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Third: Specific Requirements

The prospectus should, unless otherwise specified, contain the information required by this appendix, which summarizes the specific information requirements of the different types of Debt Securities prospectuses.

Section One: Front Cover Page

The cover page of the prospectus should contain the following particulars:—

(a) Full name and registration number of the issuer
(b) Type and amount of Debt Securities
(c) Date of prospectus
(d) Full name of the adviser
(e) Full name of the lead manager (if any)
(f) Full names of sub-managers
(g) Full name of the managing underwriter (if any)
(h) Full name of the trustee
(i) Full name of the guarantor (if any)
(j) Full name of paying agent
(k) Statement of disclaimer
(l) Type of Listing that is sought
(m) Rating of Debt Securities if any
(n) The following disclaimer statement, written in capital letters and box framed, as follows:

THE BAHRAIN MONETARY AGENCY AND THE BAHRAIN STOCK EXCHANGE ASSUME NO RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THE STATEMENTS AND INFORMATION CONTAINED IN THIS DOCUMENT AND EXPRESSLY DISCLAIM ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT.
(o) Date of issuance of the prospectus.

Section 2: Inside Cover

2.1 Responsibility Statement:

If not already disclosed on the front cover, the prospectus should contain the following statements on the inside cover, framed and written in capital letters.
2.1.1 Directors Responsibility Statement:

"THE DIRECTORS OF THE COMPANY, WHOSE NAMES APPEAR HEREIN, ACCEPT RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THIS DOCUMENT. TO THE BEST OF THE KNOWLEDGE AND BELIEF OF THE DIRECTORS, WHO HAVE TAKEN ALL REASONABLE CARE TO ENSURE THAT SUCH IS THE CASE, THE INFORMATION CONTAINED IN THIS DOCUMENT IS IN ACCORDANCE WITH THE FACTS AND CONTAINS NO OMISSIONS LIKELY TO AFFECT THE IMPORTANCE AND COMPLETENESS OF THE DOCUMENT."
2.2 Declaration by Issuers:

Where a prospectus is issued under these Guidelines, a declaration is required to be stated in the prospectus that, during the 12 calendar months immediately preceding the date of application to the Agency:
(a) no legal proceedings have been commenced against the issuer or any of its subsidiaries in respect of any breach of any securities or banking laws or the applicable laws.
(b) in the case of a listed corporation, no action has been taken against the listed corporation by the relevant stock exchange in respect of any breach of the listing requirements of the relevant stock exchange; and
(c) neither the issuer nor any of its subsidiaries have breached any terms and conditions in respect of borrowed monies which has resulted in the occurrence of an event of default and an immediate recall of such borrowed monies.
2.3 Statement on Risk:

The following statement should appear in bold on the inside cover, framed and written in capital letters, as follows:

"FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE "RISK ANALYSIS" COMMENCING ON PAGE [ ] HEREOF".
2.4 Validity Period

The prospectus which is issued under these Guidelines should also contain a statement that no Debt Securities will be allotted or issued on the basis of the prospectus later than 6 months after the date of issue of the prospectus.

Section 3: Glossary of Defined Terms

A prospectus shall provide a glossary of the abbreviations and technical terms used in it.

Section 4: Corporate Directory and Information Summary

The prospectus should disclose the issuer's corporate directory, a summary of corporate information, a summary of financial information and a description of the indicative timetable in relation to an issue, offer or invitation of Debt Securities, as stipulated under paragraphs 4.1 to 4.4 below.

4.1 Issuer' s Corporate Directory

The prospectus should contain details of persons connected with the issue of the prospectus and the Debt Securities, as follows:—
1. Names, nationalities, addresses and occupations of all directors (including executive and non-executive directors) and, if applicable, to specify who are independent directors;
2. If applicable, names of audit committee members;
3. Addresses and telephone numbers of the issuer's registered office and head/management office, as well as e-mail and website addresses;
4. Names and addresses of the following parties (where applicable):—
(a) Auditors;
(b) Reporting Auditors or Accountants;
(c) Issuing House;
(d) Solicitors/Lawyers;
(e) Principal Bankers;
(f) Rating Agency;
(g) Registrar;
(h) Trustee;
(i) Guarantor(s);
(j) Adviser;
(k) Sharia Adviser/committee;
(l) Lead Manager;
(m) Managing Underwriter;
(n) Underwriters;
(o) Paying Agent;
(p) Facility Agent; and
(q) Authorised Depository Institution(s).
5. Names and addresses of expert(s) who prepared reports or excerpts or summaries thereof that are included in the prospectus; and
6. If applicable, name(s) of stock exchange(s) where securities of the issuer are already listed.
4.2 Summary of Corporate Information

