

                April 2012

              • LDR-1.2.2

                Following its receipt and acknowlegment of the notification referred to in Paragraph LDR-1.2.1, the operator may then seek the formal approvals needed from any person(s) other than the CBB, as required by law, before the liquidation process can be commenced.

                April 2012

            • LDR-1.3 LDR-1.3 Prior Approval

              • LDR-1.3.1

                Upon finalising the decision to liquidate, the operator of a Bahrain domiciled CIU must seek in writing, the CBB's prior written approval to liquidate. The liquidation must be subject to the terms of the instrument constituting the CIU and any other applicable laws.

                April 2012

              • LDR-1.3.2

                The formal request referred to in Paragraph LDR-1.3.1 must be supported by a Board Resolution ratifying the decision, subject to CBB approval.

                April 2012

              • LDR-1.3.3

                The operator may not undertake any step amounting to actual liquidation of the CIU until it has received a final written approval from the CBB.

                April 2012

              • LDR-1.3.4

                CBB approval in response to a request to liquidate a Bahrain domiciled CIU will normally be given in the following circumstances:

                (a) The CIU was not able to operate within 6 months from the CBB's authorisation/registration date (refer to Module ARR);
                (b) The purpose of the CIU cannot be accomplished;
                (c) The constitutional documents of the CIU stipulate a specific maturity date;
                (d) The NAV of the CIU has fallen below a certain size, where the board believes it is not feasible to continue operating the CIU; or
                (e) A resolution of a duly convened meeting of the CIU participants has been passed to liquidate the CIU.
                April 2012

            • LDR-1.4 LDR-1.4 Process

              • LDR-1.4.1

                Bahrain domiciled CIUs must simultaneously give at least one month's written notice, as a minimum, to CIU participants of their intention to liquidate the CIU, together with an explanation for such intention. A copy of this notice must be provided to the CBB at the time it is issued to CIU participants.

                April 2012

              • LDR-1.4.2

                Bahrain domiciled CIU must comply with all applicable laws and directions issued by the CBB, throughout the liquidation process.

                April 2012

              • LDR-1.4.3

                Subsequent to obtaining CBB approval for the liquidation, the board must hold an Extraordinary General Meeting (EGM) to resolve the following:

                (a) The date upon which the operations of the CIU and fund company (if applicable) will cease and the final accounts will be prepared;
                (b) The appointment of a liquidator, acceptable to the CBB, responsible for liquidating the CIU and fund company (if applicable); and
                (c) The appointment of an external auditor, acceptable to the CBB, responsible for preparing the final accounts of the CIU.
                April 2012

              • LDR-1.4.4

                Additionally, the CBB expects the determination of the timeframe whereby the proceeds of the CIU will be fully distributed to all CIU participants, to be ratified at the EGM.

                April 2012

              • LDR-1.4.5

                The appointments of the liquidator and the external auditor are subject to CBB approval.

                April 2012

              • LDR-1.4.6

                Upon completion of the liquidation process, the operator must submit the following to the CBB:

                (a) The final report from the liquidator confirming the completion of the liquidation process and the final audited accounts of the CIU and fund company (if applicable);
                (b) Evidence that the Commercial Registration of the fund company, provided by the Ministry of Industry and Commerce has been cancelled (if applicable);
                (c) An independent verification by the external auditor that the CIU's assets have been distributed to CIU participants in accordance with the instrument constituting the CIU. For non-operational CIUs, the audit verification must confirm that the CIU has not operated; and
                (d) A request for the CIU to be removed from the CBB's register of authorised/registered CIUs.
                April 2012

              • LDR-1.4.7

                By virtue of its authorisation/registration with the CBB, the Bahrain domiciled CIU acknowledges the authority of the CBB to request the CIU to undergo liquidation or to de-register a CIU at any time and/or, acting by way of Directive, order its compulsory liquidation. Such powers shall be exercised reasonably. The CIU also acknowledges that the courts of Bahrain have the authority to order the compulsory liquidation of Bahrain domiciled CIUs.

                April 2012

          • LDR-2 LDR-2 Revocation of Authorisation

            • LDR-2.1 LDR-2.1 CBB Revocation of Authorisation Powers

              • LDR-2.1.1

                The CBB may revoke authorisation of a Bahrain domiciled CIU in the following cases:

                (a) If the CIU is not in operation within 6 months from the date of its authorisation (Refer to Module ARR);
                (b) If any of the applicable requirements contained in Volume 7 are not met;
                (c) If false or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                (d) If the CBB believes it necessary in order to safeguard the interests of potential investors or the CIU's participants.
                April 2012

              • LDR-2.1.2

                An authorisation may be revoked by the CBB, subsequent to the ruling of a competent authority, such as a court that has issued an order to liquidate the CIU.

                April 2012

              • LDR-2.1.3

                In the case that the CIU did not operate within 6 months from the date of its authorisation, the CIU must return back any monies collected from potential CIU participants together with all subscription fees charged, and confirm the same in writing to the CBB.

                April 2012

              • LDR-2.1.4

                Where the CBB proposes to cancel a CIU's authorisation, it will give the CIU concerned a written notice of its intention to do so and the reasons for such action. The CIU has 30 calendar days from the date of the written notice to appeal the decision.

                April 2012

          • LDR-3 LDR-3 Revocation of Registration

            • LDR-3.1 LDR-3.1 CBB Revocation of Registration Powers

              • LDR-3.1.1

                The CBB may revoke registration of a Bahrain domiciled exempt CIU in the following cases:

                (a) If the CIU is not in operation within 6 months from the date of its registration (Refer to Module ARR);
                (b) If any of the applicable requirements contained in Volume 7 are not met;
                (c) If false or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                (d) If the CBB believes it necessary in order to safeguard the interests of potential investors or the CIU's participants.
                April 2012

              • LDR-3.1.2

                A registration may be revoked by the CBB, subsequent to the ruling of a competent authority, such as a court that has issued an order to liquidate the CIU.

                April 2012

              • LDR-3.1.3

                In the case that the CIU did not operate within 6 months from the date of its registration, the CIU must return back any monies collected from potential CIU participants together with all subscription fees charged, and confirm the same in writing to the CBB.

                April 2012

              • LDR-3.1.4

                Where the CBB proposes to cancel a CIU's registration, it shall give the CIU concerned a written notice of its intention to do so and the reasons for such action. The CIU has 30 calendar days from the date of the written notice to appeal the decision.

                April 2012

      • Classification of Undertakings

        • BDR BDR Bahrain Domiciled Retail CIUs

          • BDR-A: BDR-A: Introduction

            • BDR-A.1 BDR-A.1 Purpose

              • Executive Summary

                • BDR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Retail CIUs.

                  April 2012

              • Legal Basis

                • BDR-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain domiciled retail CIUs and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BDR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BDR-A.2 BDR-A.2 Module History

              • Evolution of Module

                • BDR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • BDR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BDR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  BDR-7.1.3 10/2017 Added sub-paragraph (g) on annual valuation.
                  BDR-12.1.1A 10/2017 Added a new Paragraph on Exchange Traded Fund.
                  BDR-12.1.6 10/2017 Added a new Paragraph.
                       
                       

              • Superseded Requirements

                • BDR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • BDR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BDR-B: BDR-B: Definition

            • BDR-B.1 BDR-B.1 Definition

              • Bahrain Domiciled Retail CIUs

                • BDR-B.1.1

                  Bahrain domiciled retail CIUs are defined under Paragraph ARR-B.1.7 as CIUs that may be offered to all types of investors.

                  April 2012

              • Authorisation Requirements

                • BDR-B.1.2

                  Bahrain domiciled retail CIUs must be authorised by the CBB prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-2 of Module ARR.

                  April 2012

          • BDR-1: BDR-1: Documents Constituting the CIU

            • BDR-1.1 BDR-1.1 General Requirements

              • BDR-1.1.1

                Every Bahrain domiciled retail CIU must be constituted by way of documents, containing the information listed in Supplementary Information document ARR(i), in Part B of Volume 7.

                April 2012

              • BDR-1.1.2

                In the case of CIUs established as Common CIUs established under the laws of contract, the documents are the Memorandum and Articles of Association of the fund company and the CIU instrument. In the case of Corporates established under the Bahrain Commercial Companies Law, the documents are the Memorandum and Articles of Association. In the case of CIUs established as Trusts under the Financial Trust Law, the legal document is the trust deed.

                April 2012

              • BDR-1.1.3

                The operator of a Bahrain domiciled retail CIU together with the directors of the CIU concerned, or trustees, as appropriate, must ensure that the documents constituting the CIU:

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the operator, fund manager and other relevant persons to the CIU; and
                (c) Are not unfairly prejudicial to the interests of the CIU participants, either generally or to a particular class of CIU participants.
                April 2012

              • BDR-1.1.4

                The operator of a Bahrain domiciled retail CIU together with the directors of the CIU concerned, or trustees, as appropriate, must maintain the documents constituting the CIU.

                April 2012

              • BDR-1.1.5

                Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the documents. An updated copy of the documents must be made available to the CBB within 30 calendar days of the revision being approved.

                April 2012

          • BDR-2: BDR-2: Prospectus

            • BDR-2.1 BDR-2.1 General Requirements

              • BDR-2.1.1

                Every Bahrain domiciled retail CIU authorised under Chapter ARR-2 must publish a prospectus containing, as a minimum, the information set out in Supplementary Information document ARR(ii) in Part B of Volume 7.

                April 2012

              • BDR-2.1.2

                The board of the CIU, or trustees, as appropriate, must ensure that the information contained in the prospectus:

                (a) Is complete and transparent;
                (b) Is not false, misleading, or unfairly prejudicial to the interests of the CIU participants generally or to the participants of other classes of instruments issued by the CIU; and
                (c) Does not contain any provision that conflicts with any Rule in Volume 7, or other legal or regulatory requirements that apply to the CIU or other relevant persons connected to the CIU.
                April 2012

              • BDR-2.1.3

                The documents constituting the Bahrain domiciled retail CIU must form an integral part of the prospectus and must be annexed to it. Alternatively, the prospectus must specify where the documents constituting the Bahrain domiciled retail CIU may be obtained.

                April 2012

              • BDR-2.1.4

                The board of the CIU must keep the prospectus up-to-date, such that the information it contains is materially current.

                April 2012

              • BDR-2.1.5

                Once the CIU is authorised, prior approval must be obtained from the CBB for any subsequent material changes to the prospectus. An updated copy of the prospectus must be made available to the CBB within 30 calendar days of the revision being agreed, and CIU participants must be notified of the changes at least 30 calendar days before they take effect, given that a window for redemption is made available to CIU participants within this timeframe.

                April 2012

              • BDR-2.1.6

                For the purposes of the Paragraph BDR-2.1.5, material changes include, but are not limited to:

                (a) Changes in the relevant persons;
                (b) A change in legal structure;
                (c) A change to the investment strategy; or
                (d) A change in fees.
                April 2012

              • BDR-2.1.7

                The CIU must provide a copy of its most recent prospectus, free of charge, to any existing and potential CIU participants.

                April 2012

              • BDR-2.1.8

                The CIU must, upon request, provide explanations and such other information supplementary to the prospectus as may reasonably be required by any existing and potential CIU participants.

                April 2012

            • BDR-2.2 BDR-2.2 Simplified Prospectus

              • BDR-2.2.1

                Where a simplified prospectus is published by a Bahrain domiciled retail CIU, it must include, as a minimum, the information specified in Supplementary Information document ARR(iii) in Part B of Volume 7. It must also include a statement stating that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available free of charge to existing and potential CIU participants upon request.

                April 2012

              • BDR-2.2.2

                A simplified prospectus must contain a summary of the key features of the CIU, including its investment policy and fee structure. It must not be misleading.

                April 2012

              • BDR-2.2.3

                A simplified prospectus must be kept up to date, such that the information it contains is materially current and accurately represents the full prospectus.

                April 2012

              • BDR-2.2.4

                There is no requirement for a simplified prospectus to be approved by the CBB, nor for any subsequent material changes to be approved or notified. However, the simplified prospectus must accurately reflect the full prospectus, which is subject to approval requirements (see Rule BDR-2.1.5).

                April 2012

          • BDR-3: BDR-3: CIU Holdings

            • BDR-3.1 BDR-3.1 Rights

              • BDR-3.1.1

                If a Bahrain domiciled retail CIU has different classes of holdings, the documents constituting the CIU must clearly set out:

                (a) The different features of each class of holdings, including their respective rights;
                (b) The allocation of expenses and fees; and
                (c) How the proportion of the value of the assets of the CIU and the proportion of income available for allocation attributable to each such class is to be calculated.
                April 2012

              • BDR-3.1.2

                For the purposes of this Module, the interest of the CIU participants in a Bahrain domiciled retail CIU (by whatever name these interests are called), are deemed to consist of holdings (including fractions of a holding), each holding representing one undivided share of the entitlement in the CIU's assets.

                April 2012

              • BDR-3.1.3

                The documents constituting the CIU may provide for different classes of holdings to be issued in an authorised CIU and, in the case of umbrella CIUs, may provide that different classes of holdings may be issued for each sub-CIU.

                April 2012

            • BDR-3.2 BDR-3.2 Issue, Purchase and Redemption of Holdings

              • BDR-3.2.1

                Holdings may not be created or issued unless the equivalent of the net issue price is paid into the assets of a Bahrain domiciled retail CIU within the usual time limits. This does not preclude the distribution of bonus holdings.

                April 2012

              • BDR-3.2.2

                No direct or indirect lending should be made to CIU participants for the purpose of purchasing holdings in a Bahrain domiciled retail CIU, unless the CIU participant is classified as an accredited investor and the lending is incidental to the investment.

                April 2012

              • BDR-3.2.3

                CIU participants must, in accordance with the CIU documents, either be:

                (a) Issued with registered certificates evidencing title to holdings; or
                (b) Provided with written confirmation of entry in a register for such holdings which must be kept current and up-to-date at all times and must contain full details of the names and addresses of the CIU participants, the number of holdings held by them, and the date of acquisition of such holdings.
                April 2012

              • BDR-3.2.4

                Holdings in a CIU must be redeemed, repurchased, reimbursed or repaid (as may be appropriate) at the request of the CIU participants and in accordance with the Bahrain domiciled retail CIU's documents.

                April 2012

              • BDR-3.2.5

                Holdings may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate):

                (a) In accordance with the prospectus constituting the Bahrain domiciled retail CIU; and
                (b) At a price arrived at by dividing the NAV of the CIU by the number of holdings outstanding, after taking into account any charges as stated in the prospectus.
                April 2012

              • BDR-3.2.6

                The prospectus constituting the Bahrain domiciled retail CIU must clearly state the frequency and basis for calculation of the issue price, repurchase price and other appropriate prices of the holdings in the CIU.

                April 2012

          • BDR-4: BDR-4: Investments

            • BDR-4.1 BDR-4.1 Risk Management

              • BDR-4.1.1

                Bahrain domiciled retail CIUs must operate on the principle of risk spreading and must maintain and implement investment and risk management policies aimed at the prudent risk control.

                April 2012

              • BDR-4.1.2

                The prospectus must summarise the policies and limits which the Bahrain domiciled retail CIU will apply, including (but not limited to):

                (a) The type of assets which the CIU may invest in;
                (b) The aggregate limits for each asset class;
                (c) Geographic allocation, limits per country, and sectors limits (if applicable);
                (d) Permitted individual exposures under each asset class; and
                (e) A description of remedial measures to be taken in the event of limit exceptions.
                April 2012

              • BDR-4.1.3

                As further guidance, reference should be made to Supplementary Investment document, ARR(ii) which sets out the minimum information to be contained in the prospectus, and Supplementary Investment document, ARR(iv) which sets out the admissible assets and limits for Bahrain domiciled retail CIUs.

                April 2012

              • BDR-4.1.4

                Bahrain domiciled retail CIUs may only invest in the type of assets specified in and in accordance with the limits prescribed in ARR(iv), unless otherwise agreed and approved in writing by the CBB. However, such limits do not apply until the expiry of a period of six months from the date of the initial offering of the CIU.

                April 2012

              • BDR-4.1.5

                Where such approvals are given, the fact must be notified to CIU participants as an amendment to the prospectus (and simplified prospectus where applicable).

                April 2012

              • BDR-4.1.6

                The CBB may allow a Bahrain domiciled retail CIU to broaden its investment policy to allow investments in financial assets other than those specified in ARR(iv), if it is satisfied that such assets are sufficiently liquid and the interests of the CIU participants are not prejudiced. The CBB may similarly also approve limits beyond those specified in ARR(iv), if it is satisfied that such approval is in the interests of the CIU participants.

                April 2012

              • BDR-4.1.7

                If the name or particulars of a Bahrain domiciled retail CIU indicates a specific objective, asset class, geographic region or market, the CIU must invest at least 60% of its assets in investments that reflect the specific objective, asset class, region or market. The remaining balance of the CIU's assets may only be held in cash or cash equivalents.

                April 2012

            • BDR-4.2 BDR-4.2 Derivative Transactions

              • BDR-4.2.1

                A Bahrain domiciled retail CIU may enter into permitted financial derivative transactions, provided that the following conditions are adhered to at all times:

                (a) The underlying positions continue to satisfy the limits specified in ARR(iv);
                (b) The transactions are consistent with the stated investment objectives;
                (c) The counterparties are licensed financial institutions or licensed exchanges or clearing houses;
                (d) The prospectus of the CIU clearly specifies the use and rationale of such transactions (i.e. for hedging purposes or for achieving investment goals), and provides a clear description of the associated risks, including the risk of volatility in NAVs;
                (e) The derivative positions and balances allow independent and reliable daily valuations and can be sold, liquidated or closed by an offsetting transaction at any time, at their fair value and at the initiative of the CIU;
                (f) The transactions are subject to sound and documented risk management policies and practices; and
                (g) The arrangement is consistent with good market practice.
                April 2012

            • BDR-4.3 BDR-4.3 Significant Influence / Conflicts of Interest

              • BDR-4.3.1

                Bahrain domiciled retail CIUs must not acquire securities issued by a relevant person, unless exempted in writing by the CBB.

                April 2012

              • BDR-4.3.2

                Exemption from Rule BDR-4.3.1 will normally only be given by the CBB in cases where a Bahrain domiciled retail CIU is pursuing a market index strategy, such that it is obliged to invest in a relevant person's securities in order to replicate a market index.

                April 2012

              • BDR-4.3.3

                Bahrain domiciled retail CIUs must not invest in any security (of any class) in a company or other undertaking, if any director of the CIU or of any relevant person and its affiliates individually or collectively owns more than 5% of those securities.

                April 2012

              • BDR-4.3.4

                The prohibition in Paragraph BDR-4.3.3 also applies where the ownership of the directors of the CIU or of any relevant person and its affiliates, is in the parent, subsidiary or other associated undertaking of the company in which the CIU is to make the investment.

                April 2012

              • BDR-4.3.5

                Bahrain domiciled retail CIUs must not invest in other CIUs which have the same operator, as the Bahrain domiciled retail CIU.

                April 2012

              • BDR-4.3.6

                Bahrain domiciled retail CIUs must not enter into a transaction where one of the relevant persons is a counterparty to the transaction.

                April 2012

            • BDR-4.4 BDR-4.4 Other Restrictions on Investments

              • BDR-4.4.1

                Bahrain domiciled retail CIUs must not:

                (a) Assume, guarantee, endorse or otherwise become directly or contingently liable for the obligations or indebtedness of any person, except in accordance with its prospectus or instrument constituting the CIU; or
                (b) Acquire any asset which involves the assumption of any liability which is unlimited.
                April 2012

            • BDR-4.5 BDR-4.5 Non-compliance with and Breaches of Investment Limits

              • BDR-4.5.1

                If the investment limits and risk management policies specified in the prospectus are breached because of a reason other than a market change or movement, the Bahrain domiciled retail CIU must take all necessary steps to remedy the situation immediately, without jeopardizing the interests of CIU participants.

                April 2012

              • BDR-4.5.2

                Any breach of investment limits and risk management policies, that has occurred because of a reason other than a market change or movement, must be reported to the CBB in writing by the board of the CIU, the custodian and the fund administrator, in a timely manner and accompanied by a plan and time-frame whereby the breach would be rectified.

                April 2012

              • BDR-4.5.3

                If the breach occurs as a result of a market change or movement, the Bahrain domiciled retail CIU must take all necessary steps to remedy the situation, if possible, but without jeopardizing the interests of CIU participants, and to notify the CBB of the same.

                April 2012

              • BDR-4.5.4

                The CBB does not consider it a breach in the event that the fund manager foresees, due to adverse market conditions, that it is in the best interest of CIU participants to shift from investments into cash and cash equivalents. In such case, the following notifications must be made:

                (a) The board is required to immediately notify the CBB and the registrar stating the reason and the expected time by which the stipulated limits will be met;
                (b) The board is required to immediately notify the CBB and the registrar once the CIU resumes investing in accordance with the investment limits stipulated in the prospectus; and
                (c) The registrar is required to notify the CIU participants of the information above.
                April 2012

          • BDR-5: BDR-5: Borrowing, Lending and Short Selling

            • BDR-5.1 BDR-5.1 Borrowing

              • BDR-5.1.1

                A Bahrain domiciled retail CIU may only borrow subject to the following conditions:

                (a) The borrowing is temporary;
                (b) The borrowing is to be repaid out of the assets of the CIU;
                (c) The assets of the CIU, other than those pledged for the purpose of the borrowing transaction are not pledged;
                (d) The borrowing does not at any time exceed 20% of the CIU's assets;
                (e) The circumstances for such borrowing are disclosed in the prospectus; and
                (f) The borrowing is made on an exceptional basis to assist with liquidity management, rather than to leverage returns.
                April 2012

            • BDR-5.2 BDR-5.2 Lending

              • BDR-5.2.1

                A Bahrain domiciled retail CIU must not lend its assets to a relevant person of the CIU.

                April 2012

              • BDR-5.2.2

                A Bahrain domiciled retail CIU may only lend its assets by entering into a stock lending agreement.

