BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



Location: Guidelines on Insiders > 14. Appendices
  • 14. Appendices

    • Appendix 1 — Regulations on Insiders

      Relevant Articles from Circular No. ODG/407/03 dated 3rd December 2003 on BMA's Disclosure Standards:

      • Article 40. Transactions by Directors and Senior Management

        40.1 Any change in the board of directors and senior management must be notified immediately to the Agency.
        40.2 The issuer must adopt rules governing dealings by directors, senior management and associated persons in the listed securities of the issuer, in terms no less exacting than those issued by the Agency.
        40.3 The rules issued by the Agency should be regarded as applicable to purchases by an issuer of its own shares.
        40.4 The directors, senior management and associated persons wishing to buy or sell securities in their company, must first pay attention to the following basic rules, and any other rules issued by the Agency from time to time:—
        40.4.1 Directors and senior management should not deal in their companies' securities on considerations of a short-term nature.
        40.4.2 Directors and senior management will always be thought to be in possession of more information than can ever be published. Accordingly, they must accept that they cannot always feel free to deal in their companies' securities, even when the rules would not prohibit them from doing so.
        40.4.3 Notwithstanding this general constraint, there must be periods in the year when directors are, in principle (but subject to the rules) regarded as free to deal in their companies' securities. The following rules have been formulated on the basis that:—
        a) dealings should not normally take place for a minimum period prior to the announcement of regularly recurring information, particularly profits, dividends and other distributions, whether or not the information is price-sensitive (this period being defined in Article 41 below), and
        b) dealings should not take place prior to the announcement of matters of an exceptional nature involving unpublished price-sensitive information, in relation to the market price of the securities of the issuer (or where relevant, any other listed company).
        40.4.4 For the purpose of the rules, the grant to a director or senior manager of an option to subscribe or purchase his issuer's securities shall be regarded as a dealing by him, if the price at which such option may be exercised is fixed at the time of such grant. If, however, an option is granted to a director or senior manager on terms whereby the price at which such option may be exercised is to be fixed at the time of exercise, the dealing is to be regarded as taking place at the time of exercise.
        40.5 Matters of an exceptional nature cause particular difficulty. A director and senior manager who has knowledge of the exceptional matter in question will normally be prohibited from dealing by the Agency's law and rules, but even if he is not so prohibited he should nevertheless refrain from dealing under the circumstances outlined below. Similarly, a director or senior manager who has no such knowledge should be advised, when he notifies his intention to deal under Article 41 below, that it would be inappropriate for him to deal where the same circumstances apply. Those circumstances are when:—
        40.5.1 The matter in question constitutes unpublished price-sensitive information in relation to the issuer's securities, and
        40.6 In principle, a director should seek to secure that all dealings in which he is deemed to be interested should be conducted in accordance with the provisions of Article 41, set out as a general proposition.

        Nevertheless it is recognized that a director's or senior manager's duty in this respect will depend on the particular circumstances. A director who is sole trustee, for example, should follow the same procedure as for any dealings on his own account, and should deal only if he would be personally allowed to do so under the rules, even if he is exempt from the general prohibitions imposed by the Agency's law and rules, by virtue of the special defences relating to trustees covered by such provisions.

        Where a director has co-trustees who are not directors of the issuer, he may not be able to ensure that the procedure applicable to his personal dealings is followed in respect of dealings on behalf of the trust. The director/trustee has to avoid acting in breach of trust, and at the same time to refrain from divulging or abusing confidential information, and it may not always be practicable to expect that the trustee will refrain from dealing, at a time when one of their members is not personally free to deal.

        On the other hand, if a director, whether or not himself a trustee, has as settlor or otherwise, an important influence over the decision of the trustee, the procedure applicable to his personal dealings ought to be followed and the trustee should not deal when he personally is not free to deal. Again, the remoteness of some interests may be such as to make the imposition of any duty under Article 41 below impracticable or inappropriate. Article 41 below indicates certain precautions, which should be taken.

        It is an over-riding principle that under no circumstances should a director or senior manager deal, where prohibited from doing so by the Agency's law and rules, or make any unauthorized disclosure of any confidential information, whether to co-trustees or any other person, or make any use of such information for the advantage of himself or others, even those to whom he owes a fiduciary duty.
        40.7 When a director places investment funds under professional management where either he retains or exercises influence, the managers should be made subject to the same restrictions and procedures as the director himself, in respect of proposed dealings in the issuer's securities.