The prospectus should include a summary of the background information about the issuer, as follows:
(a) Background and summary of history;
(b) Description of principal activities; and
(c) Description of group structure and, if complex, a diagrammatic illustration of the group structure.
The summary should also deal with the material risk factors specific to the issuer and the Debt Securities.
4.3 Summary of Financial Information

The prospectus should include a summary of the issuer's income statement for the past 5 years (or since business commencement if less than 5 years). This would include, at the minimum, the following:
(a) Turnover/Revenue;
(b) Profit before interest, depreciation, taxation and amortisation;
(c) Exceptional items;
(d) Share of profits and losses of associates and joint ventures;
(e) Profit/loss before tax;
(f) Tax expense; and
(g) Net profit/loss.
There should also be a summary of the balance sheet of the issuer as at the last date to which accounts were made up, detailing the issuer's equity, assets' and liabilities' position.
4.4 Indicative Timetable

The prospectus should disclose the following tentative timetable:—
(a) The opening and closing date of the issue, offer or invitation in respect of Debt Securities;
(b) The tentative listing date, if applicable; and
(c) Other relevant dates in conjunction with the issue, offer or invitation of Debt Securities.
In the case of an issue, offer or invitation in respect of Debt Securities, the offer period should not be longer than 3 months from the date of the issue of the prospectus, or such longer period as may be allowed in writing by the Agency.

Section 5: Terms and Conditions of the Debt Securities

5.1 Detailed terms and conditions of the Debt Securities should be disclosed in the prospectus. These include, where applicable, the following:—
(a) Type and nominal amount of Debt Securities;
(b) Ranking of Debt Securities;
(c) Issue price;
(d) Interest/coupon/profit rate/income;
(e) Minimum subscription required of the Debt Securities in order to satisfy the objectives of the issue, offer or invitation (to include procedures for refund if this requirement is not met);
(f) Tenor (nature) of the Debt Securities;
(g) Form and denomination of Debt Securities on issuance;
(h) Underwriting arrangements;
(i) Events of Default;
(j) Details of any security for the Debt Securities;
(k) Rating assigned to Debt Securities (together with a description of the rating);
(l) Type of Listing that is sought;
(m) Summary of rights conferred upon the holders of Debt Securities;
(n) Governing law — any special legislation under which the Debt Securities have been created and the choice of jurisdiction in the event of litigation;
(o) Repayment terms and frequency of interest/profit/income payments;
(p) Sharia principle and concept adopted (for Islamic Debt Securities);
(q) Types of underlying assets of the transaction (for Islamic Debt Securities);
(r) Details of any sinking fund requirement; and
(s) Regulatory approvals are required including dates of approval.
5.2 The Agency may, on the application of the issuer, allow a preliminary prospectus to be submitted without containing the following information, provided the issuer undertakes to deliver to the Agency a price information sheet containing such information:—
(a) Exact number of Debt Securities;
(b) Price of the Debt Securities; and
(c) Interest/coupon/profit/income rate.
In this regard, the issuer must not issue the Debt Securities until the preliminary prospectus has been submitted to the Agency. The price information sheet containing the above information must accompany the preliminary prospectus when issued to investors.
5.3 If the Debt Securities are convertible into equity or are issued with warrants, whether or not detachable, the following detailed information (where applicable) should be made available in the prospectus:
(a) Mode of conversion;
(b) Number of warrants;
(c) Conversion period;
(d) Price of warrants;
(e) Conversion ratio;
(f) Rights attached to warrants;
(g) Conversion price;
(h) Warrant exercise period; and
(i) Warrant exercise price.

Section 6: Utilisation of Proceeds

6.1 If applicable, the prospectus should provide details of the utilisation of proceeds from the issue, offer or invitation in respect of Debt Securities and the proposed timeframe for utilisation of the proceeds and the activities or projects that the proceeds will be invested in.
6.2 The preliminary prospectus is allowed to disclose an indicative utilisation of proceeds based on the proposed maximum amount of the Debt Securities but the final prospectus should contain information regarding the utilisation of proceeds on an actual basis.