                April 2012

              • BDR-5.2.3

                A Bahrain domiciled retail CIU may only enter into stock lending arrangements in respect of any securities held by it, provided that:

                (a) The counterparty is a licensed financial institution;
                (b) The arrangement is consistent with best market practice;
                (c) Acceptable collateral with a value equal to the securities lent is obtained to secure the obligation;
                (d) The current realisable value of the securities and of the relevant collateral is monitored daily in order to make-up the difference when the current realisable value of the collateral falls below that of the securities lent;
                (e) The aggregate value of stocks lent does not at any time exceed 20% of the net asset value of the CIU's assets; and
                (f) The circumstances for such lending are disclosed in the prospectus.
                April 2012

            • BDR-5.3 BDR-5.3 Short Selling

              • BDR-5.3.1

                A Bahrain domiciled retail CIU must not engage in short selling of securities.

                April 2012

          • BDR-6: BDR-6: Fees and Dividends

            • BDR-6.1 BDR-6.1 Fees

              • BDR-6.1.1

                All costs and charges, including fees to relevant persons, payable from the assets of a Bahrain domiciled retail CIU must be clearly stated and disclosed in the prospectus and must include the following:

                (a) The breakdown of such costs and charges;
                (b) The estimated or actual amount of costs and charges payable;
                (c) The nature and the basis for their calculation; and
                (d) The maximum amounts payable, expressed as percentages of the CIU's assets, on a per annum basis.
                April 2012

              • BDR-6.1.2

                Where a performance fee is charged by way of deduction from the assets of a Bahrain domiciled retail CIU, the following must be stated in the prospectus:

                (a) The frequency of charging the performance fee to the CIU; and
                (b) The basis upon which the performance fee is calculated.
                April 2012

              • BDR-6.1.3

                If a performance fee is levied, the fee may only be payable:

                (a) Not more frequently than annually;
                (b) If the NAV per holding exceeds the NAV per holding on which the performance fee was last calculated and paid; and
                (c) From an audited NAV.
                April 2012

              • BDR-6.1.4

                Costs, charges and fees which have not been disclosed in a Bahrain domiciled retail CIU's prospectus must not be paid from the CIU's assets.

                April 2012

            • BDR-6.2 BDR-6.2 Dividends

              • BDR-6.2.1

                All requests for distribution of dividends on holdings, must be approved in writing by the CBB prior to announcing the proposed dividend by way of a press announcement or any other means of communication and prior to submitting a proposal for distribution to CIU participants of a Bahrain domiciled retail CIU.

                April 2012

          • BDR-7: BDR-7: Valuation of Assets

            • BDR-7.1 BDR-7.1 General Requirements

              • BDR-7.1.1

                The board of Directors must ensure that an independent, fair and regular valuation of all the CIU's assets, is conducted by appropriately qualified valuators.

                April 2012

              • BDR-7.1.2

                The valuation principles to be applied must be stated in the CIU's prospectus and must include details of the methods and frequency of the valuation of assets.

                April 2012

              • BDR-7.1.3

                The CBB expects the scope of the valuation policy:

                (a) To reflect 'good practice' industry standards;
                (b) Wherever possible, to be based on multiple and independent price sources;
                (c) Where unavoidable, valuations based on trader, broker or pricing models, input should be sufficiently tested and controlled, and declared, such that conflicts of interest are minimised;
                (d) Procedures should be developed to identify stale prices or illiquid assets;
                (e) The valuation of such assets should be performed by an expert in the asset class; and
                (f) Valuations should normally be undertaken at least on a monthly basis.
                (g) In the case of CIUs structured as B-REITs, the valuation must be undertaken at least annually.
                Amended: October 2017
                April 2012

              • BDR-7.1.4

                The fund administrator must notify the CBB, in writing, if:

                (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date;
                (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIU; or
                (iii) The total NAV falls below 50% of the total NAV of the CIU relative to the previous valuation day.
                April 2012

          • BDR-8: BDR-8: Books and Records

            • BDR-8.1 BDR-8.1 General Requirements

              • BDR-8.1.1

                Bahrain domiciled retail CIUs must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The CIU and its relevant persons, as appropriate, to comply with the Rules in this Module; and
                (b) The CIU to demonstrate at any time that such compliance has been achieved.
                April 2012

              • BDR-8.1.2

                The records referred to in Paragraph BDR-8.1.1, include but are not limited to, the minutes of the board of director's meetings (see Paragraph CG-4.1.1), the prospectus, contractual agreements, documents constituting the CIU and annual audited statements.

                April 2012

              • BDR-8.1.3

                Bahrain domiciled retail CIUs must maintain, through the appointed registrar, a register of holdings in the CIU. The register must be kept up to date at all times and must contain the following information:

                (a) Name of the CIU participant;
                (b) Official identification of the CIU participant (including the type and number);
                (c) Address and contact details of the CIU participant;
                (d) Number of units held by the CIU participant;
                (e) Number(s) of the certificate(s) issued to each CIU participant;
                (f) Date of issuance or transfer of units to the CIU participant;
                (g) Record of redemption of units; and
                (h) Record of cancellation of units.
                April 2012

              • BDR-8.1.4

                Bahrain domiciled retail CIUs must, through the appointed registrar, obtain and safe-keep all signed application forms, along with KYC documents for each CIU participant, in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable laws and regulations.

                April 2012

              • BDR-8.1.5

                The operator of a Bahrain domiciled retail CIU must make available for public inspection in Bahrain, free of charge, the following documents:

                (a) The documents constituting the CIU;
                (b) The prospectus (and simplified prospectus if applicable);
                (c) All annual and semi-annual reports issued by the CIU; and
                (d) Copies of all CBB approvals, where required.
                April 2012

          • BDR-9: BDR-9: Financial Statements and Disclosure Requirements

            • BDR-9.1 BDR-9.1 General Requirements

              • BDR-9.1.1

                Bahrain domiciled retail CIUs must prepare semi-annual (interim) and annual audited financial statements for each financial year.

                April 2012

              • BDR-9.1.2

                The annual audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or AAOIFI Standards, as applicable, by a qualified independent external auditor located in Bahrain and acceptable to the CBB. The semi-annual (interim) financial statements must be subject to an independent review by the same auditor.

                April 2012

              • BDR-9.1.3

                The annual audited financial statements must be disclosed and distributed to CIU participants and submitted to the CBB, within 4 months of the end of the CIU's financial year.

                April 2012

              • BDR-9.1.4

                The semi-annual (interim) financial statements must be disclosed and distributed to CIU participants and submitted to the CBB, within 2 months of the period end.

                April 2012

              • BDR-9.1.5

                Both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) of Part B of Volume 7.

                April 2012

              • BDR-9.1.6

                Publication of semi-annual and annual audited financial statements on the CIU's or operator's website is encouraged.

                April 2012

              • BDR-9.1.7

                The annual audited financial statements of the fund company (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund company.

                April 2012

              • BDR-9.1.8

                Bahrain domiciled retail CIUs must disclose their NAV to all CIU participants and potential investors, in accordance with the prospectus.

                April 2012

          • BDR-10: BDR-10: Advertisements

            • BDR-10.1 BDR-10.1 General Requirements

              • BDR-10.1.1

                The operator/fund manager, as appropriate, is responsible to ensure that all advertisements in respect of Bahrain domiciled retail CIUs must:

                (a) Be fair, transparent and not misleading;
                (b) Be clear and self-explanatory (describing the nature or type of CIU to which the advertisement relates);
                (c) State any assumptions, forecasts and projections, on which claims in advertisements are based. Where an advertisement contains any forecast or projection, it must make clear the basis upon which that forecast or projection is made;
                (d) Contain risk warnings, including the potential for loss, in a manner that such warning is prominently presented and not obscured or disguised. The font used for risk warnings must be readable, bold and not less than the font of the advertisement;
                (e) Not describe CIUs as "guaranteed" unless there is a legally enforceable capital guarantee;
                (f) Not include any comparisons which may be misleading, considering the circumstances of the CIU; and
                (g) Include a statement informing the client that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available to the client, free of charge.
                April 2012

              • BDR-10.1.2

                For the purposes of this Module, advertising may include, but is not limited to, advertising in print or other media, e-mail or internet.

                April 2012

          • BDR-11: BDR-11: Access to Premises

            • BDR-11.1 BDR-11.1 General Requirements

              • BDR-11.1.1

                Relevant persons of Bahrain domiciled retail CIUs must permit representatives of the CBB, or persons appointed by the CBB to have access, with or without notice, duing reasonable business hours to any of their business premises to allow the CBB to carry out inspection or investigation of the CIU at any point of time, in order for the CBB to discharge its regulatory obligations.

                April 2012

          • BDR-12: BDR-12: Listing Requirements

            • BDR-12.1 BDR-12.1 General Requirements

              • BDR-12.1.1

                Bahrain domiciled retail CIUs may only be listed on a licensed exchange and must state such intention in the prospectus.

                April 2012

              • BDR-12.1.1A

                An example of a listed Bahrain domiciled retail CIU include Exchange Traded Funds ((ETFs). ETFs are effectively mutual funds that are traded like stocks on a stock exchange. An ETF is a marketable security that tracks an index, a commodity, bonds or a basket of securities.

                Added: October 2017

              • BDR-12.1.2

                In the case that a Bahrain domiciled retail CIU intends to be listed subsequent to being authorised by the CBB, it must:

                (a) Amend the prospectus after obtaining the CBB's approval; and
                (b) Notify the CIU participants of such intention.
                April 2012

              • BDR-12.1.3

                Subsequent to fulfilling the requirements listed in Paragraph BDR-12.1.2, the operator of the CIU must:

                (a) Obtain CBB's non-objection to be listed;
                (b) Obtain the required approvals from the licensed exchange; and
                (c) Thereafter, notify the CBB of the effective date of listing.
                April 2012

              • BDR-12.1.4

                In the event of listing, the prospectus of the listed CIU must be made available to potential subscribers.

                April 2012

              • BDR-12.1.5

                Listed CIUs must at all times observe the definition of "eligible investors" as per indicated in the prospectus.

                April 2012

              • BDR-12.1.6

                The listed Bahrain domiciled retail CIU must follow the listing rules provided by the licensed exchange.

                Added: October 2017

          • BDR-13: BDR-13: Mergers and Transfers

            • BDR-13.1 BDR-13.1 General Requirements

              • BDR-13.1.1

                A Bahrain domiciled retail CIU must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled retail CIU.

                April 2012

              • BDR-13.1.2

                The request for approval above must be supported by the following information:

                (a) The reasons for the proposed merger or transfer;
                (b) The alternatives available to CIU participants (including a right to redeem without charge, or switch into another Bahrain domiciled retail CIU without charge); and
                (c) The estimated costs of the merger or transfer, and information on who is expected to bear such costs.
                April 2012

              • BDR-13.1.3

                All CIU participants must be informed, at least 15 business days prior to the intention to merge or transfer to another Bahrain domiciled retail CIU in order for them to make an informed decision.

                April 2012

              • BDR-13.1.4

                In all cases, a merger or transfer of a Bahrain domiciled retail CIU must be in accordance with the instrument constituting the CIU and all other applicable laws.

                April 2012

          • BDR-14: BDR-14: Suspension of Dealing in CIU Holdings

            • BDR-14.1 BDR-14.1 Suspension of Dealing

              • BDR-14.1.1

                A Bahrain domiciled retail CIU must notify the CBB and all CIU participants upon the suspension of dealing in the CIU holdings and provide the rationale for such decision.

                April 2012

            • BDR-14.2 BDR-14.2 Resumption of Dealing

              • BDR-14.2.1

                A Bahrain domiciled retail CIU must notify the CBB and all CIU participants upon the resumption of dealing in the CIU holdings and provide the date on which the dealing was resumed.

                April 2012

        • BDE BDE Bahrain Domiciled Expert CIUs

          • BDE-A BDE-A Introduction

            • BDE-A.1 BDE-A.1 Purpose

              • Executive Summary

                • BDE-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Expert CIUs.

                  April 2012

              • Legal Basis

                • BDE-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain Domiciled expert CIUs applicable to collective investment undertakings and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BDE-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BDE-A.2 BDE-A.2 Module History

              • Evolution of Module

                • BDE-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • BDE-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BDE-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  BDE-7.1.3(g) 10/2017 Deleted subparagraph on annual valuation.
                       
                       
                       
                       

              • Superseded Requirements

                • BDE-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • BDE-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BDE-B BDE-B Definition

            • BDE-B.1 BDE-B.1 Definition

              • Bahrain Domiciled Expert CIUs

                • BDE.B.1.1

                  Bahrain domiciled expert CIUs are defined under section Paragraph ARR-B.1.14 as CIUs that may be offered only to expert investors, and impose a minimum initial investment of USD10,000 (or equivalent in any other currency).

                  April 2012

                • BDE.B.1.2

                  A Bahrain domiciled expert CIU must be able to demonstrate that each of its participants falls within the definition of an expert investor. It should also be able to demonstrate that the risk exposure potentially represented by a Bahrain domiciled expert CIU have been clearly communicated and understood by the CIU participants.

                  April 2012

                • BDE.B.1.3

                  To help demonstrate compliance with Rule BDE-B.1.2, the CBB would expect to see a written confirmation from each CIU participant, stating that they satisfy the definition of an expert investor and confirming that they understand the higher risks involved in an expert CIU.

                  April 2012

              • Authorisation Requirements

                • BDE.B.1.4

                  Bahrain domiciled expert CIUs must be authorised by the CBB prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-3.

                  April 2012

          • BDE-1 BDE-1 Documents Constituting the CIU

            • BDE-1.1 BDE-1.1 General Requirements

              • BDE-1.1.1

                Every Bahrain domiciled expert CIU must be constituted by way of documents, containing the information listed in Supplementary Information document ARR(i), in Part B of Volume 7.

                April 2012

              • BDE-1.1.2

                In the case of CIUs established as Common CIUs established under the laws of contract, the documents are the Memorandum and Articles of Association of the fund company and the CIU instrument. In the case of Corporates established under the Bahrain Commercial Companies Law, the documents are the Memorandum and Articles of Association. In the case of CIUs established as Trusts under the Financial Trust Law, the legal document is the trust deed.

                April 2012

              • BDE-1.1.3

                The operator of a Bahrain domiciled expert CIU together with the directors of the CIU concerned, or trustees, as appropriate, must ensure that the documents constituting the CIU:

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the operator, fund manager and other relevant persons to the CIU; and
                (c) Are not unfairly prejudicial to the interests of the CIU participants, either generally or to a particular class of CIU participants.
                April 2012

              • BDE-1.1.4

                The operator of a Bahrain domiciled expert CIU together with the directors of the CIU concerned, or trustees, as appropriate, must maintain the documents constituting the CIU.

                April 2012

              • BDE-1.1.5

                Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the documents. An updated copy of the documents must be made available to the CBB within 30 calendar days of the revision being approved.

                April 2012

          • BDE-2 BDE-2 Prospectus

            • BDE-2.1 BDE-2.1 General Requirements

              • BDE-2.1.1

                Every Bahrain domiciled expert CIU authorised under Chapter ARR-3 must publish a prospectus containing, as a minimum, the information set out in Supplementary Information document ARR(ii), in Part B of Volume 7.

                April 2012

              • BDE-2.1.2

                The board of the CIU, or trustees, as appropriate, must ensure that the information contained in the prospectus:

                (a) Is complete and transparent;
                (b) Is not false, misleading, or unfairly prejudicial to the interests of the CIU participants generally or to the participants of other classes of instruments issued by the CIU; and
                (c) Does not contain any provision that conflicts with any Rule in Volume 7, or other legal or regulatory requirements that apply to the CIU or other relevant persons connected to the CIU.
                April 2012

              • BDE-2.1.3

                The documents constituting the Bahrain domiciled expert CIU must form an integral part of the prospectus and must be annexed to it. Alternatively, the prospectus must specify where the documents constituting the Bahrain domiciled expert CIU may be obtained.

                April 2012

              • BDE-2.1.4

                The board of the CIU must keep the prospectus up-to-date, such that the information it contains is materially current.

                April 2012

              • BDE-2.1.5

                Once the CIU is authorised, prior approval must be obtained from the CBB for any subsequent material changes to the prospectus. An updated copy of the prospectus must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participants must be notified of the changes at least 30 calendar days before they take effect, given that a window for redemption is made available to CIU participants within this timeframe.

                April 2012

              • BDE-2.1.6

                For the purposes of the Paragraph BDE-2.1.5, material changes include, but are not limited to:

                (a) Changes in the relevant persons;
                (b) A change in legal structure;
                (c) A change to the investment strategy; or
                (d) A change in fees.
                April 2012

              • BDE-2.1.7

                The CIU must provide a copy of its most recent prospectus, free of charge, to any existing and potential CIU participants.

                April 2012

              • BDE-2.1.8

                The CIU must, upon request, provide explanations and such other information supplementary to the prospectus as may reasonably be required by any existing and potential CIU participants.

                April 2012

            • BDE-2.2 BDE-2.2 Simplified Prospectus

              • BDE-2.2.1

                Where a simplified prospectus is published by a Bahrain domiciled expert CIU, it must include, as a minimum, the information specified in Supplementary Information document ARR(iii), in Part B of Volume 7. It must also include a statement stating that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available free of charge to existing and potential CIU participants upon request.

                April 2012

              • BDE-2.2.2

                A simplified prospectus must contain a summary of the key features of the CIU, including its investment policy and fee structure. It must not be misleading.

                April 2012

              • BDE-2.2.3

                A simplified prospectus must be kept up to date, such that the information it contains is materially current and accurately represents the full prospectus.

                April 2012

              • BDE-2.2.4

                There is no requirement for a simplified prospectus to be approved by the CBB, nor for any subsequent material changes to be approved or notified. However, the simplified prospectus must accurately reflect the full prospectus, which is subject to approval requirements (see Rule BDE-2.1.5).

                April 2012

          • BDE-3 BDE-3 CIU Holdings

            • BDE-3.1 BDE-3.1 Rights

              • BDE-3.1.1

                If a Bahrain domiciled expert CIU has different classes of holdings, the documents constituting the CIU must clearly set out:

                (a) The different features of each class of holdings, including their respective rights;
                (b) The allocation of expenses and fees; and
                (c) How the proportion of the value of the assets of the CIU and the proportion of income available for allocation attributable to each such class is to be calculated.
                April 2012

              • BDE-3.1.2

                For the purposes of this Module, the interest of the CIU participants in a Bahrain domiciled expert CIU (by whatever name these interests are called), are deemed to consist of holdings (including fractions of a holding), each holding representing one undivided share of the entitlement in the CIU's assets.

                April 2012

              • BDE-3.1.3

                The documents constituting the CIU may provide for different classes of holdings to be issued in an authorised CIU and, in the case of umbrella CIUs, may provide that different classes of holdings may be issued for each sub-CIU.

                April 2012

            • BDE-3.2 BDE-3.2 Issue, Purchase and Redemption of Holdings

              • BDE-3.2.1

                Holdings may not be created or issued unless the equivalent of the net issue price is paid into the assets of a Bahrain domiciled expert CIU within the usual time limits. This does not preclude the distribution of bonus holdings.

                April 2012

              • BDE-3.2.2

                No direct or indirect lending should be made to CIU participants for the purpose of purchasing holdings in a Bahrain domiciled expert CIU, unless the CIU participant is classified as an accredited investor and the lending is incidental to the investment.

                April 2012

              • BDE-3.2.3

                CIU participants must, in accordance with the CIU documents, either be:

                (a) Issued with registered certificates evidencing title to holdings; or
                (b) Provided with written confirmation of entry in a register for such holdings which must be kept current and up-to-date at all times and must contain full details of the names and addresses of the CIU participants, the number of holdings held by them, and the date of acquisition of such holdings.
                April 2012

              • BDE-3.2.4

                Holdings in a CIU must be redeemed, repurchased, reimbursed or repaid (as may be appropriate) at the request of the CIU participants and in accordance with the Bahrain domiciled expert CIU's documents.

                April 2012

              • BDE-3.2.5

                Holdings may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate):

                (a) In accordance with the prospectus constituting the Bahrain domiciled expert CIU: and
                (b) At a price arrived at by dividing the NAV of the CIU by the number of holdings outstanding, after taking into account any charges as stated in the prospectus.
                April 2012

              • BDE-3.2.6

                The prospectus constituting the Bahrain domiciled expert CIU must clearly state the frequency and basis for calculation of the issue price, repurchase price and other appropriate prices of the holdings in the CIU.

                April 2012

          • BDE-4 BDE-4 Investments

            • BDE-4.1 BDE-4.1 Risk Management

              • BDE-4.1.1

                Bahrain domiciled expert CIUs must operate on the principle of risk spreading and must maintain and implement investment and risk management policies aimed at the prudent risk control.

                April 2012

              • BDE-4.1.2

                The prospectus must summarise the policies and limits which the Bahrain domiciled expert CIU will apply, including (but not limited to):

                (a) The type of assets which the CIU may invest in;
                (b) The aggregate limits for each asset class;
                (c) Geographic allocation, limits per country, and sectors limits (if applicable);
                (d) Permitted individual exposures under each asset class; and
                (e) A description of remedial measures to be taken in the event of limit exceptions.
                April 2012

              • BDE-4.1.3

                As further guidance, reference should be made to Supplementary Information document, ARR (iii) which sets out the minimum information to be contained in the prospectus, and Supplementary Information document, ARR (iv) which sets out the admissible assets and limits for Bahrain domiciled expert CIUs.

                April 2012

              • BDE-4.1.4

                Bahrain domiciled expert CIUs may only invest in the type of assets specified in and in accordance with the limits prescribed in ARR(iv), unless otherwise agreed and approved in writing by the CBB. However, such limits do not apply until the expiry of a period of six months from the date of the initial offering of the CIU.

                April 2012

              • BDE-4.1.5

                Where such approvals are given, the fact must be notified to CIU participants as an amendment to the prospectus (and simplified prospectus where applicable).

                April 2012

              • BDE-4.1.6

                The CBB may allow a Bahrain domiciled expert CIU to broaden its investment policy to allow investments in financial assets other than those specified in ARR(iv), if it is satisfied that such assets are sufficiently liquid and the interests of the CIU participants are not prejudiced. The CBB may similarly also approve limits beyond those specified in ARR(iv), if it is satisfied that such approval is in the interests of the CIU participants.