      • Article 41. Guidelines for Trading by Directors and Senior Management:

        41.1 A director or a senior manager should not deal in any of the securities of the issuer at any time, when he is in possession of unpublished price-sensitive information in relation to those securities.
        41.2 The same restrictions should apply to dealings by a director or by a senior manager in the securities of any other listed issue, when by virtue of his position as a director or as a senior manager of his own company, he is in possession of unpublished price-sensitive information in relation to those securities.
        41.3 A director or a senior manager should not deal in any securities of his own company without first notifying the Board's committee appointed for this purpose, and receiving a form of acknowledgement. In his own case, the committee should first notify the other directors and receive a form of acknowledgement.
        41.4 The procedure established within the issuer should, as a minimum, provide a written record maintained by the issuer, saying that the appropriate notification was given and acknowledged, and for the concerned director to have written confirmation to that effect.
        41.5 During the 30 days immediately preceding the preliminary announcement of the issuer's annual results and the announcement of the quarterly and half-yearly results, or of dividends and distributions to be paid, a director, senior management and associated persons should not purchase any securities of the company, nor should he deal in securities as laid out in the abovementioned Article 40, nor should he sell any such securities unless the circumstances are exceptional, for example, where a pressing financial commitment has to be met. In any event, he must comply with the procedure in Article 40.5 above.
        41.6 Issuers producing quarterly results should consult the Agency on the formulation of modified dealing procedures appropriate to their case.
        41.7 The restrictions on dealings by a director or by a senior manager contained in these rules should be regarded as equally applicable to any dealings by his or her spouse, or by or on behalf of any minor, and any other dealings in which for the purpose of the applicable laws, regulations and rules he is to be treated as interested. It is the duty of the director, to seek avoidance of any such dealing, at a time when he himself is not free to deal.
        41.8 Any director of the issue who acts as trustee of a trust should ensure that his co-trustees are aware of the identity of any company of which he is a director, so as to enable them to anticipate possible difficulties. A director having funds under management should likewise advise the investment manager.
        41.9 Any director who is a beneficiary, but not a trustee, of a trust which deals in securities of the issuer, should endeavour to ensure that the trustees notify him after they have dealt in such securities on behalf of the trust, in order that he in turn may notify the issuer. For this purpose, he should ensure that the trustees are aware of the companies of which he is a director.
        41.10 A list of directors and senior managers dealing in the securities of the issuer since the date of the previous list should be circulated to members of the board with the board papers, or alternatively, the register maintained for this purpose.
        41.11 An issuer shall endeavour to ensure that any employee of the issuer, or director or directors of an issuer, who as a board member or individual employee of a subsidiary company and, because of his office or employment in the company or subsidiary, is likely to be in possession of unpublished price-sensitive information in relation to the securities of any listed company, should deal in those securities in accordance with these Rules.

      • Article 44. Insider Trading and Material Information Temporarily Withheld

        Immediate public disclosure of the information in question must be effected if the issuer should learn that insider trading, as defined in Article 57 hereof, has taken, or is taking place. In unusual cases, where the trading is insignificant and did not have any influence on the market, and measures sufficient to halt the insider trading and prevent its recurrence have already been taken, exceptions could be made which should be discussed with the Agency. The Agency can provide current information regarding market activity in the issuer's securities with which to help assess the significance of such trading.

      • Article 56. Policy on Insider Trading

        Insiders:

        All persons who come into possession of material inside information before its public release are considered insiders for the purposes of the Agency's disclosure policies. Such persons include controlling shareholders, directors, officers and employees, and frequently should also include any officials of the Agency and the Exchange who have access to such information, outside attorneys, accountants, auditors, underwriters, investment bankers, public relations advisers, advertising agencies, consultants and other independent contractors. The husbands, wives, immediate families and those under the control of insiders may also be regarded as insiders. Where acquisition or other negotiations are concerned, the above relationships apply to other parties to the negotiations as well. Finally, for purposes of the Agency's disclosure policy, insiders include "tippees" who come into possession of material inside information.

      • Article 57. Insider Trading

        "Insider trading" refers not only to the purchase or sale of an issuer's equity and debt securities, but also to the purchase or sale of puts, calls or other options with respect to such securities. Such trading is deemed to be done by an insider whenever he has any beneficial interest, direct or indirect, in such securities or options, regardless of whether they are actually held in his name. Included in the concept of "insider trading" is "tipping", or revealing inside information to outside individuals, to enable such individuals to trade in the issuer's securities on the basis of undisclosed information.

      • Article 58. Insiders and Refraining from Trading

        Following dissemination of the information, insiders should refrain from trading until the public has had an opportunity to evaluate it thoroughly. Where the effect of the information on investment decisions is readily understandable, as in the case of earnings and dividends, the required waiting period in this case can be shorter than where the information needs to be interpreted, before its bearing on investment decisions can be evaluated. While the waiting period is dependent on how thoroughly and how quickly after its release the information is published by the news-wire services and the press, the Agency recommends that as a basic policy, when dissemination is made in accordance with the Agency policy, insiders should wait until the commencement of the following day's trading, or for twenty-four hours, whichever is less, after the general publication of the release in a national medium.