Section 7: Risk Analysis

7.1 The prospectus should contain information about all material risks, contingent or otherwise, associated with lending to the issuer. Any risk disclosed in the prospectus should be accompanied by a statement of the effect that the risk factors might have on the issuer and the Debt Securities. If possible, the effects should be quantified. The disclosures must include risks relating to the issuer's financial performance. Any subsequent material change must be reflected in the final prospectus and supplementary prospectus.
7.2 The material risks set out below are only a guide to some of the types of risks that may apply to the issuer and the Debt Securities. The issuer has an obligation to disclose any other material risks, contingent or otherwise, not mentioned below:
(a) Risks associated with the nature of business of the issuer;
(b) If the issuer has no operating history or its history is limited, the risks of investing in a new or relatively new venture;
(c) Risks arising from economic conditions and cycles (including industry risk) that are significant or peculiar to the issuer' s business;
(d) Risks relating to any form of government control or regulation that, when changed, have financial consequences for the issuer;
(e) Any legal uncertainties concerning the issuer's business or operations or contractual agreements; and
(f) Risks relating to financial performance, as follows:
i. Covenants under borrowing facility agreements which limit the issuer/group's operating and financial flexibilities;
ii. Foreseeable capital commitments; and
iii. Existing and potential indebtedness.

Section 8: Corporate Information and Background of the Issuer

The prospectus should provide detailed information on the profile of the issuer as required below. Updates on changes to any of the information must be disclosed in the supplementary prospectus, where applicable.

8.1 History

History of the issuer, from inception to-date, and the date and place of incorporation of the issuer.
8.2 Shareholders, Directors and Key Management Information
8.2.1 In relation to any major shareholders and promoters, the prospectus should disclose at least the following information:
(a) Name, occupation, qualification and business experience;
(b) Shareholding in the issuer
(c) In the case where the major shareholder/promoter is a corporation, date and place of incorporation, principal activities, directors and major shareholders of the corporation; and
(d) Current directorships and major shareholdings in all other public corporations.
8.2.2 In respect of the issuer's directors and chief executive officer, the prospectus should disclose the following:
(a) Name, age, occupation and qualification;
(b) Profile, including business and management experience;
(c) Whether directors represent corporate shareholders;
(d) Shareholders (both direct and indirect) of the issuer; and
(e) Current directorships and major shareholdings in all public corporations.
8.2.3 In relation to the issuer's key management and, where applicable, its key technical personnel, the following details should also be disclosed in the prospectus:
(a) Name, age, occupation and qualification; and
(b) Profile, including business and management experience.
"Major shareholder" or "major shareholding" referred to above means a person who has an interest or interests in one or more voting shares and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is not less than 5% of the aggregate of the nominal amount of all the voting shares in the corporation.
8.3 Business Overview

Where applicable, there should be a description of and information on the following:
(a) Group structure, including a list of subsidiary and associated corporations and the percentage of interest held by the issuer;
(b) Principal business activities;
(c) The types of products manufactured or services provided by the issuer;
(d) The issuer's estimated market coverage, position and principal markets for products;
(e) Location of principal assets (both tangible and intangible), production facilities and principal place of business; and
(f) Key customers and suppliers (more than 10% of sales/purchases), level of sales and length of relationship.
Single purpose corporations should give a description of the project involved and material contractual agreements governing the project. A profile of contracting parties should be included.
8.4 Industry Overview

In relation to the industry or industries in which the issuer operates, there should be, where applicable, disclosure of the following:
(a) Description of the industry in which the issuer is in and its position within the industry;
(b) Industry participants and competition;
(c) Relevant laws and regulations governing the industry and peculiarities of the industry; and
(d) Prospects and outlook of the industry.
8.5 Future Plans and Prospects

The prospectus should discuss and disclose the following:
(a) Description of the business development plans (if any) and future plans of the issuer as well as steps taken (including timeframes) to realize the plans; and
(b) Prospects of the issuer in light of the industry prospects/outlook/conditions, future plans/strategies and competition.