                April 2012

              • BDE-4.1.7

                If the name or particulars of a Bahrain domiciled expert CIU indicates a specific objective, asset class, geographic region or market, the CIU must invest at least 60% of its assets in investments that reflect the specific objective, asset class, region or market. The remaining balance of the CIU's assets may only be held in cash or cash equivalents.

                April 2012

            • BDE-4.2 BDE-4.2 Derivative Transactions

              • BDE-4.2.1

                A Bahrain domiciled expert CIU may enter into permitted financial derivative transactions, provided that the following conditions are adhered to at all times:

                (a) The underlying positions continue to satisfy the limits specified in ARR(iv);
                (b) The transactions are consistent with the stated investment objectives;
                (c) The counterparties are licensed financial institutions or licensed exchanges or clearing houses;
                (d) The prospectus of the CIU clearly specifies the use and rationale of such transactions (i.e. for hedging purposes or for achieving investment goals), and provides a clear description of the associated risks, including the risk of volatility in net asset values;
                (e) The derivative positions and balances allow independent and reliable daily valuations and can be sold, liquidated or closed by an offsetting transaction at any time, at their fair value and at the initiative of the CIU;
                (f) The transactions are subject to sound and documented risk management policies and practices; and
                (g) The arrangement is consistent with good market practice.
                April 2012

            • BDE-4.3 BDE-4.3 Significant Influence / Conflicts of Interest

              • BDE-4.3.1

                Bahrain domiciled expert CIUs must not acquire securities issued by a relevant person, unless exempted in writing by the CBB.

                April 2012

              • BDE-4.3.2

                Exemption from Rule BDE-4.3.1 will normally only be given by the CBB in cases where a Bahrain domiciled expert CIU is pursuing a market index strategy, such that it is obliged to invest in a relevant person's securities in order to replicate a market index.

                April 2012

              • BDE-4.3.3

                Bahrain domiciled expert CIUs must not invest in any security (of any class) in a company or other undertaking, if any director of the CIU or of any relevant person and its affiliates individually or collectively owns more than 5% of those securities.

                April 2012

              • BDE-4.3.4

                The prohibition in Paragraph BDE-4.3.3 also applies where the ownership of the directors of the CIU or of any relevant person and its affiliates, is in the parent, subsidiary or other associated undertaking of the company in which the CIU is to make the investment.

                April 2012

              • BDE-4.3.5

                Bahrain domiciled expert CIUs must not invest in other CIUs which have the same operator, as the Bahrain domiciled expert CIU.

                April 2012

              • BDE-4.3.6

                Bahrain domiciled expert CIUs must not enter into a transaction where one of the relevant persons is a counterparty to the transaction.

                April 2012

            • BDE-4.4 BDE-4.4 Other Restrictions on Investments

              • BDE-4.4.1

                Bahrain domiciled expert CIUs must not:

                (a) Assume, guarantee, endorse or otherwise become directly or contingently liable for the obligations or indebtedness of any person, except in accordance with its prospectus or instrument constituting the CIU; or
                (b) Acquire any asset which involves the assumption of any liability which is unlimited.
                April 2012

            • BDE-4.5 BDE-4.5 Non-Compliance with and Breaches of Investment Limits

              • BDE-4.5.1

                If the investment limits and risk management policies specified in the prospectus are breached because of a reason other than a market change or movement, the Bahrain domiciled expert CIU must take all necessary steps to remedy the situation immediately, without jeopardizing the interests of CIU participants.

                April 2012

              • BDE-4.5.2

                Any breach of investment limits and risk management policies, that has occurred because of a reason other than a market change or movement, must be reported to the CBB in writing by the board of the CIU, the custodian and the fund administrator, in a timely manner and accompanied by a plan and time-frame whereby the breach would be rectified.

                April 2012

              • BDE-4.5.3

                If the breach occurs as a result of a market change or movement, the Bahrain domiciled expert CIU must take all necessary steps to remedy the situation, if possible, but without jeopardizing the interests of CIU participants, and to notify the CBB of the same.

                April 2012

              • BDE-4.5.4

                The CBB does not consider it a breach in the event that the fund manager foresees, due to adverse market conditions, that it is in the best interest of CIU participants to shift from investments into cash and cash equivalents. In such case, the following notifications must be made:

                (a) The board is required to immediately notify the CBB and the registrar stating the reason and the expected time by which the stipulated limits will be met;
                (b) The board is required to immediately notify the CBB and the registrar once the CIU resumes investing in accordance with the investment limits stipulated in the prospectus; and
                (c) The registrar is required to notify the CIU participants of the information above.
                April 2012

          • BDE-5 BDE-5 Borrowing, Leveraging, Lending and Short Selling

            • BDE-5.1 BDE-5.1 Borrowing

              • BDE-5.5.1

                A Bahrain domiciled expert CIU may only borrow subject to the following conditions:

                (a) The borrowing is temporary;
                (b) The borrowing is to be repaid out of the assets of the CIU;
                (c) The assets of the CIU, other than those pledged for the purpose of the borrowing transaction are not pledged;
                (d) The borrowing does not at any time exceed 20% of the CIU's assets;
                (e) The circumstances for such borrowing are disclosed in the prospectus; and
                (f) The borrowing is made on an exceptional basis to assist with liquidity management, rather than to leverage returns.
                April 2012

            • BDE-5.2 BDE-5.2 Leveraging

              • BDE-5.2.1

                A Bahrain domiciled expert CIU may only borrow up to 20% of the CIU's assets for the purpose of leveraging returns.

                April 2012

              • BDE-5.2.2

                The aggregate borrowing and leveraging limit permitted for Bahrain domiciled expert CIUs must not exceed 30% of the CIU's assets at any time.

                April 2012

            • BDE-5.3 BDE-5.3 Lending

              • BDE-5.3.1

                A Bahrain domiciled expert CIU must not lend its assets to a relevant person of the CIU.

                April 2012

              • BDE-5.3.2

                A Bahrain domiciled expert CIU may only lend its assets by entering into a stock lending agreement.

                April 2012

              • BDE-5.3.3

                A Bahrain domiciled expert CIU may only enter into stock lending arrangements in respect of any securities held by it, provided that:

                (a) The counterparty is a licensed financial institution;
                (b) The arrangement is consistent with best market practice;
                (c) Acceptable collateral with a value equal to the securities lent is obtained to secure the obligation;
                (d) The current realisable value of the securities and of the relevant collateral is monitored daily in order to make-up the difference when the current realisable value of the collateral falls below that of the securities lent;
                (e) The aggregate value of stocks lent does not at any time exceed 20% of the net asset value of the CIU's assets; and
                (f) The circumstances for such lending are disclosed in the prospectus.
                April 2012

            • BDE-5.4 BDE-5.4 Short Selling

              • BDE-5.4.1

                A Bahrain domiciled expert CIU must not engage in short selling of securities.

                April 2012

          • BDE-6 BDE-6 Fees and Dividends

            • BDE-6.1 BDE-6.1 Fees

              • BDE-6.1.1

                All costs and charges, including fees to relevant persons, payable from the assets of a Bahrain domiciled expert CIU must be clearly stated and disclosed in the prospectus and must include the following:

                (a) The breakdown of such costs and charges;
                (b) The estimated or actual amount of costs and charges payable;
                (c) The nature and the basis for their calculation; and
                (d) The maximum amounts payable, expressed as percentages of the CIU's assets, on a per annum basis.
                April 2012

              • BDE-6.1.2

                Where a performance fee is charged by way of deduction from the assets of a Bahrain domiciled expert CIU, the following must be stated in the prospectus:

                (a) The frequency of charging the performance fee to the CIU; and
                (b) The basis upon which the performance fee is calculated.
                April 2012

              • BDE-6.1.3

                If a performance fee is levied, the fee may only be payable:

                (a) Not more frequently than annually;
                (b) If the NAV per holding exceeds the NAV per holding on which the performance fee was last calculated and paid; and
                (c) From an audited NAV.
                April 2012

              • BDE-6.1.4

                Costs, charges and fees which have not been disclosed in a Bahrain domiciled expert CIU's prospectus must not be paid from the CIU's assets.

                April 2012

            • BDE-6.2 BDE-6.2 Dividends

              • BDE-6.2.1

                All requests for distribution of dividends on holdings, must be approved in writing by the CBB prior to announcing the proposed dividend by way of a press announcement or any other means of communication and prior to submitting a proposal for distribution being announced or distributed to CIU participants of a Bahrain domiciled expert CIU.

                April 2012

          • BDE-7 BDE-7 Valuation of Assets

            • BDE-7.1 BDE-7.1 General Requirements

              • BDE-7.1.1

                The board of Directors must ensure that an independent, fair and regular valuation of all the CIU's assets, is conducted by appropriately qualified valuators.

                April 2012

              • BDE-7.1.2

                The valuation principles to be applied must be stated in the CIU's prospectus and must include details of the methods and frequency of the valuation of assets.

                April 2012

              • BDE-7.1.3

                The CBB expects the scope of the valuation policy:

                (a) To reflect 'good practice' industry standards;
                (b) Wherever possible, to be based on multiple and independent price sources;
                (c) Where unavoidable, valuations based on trader, broker or pricing models, input should be sufficiently tested and controlled, and declared, such that conflicts of interest are minimised;
                (d) Procedures should be developed to identify stale prices or illiquid assets;
                (e) The valuation of such assets should be performed by an expert in the asset class;
                (f) Valuations should normally be undertaken at least on a monthly basis.
                (g) [This subparagraph was deleted in October 2017].
                Amended: October 2017
                April 2012

              • BDE-7.1.4

                The fund administrator must notify the CBB, in writing, if:

                (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date.
                (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIU; or
                (iii) The total NAV falls below 50% of the total NAV of the CIU relative to the previous valuation day.
                April 2012

          • BDE-8 BDE-8 Books and Records

            • BDE-8.1 BDE-8.1 General Requirements

              • BDE-8.1.1

                Bahrain domiciled expert CIUs must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The CIU and its relevant persons, as appropriate, to comply with the Rules in this Module; and
                (b) The CIU to demonstrate at any time that such compliance has been achieved.
                April 2012

              • BDE-8.1.2

                The records referred to above, include but are not limited to, the minutes of the board of director's meetings (see Paragraph CG-4.1.1), the prospectus, contractual agreements, documents constituting the CIU and annual audited statements.

                April 2012

              • BDE-8.1.3

                Bahrain domiciled expert CIUs must maintain, through the appointed registrar, a register of holdings in the CIU. The register must be kept up to date at all times and must contain the following information:

                (a) Name of the CIU participant;
                (b) Official identification of the CIU participant (including the type and number);
                (c) Address and contact details of the CIU participant;
                (d) Number of units held by the CIU participant;
                (e) Number(s) of the certificate(s) issued to each CIU participant;
                (f) Date of issuance or transfer of units to the CIU participant;
                (g) Record of redemption of units; and
                (h) Record of cancellation of units.
                April 2012

              • BDE-8.1.4

                Bahrain domiciled expert CIUs must, through the appointed registrar, obtain and safe-keep all signed application forms, along with KYC documents for each CIU participant, in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable laws and regulations.

                April 2012

              • BDE-8.1.5

                The operator of a Bahrain domiciled expert CIU must make available for public inspection free of charge in Bahrain, the following documents:

                (a) The documents constituting the CIU;
                (b) The prospectus (and simplified prospectus if applicable);
                (c) All annual and semi-annual reports issued by the CIU; and
                (d) Copies of all CBB approvals, where required.
                April 2012

          • BDE-9 BDE-9 Financial Statements and Disclosure Requirements

            • BDE-9.1 BDE-9.1 General Requirements

              • BDE-9.1.1

                Bahrain domiciled expert CIUs must prepare semi-annual (interim) and annual audited financial statements for each financial year.

                April 2012

              • BDE-9.1.2

                The annual audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or AAOIFI Standards, as applicable, by a qualified independent external auditor located in Bahrain and acceptable to the CBB. The semi-annual (interim) financial statements must be subject to an independent review by the same auditor.

                April 2012

              • BDE-9.1.3

                The annual audited financial statements must be disclosed and distributed to CIU participants and submitted to the CBB, within 4 months of the end of the CIU's financial year.

                April 2012

              • BDE-9.1.4

                The semi-annual (interim) financial statements must be disclosed and distributed to CIU participants and submitted to the CBB, within 2 months of the period end.

                April 2012

              • BDE-9.1.5

                Both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) of Part B of Volume 7.

                April 2012

              • BDE-9.1.6

                Publication of semi-annual and annual audited financial statements on the CIU's or operator's website is encouraged.

                April 2012

              • BDE-9.1.7

                The annual audited financial statements of the fund company (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund company.

                April 2012

              • BDE-9.1.8

                Bahrain domiciled expert CIUs must disclose their NAV to all CIU participants and potential investors, in accordance with the prospectus.

                April 2012

          • BDE-10 BDE-10 Advertising

            • BDE-10.1 BDE-10.1 General Requirements

              • BDE-10.1.1

                The operator/fund manager, as appropriate, is responsible to ensure that all advertisements in respect of Bahrain domiciled expert CIUs must:

                (a) Be fair, transparent and not misleading;
                (b) Be clear and self-explanatory (describing the nature or type of CIU to which the advertisement relates);
                (c) State any assumptions, forecasts and projections, on which claims in advertisements are based. Where an advertisement contains any forecast or projection, it must make clear the basis upon which that forecast or projection is made;
                (d) Contain risk warnings, including the potential for loss, in a manner that such warning is prominently presented and not obscured or disguised. The font used for risk warnings must be readable, bold and not less than the font of the advertisement;
                (e) Not describe CIUs as "guaranteed" unless there is a legally enforceable capital guarantee;
                (f) Not include any comparisons which may be misleading, considering the circumstances of the CIU; and
                (g) Include a statement informing the client that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available to the client, free of charge.
                April 2012

              • BDE-10.1.2

                For the purposes of this Module, advertising may include, but is not limited to, advertising in print or other media, e-mail or internet.

                April 2012

          • BDE-11 BDE-11 Access to Premises

            • BDE-11.1 BDE-11.1 General Requirements

              • BDE-11.1.1

                Relevant persons of Bahrain domiciled expert CIUs must permit representatives of the CBB, or persons appointed by the CBB to have access, with or without notice, duing reasonable business hours to any of their business premises to allow the CBB to carry out inspection or investigation of the CIU at any point of time, in order for the CBB to discharge its regulatory obligations.

                April 2012

          • BDE-12 BDE-12 Listing Requirements

            • BDE-12.1 BDE-12.1 General Requirements

              • BDE-12.1.1

                Bahrain domiciled expert CIUs may only be listed on a licensed exchange and must state such intention in the prospectus.

                April 2012

              • BDE-12.1.2

                In the case that a Bahrain domiciled expert CIU intends to be listed subsequent to being authorised by the CBB, it must:

                (a) Amend the prospectus after obtaining the CBB's approval; and
                (b) Notify the CIU participants of such intention.
                April 2012

              • BDE-12.1.3

                Subsequent to fulfilling the requirements listed in Paragraph BDE-12.1.2, the operator of the CIU must:

                (a) Obtain CBB's non-objection to be listed;
                (b) Obtain the required approvals from the licensed exchange; and
                (c) Thereafter, notify the CBB of the effective date of listing.
                April 2012

              • BDE-12.1.4

                In the event of listing, the prospectus of the listed CIU must be made available to potential subscribers.

                April 2012

              • BDE-12.1.5

                Listed CIUs must at all times observe the definition of "eligible investors" as per indicated in the prospectus.

                April 2012

          • BDE-13 BDE-13 Mergers and Transfers

            • BDE-13.1 BDE-13.1 General Requirements

              • BDE-13.1.1

                A Bahrain domiciled expert CIU must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled expert CIU.

                April 2012

              • BDE-13.1.2

                The request for approval above must be supported by the following information:

                (a) The reasons for the proposed merger or transfer;
                (b) The alternatives available to CIU participants (including a right to redeem without charge, or switch into another Bahrain domiciled expert CIU without charge); and
                (c) The estimated costs of the merger or transfer, and information on who is expected to bear such costs.
                April 2012

              • BDE-13.1.3

                All CIU participants must be informed of the intention to merge or transfer to another Bahrain domiciled expert CIU, sufficiently prior to the event taking place, in order for them to make an informed decision.

                April 2012

              • BDE-13.1.4

                In all cases, a merger or transfer of a Bahrain domiciled expert CIU must be in accordance with the instrument constituting the CIU and all other applicable laws.

                April 2012

          • BDE-14 BDE-14 Suspension of Dealing in CIU Holdings

            • BDE-14.1 BDE-14.1 Suspension of Dealing

              • BDE-14.1.1

                A Bahrain domiciled expert CIU must notify the CBB and all CIU participants upon the suspension of dealing in the CIU holdings and provide the rationale for such decision.

                April 2012

            • BDE-14.2 BDE-14.2 Resumption of Dealing

              • BDE-14.2.1

                A Bahrain domiciled expert CIU must notify the CBB and all CIU participants upon the resumption of dealing in the CIU holdings and provide the date on which the dealing was resumed.

                April 2012

        • BDX BDX Bahrain Domiciled Exempt CIUs

          • BDX-A BDX-A Introduction

            • BDX-A.1 BDX-A.1 Purpose

              • Executive Summary

                • BDX-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Exempt CIUs.

                  April 2012

              • Legal Basis

                • BDX-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain domiciled exempt CIUs applicable to collective investment undertakings and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BDX-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BDX-A.2 BDX-A.2 Module History

              • Evolution of Module

                • BDX-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • BDX-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BDX-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       
                  April 2012

              • Superseded Requirements

                • BDX-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • BDX-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BDX-B BDX-B Definition

            • BDX-B.1 BDX-B.1 Definition

              • BDX-B.1.1

                Bahrain domiciled exempt CIUs are defined in Rule ARR-B.1.18 as CIUs that are lightly regulated and may be offered only to accredited investors, and impose a minimum initial investment of USD100,000 (or equivalent in any other currency).

                April 2012

              • BDX-B.1.2

                A Bahrain domiciled exempt CIU must be able to demonstrate that each of its participants falls within the definition of an accredited investor. It should also be able to demonstrate that the risk exposure potentially represented by a Bahrain domiciled exempt CIU has been clearly communicated and understood by the CIU participants.

                April 2012

              • BDX-B.1.3

                To help demonstrate compliance with Rule BDX-B.1.2, the CBB would expect to see a written confirmation from each CIU participant, stating that they satisfy the definition of an accredited investor and confirming that they understand the higher risks involved in an exempt CIU.

                April 2012

              • Registration Requirements

                • BDX-B.1.4

                  Bahrain domiciled exempt CIUs must be registered by the CBB prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-4 of Module ARR.

                  April 2012

          • BDX-1 BDX-1 Document Constituting the CIU

            • BDX-1.1 BDX-1.1 General Requirements

              • BDX-1.1.1

                Every Bahrain domiciled exempt CIU must be constituted by way of documents, containing the information listed in Supplementary Information document ARR(i), in Part B of Volume 7.

                April 2012

              • BDX-1.1.2

                In the case of CIUs established as Common CIUs established under the laws of contract, the documents are the Memorandum and Articles of Association of the fund company and the CIU instrument. In the case of Corporates established under the Bahrain Commercial Companies Law, the documents are the Memorandum and Articles of Association. In the case of CIUs established as Trusts under the Financial Trust Law, the legal document is the trust deed

                April 2012

              • BDX-1.1.3

                The operator of a Bahrain domiciled exempt CIU together with the directors of the CIU concerned, or trustees, as appropriate, must ensure that the documents constituting the CIU:

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the operator, fund manager and other relevant persons to the CIU; and
                (c) Is not unfairly prejudicial to the interests of the CIU participants, either generally or to a particular class of CIU participants.
                April 2012

              • BDX-1.1.4

                The operator of a Bahrain domiciled exempt CIU together with the directors of the CIU concerned, or trustees, as appropriate, must maintain the documents constituting the CIU.

                April 2012

              • BDX-1.1.5

                Once registered, any subsequent material changes to the documents must be notified to the CBB 10 business days prior to execution. An updated copy of the documents must be made available to the CBB within 30 calendar days of executing such changes.

                April 2012

              • BDX-1.1.6

                In the case that any subsequent changes to the documents that are not made in accordance with the requirements stipulated in this Module, the CBB reserves the right to request a reversal of any such change.

                April 2012

          • BDX-2 BDX-2 Prospectus

            • BDX-2.1 BDX-2.1 General Requirements

              • BDX-2.1.1

                Every Bahrain domiciled exempt CIU registered under Chapter ARR-4 must publish a prospectus containing, as a minimum, the information set out in Supplementary Information document ARR(ii), in Part B of Volume 7.

                April 2012

              • BDX-2.1.2

                The board of the Bahrain domiciled exempt CIU, or trustees, as appropriate, must ensure that the information contained in the prospectus:

                (a) Is complete and transparent;
                (b) Is not false, misleading, or unfairly prejudicial to the interests of the CIU participants generally or to the participants of other classes of instruments issued by the CIU; and
                (c) Does not contain any provision that conflicts with any Rule in Volume 7, or other legal or regulatory requirements that apply to the Bahrain domiciled exempt CIU or other relevant persons connected to the CIU.
                April 2012

              • BDX-2.1.3

                The documents constituting the Bahrain domiciled exempt CIU must form an integral part of the prospectus and must be annexed to it. Alternatively, the prospectus must specify where the documents constituting the Bahrain domiciled exempt CIU may be obtained.

                April 2012

              • BDX-2.1.4

                The board of the Bahrain domiciled exempt CIU must keep the prospectus up-to-date, such that the information it contains is materially current.

                April 2012

              • BDX-2.1.5

                The prospectus of a Bahrain domiciled exempt CIUs must clearly display a statement to the fact that the CIU is considered an exempt CIU for the purposes of the CBB's Volume 7 (Collective Investment Undertakings) Rulebook.

                April 2012

              • BDX-2.1.6

                Once a Bahrain domiciled exempt CIU is registered, prior approval must be obtained from the majority of the CIU participants for any subsequent material changes to the prospectus. An updated copy of the prospectus must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participants must be notified of the changes at least 14 calendar days before they take effect.

