4. Scope of Application

These Guidelines shall be applied to all companies listed on the Bahrain Stock Exchange, as well as to the insiders of such companies.

In general Article 56 of the Disclosure Standards defines all insiders to whom these Guidelines should be applied. However, for the purpose of implementation of these Guidelines, insiders can be divided into:

1. Permanent Insiders: Which can be divided into two classes, namely:
a. Statutory Insiders: The members of the Board of Directors or the Supervisory Board of a company, or similar positions, and the company's external auditor and the employees of the auditing firms having the main responsibility for the audit of the listed company, and connected persons of the abovementioned insiders.

The listed company's holdings and dealings in its own shares (treasury shares) is also to be considered as Statutory Insiders.

Where an individual is represented on the Board of a listed company as a nominee of a company/institution, in such a case the nominee as well as the company/institution shall be deemed to be an insider.
b. Insiders by Definition: The listed company shall determine as insiders by definition persons who, by virtue of the exercise of their duties, regularly receive information on the company, which is likely to have a material effect on the value of its securities. The determination of a person as an insider by definition requires The Committee to notify such a person. It is often justified to include as insiders the members of the company's internal executive group, the persons in charge of the most important fields and persons who are responsible for the financing, legal issues, research and development, as well as communications of the company. It is often justified to also include as insiders the secretaries of the top management of the company. The group of insiders by definition should, however, not be made unnecessarily large by definition.
2. Temporary Insiders: Every insider shall evaluate whether information that he possesses shall be deemed as inside information. The insider shall also be responsible for not violating the provisions on abuse of inside information, regardless of whether he has been entered onto the Insiders' Register or not. The listed company should determine such insiders on a case-by-case (project-by-project) basis.

The evaluation on whether an issue, project or arrangement under preparation can be deemed temporary shall be made on a case-by-case comprehensive evaluation, taking into consideration all facts relevant to the matter. The facts to be taken into consideration in the evaluation may be both internal (e.g., the decision-making process in the company necessary for the realization of the issue, a project or arrangement under preparation, as well as the importance of an issue or arrangement in the company's point of view) or external (e.g., the established corporate practices of the company's line of business) with regard to the company's previous corporate practice and shall consequently be taken into consideration in the evaluation.

For more clarity and from a practical point of view, the following are examples of both permanent and temporary insider trading cases that have been brought by some securities' regulators, and are cases against:
1. Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;
2. Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information;
3. Employees of law firms, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded;
4. Government employees who learned of such information because of their employment; and
5. Other persons who misappropriated and took advantage of, confidential information from their employers.