Section 9: Related-Party Transaction or Conflict of Interest

(a) The prospectus should disclose existing and potential related-party transactions and conflicts of interest in relation to the corporation and its related parties, together with steps taken to resolve such conflicts of interest. "Related party" refers to a director, major shareholder and/or person connected with such director or major shareholder.
(b) Related-party transactions are transactions entered into by the corporation or its subsidiaries that involve the interests, direct or indirect, of a related party. Such disclosure is also required if the corporation enters into any transaction with its key management and technical personnel.
(c) The issuer should disclose the nature and extent of the related-party transactions and conflict-of-interest situations in the prospectus. Any approvals received from non-interested shareholders should be stated.
(d) In addition, where applicable, the existence and extent of any conflicts of interests between any parties to the Debt Securities should be disclosed in the prospectus.

Section 10: Historical Financial Information

10.1 The prospectus should provide details of the income statement and balance sheet of the issuer for the past 5 financial years (or since commencement of business, if less than 5 financial years) and an analysis of, but not limited to, the following:
(a) Overview of revenue and operating profit and contributing factors, exceptional items, share of profits and losses of associates and joint ventures;
(b) Segmental analysis of revenue and operating profit by subsidiary/associated companies, products/services and geographical location; and
(c) Any unusual or infrequent events or transaction or any significant economic changes that materially affected the amount of reported income from operations and the extent to which income was affected.
10.2 The prospectus should also disclose particulars of borrowings of the issuer.
10.3 If the issuer is newly incorporated and/or does not have any financial record, the prospectus should make the appropriate disclosure of such fact.

Section 11: Forecasted Financial Information

11.1 Where profit/cash flow projections are disclosed in the prospectus, the projections should be reviewed and reported on by the reporting accountants or other experts and such report must be set out in the prospectus.
11.2 Sufficient details on the bases and assumptions of the projections should be disclosed to enable the investor to assess the reliability of the projections and the effect of any changes to the assumptions used. The bases and assumptions should:—
(a) provide useful information to investors to assist them in forming a view as to the reasonableness and reliability of the projections;
(b) draw the investors' attention to, and where possible quantify, those uncertain factors which could materially affect the achievement of the projections;
(c) avoid generalisations and all-embracing assumptions (general assumptions, where applicable, could be made) and those relating to the general accuracy of the projections; and
(d) be clearly stated and reviewed for reasonableness by the directors who are responsible for the projections and bases and assumptions thereto.
11.3 The following requirements are applicable in respect of profit/cash flow projections:
(a) The projections should be realistic and achievable to provide investors with information on the issuer's prospects;
(b) The projections should be compiled with utmost care and objectivity; and
(c) Where the projections are subject to high probability of variation, the issuer shall provide a sensitivity analysis based on any one of the key variables such as selling prices, volume of sales, production costs, production capacity, operating expenses and financing costs.
11.4 In addition to the above, owing to the specific nature of profit/cash flow projections, the issuer should take note of the following:—
(a) A projection, being a representation of financial information based on a set of assumptions which are uncertain and hypothetical, should be qualified as to its achievability for those reasons;
(b) The qualifications of projected financial information should draw attention to the fact that the presentation is based on hypothetical assumptions, and that actual events may differ from those assumed, and may materially affect the financial information projected; and
(c) Notwithstanding the uncertainties and hypothetical assumptions associated with projections, the projections should be prepared with care, skill and objectivity so as to represent the stated assumptions, and not to purport unreasonable hypotheses and assumptions.