                April 2012

              • BDX-2.1.7

                For the purposes of Paragraph BDX-2.1.6:

                (a) Material changes include, but are not limited to:
                (i) Changes in the relevant persons, except for the placement agent;
                (ii) A change in legal structure;
                (iii) A change to the investment strategy; or
                (iv) A change in fees; and
                (b) The majority of the CIU participants is expected to be not less than two-thirds of the CIU participants in terms of number of participants and number of units held.
                April 2012

              • BDX-2.1.8

                The Bahrain domiciled exempt CIU must provide a copy of its most recent prospectus free of charge to any existing and potential CIU participants.

                April 2012

              • BDX-2.1.9

                The Bahrain domiciled exempt CIU must, upon request, provide explanations and such other information supplementary to the prospectus as may reasonably be required by any existing and potential CIU participants.

                April 2012

          • BDX-3 BDX-3 CIU Holdings

            • BDX-3.1 BDX-3.1 General Requirements

              • BDX-3.1.1

                If a Bahrain domiciled exempt CIU has different classes of holdings, the documents constituting the CIU must clearly set out:

                (a) The different features of each class of holding, including their respective rights;
                (b) The allocation of expenses and fees; and
                (c) How the proportion of the value of the assets of the CIU and the proportion of income available for allocation attributable to each such class is to be calculated.
                April 2012

              • BDX-3.1.2

                CIU participants must, in accordance with the CIU documents, either be:

                (a) Issued with registered certificates evidencing title to holdings; or
                (b) Provided with written confirmation of entry in a register for such holdings which shall be kept current and up-to-date at all times and shall contain full details of the names and addresses of the CIU participants, the number of holdings held by them, and the date of acquisition of such holdings.
                April 2012

              • BDX-3.1.3

                Holdings may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate), in accordance with the prospectus constituting the Bahrain domiciled exempt CIU.

                April 2012

          • BDX-4 BDX-4 Investments

            • BDX-4.1 BDX-4.1 Risk Management

              • BDX-4.1.1

                Bahrain domiciled exempt CIUs should operate on the principle of risk management and be diligent in maintaining and implementing investment and risk management policies aimed at the prudent risk control.

                April 2012

              • BDX-4.1.2

                The prospectus must disclose the investment policies of the Bahrain domiciled exempt CIU.

                April 2012

            • BDX-4.2 BDX-4.2 Significant Influence / Conflicts of Interest

              • BDX-4.2.1

                Bahrain domiciled exempt CIUs may only enter into related party transactions provided they are clearly disclosed and permissible in accordance with the initial prospectus.

                April 2012

            • BDX-4.3 BDX-4.3 Breaches of Investment Limits

              • BDX-4.3.1

                The fund manager must abide by the prescribed limits within the prospectus and any breach that occurs must be reported to the CIU participants on a prompt basis.

                April 2012

          • BDX-5 BDX-5 Lending

            • BDX-5.1 BDX-5.1 General Requirements

              • BDX-5.1.1

                A Bahrain domiciled exempt CIU must not lend its assets to any relevant person of the CIU.

                April 2012

              • BDX-5.1.2

                A Bahrain domiciled exempt CIU must not lend its assets, except as otherwise needed in relation to stock lending, for the purposes of meeting margin requirements where the CIU is using financial derivatives, or where it is an incidental part of the investment deals provided for in the investment objective stated in the prospectus of the CIU.

                April 2012

          • BDX-6 BDX-6 Fees

            • BDX-6.1 BDX-6.1 General Requirements

              • BDX-6.1.1

                All costs and charges, including fees to relevant persons, payable from the assets of a Bahrain domiciled exempt CIU must be clearly stated and disclosed in the prospectus.

                April 2012

          • BDX-7 BDX-7 Valuation of Asset

            • BDX-7.1 BDX-7.1 General Requirements

              • BDX-7.1.1

                The board of directors must ensure an independent, fair and timely valuation of all the CIU's assets, is conducted by appropriately qualified valuators, in line with the prospectus.

                April 2012

          • BDX-8 BDX-8 Books and Records

            • BDX-8.1 BDX-8.1 General Requirements

              • BDX-8.1.1

                Bahrain domiciled exempt CIUs must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The CIU and its relevant persons, as appropriate, to comply with the rules in this Module; and
                (b) The CIU to demonstrate at any time that such compliance has been achieved.
                April 2012

              • BDX-8.1.2

                The records referred to under Rule BDX-8.1.1, include but are not limited to, the minutes of the board of directors' meetings (see Paragraph CG-4.1.1), the prospectus, contractual agreements, documents constituting the CIU and annual audited statements.

                April 2012

              • BDX-8.1.3

                Bahrain domiciled exempt CIUs must, through the appointed registrar, obtain and safe-keep all signed application forms, along with KYC documents for each CIU participant, in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable laws and regulations.

                April 2012

          • BDX-9 BDX-9 Financial Statements

            • BDX-9.1 BDX-9.1 General Requirements

              • BDX-9.1.1

                Bahrain domiciled exempt CIUs must prepare semi-annual (interim) and annual audited financial statements for each financial year.

                April 2012

              • BDX-9.1.2

                The annual audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or AAOIFI Standards, as applicable, by a qualified independent external auditor located in Bahrain and acceptable to the CBB. The semi-annual (interim) financial statements must be subject to an independent review by the same auditor.

                April 2012

              • BDX-9.1.3

                The annual audited financial statements must be disclosed and distributed to CIU participants and submitted to the CBB, within 4 months of the end of the CIU's financial year.

                April 2012

              • BDX-9.1.4

                The semi-annual (interim) financial statements must be disclosed and distributed to CIU participants and submitted to the CBB, within 2 months of the period end.

                April 2012

              • BDX-9.1.5

                Both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) of Part B of Volume 7.

                April 2012

              • BDX-9.1.6

                The annual audited financial statements of the fund company (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund company.

                April 2012

          • BDX-10 BDX-10 Promotion

            • BDX-10.1 BDX-10.1 General Requirements

              • BDX-10.1.1

                The promotion of Bahrain domiciled exempt CIUs must be limited to accredited investors and no public offering or mass marketing is permitted.

                April 2012

          • BDX-11 BDX-11 Access to Premises

            • BDX-11.1 BDX-11.1 General Requirements

              • BDX-11.1.1

                Relevant persons of Bahrain domiciled exempt CIUs must permit representatives of the CBB, or persons appointed by the CBB to have access, with or without notice, duing reasonable business hours to any of their business premises to allow the CBB to carry out inspection or investigation of the CIU at any point of time, in order for the CBB to discharge its regulatory obligations.

                April 2012

          • BDX-12 BDX-12 Mergers and Transfers

            • BDX-12.1 BDX-12.1 General Requirements

              • BDX-12.1.1

                A Bahrain domiciled exempt CIU must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled exempt CIU.

                April 2012

              • BDX-12.1.2

                The request for approval above must be supported by the following information:

                (a) The reasons for the proposed merger or transfer;
                (b) The alternatives available to CIU participants (including a right to redeem without charge, or switch into another Bahrain domiciled exempt CIU without charge); and
                (c) The estimated costs of the merger or transfer, and information on who is expected to bear such costs.
                April 2012

              • BDX-12.1.3

                All CIU participants must be informed, at least 15 business days prior to the intention to merge or transfer to another Bahrain domiciled exempt CIU in order for them to make an informed decision.

                April 2012

              • BDX-12.1.4

                In all cases, a merger or transfer of a Bahrain domiciled exempt CIU must be in accordance with the instrument constituting the CIU and all other applicable laws.

                April 2012

          • BDX-13 BDX-13 Suspension of Dealing in CIU Holdings

            • BDX-13.1 BDX-13.1 Suspension of Dealing

              • BDX-13.1.1

                A Bahrain domiciled exempt CIU must notify the CBB and the CIU participants upon the suspension of dealing in the CIU holdings and provide the rationale for such decision.

                April 2012

            • BDX-13.2 BDX-13.2 Resumption of Dealing

              • BDX-13.2.1

                A Bahrain domiciled exempt CIU must notify the CBB and the CIU participants upon the resumption of dealing in the CIU holdings and provide the date on which the dealing was resumed.

                April 2012

        • BRT BRT Bahrain Domiciled Real Estate Investment Trusts (B-REITs)

          • BRT-A BRT-A Introduction

            • BRT-A.1 BRT-A.1 Purpose

              • Executive Summary

                • BRT-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Real Estate Investment Trusts (B-REITS).

                  April 2012

              • Legal Basis

                • BRT-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain domiciled real estate investment trusts (B-REITs) and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BRT-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BRT-A.2 BRT-A.2 Module History

              • Evolution of Module

                • BRT-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • BRT-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BRT-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  BRT-1.1.2
                  BRT-1.1.4
                  BRT-2.2.1
                  10/2017 Added Bahrain Domiciled retail CIU.
                  BRT-2.3.2 10/2017 Amended paragraph on leveraging requirement.
                  BRT-2.3.4 10/2017 Added paragraph on market making arrangements.
                  BRT-4.1.1AA 10/2017 Added paragraph on the requirement to appoint an external appraiser.
                  BRT-4.1.1A 10/2017 Added paragraph on valuation requirement.
                  BRT-2.1.1 01/2018 Amended paragraph.

                • BRT-A.2.4

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BRT-B BRT-B Definition

            • BRT-B.1 BRT-B.1 Definition

              • BRT-B.1.1

                Bahrain domiciled real estate investment trusts (B-REITs) are defined as collective investment undertakings the objectives of which are acquiring, holding, administering, managing and selling income generating local and foreign real estate properties, either directly or indirectly.

                April 2012

              • BRT-B.1.2

                Indirect holding would be through holding of units or shares of another REIT.

                April 2012

          • BRT-1 BRT-1 General Requirements

            • BRT-1.1 BRT-1.1 General Requirements

              • Documents Constituting a B-REIT

                • BRT-1.1.1

                  A B-REIT must be constituted as a Trust, established under the Financial Trust Law of Bahrain and in accordance with a Trust Deed or a Trust Instrument.

                  April 2012

              • Authorisation/Registration Requirements

                • BRT-1.1.2

                  A B-REIT may be established in the form of a Bahrain domiciled retail CIU or a Bahrain domiciled exempt CIU and must be authorised/registered by the CBB prior to being offered to eligible investors, in accordance with the requirements set out in applicable Sections of Module ARR.

                  Amended: October 2017
                  April 2012

              • Liquidation/De-Registration of B-REITs

                • BRT-1.1.3

                  B-REITs intending to undergo liquidation/de-registration must comply with all the Rules outlined in Module LDR.

                  April 2012

              • Regulatory Requirements

                • BRT-1.1.4

                  B-REITs in the form of Bahrain domiciled retail CIUs or Bahrain Domiciled exempt CIUs are subject to the Rules outlined in Module BDR for Bahrain domiciled retail CIUs and Module BDX dealing with Bahrain domiciled exempt CIUs, in addition to the other requirements outlined in Volume 7 applicable to their CIU category. B-REITs are also subject to the specific requirements and restrictions outlined in this Module, which prevail if different from the requirements in Modules BDR or BDX.

                  Amended: October 2017
                  April 2012

                • BRT-1.1.5

                  The trustee/fund manager must appoint a qualified property manager(s) responsible for the management of the properties under the B-REIT and for raising regular reports to the trustee/fund manager on the performance of such property.

                  April 2012

          • BRT-2 BRT-2 Specific Requirements

            • BRT-2.1 BRT-2.1 Restrictions on Investment Policy

              • BRT-2.1.1

                B-REITs established as Bahrain domiciled retail CIUs must be subject to the following restrictions on their investment policy:

                (a) Unless otherwise agreed with the CBB, the B-REIT must hold a minimum of 2 real estate properties, comprising of at least 80% of the B-REIT's NAV;
                (b) A maximum of 20% of the B-REIT's NAV may be invested in the development of existing owned property;
                (c) A maximum of 20% of the B-REIT's NAV may be invested in other REITs, subject to 10% investment per REIT; and
                (d) Other assets of the B-REIT must be held in cash and cash equivalents.
                Amended: January 2018
                April 2012

              • BRT-2.1.2

                B-REITs established as Bahrain domiciled exempt CIUs must invest in the following assets only:

                (a) Real estate properties;
                (b) Development of existing owned property;
                (c) Other REITs, subject to a maximum of 20% of the B-REIT NAV; and
                (d) Other assets of the B-REIT must be held in cash and cash equivalents.
                April 2012

              • BRT-2.1.3

                Immovable assets may either be held directly or indirectly. Immovable assets situated outside the Kingdom of Bahrain may also be held through foreign special purpose vehicles, which must be consolidated.

                April 2012

              • BRT-2.1.4

                B-REITs are not permitted to invest in undeveloped land and mortgages.

                April 2012

            • BRT-2.2 BRT-2.2 Listing Requirements and Prohibitions

              • BRT-2.2.1

                The units of a B-REIT established as a Bahrain domiciled retail CIU must be listed on a licensed exchange(s), within six months from the date of starting of operations, and in accordance with the provisions set in the offering document.

                Amended: October 2017
                April 2012

              • BRT-2.2.2

                For B-REITs established as Bahrain domiciled exempt CIUs, listing of the units of a B-REIT is optional.

                April 2012

            • BRT-2.3 BRT-2.3 Other Requirements

              • Minimum Size of a B-REIT

                • BRT-2.3.1

                  The minimum value of a B-REIT must be US$ 20 million or its equivalent in another currency, at the initial closing.

                  April 2012

              • Leveraging

                • BRT-2.3.2

                  A B-REIT established as a Bahrain domiciled retail CIU, must limit its leverage to a maximum of 50% of its NAV for investment purposes.

                  Amended: October 2017
                  April 2012

              • Dividend Policy

                • BRT-2.3.3

                  A B-REIT must distribute annual dividends of not less than 90 % of its audited net realised income to its participants, within six months from the end of its financial year.

                  April 2012

              • Market Making Arrangements

                • BRT-2.3.4

                  A B-REIT established as a Bahrain domiciled retail CIU, must appoint one or more market makers that are acceptable to the CBB, for a minimum period of one year effective from the launch date of the B-REIT.

                  Added: October 2017

          • BRT-3 BRT-3 Reporting and Disclosure Requirements

            • BRT-3.1 BRT-3.1 General Requirements

              • Jointly Controlled Entities

                • BRT-3.1.1

                  If a B-REIT jointly controls and owns the property, the following information must be disclosed in the audited financial report:

                  (a) Name (if applicable) and a brief physical description of the property;
                  (b) Description of business activity;
                  (c) Percentage ownership;
                  (d) Accounting period (if different from the CIU);
                  (e) Material restrictions on repayments;
                  (f) Divided schedule (if applicable);
                  (g) Details of debt and extent to which there is recourse to the organization;
                  (h) Relationship with other partners (e.g. pre-emptive rights etc); and
                  (i) Narrative on performance.
                  April 2012

              • Financing and Debt Position

                • BRT-3.1.2

                  B-REITs must include in their audited financial report:

                  (a) An explanation of the net finance charge in their accounts;
                  (b) An explanation of the market valuations of their hedging instruments and/or debt;
                  (c) Proportion of fixed versus floating debt;
                  (d) Maturity profile of debt;
                  (e) An analysis of the proportion of debt that is secured by specific assets versus unsecured assets; and
                  (f) Details of the weighted average cost of debt.
                  April 2012

              • Historical Financial Results

                • BRT-3.1.3

                  If applicable, B-REITs must include in their audited financial report financial data on a consolidated basis for each of the past five years. At a minimum this historical data should include:

                  (a) Gross revenues;
                  (b) Net profit (both absolute and per share);
                  (c) Net assets (both absolute and per share); and
                  (d) Gearing percentage (debt to total assets).
                  April 2012

              • Portfolio Performance

                • BRT-3.1.4

                  B-REITs must disclose in their annual report, the following information on investment assets to the CIU participants:

                  (a) Address of the asset;
                  (b) Acquisition date;
                  (c) Type of property including the respective proportion allocated to office/retail/residential/parking;
                  (d) Land area;
                  (e) Gross/lettable building space;
                  (f) Current valuation;
                  (g) Valuation cap rate;
                  (h) Average passing rent per square meter;
                  (i) Current level of leasing incentives for each asset;
                  (j) Annualized net rent based on current rent roll;
                  (k) Vacant space of a building and any large impending lease expiries;
                  (l) Operating profit (after property expenses);
                  (m) Internal rate of return since acquisition;
                  (n) Percentage of ownership (and commentary on control provisions);
                  (o) Form of ownership (e.g. freehold or leasehold ownership);
                  (p) Duration remaining on leasehold;
                  (q) Year of construction completion/major refurbishment; and
                  (r) Impending capital expenditure costs.
                  April 2012

          • BRT-4 BRT-4 Valuation of Assets

            • BRT-4.1 BRT-4.1 General Requirements

              • BRT-4.1.1AA

                At least one external appraiser must be appointed to carry out the valuation of the B-REIT's assets.

                Added: October 2017

              • BRT-4.1.1

                The valuation of investment properties held by B-REITs must be acceptable to the CBB and in accordance with the prevailing market value.

                April 2012

              • BRT-4.1.1A

                The CBB has the right to require a second opinion on the valuation of property assets or valuation report, given that the appointment of the second independent valuator is acceptable to the CBB.

                Added: October 2017

              • BRT-4.1.2

                It is recommended that valuation report formats be prepared in line with internationally acceptable standards such as the standards required by the International Valuation Standards Committee (IVSC). A standard valuation format is provided in Appendix 1 of this Module and may be used as a guideline.

                April 2012

              • Investment Property — Appraiser Fee Basis

                • BRT-4.1.3

                  In order to ensure that the external appraiser is independent and objective, B-REITs must agree upon a fee basis that is independent of the outcome of the valuation process and appraised value.

                  April 2012

                • BRT-4.1.4

                  The valuation report must disclose the following:

                  (a) The basis for appraiser fees (e.g. a fee based upon hours spent, as a result of appraised value or a fixed fee amount);
                  (b) The amount of annual non-valuation fees that have been paid to the appraiser(s); and
                  (c) Whether the fee for each appraiser accounts for more than 10% of that appraiser's turnover.
                  April 2012

          • Appendix 1 Appendix 1 Standard Valuation Report Format

            The following represents a sample of the recommended content for reporting on the valuation of a completed asset, which may be applied as deemed applicable:

            •   Executive summary and/or valuation certification:
            1. Introduction
            2. Instructions
            3. Qualifications and assumptions
            4. Date of inspection
            5. Basis of valuation (including definition of market value).
            •   Property details:
            1. Location details, including surrounding development
            2. Formal site identification
            3. Physical features e.g. size, configuration, frontage, topography
            4. Site services
            5. Area planning particulars
            6. Statutory assessment
            7. Environment considerations.
            •   Improvements :
            1. General description
            2. Gross lettable area and net lettable area
            3. Construction and finishes
            4. Services and amenities
            5. Age and condition, state of repair.
            •   Financial summary:
            1. Occupational/tenancy details
            2. Lease expiry analysis
            3. Leasing status (vacant tenancies, monthly tenancies, rental arrears etc.)
            4. Rental income and analysis
            5. Other income
            6. Outgoings
            7. Capital expenditure
            8. Net income summary
            •   Market overview:
            1. Economic overview
            2. Market sector overview
            3. Sales and rental analyses
            •   Valuation rationale:
            1. Valuation methodologies
            2. Valuation reconciliation
            3. Risk analysis.
            April 2012

            • Disclosure of Information Contained within Property Valuation

              Valuation reports must not be misleading. The purpose and intended use of the valuation should be clearly reported, and full disclosure should be made of the basis for the valuation estimate, its applicability and its limitations.

              April 2012

            • Frequency of valuations

              (a) Valuations should be performed with sufficient regularity to as to be a valid estimate of value at the reporting date;
              (b) B-REITs should have the portfolio valued by an external valuer(s) at least once a year. The valuation should state the method of valuation followed;
              (c) B-REITs should be encouraged to undertake a half-yearly update in the form of a "short" form report detailing any key changes to the property;
              (d) Valuation companies should be asked to tender on the portfolio every two years. The previous valuation company should be prohibited from submitting a tender for a period of two year from the end of the contract; and
              (e) The valuer(s) undertaking the property valuation should have relevant experience of at least five years in valuing properties of a similar asset class within the country.
              April 2012

        • ODC ODC Overseas Domiciled CIUs

          • ODC-A ODC-A Introduction

            • ODC-A.1 ODC-A.1 Purpose

              • Executive Summary

                • ODC-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Overseas Domiciled CIUs.

                  April 2012

              • Legal Basis

                • ODC-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding overseas domiciled CIUs and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • ODC-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • ODC-A.2 ODC-A.2 Module History

              • Evolution of Module

                • ODC-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • ODC-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • ODC-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  ODC-1.1.1, ODC-6.1.1, ODC-6.2 07/2015 Amended to reflect the process for filing for exempt and expert CIUs.
                  ODC-5.1.2 07/2015 Added requirement for placement agent to retain supporting documentation ensuring suitability of the CIU for the targeted category of investors.
                  ODC-B.1.2 07/2017 Deleted "resident" with respect to investors
                  ODC-3.1.1; ODC-3.1.2 07/2017 Deleted "Bahrain resident" and added "CIU participants in Bahrain".
                  ODC-7 10/2017 Added new section on 'Listing Requirements'.

              • Superseded Requirements

                • ODC-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • ODC-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • ODC-B ODC-B Definition

            • ODC-B.1 ODC-B.1 Definition

              • ODC-B.1.1

                Overseas domiciled CIUs are undertakings as defined under Paragraph ARR-B.1.11 of Module ARR.

                April 2012

              • ODC-B.1.2

                Overseas domiciled CIUs are only impacted by the requirements contained in this Module, if they are offered to investors in the Kingdom of Bahrain.

                Amended: July 2017
                April 2012

          • ODC-1 ODC-1 General Requirements

            • ODC-1.1 ODC-1.1 Authorisation, Registration and Filing Requirements

              • ODC-1.1.1

                Overseas domiciled CIUs must be registered/authorised by the CBB, or filed with the CBB, as applicable, prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-5 of Module ARR.

                Amended: July 2015
                April 2012

              • ODC-1.1.2

                Overseas domiciled CIUs must only be distributed by placement agents as defined under Chapter RP-12 Module RP.

                April 2012

            • ODC-1.2 ODC-1.2 Distribution Requirements

              • ODC-1.2.1

                The placement agent of an overseas domiciled CIU must always make available a copy of the CIU's most recent prospectus and simplified prospectus (where applicable) free of charge to any potential eligible investor.

                April 2012

              • ODC-1.2.2

                The placement agent of an overseas domiciled CIU must provide explanations and such other information supplementary to the prospectus as may be reasonably required by a potential investor.

                April 2012

              • ODC-1.2.3

                The placement agent of an overseas domiciled CIU must ensure that the CIU's prospectus and simplified prospectus (where applicable) are kept up-to-date.

                April 2012

              • ODC-1.2.4

                Any change to the prospectus and simplified prospectus must be communicated to the CBB and to CIU participants, within the deadline specified by the home regulator.

                April 2012

              • ODC-1.2.5

                A most recent copy of the prospectus and simplified prospectus (where applicable) must be made available to the CBB upon request.

                April 2012

              • ODC-1.2.6

                The placement agent of overseas domiciled expert CIUs and overseas domiciled exempt CIUs must be able to demonstrate that each of their participants fall within the definition of an expert investor or accredited investor (as appropriate). They must also be able to demonstrate that the additional risks potentially represented by an expert CIU or exempt CIU have been clearly communicated and understood by the CIU participants.

                April 2012

              • ODC-1.2.7

                To demonstrate compliance with Rule ODC-1.2.6, the CBB would expect to see a written confirmation from each CIU participant, stating that they satisfy the definition of an expert investor or accredited investor (as appropriate) and confirming that they understand the higher risks involved in an expert CIU or exempt CIU.

                April 2012

          • ODC-2 ODC-2 Advertising

            • ODC-2.1 ODC-2.1 Overseas Domiciled Retail CIUs and Overseas Domiciled Expert CIUs

              • ODC-2.1.1

                The placement agent of overseas domiciled retail CIUs and overseas domiciled expert CIUs is responsible to ensure that the advertisements in respect of such CIUs must:

                (a) Be fair, transparent and not misleading;
                (b) Be clear and self-explanatory (describing the nature or type of CIU to which the advertisement relates);
                (c) State any assumptions, forecasts and projections, on which claims in advertisements are based. Where an advertisement contains any forecast or projection, it must make clear the basis upon which that forecast or projection is made;
                (d) Contain risk warnings, including the potential for loss, in a manner that such warning is prominently presented and not obscured or disguised. The font used for risk warnings must be readable, bold and not less than the font of the advertisement material;
                (e) Not describe CIUs as "guaranteed" unless there is a legally enforceable capital guarantee;
                (f) Not include any comparisons which may be misleading, considering the circumstances of the CIU; and
                (g) Include a statement informing the client that more detailed information on the CIU is contained in the prospectus, a copy of which must be made available to the client, free of charge.
                April 2012

              • ODC-2.1.2

                For the purposes of this Module, advertising may include, but is not limited to print or other media, e-mail or internet.

                April 2012

            • ODC-2.2 ODC-2.2 Overseas Domiciled Exempt CIUs

              • ODC-2.2.1

                The promotion of overseas domiciled exempt CIUs must be limited to accredited investors and no public offering or mass marketing is permitted.

                April 2012

          • ODC-3 ODC-3 Reporting Requirements

            • ODC-3.1 ODC-3.1 Reporting to CIU Participants

              • ODC-3.1.1

                Overseas domiciled CIUs must publish and distribute to their CIU participants in Bahrain at least one report in respect of each financial year. Annual reports and accounts prepared in accordance with home jurisdiction accounting standards must be published and distributed to CIU participants within the time scales, format and means of distribution specified by their home jurisdiction. Such time scales, format and means of distribution must be communicated to the CIU participants prior their investment.

                Amended: July 2017
                April 2012

              • ODC-3.1.2

                Overseas domiciled CIUs must distribute to their CIU participants any other reports (such as valuation reports), where these are specified in the CIU's prospectus.

                Amended: July 2017
                April 2012

              • ODC-3.1.3

                Overseas domiciled CIUs must notify CIU participants in a timely manner of any intention to merge, transfer, wind up or suspend dealings in the CIU.

                April 2012

            • ODC-3.2 ODC-3.2 Reporting to CBB

              • ODC-3.2.1

                The placement agent of an overseas domiciled CIU must notify the CBB in a timely manner of any intention to merge, transfer, wind up or suspend dealings in the CIU.

                April 2012

              • ODC-3.2.2

                The placement agent of an overseas domiciled CIU must complete and submit to the CBB, the CIU Quarterly Statistical Return (Form CIU (QS)), within 21 calendar days of the end of each quarter.

                April 2012

          • ODC-4 ODC-4 Fees and Charges

            • ODC-4.1 ODC-4.1 General Requirements

              • ODC-4.1.1

                The placement agent of an overseas domiciled CIU must abide by the terms and conditions stated in the prospectus of the CIU with regards to fees and charges payable by the CIU participant.

                April 2012

          • ODC-5 ODC-5 Books and Records

            • ODC-5.1 ODC-5.1 General Requirements

              • ODC-5.1.1

                The placement agent of an overseas domiciled CIU must keep copies of all reports to the CIU participants and the CBB, within its premises. Such reports should be available to the CBB upon request.

                April 2012

              • ODC-5.1.2

                The placement agent of an overseas domiciled CIU must keep all documents supporting the due diligence process undertaken to ensure suitability of the CIU to the targeted category of investors within its premises. Such documents must be available to the CBB upon request.

                Added: July 2015

          • ODC-6 ODC-6 De-registration/Authorisation of Overseas Domiciled CIUs

            • ODC-6.1 ODC-6.1 Voluntary De-Registration/Authorisation or Withdrawal of Filing

              • ODC-6.1.1

                The placement agent of an overseas domiciled CIU, must give at least one month's written notice to CIU participants and to the CBB of its intention to de-register/authorise or withdraw the filing of the CIU. The notification must be submitted along with an explanation of the reasons for wishing to de-register/authorise or withdraw filing of the CIU, and subsequently a confirmation that there are no obligations outstanding to any CIU participant.

                Amended: July 2015
                April 2012

              • ODC-6.1.2

                The CBB will normally respond to such requests within 15 business days of the request being made.

                April 2012

            • ODC-6.2 ODC-6.2 Cancellation of Authorisation, Registration of Filing by the CBB

              • ODC-6.2.1

                The CBB may cancel the authorisation, registration or filing of an overseas domiciled CIU if in its opinion it believes it necessary in order to safeguard the interests of potential investors or the CIU participants.

                Amended: July 2015
                April 2012

              • ODC-6.2.2

                Where the CBB proposes to cancel an overseas domiciled CIU authorisation, registration of filing pursuant to Paragraph ODC-6.2.1, it shall give the placement agent a written notice of its intention to do so and the reasons for such action.

                Amended: July 2015
                April 2012

          • ODC-7 ODC-7 Listing Requirements

            • ODC-7.1 ODC-7.1 General Requirements

              • ODC-7.1.1

                Overseas Domiciled CIUs may only be listed on a licensed exchange and must state such intention in the prospectus.

                Added: October 2017

              • ODC-7.1.1A

                An example of a listed Overseas Domiciled CIU include Exchange Traded Funds (ETFs). ETFs are effectiviely mutual funds that are traded like stocks on a stock exchange. An ETF is a marketable security that tracks an index, a commodity, bonds or a basket of securities.

                Added: October 2017

              • ODC-7.1.2

                In the case that an Overseas Domiciled CIU intends to be listed subsequent to being authorized/registered by the CBB, it must:

                (a) Notify the CIU participants of such intention.
                Added: October 2017

              • ODC-7.1.3

                Subsequent to fulfilling the requirements listed in Paragraph ODC-7.1.2, the placement agent of the CIU must:

                (a) Obtain CBB's non-objection to be listed;
                (b) Obtain the required approvals from the licensed exchange; and
                (c) Thereafter, notify the CBB of the effective date of listing.
                Added: October 2017

              • ODC-7.1.4

                In the event of listing, the prospectus of the listed CIU must be made available to potential subscribers.

                Added: October 2017

              • ODC-7.1.5

                Listed CIUs must at all times observe the definition of "eligible investors" as per indicated in the prospectus.

                Added: October 2017

              • ODC-7.1.6

                The listed overseas domiciled CIU must follow the listing rules provided by the licensed exchange.

                Added: October 2017

        • SCC SCC Shari'a Compliant CIUs

          • SCC-A SCC-A Introduction

            • SCC-A.1 SCC-A.1 Purpose

              • Executive Summary

                • SCC-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Shari'a Compliant CIUs.

                  April 2012

              • Legal Basis

                • SCC-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Shari'a Compliant CIUs and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • SCC-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • SCC-A.2 SCC-A.2 Module History

              • Evolution of Module

                • SCC-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • SCC-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • SCC-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       

                • SCC-A.2.4

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

              • Superseded Requirements

                • SCC-A.2.5

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • SCC-A.2.6

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • SCC-B SCC-B Scope of Application

            • SCC-B.1 SCC-B.1 Requirements for Shari'a Compliant CIUs

              • Definition

                • SCC-B.1.1

                  Shari'a compliant CIUs are CIUs that hold themselves out to be managed in accordance with Shari'a principles.

                  April 2012

              • Application

                • SCC-B.1.2

                  This Module applies to all Bahrain domiciled Shari'a compliant CIUs.

                  April 2012

                • SCC-B.1.3

                  The Rules included in this Module are additional to other applicable Rules contained in other Modules of Volume 7.

                  April 2012

          • SCC-1 SCC-1 General Requirements

            • SCC-1.1 SCC-1.1 General Requirements

              • SCC-1.1.1

                Shari'a compliant CIUs must ensure that their prospectus contains provisions describing the Shari'a compliant nature of the CIU, the process for achieving such compliance, and the names of the Shari'a Board Members/Advisor(s) appointed under Rule SCC-2.1.1.

                April 2012

              • SCC-1.1.2

                Shari'a compliant CIUs must comply with all applicable standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

                April 2012

              • SCC-1.1.3

                All relevant persons of Shari'a compliant CIUs must comply with the provisions of IFSB-6 dealing with "Guiding Principles on Governance for Islamic Collective Investment Schemes".

                April 2012

              • SCC-1.1.4

                Shari'a compliant overseas domiciled CIUs, are authorised/registered in accordance with the requirements outlined in Module ARR.

                April 2012

              • SCC-1.1.5

                In authorising/registering overseas domiciled CIUs which are or purport to be Shari'a compliant CIUs, the CBB requires such CIUs to meet the requirements outlined in this Module. Alternatively, the CBB may accept other specific arrangements as having equivalent effect.

                April 2012

              • SCC-1.1.6

                The operator of Shari'a compliant CIUs must ensure that the operations and investments of the CIU are subject to compliance monitoring and reporting by its Shari'a Board Members/Advisors, in accordance with applicable AAOIFI standards. For products and activities not covered by AAOIFI, International Financial Reporting Standards (IFRS) / International Accounting Standards (IAS) must be followed.

                April 2012

              • SCC-1.1.7

                The financial accounts of a Shari'a compliant CIU must be prepared in accordance with AAOIFI standards. For instances not covered by AAOIFI standards, IFRS must be followed, together with an explanation in the notes to the financials of such deviation.

                April 2012

              • SCC-1.1.8

                The audit of a Shari'a compliant CIU must be carried out in accordance with the relevant AAOIFI standards.

                April 2012

          • SCC-2 SCC-2 Shari'a Supervisory Board

            • SCC-2.1 SCC-2.1 Appointment of Shari'a Supervisory Board Members/Advisor(s)

              • SCC-2.1.1

                The operator of Shari'a compliant CIUs must appoint a Shari'a Supervisory Board/Shari'a Advisor(s). The Sharia Board must comprise of a minimum of three Shari'a scholars as members, approved by the board of the CIU and acceptable to the CBB, prior to their appointment and on an on-going basis subsequently. Alternatively, the operator may appoint a Sharia Advisor(s). In both cases, the arrangement must be in line with the prospectus of the CIU.

                April 2012

              • SCC-2.1.2

                The role of a Shari'a Supervisory Board Member/Advisor requires an appropriate level of knowledge of Islamic finance and related rules and their application to the industry and a good understanding of the industry. Therefore, the CBB will normally consider a proposed Shari'a Supervisory Board Member/Advisor(s) to be suitable if he is highly experienced in this field and is a specialised jurist in Fiqh Al-Mua'malat (Islamic commercial jurisprudence) and familiar with Islamic finance.

                April 2012

              • SCC-2.1.3

                The operator of Shari'a compliant CIUs must ensure the following:

                (a) Appointments, dismissals or other changes in respect of Shari'a Board Members/Advisor(s) are approved by the governing body of the CIU (i.e. its board of directors or trustees, as appropriate);
                (b) The Shari'a Board Members/Advisor(s) are independent of the CIU — amongst other things, a Shari'a Board Member/Advisor(s) must not be a director, trustee or controller of any relevant persons of the CIU or any of its relevant persons, including Sharia Advisors on the payroll of the operator;
                (c) The Shari'a Board Members/Advisor(s) are suitably qualified and experienced for their role; and
                (d) The Shari'a Board Members/Advisor(s) are given sufficient resources and access to information and personnel, in order to undertake effectively their role as Shari'a Advisors to the CIU.
                April 2012

              • SCC-2.1.4

                Subsequent to the initial appointment, Shari'a compliant CIUs (retail and expert) must report without delay to the CBB and to the CIU participants, changes to their Shari'a Board Members/Advisor(s), together with an explanation for the change. All such changes must be subject to the CBB's prior written approval and reflected in an update to the CIU's prospectus (and simplified prospectus where applicable).

                April 2012

              • SCC-2.1.5

                Subsequent to the initial appointment, Shari'a compliant exempt CIUs must report without delay to the CBB and to the CIU participants, changes to their Shari'a Supervisory Board Members/Advisor(s), together with an explanation for the change. All such changes must be notified to the CBB and reflected in an update to the CIU's prospectus (and simplified prospectus where applicable).

                April 2012

            • SCC-2.2 SCC-2.2 Role and Responsibilities of Shari'a Supervisory Boardc Members/Advisor(s)

              • SCC-2.2.1

                The Shari'a Supervisory Board/Advisor(s) must ensure that the CIU's activities and the underlying investments comply with Shari'a principles.

                April 2012

              • SCC-2.2.2

                The Shari'a Supervisory Board/Advisor(s) must review and approve the prospectus and documents of the CIU initially and on an ongoing basis, to ensure compliance with Shari'a standards. In doing so, they must ensure that certain prescribed additional disclosure relating to Shari'a compliance is stated in the prospectus of the CIU.

                April 2012

              • SCC-2.2.3

                The Shari'a Supervisory Board/Advisor(s) must ensure, on an ongoing basis, that the underlying investments of the CIU are Shari'a compliant and that all restrictions related to the investment strategy are met.

                April 2012

              • SCC-2.2.4

                The Shari'a Supervisory Board/Advisor(s) must undertake a Shari'a review of the CIU in accordance with AAOIFI standards and prepare an annual report in accordance with AAOIFI to be incorporated within the annual audited financial statements of the CIU. The annual audited financial statements of the CIU must contain a report and opinion from the CIU's Shari'a Supervisory Board/Advisor(s):

                (a) Explaining the work undertaken by them to verify compliance by the CIU with the Shari'a standards; and
                (b) Giving an opinion on the extent of the CIU's compliance with Shari'a standards.
                April 2012

        • PIU PIU Private Investment Undertakings

          • PIU-A PIU-A Introduction

            • PIU-A.1 PIU-A.1 Purpose

              • Executive Summary

                • PIU-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Private Investment Undertakings.

                  April 2012

              • Legal Basis

                • PIU-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding private investment undertakings and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • PIU-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • PIU-A.2 PIU-A.2 Module History

              • Evolution of Module

                • PIU-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • PIU-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • PIU-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  PIU-2.5 07/2013 Amended due date and collection process for annual fee.
                  PIU-2.5.6 10/2013 Amended to allow payment of fee by way of wire transfer.
                       
                       
                       
                       

                • PIU-A.2.4

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • PIU-B PIU-B Definitions

            • PIU-B.1 PIU-B.1 Private Investment Undertakings

              • PIU-B.1.1

                Private investment undertakings (PIUs) are defined as investment undertakings/funds that are registered with the CBB and may be initiated by or offered to high net worth individuals or institutional investors, and impose a minimum initial investment/participatory interest of USD 3 million (or equivalent in any other currency).

                April 2012

              • PIU-B.1.2

                PIUs are structures that have been created to facilitate private investments with a capacity to fit the criteria of such schemes. The role of the CBB is limited to processing the registration of PIUs in line with this Module, and to subsequently gather statistical information related to PIUs, for the purpose of monitoring developments in the financial services sector only. PIUs are not subject to the CBB's on-going supervisory requirements and are not subject to any of the provisions in the Volume 7, other than this Module.

                April 2012

            • PIU-B.2 PIU-B.2 High Net Worth Investor

              • PIU-B.2.1

                PIUs are only regulated to the extent that they are only subject to the reporting requirements under rule PIU-7.1.1 of this Module, for the purpose of monitoring the growth in the financial sector. They are not subject to any restrictions on their investment policies, as a result of which they may exhibit high risk characteristics, such as high levels of leverage and the taking of large speculative positions. Accordingly, PIUs may only be offered to a highly restricted investor base (i.e. those defined as high net worth investors).

                April 2012

              • PIU-B.2.2

                High net worth investors are:

                (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD 25 million or more;
                (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 25 million; or
                (c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest in financial instruments (such as state pension funds).
                April 2012

              • PIU-B.2.3

                A PIU must be able to demonstrate that each of its PIU participants falls within the definition of a high net worth investor. It should also be able to demonstrate that the risk exposure potentially represented by a PIU has been clearly communicated and understood by the PIU participants.

                April 2012

              • PIU-B.2.4

                To help demonstrate compliance with Rule PIU-B.2.3, a PIU should be able to provide a written confirmation from each PIU participant, stating that they satisfy the definition of a high net worth investor and confirming that they understand the types of risks involved in a PIU.

                April 2012

              • PIU-B.2.5

                The minimum initial investment requirement specificed in Rule PIU-B.1.1 means that the first investment made by an investor into the PIU must be at least USD 3 million (or its equivalent in any other currency). Subsequent investments may be for smaller amounts. Subsciptions on commitment basis must be for at least USD 3 million (or its equivalent in any other currency).

                April 2012

          • PIU-1 PIU-1 Relevant Persons

            • PIU-1.1 PIU-1.1 General Requirements

              • PIU-1.1.1

                The appointment of relevant persons to the PIU, must observe the following:

                (a) Operator, which must be a licensed entity;
                (b) Custodian, which must a CBB licensee;
                (c) Trustee (if applicable), which must be a CBB licensee;
                (d) Fund Manager (if applicable), which must be a licensed entity;
                (e) Fund Administrator, which must be a CBB licensee;
                (f) Investment Advisor (optional); and
                (g) External Auditor, based in the Kingdom of Bahrain.
                April 2012

              • Combination of Relevant Persons

                • PIU-1.1.2

                  The combination of relevant persons to the PIU, must observe the following:

                  (a) The operator of a PIU, may either be combined with the custodian or with the fund manager, but not both;
                  (b) If the PIU is structured as a trust, the trustee, who will be assuming the role of the operator, must not be combined with the fund manager;
                  (c) The trustee may be combined with the custodian/fund administrator;
                  (d) The appointment of a fund manager is optional, however, if a fund manager is appointed, it must not be combined with the custodian/fund administrator;
                  (e) The custodian may be combined with the operator and/or fund administrator; and
                  (f) The fund administrator may be combined with the custodian.
                  April 2012

            • PIU-1.2 PIU-1.2 Appointment of Relevant Persons

              • Operator/Custodian

                • PIU-1.2.1

                  The initial appointment of the operator/custodian of a PIU will be approved by the CBB as part of the process of registration.

                  April 2012

              • Other Relevant Persons

                • PIU-1.2.2

                  All relevant persons to a PIU must be appointed by the operator/custodian of a PIU, after it conducts an assessment and is satisfied as to the suitablity of the relevant person to undertake that role, prior to entering into an agreement with the PIU.

                  April 2012

              • Market Conduct

                • PIU-1.2.3

                  Relevant persons must maintain proper standards of market conduct, in relation to their role with respect to a PIU, in addition to any applicable legal and regulatory requirements (such as those imposed on them by virtue of their license, in the case of CBB licensees).

                  April 2012

              • Roles and Responsibilities

                • PIU-1.2.4

                  For further guidance on the expected responsibilities and roles of relevant persons, reference may be made to Module RP.

                  April 2012

          • PIU-2 PIU-2 Registration

            • PIU-2.1 PIU-2.1 General Requirements

              • PIU-2.1.1

                PIUs must be registered with the CBB prior to being offered to high net worth investors.

                April 2012

              • PIU-2.1.2

                An application for registration may only be made by the operator/custodian of the PIU.

                April 2012

            • PIU-2.2 PIU-2.2 Registration Process

              • PIU-2.2.1

                A request for registration under Rule PIU-2.2.1 must be made by submitting a formal letter containing the structure of the PIU and the relevant persons to the PIU, and signed by an authorised signatory of the applicant, together with all supporting documentation, as follows:

                (a) Draft Private Offering Document;
                (b) Draft Memorandum and Articles of Association or Trust Instrument (or trust deed, where appropriate);
                (c) Certified and valid passport copies and CVs of the directors; and
                (d) A board resolution of the operator, approving the application to seek registration of the PIU.
                April 2012

              • PIU-2.2.2

                The documents requested in Paragraph PIU-2.2.1 are required for filing purposes only and will not be reviewed by the CBB as to the contents or accuracy of the information contained within. As such, the CBB will bear no responsibility for the correctness of such documents.

                April 2012

              • PIU-2.2.3

                The request for registration must identify a representative in their capacity as the person responsible for submitting the application for the PIU. This person must be:

                (a) An officer of the operator/custodian of the PIU; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • PIU-2.2.4

                The operator/custodian of a PIU together with the directors of the PIU concerned, or trustees, as appropriate, must ensure that the documents constituting the PIU:

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the PIU operator/custodian, fund manager and other relevant persons to the PIU; and
                (c) Are not unfairly prejudicial to the interests of the PIU participants, either generally or to a particular class of PIU participants.
                April 2012

              • PIU-2.2.5

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint on his behalf a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal counsel prior to submision to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the registration process, when seeking clarification of any issues.