Section 12: Other Information

The prospectus should, where applicable, set out the following:—

12.1 Written Consent

Consent of the relevant parties such as advisers, reporting accountants, rating agency, registrars, solicitors, bankers, valuers, underwriters and experts for inclusion in the prospectus of their names and where relevant, statements and reports in the form and context in which such statements and reports appear, together with a statement that they have not withdrawn such consent.
12.2 Experts' Statements and Reports
12.2.1 Where the prospectus contains any statement made by an expert, there should also be disclosed excerpts from, or summaries of opinion expressed, and conclusions recorded in the experts' report.
12.2.2 Experts' reports should be dated within a reasonable time of the issue of the prospectus. This is to ensure that contents therein are substantially relevant at the time of the issue of the prospectus.
12.2.3 The experts' report should state whether the report was prepared for inclusion in the prospectus.
12.2.4 For Islamic Debt Securities, excerpts from the Sharia Adviser report should be disclosed in the prospectus. In addition, the qualification and experience of the Sharia Adviser should also be disclosed.
12.2.5 A report by the directors of the corporation stating whether, after due enquiry by them in relation to the interval between the date to which the last audited accounts of the corporation have been made up and a date not earlier than 14 days before the date of issue of the prospectus:—
(a) the business of the corporation and its subsidiary corporations have, in their opinion, been satisfactorily maintained;
(b) there have, in their opinion, arisen since the last audited accounts of the corporation, circumstances which have adversely affected the trading or the value of the assets of the corporation or any of its subsidiary corporations;
(c) the current assets of the corporation and its subsidiary corporations appear in the books at values which are believed to be realizable in the ordinary course of business;
(d) there are no contingent liabilities by reason of any guarantees or indemnities given by the corporation or any of its subsidiary corporations; and
(e) there have been, since the last audited accounts of the corporation, no changes in the published reserves or any unusual factors affecting the profits of the corporation and its subsidiary corporations.
12.3 Auditor's (Accountant's) Report
12.3.1 This report must be prepared by an accountant, who must be a qualified and approved auditor, dealing with the financial information of the issuer. The report must be signed and dated and state that it was prepared for incorporation in the prospectus.
12.3.2 The report should state the following:—
(a) The basis of accounting policies adopted in preparation of the report;
(b) That the report has been prepared in accordance with the standards and disclosure of the Agency, on any changes in the accounting policy adopted and the reasons for such changes; and
(c) Details of any auditor's qualification to audited accounts and other forms of modified auditor's qualification.
(d) The report should deal with the income statement and balance sheet of the issuer in respect of each of the 5 financial years (or since commencement of business, if less than 5 financial years) immediately preceding the last date to which the accounts of the issuer were made up. Such date shall be no more than 6 months prior to the issue of prospectus.
(e) A cash flow statement of the issuer (proforma or actual) for the latest audited accounts (where applicable).
(f) If the proceeds, or any part of the proceeds, of the issue, offer or invitation in respect of Debt Securities are to be applied directly or indirectly in the purchase of any business, the report should deal with the income statement and balance sheet of the business for each of the past 5 financial years immediately preceding the last date to which the accounts of the business were made up (since commencement of business, if less than 5 financial years). Such date shall not be more than 6 months prior to the issue of prospectus.
(g) If the proceeds or any part of the proceeds, of the issue of the Debt Securities are to be applied directly or indirectly in any manner resulting in the acquisition by the issuer of any corporation; and
(h) If by reason of that acquisition, or anything to be done in consequence or in connection with it, that corporation will become a subsidiary of the issuer, the report should deal with the income statement and balance sheet of the corporation (for the past 5 years, or since business commencement if less than 5 years).

Section 13: Documents Available for Review

The prospectus should include a statement that, throughout the validity period of the prospectus:—

13.1 Each material contract disclosed in the prospectus and, in the case of contracts not reduced into writing, a memorandum which gives full particulars of the contracts, may be inspected without charge at the registered office of the issuer in Bahrain and if it has no registered office in Bahrain, at such other address as may be specified in the prospectus for that purpose;
13.2 Such information and documents as are specified in these Guidelines, may be reviewed by relevant persons specified therein; and
13.3 True copies of all consents required under these Guidelines from any person named in the prospectus, to be made available for review, without charge, at the registered office of the issuer in Bahrain and if it has no registered office in Bahrain, at such other address as may be specified in the prospectus for that purpose.

Section 14: Procedures For Application

14.1 The prospectus should contain instructions about how to apply for the Debt Securities pursuant to the prospectus and how to complete applications.
14.2 The following information should be set out in the prospectus:
(a) The addresses where completed applications should be sent to as well as a statements as to whom bank drafts/payments should be made payable;
(b) The minimum number of Debt Securities that can be applied for and the multiples of additional Debt Securities for which investors may apply; and
(c) Whether directors of the issuer reserves the right to extend the closing date.
14.3 The application form should be identifiable with the prospectus to which it relates and warn investors against signing the form without having read and understood the prospectus. Accordingly, the application form should contain the following statements:—
(a) The name of the corporation and registration number (if any);
(b) The date of the prospectus to which it relates;
(c) The expiry date of the prospectus;
(d) Words to the effect that, in accordance with the requirements of the Agency, the application form must not be circulated unless accompanied by the prospectus; and
(e) Words to the effect that investors should have read the prospectus before completing the application form.
14.4 If the Debt Securities have been specified by a stock exchange to be prescribed securities under any relevant central depository's laws or regulations, the prospectus should state that the securities are so prescribed and that applicants are required to have securities accounts when making their applications.