                April 2012

              • PIU-2.2.6

                The applicant must be satisfied that the lawyer appointed to make the request for registration of the PIU on his behalf, has reviewed the proposed structure or operations in detail.

                April 2012

              • PIU-2.2.7

                The CBB's review of a request for registration is mainly limited to satisfying itself that the conditions specified in this Module are likely to be complied with.

                April 2012

              • PIU-2.2.8

                The CBB will acknowledge requests for registration of PIUs within 2 business days of receipt and provide formal feedback (if any) on the request within 5 business days of receipt. This feedback will confirm whether the request is complete, or whether further information/documents are required.

                April 2012

              • PIU-2.2.9

                Should further information/documents be required, then the applicant has 90 calendar days from the date of the CBB's feedback in which to complete the application, failing which the CBB reserves the right to cancel the request and require the submission of a new one.

                April 2012

            • PIU-2.3 PIU-2.3 Granting of Registration

              • PIU-2.3.1

                To be registered, an applicant must demonstrate compliance with the conditions specified in this Module. Should the request for registration be accepted, the CBB will notify the applicant in writing of the fact. The registration may be subject to additional conditions being met.

                April 2012

            • PIU-2.4 PIU-2.4 Refusal of Registration

              • PIU-2.4.1

                The CBB may refuse to register a PIU, if in its opinion:

                (a) The requirements in this Module are unlikely to be met; or
                (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided.
                April 2012

              • PIU-2.4.2

                Where the CBB proposes to refuse a request for registration, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision.

                April 2012

            • PIU-2.5 PIU-2.5 Fees Payable to the CBB

              • Application Fees

                • PIU-2.5.1

                  Each request for registration of a PIU must be accompanied by a non-refundable BD 100 processing fee at the time of submitting the formal application to the CBB.

                  April 2012

              • Annual Fees

                • PIU-2.5.2

                  Each PIU registered by the CBB is subject to an annual fee of BD 2,000. The fee is payable on the 15th January of the annual year for which the fee is due.

                  Amended: July 2013
                  April 2012

                • PIU-2.5.3

                  For newly registered PIUs, the first annual registration fee is payable when the registration letter is issued by the CBB. The amount payable is the annual fee of BD 2,000 on a monthly prorata basis as determined by the CBB.

                  April 2012

                • PIU-2.5.4

                  All annual fees are collected by direct debit and all operators/trustees of PIUs must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • PIU-2.5.5

                  Where the PIU is de-registered, (whether at the initiative of the operator/custodian or the CBB), no refund is paid for any months remaining in the calendar year in question.

                  April 2012

                • PIU-2.5.6

                  If a PIU or newly established PIU does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the PIU.

                  Added: October 2013

          • PIU-3 PIU-3 Private Offering Document

            • PIU-3.1 PIU-3.1 General Requirements

              • PIU-3.1.1

                Every PIU registered under Chapter PIU-2 must have in place a private offering document.

                April 2012

              • PIU-3.1.2

                The board of the PIU, as appropriate, must ensure that the information contained in the private offering document:

                (a) Is complete and transparent;
                (b) Is not false, misleading, or is unfairly prejudicial to the interests of the PIU participants generally or to the participants of other classes of instruments issued by the PIU;
                (c) Does not contain any provision that conflicts with any Rule in this Volume, or other legal or regulatory requirements that apply to the PIU or other relevant persons connected to the PIU; and
                (d) Does not conflict with any other Laws or Regulations in any jurisdiction.
                April 2012

              • PIU-3.1.3

                The private offering document of a PIU must clearly display a statement to the fact that the PIU:

                (a) Is subject only to registration by the CBB and that the CBB does not assume any obligations or liabilities as a result of its registration; and
                (b) Will not violate the Laws of the Kingdom of Bahrain or any other jurisdiction.
                April 2012

          • PIU-4 PIU-4 Holdings

            • PIU-4.1 PIU-4.1 General Requirements

              • PIU-4.1.1

                Holdings may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate):

                (a) In accordance with the private offering document constituting the PIU; and
                (b) Only to or by investors qualifying as high net worth investors.
                April 2012

          • PIU-5 PIU-5 Books and Records

            • PIU-5.1 PIU-5.1 General Requirements

              • PIU-5.1.1

                PIUs must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The PIU and its relevant persons, as appropriate, to comply with the Rules in this Module; and
                (b) The PIU to demonstrate at any time that such compliance has been achieved.
                April 2012

              • PIU-5.1.2

                The records referred to under Rule PIU-5.1.1 include but are not limited to, the minutes of the board of Director's meetings, the private offering document, contractual agreements, documents constituting the PIU, transaction records, annual audited statements and KYC documents for each CIU participant, in original form or in the form of a certified copy.

                April 2012

          • PIU-6 PIU-6 Financial Statements

            • PIU-6.1 PIU-6.1 General Requirements

              • PIU-6.1.1

                PIUs must prepare annual audited financial statements for each financial year, by a qualified independent external auditor located in Bahrain.

                April 2012

              • PIU-6.1.2

                The annual audited financial statements of the fund company (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund company.

                April 2012

          • PIU-7 PIU-7 Reporting to the CBB

            • PIU-7.1 PIU-7.1 Reporting Requirements

              • PIU-7.1.1

                The operator/custodian of a PIU must report to the CBB, 21 calendar days of each quarter end, the total net asset value of the PIU with a breakdown of the figure as follows:

                (a) Resident institutions;
                (b) Resident individuals;
                (c) Non-resident institutions; and
                (d) Non-resident individuals.
                April 2012

              • PIU-7.1.2

                For the purpose of reporting requirements under this Section, the quarter end of a PIU must be a 3-month period ending on 31st March, 30th June, 30th September or 31st December.

                April 2012

          • PIU-8 PIU-8 Liquidation

            • PIU-8.1 PIU-8.1 General Requirements

              • PIU-8.1.1

                A PIU intending to liquidate must notify the CBB of such intent and must seek legal advice on how to complete the process in a satisfactory manner.

                April 2012

              • PIU-8.1.2

                Upon completion of the liquidation process, the operator/custodian of the PIU must notify the CBB of such fact.

                April 2012

          • PIU-9 PIU-9 Revocation of Registration

            • PIU-9.1 PIU-9.1 CBB Revocation of Registration Powers

              • PIU-9.1.1

                The CBB may revoke registration of a PIU in the following cases:

                (a) If any of the applicable requirements contained in this Module are not met; or
                (b) If false or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided.
                April 2012

              • PIU-9.1.2

                A registration may be revoked by the CBB, subsequent to the ruling of a competent authority, such as a court that has issued an order to liquidate the PIU.

                April 2012

              • PIU-9.1.3

                Where the CBB proposes to cancel a PIU's registration, it shall give the PIU concerned a written notice of its intention to do so and the reasons for such action. The PIU has 30 calendar days from the date of the written notice to appeal the decision.

                April 2012

      • Reporting Requirements

        • CRR CRR CBB Reporting

          • CRR-A CRR-A Introduction

            • CRR-A.1 CRR-A.1 Purpose

              • Executive Summary

                • CRR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) reporting requirements for CIUs

                  April 2012

              • Legal Basis

                • CRR-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding CBB reporting requirements applicable to collective investment undertakings and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • CRR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • CRR-A.2 CRR-A.2 Module History

              • Evolution of Module

                • CRR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • CRR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • CRR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  CRR-1.1.1 10/2016 Changed overseas domiciled CIU to placement agents offering overseas domiciled CIU holdings
                  CRR-1.3 10/2016 Amended section to be applicable to Bahrain domiciled CIUs
                  CRR-2.2.22 07/2017 Deleted 'Resident' with respect to investors.
                       
                       

              • Superseded Requirements

                • CRR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • CRR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • CRR-1 CRR-1 Prudential and Other Reporting Requirements

            • CRR-1.1 CRR-1.1 Quarterly Statistical Return

              • CRR-1.1.1

                All Bahrain domiciled CIUs and placement agents offering overseas domiciled CIU holdings must prepare and submit to the CBB a Quarterly Statistical Return (Form CIU-QS). (Refer to RP-3.4.1(n), RP-4.4.1(n), RP-7.4.1(j) and RP-12.5.5).

                Amended: October 2016
                April 2012

              • CRR-1.1.2

                A copy of Form CIU-QS is contained in Part B of Volume 7 under CBB Reporting Forms.

                April 2012

              • CRR-1.1.3

                The Quarterly Statistical Return (Form CIU-QS) must be submitted to the CBB within 21 calendar days of each quarter end.

                April 2012

              • CRR-1.1.4

                For each quarter, a certified hard copy of the Form, together with an electronic 'soft copy', must be submitted to the CBB.

                April 2012

              • CRR-1.1.5

                If the CBB notifies a CIU that a Form CIU-QS appears to be inaccurate or incomplete, the CIU must promptly look into the matter and within 5 business days of the CBB notification (or as otherwise agreed), correct any inaccuracies or make good any omissions, and submit the amended parts of Form CIU-QS.

                April 2012

              • Public Disclosure

                • CRR-1.1.6

                  Submitted Forms CIU-QS are not public documents and will not be disclosed to third parties by the CBB without the CIU's consent. However, the CBB may from time to time publish aggregate information derived from such forms for the sector as a whole.

                  April 2012

                • CRR-1.1.7

                  Whilst submitted Forms CIU-QS are not public documents, CIU's are not prevented from providing copies to third parties.

                  April 2012

            • CRR-1.2 CRR-1.2 Prudential and Financial Reporting Dates

              • CRR-1.2.1

                For the purpose of reporting requirements under this Module, the quarter end of a CIU must be a 3-month period ending on 31 March, 30 June, 30 September or 31 December.

                April 2012

              • CRR-1.2.2

                The financial year of a CIU must be a 12-month period, except where the CIU has obtained the written consent from the CBB for either the period or the period end to be other than 12 months and 31 December respectively. In any event, the financial year can never be less than a 6-month period or greater than an 18-month period.

                April 2012

            • CRR-1.3 CRR-1.3 Financial Statements and Disclosure Requirements

              • CRR-1.3.1

                Bahrain domiciled CIUs must ensure that the annual audited financial statements are disclosed and distributed to CIU participants and submitted to the CBB, within 4 months of the end of the CIU's financial year.

                Amended: October 2016
                April 2012

              • CRR-1.3.2

                Bahrain domiciled CIUs must ensure that the semi-annual (interim) financial statements are disclosed and distributed to CIU participants and submitted to the CBB, within 2 months of the period end.

                Amended: October 2016
                April 2012

              • CRR-1.3.3

                Bahrain domiciled CIUs must ensure that both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) or Part B of Volume 7. (Refer to Chapters BDR-9, BDE-9 and BDX-9).

                Amended: October 2016
                April 2012

              • CRR-1.3.4

                Bahrain domiciled CIUs must ensure that the annual audited financial statements of the fund company (if applicable) are submitted to the CBB, within 3 months of the financial year-end of the fund company.

                Amended: October 2016
                April 2012

              • CRR-1.3.5

                Bahrain domiciled Listed CIUs must observe all applicable CBB Capital Market and licensed exchange requirements, as updated by the relevant authorities, with respect to their final audited accounts. These other requirements are currently issued separately and included in Volume 6 (Capital Markets) and the Rulebook of the licensed exchange.

                Amended: October 2016
                April 2012

          • CRR-2 CRR-2 Notifications and Prior Approval Requirements

            • CRR-2.1 CRR-2.1 Bahrain Domiciled CIUs

              • CRR-2.1.1

                All notifications and approvals required in this Chapter are to be submitted by the CIU's relevant persons in writing.

                April 2012

              • CRR-2.1.2

                In this Chapter, the term 'in writing' includes electronic communication capable of being reproduced in paper form.

                April 2012

              • CRR-2.1.3

                A CIU must make the notifications and approvals required in Volume 7 immediately when it becomes aware, or has information which reasonably suggests, that any of the matters in Volume 7 have occurred, may have occurred or may occur in the near future.

                April 2012

              • CRR-2.1.4

                The requirements imposed on CIUs under Volume 7 apply whether the event relates to a matter that has occurred in Bahrain or in any other jurisdiction.

                April 2012

              • Launch of CIU

                • CRR-2.1.5

                  Subsequent to granting the authorisation for Bahrain domiciled CIUs, the operator is required to submit the following (refer to ARR-2.2.10):

                  (a) The final prospectus (and simplified prospectus, if applicable) together with all the signed contractual agreements of the CIU, and the authenticated Memorandum and Articles of Association of the fund company (if applicable), or any other constitutional documents, within one month from the date of authorisation/registration; and
                  (b) A written confirmation to the CBB in writing that the CIU has been launched, within a period not exceeding 6 months from the date of authorisation/registration, as applicable.
                  April 2012

                • CRR-2.1.6

                  Should for any reason a Bahrain domiciled CIU not be launched within the specified timeframe of 6 months, the operator must seek the CBB's approval for an extension to launch the CIU and confirm in writing to the CBB once the CIU is launched (refer to ARR-2.2.11)

                  April 2012

              • Documents and Prospectus Requirements

                • CRR-2.1.7

                  Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the documents of Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs. An updated copy of the documents must be made available to the CBB within 30 calendar days of the revision being approved (refer to BDR-1.1.5 and BDE-1.1.5).

                  April 2012

                • CRR-2.1.8

                  Once registered, any subsequent material changes to the documents of a Bahrain domiciled exempt CIU must be notified to the CBB 10 working days prior to execution. An updated copy of the documents must be made available to the CBB within 30 calendar days of executing such changes (refer to BDX-1.1.5).

                  April 2012

                • CRR-2.1.9

                  Once a Bahrain domiciled retail CIU or a Bahrain domiciled expert CIU is authorised, prior approval must be obtained from the CBB for any subsequent material changes to the prospectus. An updated copy of the prospectus must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participants must be notified of the changes at least 30 calendar days before they take effect, given that a window for redemption is made available to CIU participants within this timeframe (refer to BDR-2.1.5 and BDE-2.1.5).

                  April 2012

                • CRR-2.1.10

                  Once a Bahrain domiciled exempt CIU is registered, prior approval must be obtained from the majority of the CIU participants for any subsequent material changes to the prospectus. An updated copy of the prospectus must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participants must be notified of the changes at least 14 calendar days before they take effect (refer to BDX-2.1.6).

                  April 2012

              • Suspension of Dealing

                • CRR-2.1.11

                  All Bahrain domiciled CIUs must notify the CBB and all CIU participants upon the suspension of dealing in the CIU holdings and provide the rationale for such decision (refer to BDR-14.1.1, BDE-14.1.1 and BDX-13.1.1).

                  April 2012

              • Resumption of Dealing

                • CRR-2.1.12

                  All Bahrain domiciled CIUs must notify the CBB and all CIU participants upon the resumption of dealing in the CIU holdings and provide the date on which the dealing was resumed (refer to BDR-14.1.2, BDE-14.1.1 and BDX-13.2.1).

                  April 2012

              • Appointment of Relevant Persons

                • CRR-2.1.13

                  Termination of the approved operator/trustee is not permitted by the CBB, without obtaining the necessary prior written approval of the CBB and submitting the documents listed under Rule RP-1.2.4 (refer to Paragraph RP-1.2.3).

                  April 2012

                • CRR-2.1.14

                  Appointments of other relevant persons subsequent to granting authorisation of a Bahrain domiciled retail CIU or Bahrain domiciled expert CIU must be approved by the CBB, prior to the termination of the agreement with the existing relevant person (refer to Paragraph RP-1.3.4).

                  April 2012

                • CRR-2.1.15

                  Appointments of other relevant persons subsequent to granting approval for registration of a Bahrain domiciled exempt CIU must be notified to the CBB, 3 months prior to the effective termination date of the agreement with the existing relevant person (refer to Paragraph RP-1.3.6).

                  April 2012

                • CRR-2.1.16

                  Bahrain domiciled CIUs must, in their terms of engagement with all relevant persons, provide for them to report to the CBB in writing without delay, if they become aware of any of the following (refer to Paragraph RP-2.1.3):

                  (a) The information provided to the CIU's participants or the CBB does not truly reflect the financial situation of the CIU;
                  (b) There has been a material breach of the requirements of Volume 7, the CIU documents, or any directions issued by the CBB;
                  (c) There exist circumstances that may materially affect the ability of the CIU to fulfill its obligations to the CIU participants;
                  (d) There are material defects in the financial systems, controls or accounting records of the CIU;
                  (e) There are material inaccuracies in any reporting provided to the CBB; or
                  (f) In the case of the external auditor, they are likely to qualify any opinion they are to provide in relation to the financial statements of the CIU.
                  April 2012

              • Sharia Compliant CIUs

                • CRR-2.1.17

                  Subsequent to the initial appointment, Shari'a compliant retail CIUs and Shari'a compliant expert CIUs must report without delay to the CBB and to the CIU participants, changes to their Shari'a Board Members/Advisor(s), together with an explanation for the change. All such changes must be subject to the CBB's prior written approval and reflected in an update to the CIU's prospectus (and simplified prospectus where applicable) (refer to SCC-2.1.4).

                  April 2012

                • CRR-2.1.18

                  Subsequent to the initial appointment, Shari'a compliant exempt CIUs must report without delay to the CBB and to the CIU participants, changes to their Shari'a Board Members/Advisor(s), together with an explanation for the change. All such changes must be notified to the CBB and reflected in an update to the CIU's prospectus (and simplified prospectus where applicable) (refer to SCC-2.1.5).

                  April 2012

              • Notifications and Approvals for Liquidation of a CIU

                • CRR-2.1.19

                  Any intention to liquidate a Bahrain domiciled CIU must first be notified to the CBB by the operator together with reasons for having such intent. Notification must be made before entering into any other legally binding commitment to liquidate (refer to LDR-1.2.1).

                  April 2012

                • CRR-2.1.20

                  Upon finalising the decision to liquidate, the operator of a Bahrain domiciled CIU must seek in writing, the CBB's prior written approval to liquidate. The liquidation must be subject to the terms of the instrument constituting the CIU and any other applicable laws (refer to LDR-1.3.1).

                  April 2012

                • CRR-2.1.21

                  The formal request must be supported by a board resolution ratifying the decision, subject to CBB approval (refer to LDR-1.3.2).

                  April 2012

                • CRR-2.1.22

                  CBB approval in response to a request to liquidate a Bahrain domiciled CIU will normally be given in the following circumstances (refer to LDR-1.3.4):

                  (a) The CIU was not able to operate within 6 months from the CBB's authorisation date (refer to Module ARR);
                  (b) The purpose of the CIU cannot be accomplished;
                  (c) The constitutional documents of the CIU stipulate a specific maturity date;
                  (d) The NAV of the CIU has fallen below a certain size, where the board believes it is not feasible to continue operating the CIU; or
                  (e) A resolution of a duly convened meeting of the CIU participants has been passed to liquidate the CIU.
                  April 2012

                • CRR-2.1.23

                  Bahrain domiciled CIUs must simultaneously give at least one month's written notice, as a minimum, to CIU participants of their intention to liquidate the CIU, together with an explanation for such intention. A copy of this notice must be provided to the CBB at the time it is issued to CIU participants (refer to LDR-1.4.1).

                  April 2012

                • CRR-2.1.24

                  The appointment of the liquidator and the external auditor is subject to CBB approval (refer to LDR-1.4.5 or LDR-1.4.3 (b) and (c)).

                  April 2012

                • CRR-2.1.25

                  Upon completion of the liquidation process, the operator must submit the following to the CBB (refer to LDR-1.4.6):

                  (a) The final report from the liquidator confirming the completion of the liquidation process and the final audited accounts of the CIU and fund company (if applicable);
                  (b) Evidence that the Commercial Registration of the fund company, provided by the Ministry of Industry and Commerce has been cancelled (if applicable);
                  (c) An independent verification by auditors that the CIU's assets have been distributed to CIU participants in accordance with the instrument constituting the CIU. For non-operational CIUs, the audit verification must confirm that the CIU has not operated; and
                  (d) A request for the CIU to be removed from the CBB's register of authorised/registered CIUs.
                  April 2012

            • CRR-2.2 CRR-2.2 Relevant Persons

              • General

                • CRR-2.2.1

                  All relevant persons must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis (refer to the Module RP).

                  April 2012

              • Operator

                • CRR-2.2.2

                  The operator of Bahrain domiciled CIUs is responsible for all reporting requirements to the CBB and to other parties, as required in Volume 7. Such reporting requirements include but are not limited to (refer to Paragraph RP-3.5.1):

                  (a) Reporting any breach to the requirements of Volume 7, the CIU documents, or any directions issued by the CBB; and
                  (b) Reporting any material amendments to the CIU documents on a timely basis.
                  April 2012

                • CRR-2.2.3

                  Operators of Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs must obtain CBB's prior written approval for any additional investment in the CIU, other than the seed capital prescribed in the prospectus (refer to Paragraph RP-3.6.2).

                  April 2012

                • CRR-2.2.4

                  Operators of Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs who have introduced seed capital/investment into a CIU authorised under Module ARR must not seek partial redemption, full redemption or buy back the seed capital/investment without the prior written approval of the CBB (refer to Paragraph RP-3.6.3).

                  April 2012

                • CRR-2.2.5

                  Operators of Bahrain domiciled exempt CIUs must notify the CBB prior to committing to any additional investment in the CIU, other than the seed capital prescribed in the prospectus (refer to Paragraph RP-3.6.4)

                  April 2012

                • CRR-2.2.6

                  Operators of Bahrain domiciled exempt CIUs who have introduced seed capital/investment into a CIU registered under Module ARR must not seek partial redemption, full redemption or buy back the seed capital/investment without the prior written notification to the CBB (refer to Paragraph RP-3.6.5).

                  April 2012

                • CRR-2.2.7

                  Operators of Bahrain domiciled CIUs must seek the CBB's approval as soon as reasonably practicable as to any intention to merge, transfer or wind-up a CIU (refer to Paragraph RP-3.6.9).

                  April 2012

                • CRR-2.2.8

                  Operators of Bahrain domiciled CIUs must notify the CBB immediately upon deciding to suspend/resume dealings in a CIU (refer to Paragraph RP-3.6.10).

                  April 2012

              • Trustee

                • CRR-2.2.9

                  The trustee of Bahrain domiciled CIUs is responsible for all reporting requirements to the CBB and to other parties, as required in Volume 7. Such reporting requirements include but are not limited to (refer to Paragraph RP-4.5.1):

                  (a) Reporting any breach to the requirements of Volume 7, the CIU documents, or any directions issued by the CBB; and
                  (b) Reporting any material amendments to the CIU documents on a timely basis.
                  April 2012

                • CRR-2.2.10

                  Trustees of Bahrain domiciled CIUs must seek the CBB's prior approval as soon as reasonably practicable as to any intention to merge, transfer or wind-up a CIU (refer to Paragraph RP-4.6.2).

                  April 2012

                • CRR-2.2.11

                  Trustees of Bahrain domiciled CIUs must notify the CBB immediately upon deciding to suspend/resume dealings in a CIU (refer to Paragraph RP-4.6.3).

                  April 2012

              • Fund Manager

                • CRR-2.2.12

                  Fund managers must comply with all reporting requirements stipulated in the relevant contractual agreements (refer to Paragraph RP-5.5.1).

                  April 2012

              • Custodian

                • CRR-2.2.13

                  Custodians must comply with all reporting requirements as stipulated in the relevant contractual agreements (refer to Paragraph RP-6.5.1).

                  April 2012

                • CRR-2.2.14

                  Custodians must report to the CBB immediately when they become aware of any breach of the CIUs prospectus (refer to Paragraph RP-6.5.2).

                  April 2012

                • CRR-2.2.15

                  Custodians must provide the fund manager and fund administrator with a statement of assets pertaining to the CIU, on intervals, as agreed between the parties (refer to Paragraph RP-6.5.3).

                  April 2012

              • Fund Administrator

                • CRR-2.2.16

                  Fund administrators must comply with all reporting requirements as stipulated in the relevant contractual agreements. Such reports should include but are not limited to the following (refer to RP-7.5.1):

                  (a) Reporting of the NAV to the operator, fund manager and registrar, as prescribed in the prospectus;
                  (b) Reporting of the CIU's annual financial statements (within 4 months of the financial year-end of the CIU) and semi-annual financial statements (within 2 months of the relevant 6-month period) to the operator, fund manager, and registrar and to the CBB;
                  (c) Reporting of the fund company's annual financial statements (within 3 months of the finanical year-end of the CIU) to the CIU operator, fund manager and CBB;
                  (d) Reporting of all necessary reports of the CIU, including but not limited to the NAV report, cash accounts statements, assets valuation reports, foreign exchange profit and loss report, dividend report and trial balance, to the fund manager;
                  (e) In the case retail CIU or expert CIUs, report to the CBB, fund manager and operator, if:
                  (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date.
                  (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIU; or
                  (iii) The total NAV falls below 50% of the total NAV of the CIU relative to the previous valuation day.
                  (f) Report to the CBB any case in which the investment strategy limits / guidelines are breached;
                  (g) Report to the CBB Form CIU (QS) within the deadline required in Paragraph CRR-1.1.3;
                  (h) Report to the CBB immediately, any suspension in the determination of the NAV of the CIU, the reasons for this suspension, and tentative time to recommence of determination of the NAV; and
                  (i) To meet any reporting requirement as required by the MOIC in accordance with the Bahrain Commercial Companies Law.
                  April 2012

              • Registrar/Transfer Agent

                • CRR-2.2.17

                  Registrars/Transfer Agents must comply with all reporting requirements stipulated in the relevant contractual agreements (refer to Paragraph RP-8.5.4).

                  April 2012

              • Placement Agent

                • CRR-2.2.18

                  Placement agents must comply with all reporting requirements stipulated in the relevant contractual agreements (refer to Paragraph RP-9.5.1).

                  April 2012

                • CRR-2.2.19

                  The placement agent should report to the fund company's board of directors/trustees, any issues related to anti-money laundering and terrorist financing (refer to Paragraph RP-9.5.2).

                  April 2012

              • Investment Advisor

                • CRR-2.2.20

                  Investment advisors must comply with any reporting requirements stipulated in the relevant contractual agreements (refer to Paragraph RP-10.5.1).

                  April 2012

              • External Auditor

                • CRR-2.2.21

                  External auditors must comply with all reporting requirements stipulated in the relevant contractual agreements (refer to Paragraph RP-11.5.1).

                  April 2012

                • CRR-2.2.22

                  External auditors must report any material weaknesses in accounting and internal control systems that come to their notice, to the board of directors of the fund company/trustees and to the CBB, in a timely and on a prompt basis (refer to Paragraph RP-11.5.2).

                  April 2012

              • Placement Agent (Offering Overseas Domiciled CIU Holdings to Investors in the Kingdom of Bahrain)

                • CRR-2.2.23

                  Placement agents must comply with any reporting requirements to the CIU participants, stipulated in the relevant contractual agreements (refer to Paragraph RP-12.5.1).

                  April 2012

                • CRR-2.2.24

                  Placement agents must ensure that the CIUs' prospectus (and simplified prospectus where applicable) are kept up-to-date. Most recent copies of the prospectus (and simplified prospectus where applicable) must be circulated to existing investors and made available to the CBB within 30 calendar days of any revision (refer to Paragraph RP-12.5.2).

                  April 2012

                • CRR-2.2.25

                  Placement agents must distribute to investors the annual reports of CIUs and any other reports specified in the CIUs' prospectus, within the time scales specified by their home regulator and in accordance with the accounting standards acceptable by the home regulator (refer to Paragraph RP-12.5.3).

                  April 2012

                • CRR-2.2.26

                  Placement agents must notify the CBB and the CIU participants in a timely manner of any intention to merge, transfer, wind up or suspend dealings in overseas domiciled CIUs (refer to Paragraph RP-12.5.4).

                  April 2012

                • CRR-2.2.27

                  Placement agents must file with the CBB Form CIU (QS), the CIU Quarterly Statistical Return, within the deadline specified on the return (refer to Paragraph RP-12.5.5).

                  April 2012

          • CRR-3 CRR-3 Notifications and Approvals of the Board

            • CRR-3.1 CRR-3.1 Board of Directors

              • CRR-3.1.1

                The operator of the CIU must obtain the CBB's prior approval before a person is formally appointed to the board. The request for CBB approval must be made by submitting to the CBB a Form 2 CIU Board Member Form with a covering letter, and enclosing the following documentation (refer to Paragraph CG-2.1.1). :

                (a) A board resolution from the operator ratifying the appointment;
                (b) A current CV of the proposed board member; and
                (c) A valid passport copy of the proposed board member.
                April 2012

              • CRR-3.1.2

                The operator/trustee must immediately notify the CBB in case of any material change to the information provided in the request for appointment of a board member (refer to Paragraph CG-2.1.3).

                April 2012

              • CRR-3.1.3

                The operator/trustee must immediately notify the CBB when it becomes aware of any of the following events, affecting one of the board members (refer to Paragraph CG-2.1.4):

                (a) The conviction by a court, whether in Bahrain or elsewhere, for a crime affecting honesty;
                (b) A declaration of bankruptcy by a court of law;
                (c) A court ruling that the board member's legal capacity is totally or partially impaired; or
                (d) A sanction by a professional body of a fine, suspension, expulsion or censure.
                April 2012

              • CRR-3.1.4

                The operator/trustee of the CIU must immediately notify the CBB when a board member submits a resignation from his position, or if his membership is terminated, together with an explanation as to the reasons why (refer to Paragraph CG-2.1.5).

                April 2012

            • CRR-3.2 CRR-3.2 Meeting of CIU Participants

              • CRR-3.2.1

                If a general meeting of CIU participants is called, the board must ensure that (refer to Paragraph CG-3.3.2):

                (a) Each CIU participant is given at least 14 calendar days written notice of the meeting;
                (b) The notice specifies the place, day and time of the meeting; and
                (c) The terms and resolutions to be proposed, as well as a copy of the notice, are sent to the CIU's fund administrator and custodian and to the CBB.
                April 2012

              • CRR-3.2.2

                The board should obtain regular feedback from the placement agent(s), or sub-placement agent(s) to ascertain that formal anti-money laundering procedures in place are being adhered to, and that any suspicious findings were raised and investigated accordingly. All suspicious findings and the results of the subsequent investigation should be promptly reported to the board and to the concerned authority (refer to Paragraph CG-5.7.2).

                April 2012

              • CRR-3.2.3

                The board should be aware of any material breach that may affect the overall operation of the CIU, including but not limited to any breach to the investment policy of a CIU and report it to the CBB on a prompt and timely manner, in writing (refer to Paragraph CG-5.11.1).

                April 2012

              • CRR-3.2.4

                The board must report to the CBB, on a prompt basis, any event that may directly or indirectly impact the CIU (refer to Paragraph CG-5.11.2).

                April 2012

              • CRR-3.2.5

                In the event that the fund manager foresees, due to adverse market conditions, that it is in the best interest of CIU participants to shift from investments into cash and cash equivalents, the board is required to (refer to CG-5.11.3):

                (a) Immediately notify the CBB and the registrar stating the reason and the expected time by which the stipulated limits will be met; and
                (b) Immediately notify the CBB and the registrar once the CIU resumes investing in accordance with the investment limits stipulated in the prospectus.
                April 2012

              • CRR-3.2.6

                The board must provide the CBB, upon request, with any additional information relevant to the CIU, on a prompt basis (refer to Paragraph CG-5.11.4).

                April 2012

          • CRR-4 CRR-4 Notification and Approval Requirements for Bahrain Domiciled Retail and Bahrain Domiciled Expert CIUs

            • CRR-4.1 CRR-4.1 General Requirements

              • CRR-4.1.1

                Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs may only invest in the type of assets specified in and in accordance with the limits prescribed in Supplementary Information document, ARR(iv), unless otherwise agreed and approved in writing by the CBB. However, such limits do not apply until the expiry of a period of six months from the date of the initial offering of the CIU (refer to Rules BDR-4.1.4 and BDE-4.1.4).

                April 2012

              • Significant Influence / Conflicts of Interest

                • CRR-4.1.2

                  Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs must not acquire securities issued by a relevant person, unless exempted in writing by the CBB (refer to Rules BDR-4.3.1 and BDE-4.3.1).

                  April 2012

              • Non-compliance with and Breaches of Investment Limits

                • CRR-4.1.3

                  Any breach of investment limits and risk management policies, that has occurred because of a reason other than a market change or movement, must be reported to the CBB by the board of the CIU, the custodian and the fund administrator, in a timely manner together with a plan and time-frame whereby the breach would be rectified (refer to Rules BDR-4.5.2 and BDE-4.5.2).

                  April 2012

                • CRR-4.1.4

                  If the breach occurs as a result of a market change or movement, Bahrain domiciled retail CIUs and Bahrain domiciled expert CIUs must take all necessary steps to remedy the situation, if possible, but without jeopardizing the interests of CIU participants, and to notify the CBB of the same (refer to Rules BDR-4.5.3 and BDE-4.5.3).

                  April 2012

              • Dividends

                • CRR-4.1.5

                  All requests for distribution of dividends on holdings, must be approved in writing by the CBB prior to being announced or distributed to CIU participants of a Bahrain domiciled retail CIU or a Bahrain domiciled expert CIU (refer to Rules BDR-6.2.1 and BDE-6.2.1).

                  April 2012

                • CRR-4.1.6

                  The fund administrator of a Bahrain domiciled retail CIU or a Bahrain domiciled expert CIU must notify the CBB, in writing, if the NAV of the CIU falls below (refer to Rules BDR-7.1.4 and BDE-7.1.4):

                  (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date;
                  (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIU; or
                  (iii) The total NAV falls below 50% of the total NAV of the CIU relative to the previous valuation day.
                  April 2012

              • Listing Requirements

                • CRR-4.1.7

                  In the case that a Bahrain domiciled retail CIU or a Bahrain domiciled expert CIU intends to be listed subsequent to being authorised by the CBB, it must (refer to Rules BDR-12.1.2 and BDE-12.1.2):

                  (a) Amend the prospectus after obtaining the CBB's approval; and
                  (b) Notify the CIU participants of such intention.
                  April 2012

                • CRR-4.1.8

                  Subsequent to fulfilling the requirements of Rules BDR-12.1.2 and BDE-12.1.2, the operator of the CIU must (refer to Rules BDR-12.1.3 and BDE-12.1.3):

                  (a) Obtain CBB's non-objection to be listed;
                  (b) Obtain the required approvals from the licensed exchange; and
                  (c) Thereafter notify the CBB of the effective date of listing.
                  April 2012

              • Mergers and Transfers

                • CRR-4.1.9

                  Bahrain domiciled CIUs must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled CIU (refer to Rules BDR-13.1.1 and BDE-13.1.1)

                  April 2012

          • CRR-5 CRR-5 Notification and Approval Requirements for Overseas Domiciled CIUs

            • CRR-5.1 CRR-5.1 General Requirements

              • CRR-5.1.1

                Any change to the prospectus and simplified prospectus of an overseas domiciled CIU must be communicated to the CBB and to CIU participants, within the deadline specified by the home regulator (refer to Paragraph ODC-1.2.4).

                April 2012

              • Reporting to CBB

                • CRR-5.1.2

                  The placement agent of an overseas domiciled CIU must notify the CBB in a timely manner of any intention to merge, transfer, wind up or suspend dealings in the CIU (refer to Paragraph ODC-3.2.1).

                  April 2012

              • De-registration/De-authorisation of Overseas Domiciled CIUs

                • CRR-5.1.3

                  The placement agent of an overseas domiciled CIU, must give at least one month's written notice to CIU participants and to the CBB of its intention to de-register or de-authorise the CIU. The notification must be submitted along with an explanation of the reasons for wishing to de-register or de-authorise the CIU, and subsequently a confirmation that there are no obligations outstanding to any CIU participant (refer to Rule ODC-6.1.1).

                  April 2012

          • CRR-6 CRR-6 Accuracy of Information

            • CRR-6.1 CRR-6.1 General Requirements

              • CRR-6.1.1

                CIUs and their relevant persons must take reasonable steps to ensure that all information they give the CBB is:

                (a) Factually accurate or, in the case of estimates and judgments, fairly and properly based after appropriate enquiries have been made by the CIU; and
                (b) Complete, in that it should include anything of which the CBB would reasonably expect notice.
                April 2012

              • CRR-6.1.2

                If the relevant person of a CIU becomes aware, or has information that reasonably suggests that it has or may have provided the CBB with information that was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material way, it must notify the CBB immediately. The notification must include:

                (a) Details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;
                (b) An explanation why such information was or may have been provided; and
                (c) The correct information.
                April 2012

              • CRR-6.1.3

                If the information in Rule CRR-6.1.2 cannot be submitted with the notification, (because it is not immediately available), it must instead be submitted as soon as possible afterwards.

                April 2012

      • Enforcement & Redress

        • EN EN Enforcement

          • EN-A EN-A Introduction

            • EN-A.1 EN-A.1 Purpose

              • Executive Summary

                • EN-A.1.1

                  This Module sets out the CBB's approach to enforcement, and the measures used by the CBB to address failures by the CIU and its relevant persons to comply with its regulatory requirements. The purpose of such measures is to encourage a high standard of compliance by all those authorised by the CBB, thus reducing risk to investors and the financial system.

                  April 2012

              • Legal Basis

                • EN-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) relating to enforcement and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 and its amendments ('CBB Law').

                  Amended: April 2016
                  April 2012

                • EN-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • EN-A.2 EN-A.2 Module History

              • Evolution of Module

                • EN-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUs.

                  April 2012

                • EN-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant persons, the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • EN-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  EN-A.1.2 04/2016 Reference added to amendments to the CBB Law.
                  EN-1.1.8 04/2016 Amended to be in line with amendments to Article 129 of the CBB Law.
                       
                       
                       

                • EN-A.2.4

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • EN-B EN-B Scope of Application

            • EN-B.1 EN-B.1 Enforcement on Relevant Persons — CBB Licensees

              • EN-B.1.1

                CBB licensees that are relevant persons of Bahrain domiciled CIUs and overseas domiciled CIUs are subject to the enforcement provisions laid out in the CBB Law and in the Enforcement Modules within the respective Volumes of the CBB Rulebook, Volume 1 (Conventional Banking), Volume 2 (Islamic Banking), Volume 4 (Investment Business) or Volume 5 (Specialised Licensees).

                April 2012

            • EN-B.2 EN-B.2 Enforcement on Relevant Persons — Non-CBB Licensees

              • EN-B.2.1

                Non-CBB licensees who are relevant persons of a Bahrain domiciled CIU are required to submit themselves to the enforcement regime laid down in the CBB Law and this Module.

                April 2012

              • EN-B.2.2

                The CBB shall require evidence that the non-CBB licensee has submitted itself in the manner required above and this shall ordinarily be done by way of entry into an undertaking with the CBB (substantially in the form set out by the CBB).

                April 2012

              • EN-B.2.3

                Exceptionally, the CBB may, at its discretion, accept other means satisfying its requirement for non-CBB licensees to be subject to an enforcement regime and/or for CBB redress in the event of regulatory non-compliance.

                April 2012

              • EN-B.2.4

                The CBB reserves all legal powers and rights necessary to enforce the undertaking (referred to above) and/or take such other measures as are necessary to enforce compliance with this Module (and/or any other prior arrangement entered into with the agreement of the CBB).

                April 2012

              • EN-B.2.5

                In appropriate circumstances, the CBB will communicate non-compliance/enforcement issues to a non-CBB licensees' home state regulator with a request that they take such enforcement action as is deemed suitable.

                April 2012

            • EN-B.3 EN-B.3 Prohibition on Insurance

              • EN-B.3.1

                To help the CBB achieve the purpose of this Module, a Bahrain domiciled CIU may not enter into or make a claim under a contract of insurance that is intended to, or has the effect of, indemnifying the CIU from the financial penalties imposed on relevant persons and provided for in the relevant Enforcement Modules of CBB Rulebook.

                April 2012

          • EN-1 EN-1 Legal Sources

            • EN-1.1 EN-1.1 References to CBB Law

              • EN-1.1.1

                The CBB has numerous legal powers at its disposal. As well as contractual and other private law rights, the following Paragraphs outline the public law powers available to it under the CBB Law.

                April 2012

              • Obtaining Information from Licensees

                • EN-1.1.2

                  As part of its on-going supervision, under Articles 111 and 123 of the CBB Law, the CBB may specifically request information or temporary reporting from a licensee or individual. Recipients of such requests are bound to respond to such requests under the terms of their license.

                  April 2012

              • Inspection

                • EN-1.1.3

                  Articles 114 and 121 to 123 of the CBB Law empowers the CBB to order inspections/investigations of licensees, in order to help it assess a licensee's compliance with the provisions of the CBB Law. Such inspections or investigations may be carried out either by its own officials or others appointed for such a purpose by the CBB (Appointed Experts). Articles 111, 114, and 124 require licensees to make available to the CBB's inspectors their books and other records, and to provide all relevant information within the time limits deemed reasonable by the inspectors/investigators.

                  April 2012

                • EN-1.1.4

                  Articles 163 and 170 of the CBB Law provide for criminal sanctions where false or misleading statements are made to the CBB, or an investigation by the CBB is otherwise obstructed.

                  April 2012

                • EN-1.1.5

                  In accordance with Articles 114 and 123 of the CBB Law, licensees must provide all relevant information and assistance to appointed experts on demand.

                  April 2012

              • Formal Warnings

                • EN-1.1.6

                  The CBB may issue formal warnings to licensees or individuals. The CBB will issue such warnings where it reasonably believes that these are required to achieve its statutory objectives.

                  April 2012

              • Directions

                • EN-1.1.7

                  Article 38 of the CBB Law empowers the CBB to issue Directions to licensees or individuals. The powers conveyed allow the CBB to issue whatever Directions, it reasonable believes, are required to achieve its statutory objectives.

                  April 2012

              • Financial Penalties

                • EN-1.1.8

                  Article 129 of the CBB Law, provides the CBB the power to impose financial penalties on licensees or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law. Their use is generally limited to situations where major breaches of regulatory requirements have taken place and a licensee has failed to respond in an acceptable manner to the concerns expressed by the CBB. Financial penalties are thus normally preceded by the issuance of a written formal warning and/or Direction.

                  Amended: April 2016
                  April 2012

              • Administration

                • EN-1.1.9

                  Article 136 of the CBB Law empowers (but does not oblige) the CBB to assume the administration of a licensee in certain circumstances. These circumstances are outlined in the above Article and may include the following:

                  (a) The licensee has become insolvent;
                  (b) Its solvency is in jeopardy;
                  (c) Its continued activity is detrimental to the financial services industry in the Kingdom; or
                  (d) Its license has been cancelled.
                  April 2012

              • Cancellation of License

                • EN-1.1.10

                  Article 48 of the CBB empowers the CBB to cancel or amend a license under certain circumstances. These include cases where a licensee has:

                  (a) Failed to satisfy its license conditions;
                  (b) Violated the terms of the CBB Law, regulations or Rulebook;
                  (c) Failed to start business within six months from the date of the license being issued;
                  (d) Ceased to carry out the licensed activities permitted; or
                  (e) Not acted in the legitimate interest of its customers or creditors.
                  April 2012

              • Cancellation of "Fit and Proper" Status

                • EN-1.1.11

                  Article 65 of the CBB Law allows the CBB to determine the level of qualifications, experience and training of licensee's officers or employees. Article 65(c) of the CBB Law empowers the CBB the right to remove any official, being a board member or in an executive position, that is unqualified or unsuitable for the assigned position.

                  April 2012

              • Criminal Sanctions

                • EN-1.1.12

                  The CBB Law provides for a number of criminal sanctions in cases where certain of its provisions are contravened. This Section provides a summary of those sanctions most relevant to licensees, their directors and employees. What follows is not a complete list of all sanctions provided for in the CBB Law, nor is it a substitute for reading the Law and being fully aware of its provisions.

                  April 2012

                • EN-1.1.13

                  Licensees, their directors and employees should also be aware of the criminal sanctions provided for under other relevant Bahraini laws, such as the Decree — Law No. 4 of 2001, with respect to the prevention and prohibition of the laundering of money.

                  April 2012

                • EN-1.1.14

                  In all cases to do with criminal sanctions, the CBB can only refer the matter to the Office of the Public Prosecutor. The CBB has no authority to apply such sanctions without recourse to the courts.

                  April 2012

                • EN-1.1.15

                  Article 163 of the CBB Law provides for a term of imprisonment and/or a fine of up to BD 20,000, without prejudice to any other penalty prescribed in any other law, in case of conviction of a director, manager, official, agent or representative of any licensee who:

                  (a) Conceals any records, information or documents requested by the CBB (or any person appointed by the CBB to conduct an investigation or inspection);
                  (b) Provides statements or information in bad faith which do not reflect the actual financial position of the licensee;
                  (c) Conceals from an external auditor any records, information or documents necessary for auditing the accounts of the licensee; or
                  (d) Provides in bad faith any misleading or inaccurate statements to an external auditor which do not reflect the actual financial position of the licensee.
                  April 2012

                • EN-1.1.16

                  Part 9 of the CBB Law provides the CBB with various investigative and administrative powers to help discharge its regulatory and supervisory functions. These include the right to appoint investigators (Article 121), to assist overseas authorities (Article 122), to demand information (Article 123), and to compel access to premises or information (Article 124).

                  April 2012

                • EN-1.1.17

                  The CBB aims to achieve an open, constructive and cooperative relationship with those persons it regulates, but will resort to more formal enforcement powers where cooperation is not forthcoming.

                  April 2012

                • EN-1.1.18

                  Article 169 provides for a term of imprisonment, and/or a fine of up to BD 20,000 for any director, manager, official or employee, who acts or permits an act in violation of Article 134 of the CBB Law, dealing with the effects of insolvency, where he knows (or should have known) that the licensee is insolvent.

                  April 2012

                • EN-1.1.19

                  Article 170(2) of the CBB Law provides for terms of imprisonment and/or a fine not exceeding BD 3,000 if any director, manager, official or employee intentionally obstructs an investigation by the CBB or an appointed expert.

                  April 2012

                • EN-1.1.20

                  Article 171 of the CBB Law provides for a term of imprisonment and/or a fine not exceeding BD 10,000, if any director, manager, official or employee discloses in bad faith any confidential information relating to a customer of a licensee.

                  April 2012

          • EN-2 EN-2 Revocation of Authorisation/Registration

            • EN-2.1 EN-2.1 Revocation of Authorisation/Registration of Bahrain Domiciled CIUs

              • EN-2.1.1

                The CBB may revoke authorisation/registration of a Bahrain domiciled CIU in the following cases:

                (a) If the CIU is not in operation within 6 months from the date of its authorisation/registration (also refer to Module ARR);
                (b) If any of the applicable requirements contained in Volume 7 are not met;
                (c) If false or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                (d) If the CBB believes it necessary in order to safeguard the interests of potential investors or the CIU's participants.
                April 2012

              • EN-2.1.2

                An authorisation/registration may be revoked by the CBB upon a bankruptcy and/or insolvency and/or liquidation event arising at the CIU or any relevant person.

                April 2012

            • EN-2.2 EN-2.2 Revocation of Authorisation/Registration of Overseas Domiciled CIUs

              • EN-2.2.1

                The CBB may cancel the registration/authorisation of an overseas domiciled CIU if in its opinion it believes it necessary in order to safeguard the interests of potential investors or the CIU participants.

                April 2012

    • Part B

       

      Table of Contents
       
      Glossary of Defined Terms Oct 20 PDF Version
      CBB Authorisation Forms Form 1 CIU Application Form Jul 17 PDF Version
      Form 2 Application for Board Member of CIU Oct 16 PDF Version
      Form 3 ODC Filing Form Jul 15 PDF Version
      Form LP 1 LP Application Form July 17 PDF Version
      Form LP 2 GP Application Form July 17 PDF Version
      Form PCC 1 PCC Application Form July 17 PDF Version
      Form PCC 2 Conversion to PCC Application Form July 17 PDF Version
      CBB Reporting Forms Form CIU(QS) Quarterly Prudential Return Apr 12 MS Excel Version
      Form ALF Annual License Fee [This form was deleted in July 2013] Jul 13 Deleted
        Direct Debit Authorisation Form Oct 14 PDF Version
      Supplementary Information ARR Authorisation/Registration Requirements
      ARR - (i) Documents Constituting the CIU Apr 12 PDF Version
      ARR - (ii) Prospectus Apr 12 PDF Version
      ARR - (iii) Simplified Prospectus Apr 12 PDF Version
      ARR - (iv) Admissible Assets and Limits Apr 12 PDF Version
      CRR CBB Reporting
      CRR - (i) Contents of Financial Reports Apr 12 PDF Version

       

      • Glossary of Defined Terms

        • Glossary History

          Version Date Description of Changes
          04/2012 Initial Launch
          07/2017 Deleted "resident" with respect to investors in the terms 'placement agent offering overseas domiciled CIU holdings' and 'relevant person(s)'.
          10/2020 Amended definition of ‘Accredited investor(s)’.
             
             

          • [A] [A]

            • Accredited investor(s)

              Accredited investors are defined as investors meeting the following criteria:

              (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD 1,000,000 or more, excluding that person's principal place of residence;
              (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 1,000,000; or
              (c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest in financial instruments (such as state pension funds).
              Amended: October 2020

            • Appointed Expert(s)

              A duly qualified individual or firm appointed by the CBB to carry out inspections in accordance with Article 114 of the CBB Law or special investigations of licensees in accordance with Article 121 of the CBB Law. Appointed experts may be appointed in addition to the CBB's own officials. Examples of appointed experts include reporting accountants, lawyers, private investigators, expert witnesses and independent actuaries.

          • [B] [B]

            • Bahrain domiciled CIU(s)

              Bahrain domiciled CIUs are undertakings where:

              (a) The legal form of the CIU is established under the laws of the Kingdom of Bahrain; and
              (b) The CIU documents and contractual agreements are governed by the Laws of the Kingdom of Bahrain.

            • Bahrain domiciled exempt CIU(s)

              Bahrain domiciled exempt CIUs are exempt CIUs that are domiciled in Bahrain (see exempt CIUs and Bahrain domiciled CIUs).

            • Bahrain domiciled expert CIU(s)

              Bahrain domiciled expert CIUs are expert CIUs that are domiciled in Bahrain (see expert CIUs and Bahrain domiciled CIUs).

            • Bahrain domiciled retail CIU(s)

              Bahrain domiciled retail CIUs are retail CIUs that are domiciled in Bahrain (see retail CIUs and Bahrain domiciled CIUs).

            • B-REITs (Bahrain Domiciled Real Estate Investment Trusts)

              Bahrain domiciled real estate investment trusts (B-REITs) are defined as collective investment undertakings the objectives of which are acquiring, holding, administering, managing and selling income generating local and foreign real estate properties, either directly or indirectly.

          • [C] [C]

            • CBB licensee(s)

              CBB licensees are persons holding a license from the CBB to undertake a regulated service. Different license categories apply, depending on the types of regulated services undertaken. Each license category is subject to its own Rulebook Volume (e.g. Volumes 1 is for conventional bank licensees, Volume 2 is for Islamic bank licensees, Volume 3 is for Insurance licensees, Volume 4 is for investment firm licensees and Volume 5 is for Specialised licensees).

            • CIU participant(s)

              A (CIU) participant is a person with one or more holdings in a CIU, sometime referred to as a unit holder.

            • CIU representative

              A CIU representative can be the custodian or the administrator, appointed by the operator (in case that the operator is not a CBB licensee), to act as a liaison with the CBB and the CIU participants. Such appointment must be stated in the prospectus.

            • Closed-ended fund(s)

              Closed-ended funds are CIUs with a limited number of holdings. Where the fund vehicle is a company, holdings can take the form of shares. New holdings are rarely issued after the fund is launched and are not normally redeemable until the fund liquidates. Typically an investor can acquire or dispose of holdings in a closed-ended fund by buying or selling them on a secondary market, from a market intermediary or other investor, rather than by dealing with the CIU itself.

            • Collective Investment Undertaking(s) ('CIUs')

              Collective investment undertakings ('CIUs') are undertakings:

              (i) The sole object of which is the collective investment of capital raised from the public or through private placement, including investment seeded by the operator, in financial instruments and other assets and which operates on the basis of risk-spreading as appropriate; and
              (ii) The holdings of which may be re-purchased or redeemed out of those undertakings' assets, as appropriate.

            • Connected Parties

              Are parties where one owns, directly or indirectly, more than 49% of the issued shares of the other party.

            • Controller

              A controller is a natural or legal person who:

              (a) Holds 10% or more of the shares in the institution ("I"), or is able to exercise (or control the exercise) of more than 10% of the voting power in I; or
              (b) Holds 10% or more of the shares in a parent undertaking ("P") of I, or is able to exercise (or control the exercise) of more than 10% of the voting power in P; or
              (c) Is able to exercise significant influence over the management of I or P.

            • Custodian(s)

              A custodian is a person mandated to hold and safeguard financial instruments and other assets for the account of a CIU

          • [D] [D]

            • Director(s)

              A person who acts in the capacity of director of a CIU.

          • [E] [E]

            • Exempt CIU(s)

              Exempt CIUs are lightly regulated CIUs that may be offered only to accredited investors, and impose a minimum initial investment of USD 100,000 (or equivalent in any other currency).

            • Expert CIU(s)

              Expert CIUs are CIUs that may be offered only to expert investors, and impose a minimum initial investment of USD 10,000 (or equivalent in any other currency).

            • Expert investor(s)

              Expert investors are defined as investors meeting the following criteria:

              (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD 100,000 or more;
              (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 100,000; or
              (c) Governments, supranational organisations, central banks or other national monetary authorities, local authorities and state organisations.

            • External auditor(s)

              An external auditor means the entity responsible for the audit of the books and records of the CIU and fund company (if applicable).

          • [F] [F]

            • Financial instrument(s)

              Any of the following instruments:

              (a) Transferable securities;
              (b) Islamic financial instruments;
              (c) Money market instruments;
              (d) Holdings in collective investment undertakings;
              (e) Derivative contracts other than commodity derivatives;
              (f) Derivative contracts relating to commodities settled in cash;
              (g) Derivative contracts relating to commodities;
              (h) Credit derivatives;
              (i) Financial contracts for differences;
              (j) Other derivative contracts;
              (k) Interests in real estate property;
              (l) Certificates representing certain securities; and
              (m) Rights or Interests in Financial Instruments.

            • Fund administrator(s)

              Fund administrators are persons who undertake the administration of financial instruments and other assets held by a CIU. Their activities include but are not limited to the following:

              (a) Fund accounting services;
              (b) Client enquiries;
              (c) Valuation and pricing (including tax returns);
              (d) Regulatory compliance monitoring;
              (e) Record keeping for issuance and redemption of units in a CIU; and
              (f) General record-keeping.

            • Fund company(ies)

              A company formed with the objective of issuing units of the CIU.

            • Fund manager

              A fund manager is a person mandated to allocate and/or manage financial instruments and any other assets held by a CIU.

          • [G] [G]

            • GCC

              Gulf Cooperation Council (www.gcc-sg.org). The member countries of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

          • [H] [H]

            • High net worth investors

              High Net Worth investors are:

              (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD 25 million or more;
              (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 25 million; or
              (c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest in financial instruments (such as state pension funds).

            • Holding(s)

              Holdings mean the unit of measurement of the beneficial interest of participants in a CIU, by whatever name it is called (including 'units' and, in the case of investment trusts or companies, in the form of shares or units). Each holding (which may be in fractions of a holding) represents a right to the assets of the CIU.

          • [I] [I]

            • Instrument

              Means a document establishing the CIU, which shall include, as a minimum, the following information:

              •   Its rules of composition and operation;
              •   The terms and conditions for the creation, issuance, selling, transfer, redemption, repurchase, reimbursement, or repayment (as may be appropriate) of holdings;
              •   Its obligation to maintain a register of persons with holdings;
              •   The rights and obligations of CIU participants; and
              •   The characteristics of holdings, including initial value and voting rights (if any).

            • Investment advisor

              An investment advisor is the person undertaking the function of advising the fund manager on the merits of buying, selling, or subscribing for a particular asset or exercising any right conferred by the asset.

          • [J]

          • [K]

          • [L] [L]

            • Licensed exchange(s)

              "Licensed exchange" means an exchange licensed in respect of the operation of its market in and from the Kingdom of Bahrain.

            • Listed CIUs

              Any CIU whose units are listed on the Stock Exchange according to Article 86 of Legislative Decree No. 64 of 2006 with respect to the Central Bank of Bahrain and Financial Institutions Law.

          • [M]

          • [N]

          • [O] [O]

            • OECD

              Organisation for Economic Cooperation and Development (www.oecd.org). The member countries of the OECD are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States.

            • Open-ended fund(s)

              An open-end(ed) fund is a CIU which can issue and redeem holdings at any time. An investor can purchase holdings in such funds directly from the operator, or through a broker. An open-ended fund is equitably divided into holdings (shares or units) which vary in price in direct proportion to the variation in value of the CIU's net asset value. Each time money is invested new holdings are created to match the addition to net assets; similarly, each time holdings are redeemed by participants they are cancelled to reflect the reduction in net assets. In this way, the price of holdings remains a reflection of the underlying assets of the CIU.

            • Operator(s)

              The operator of a CIU is the person undertaking the functions of establishing, operating, including full oversight of the corporate governance on the CIU, or winding up of a CIU.

            • Overseas domiciled CIU(s)

              Overseas domiciled CIUs are undertakings that are established in and regulated by:

              (a) Recognized jurisdictions included in Chapter ARR-6; or
              (b) Other jurisdictions acceptable to the CBB.

            • Overseas domiciled exempt CIU(s)

              Overseas domiciled exempt CIUs are exempt CIUs that are domiciled in an overseas jurisdiction (i.e. a jurisdiction outside of Bahrain). (See exempt CIUs and overseas domiciled CIUs.)

            • Overseas domiciled expert CIU(s)

              Overseas domiciled expert CIUs are expert CIUs that are domiciled in an overseas jurisdiction (i.e. a jurisdiction outside of Bahrain). (See expert CIUs and overseas domiciled CIUs.)

            • Overseas domiciled retail CIU(s)

              Overseas domiciled retail CIUs are retail CIUs that are domiciled in an overseas jurisdiction (i.e. a jurisdiction outside of Bahrain). (See retail CIUs and overseas domiciled CIUs.)

          • [P] [P]

            • PIU Participant(s)

              A PIU participant is a person with one or more holdings in a PIU, sometime referred to as a unit holder.

            • Participant(s)

              A (CIU) participant is a person with one or more holdings in a CIU.

            • Placement agent

              A placement agent is an entity that acts as agent on behalf of the CIU in placing units of the CIU.

            • Placement agent offering overseas domiciled CIU holdings

              A placement agent offering overseas domiciled CIU holdings to investors in the Kingdom of Bahrain is an entity that acts as agent on behalf of the CIU in placing units of the CIU.

              Amended: July 2017

            • Private investment undertakings (PIU)

              Private Investment Undertakings are defined as investment undertakings/funds that are registered with the CBB and may be initiated by or offered to high net worth individuals or institutional investors, and impose a minimum initial investment/participatory interest of USD 3 million (or equivalent in any other currency).

            • Private offering document

              A private offering document is a legal document stating the objectives, risks and terms of investment involved with a private placement. This includes items such as the financial statements, management biographies, detailed description of the business, etc.

            • Prospectus

              A (CIU) prospectus is the CIU's primary selling document: it is also a legally binding contract between the CIU and its participant. Supplementary Information document ARR-(ii) in Part B of Volume 7 sets out minimum requirements for the contents of prospectuses issued by CIUs.

          • [Q]

          • [R] [R]

            • Recognised jurisdiction(s)

              Recognised jurisdictions, for the purposes of Volume 7, are those jurisdictions defined in Section ARR-6.1.

            • Registrar / Transfer agent

              The registrar/transfer agent is an entity engaged by the CIU to maintain the unitholders' records, including purchases, sales and account balances.

            • Relevant person(s)

              A relevant person for the purpose of Module CIU, is the:

              (a) Operator;
              (b) Trustee (if applicable);
              (c) Fund Manager;
              (d) Custodian;
              (e) Fund Administrator;
              (f) Registrar /Transfer Agent;
              (g) Placement Agent
              (h) Investment Advisor (if applicable);
              (i) External Auditor; and
              (j) CBB Licensee acting as a Placement Agent offering overseas domiciled CIU holdings to investors in the Kingdom of Bahrain.
              Amended: July 2017

            • Retail CIU(s)

              Retail CIU(s) are CIUs that may be offered to all types of investors.

          • [S] [S]

            • Shari'a supervisory board/advisor(s)

              An independent body of specialised jurists who, collectively, are entrusted with the duty of directing, reviewing and supervising the activities of a Sharia compliant CIU, in order to ensure that it is in compliance with Islamic Shari'a rules and principles.

            • Shari'a supervisory board member(s)/advisor(s) or Shari'a advisor(s)

              Is a Shari'a scholar responsible for directing, reviewing and supervising the activities of a Shari'a compliant CIU, in order to ensure it is in compliance with Islamic Shari'a rules and principles.

            • Shari'a compliant CIU

              Are CIUs that hold themselves out to be managed in accordance with Shari'a principles.

            • Shari'a compliant exempt CIU(s)

              Are exempt CIUs that hold themselves out to be managed in accordance with Shari'a principles.

            • Shari'a compliant expert CIU(s)

              Are expert CIUs that hold themselves out to be managed in accordance with Shari'a principles.

            • Shari'a compliant retail CIU(s)

              Are retail CIUs that hold themselves out to be managed in accordance with Shari'a principles.

            • Simplified prospectus

              A simplified prospectus is a summary document extracted from a full prospectus. Supplementary Information document ARR-(iii) in Part B of Volume 7 contains requirements applicable to simplified prospectuses.

          • [T] [T]

            • Trustee

              The Trustee is the entity to whom the legal title of the trust property/assets is transferred to, in order for the Trustee to exercise the duties and powers specified in the trust instrument with a view of achieving the purpose of the trust and protecting the rights of the investors

          • [U]

          • [V]

          • [W]

          • [X]

          • [Y]

          • [Z]

      • CBB Authorisation Forms

        • Form 1 CIU Application Form

          Please download the Form in PDF format.

        • Form 2 Application for Board Member of CIU

          Please download the Form in PDF format.

        • Form 3 ODC Filing Form

          Please download the Form in PDF format.

        • Form LP 1 LP Application Form

          Please download the Form in PDF format.

        • Form LP 2 GP Application Form

          Please download the Form in PDF format.

        • Form PCC 1 PCC Application Form

          Please download the Form in PDF format.

        • Form PCC 2 Conversion to PCC Application Form

          Please download the Form in PDF format.

      • CBB Reporting Forms

        • CIU(QS) Quarterly Prudential Return

          Please download the form in Excel format.

        • ALF Annual License Fee [This form was deleted in July 2013]

          This form was deleted in July 2013.

        • Direct Debit Authorisation Form

          Please download the form in PDF format.

      • Supplementary Information

        • ARR ARR Authorisation / Registration Requirements

          • Appendix ARR - (i) Documents Constituting the CIU

            Please download the Form in PDF format.

          • Appendix ARR - (ii) Prospectus

            Please download the Form in PDF format.

          • Appendix ARR - (iii) Simplified Prospectus

            Please download the Form in PDF format.

          • Appendix ARR - (iv) Admissible Assets and Limits

            Please download the Form in PDF format.

        • CRR CRR CBB Reporting

          • Appendix CRR - (i) Contents of Financial Reports

            Please download the Form in PDF format.

    • Quarterly Updates

      • October 2020

        Click here to download the Quarterly Update in PDF format.

      • January 2020

        Click here to download the Quarterly Update in PDF format.

      • January 2018

        Click here to download the Quarterly Update in PDF format.

      • October 2017

        Click here to download the Quarterly Update in PDF format.

      • October 2016

        Click here to download the Quarterly Update in PDF format.

      • April 2016

        Click here to download the Quarterly Update in PDF format.

      • January 2016

        Click here to download the Quarterly Update in PDF format.

      • July 2015

        Click here to download the Quarterly Update in PDF format.

      • October 2013

        Click here to download the Quarterly Update in PDF format.

      • July 2013

        Click here to download the Quarterly Update in PDF format.

    • Ad hoc Communications

      • Re: Virtual Assets - Red Flags and Indicators_30 November 2020

        Click here to download the Letter in PDF format.

        Click here to download the Guidance Paper in PDF format.

      • Re: Combating the Financing of Terrorism - Guidance for All Financial Institutions_17 November 2020

        Click here to download the Letter in PDF format.

        Click here to download the Guidance Paper in PDF format.

      • Reporting of Financial Impact of COVID-19_14 July 2020

        Click here to download the Letter in PDF format.

      • Re: Money Laundering & Terrorist Financing Risks & Practices during Covid-19_27 May 2020

        Click here to download the Letter in PDF format.

        Click here to download the Guidance Paper for Money Laundering & Terrorist Financing Risks & Practices during Covid-19 in PDF format.

      • Directive Automatic Exchange of Information ("AEOI") - Common Reporting Standard ("CRS") and Foreign Account Tax Compliance Act ("FATCA") Reporting Window_16 April 2020

        Click here to download the Letter in PDF format.

      • Additional COVID-19 Precautionary Measures_8 April 2020

        Click here to download the Letter in PDF format.

      • Upcoming General Meetings_19 March 2020

        Click here to download the Letter in PDF format.

      • Financial Reporting for VAT purposes_13 January 2020

        Click here to download the Letter in PDF format.

      • Amendment to the Regulatory Sandbox Framework_28 August 2017

        Click here to download the Letter in PDF format.

      • Newly Issued Laws — Protected Cell Companies and Investment Limited Partnerships_6 November 2016

        Click here to download the Letter in PDF format.

      • Trust Law_6 November 2016

        Click here to download the Letter in PDF format.

      • New Appointment Notification_7 September 2016

        Click here to download the Letter in PDF format.

      • Electronic Submission of Returns and Analysis of Data (ESRAD)_20 May 2013

        Click here to download the Letter in PDF format.

      • Launch of Volume 7 Rulebook — Collective Investment Undertakings (CIU)_2 May 2012

        Click here to download the Letter in PDF format.