      • Article 59. Prevention Procedures

        59.1 Issuers can establish, publish and enforce effective procedures applicable to the purchase and sale of its securities by the issuer, its officers, directors, employees and other "insiders" designed not only to prevent improper trading, but also to avoid any question of the propriety of insider purchases or sales.
        59.1.1 One such procedure might require corporate insiders to restrict their purchases and sales of the issuer's securities, to periods following the release of annual statements or other releases setting forth the financial condition and status of the issuer.
        59.1.2 Another could involve the purchase of an issuer's securities on a regular basis by an agent, over which neither the issuer nor the individual has any control.
        59.1.3 All insiders, as defined above, must clarify or confirm in written form all their dealings, including bid and offer quotations placed by them, to the issuer's Board's committee established for this purpose as required by the Agency.

      • Article 60. The Offence

        60.1 A person who is in possession of Inside Information as an insider may not:
        60.1.1 Deal in any securities to which that information relates; or
        60.1.2 Encourage another person to deal in any securities to which that information relates; or
        60.1.3 Disclose that information, otherwise than in the proper performance of the functions of his employment, office or profession, to any other person.

      • Article 61. Defences

        61.1 A person is not guilty of Insider Trading by virtue of dealing in Securities if he shows:
        61.1.1 That he did not at the time expect the dealing to result in a profit attributable to the fact that the information in question was Inside Information in relation to the Securities, or
        61.1.2 That at the time he believed on reasonable grounds that the information had been disclosed widely enough to ensure that none of those taking part in the dealing would be prejudiced by not having the information, or
        61.1.3 That he would have done what he did even if he had not had the information.
        61.2 A person is not guilty of Insider Trading by virtue of encouraging another person to deal in Securities if he shows:
        61.2.1 That he did not at the time expect the dealing to result in a profit attributable to the fact that the information in question was Inside Information in relation to the Securities; or
        61.2.2 That at the time he believed on reasonable grounds that the information had been or would be disclosed widely enough to ensure that none of those taking part in the dealing would be prejudiced by not having the information, or
        61.2.3 That he would have done what he did even if he had not had the information.
        61.3 A person is not guilty of Insider Trading by virtue of a disclosure of information if he shows:
        61.3.1 That he did not at the time expect any person, because of the disclosure, to deal in the Securities in question.
        61.4 A person is not guilty of Insider Trading by virtue of dealing in Securities or encouraging another person to deal if he shows that he acted in good faith in the course of his business as a market maker or his employment in the business of a market maker. For the purposes of this Article a market maker is a person who is licensed as a market maker by the Agency.
        61.5 An individual is not guilty of Insider Trading by virtue of dealing in Securities or encouraging another person to deal if he shows that:
        61.5.1 The information which he had as an insider was Market Information; and
        61.5.2 It was reasonable for an individual in his position to have acted as he did despite having that information as an insider at the time.
        61.6 For the purpose of Article 61.5.2, in determining whether it is reasonable for an individual to do any act despite having Market Information at the time, there shall, in particular, be taken into account:
        61.6.1 The content of the information;
        61.6.2 The circumstances in which he first had the information and in what capacity; and
        61.6.3 The capacity in which he now acts.
        61.7 A person is not guilty of Insider Trading by virtue of dealing in Securities or encouraging another person to deal if he shows:
        61.7.1 That he acted:
        a) in connection with an acquisition or disposal which was under consideration or the subject of negotiation, or in the course of a series of such acquisitions or disposals; and
        b) with a view to facilitating the accomplishment of the acquisition or disposal or the series of acquisitions or disposals; and
        61.7.2 That the information which he had as an insider was Market Information arising directly out of his involvement in the acquisition or disposal or series of acquisitions or disposals.
        61.8 A person is not guilty of Insider Trading by virtue of dealing in Securities or encouraging another person to deal if he shows that he acted in conformity with any price stabilization rules made by the Agency.

    • Appendix 2 — Forms

      Listed Companies

      Form: Ins-1 NOTIFICATION INSIDER POSITION BY LISTED COMPANY
      Form: Ins-2 INSIDER'S INFORMATION DECLARATION
      Form: Ins-3 DECLARATION OF INSIDER'S BENEFICIAL OWNERSHIP
      Form: Ins-4 CHANGE IN INSIDER'S BENEFICIAL OWNERSHIP(S)
      Bahrain Stock Exchange

      Form: Ins/BSE-1 NOTIFICATION INSIDER POSITION BY THE BAHRAIN STOCK EXCHANGE
      Form: Ins/BSE-2 BSE EMPLOYEES' INFORMATION DECLARATION
      Form: Ins/BSE-3 DECLARATION OF BSE EMPLOYEES' SECURITIES OWNERSHIP
      Form: Ins/BSE-4 CHANGE IN BSE'S EMPLOYEES SECURITIES OWNERSHIP(S)
      Brokerage Firms & Securities Intermediaries Service Providers

      Form: Ins/Mem-1 NOTIFICATION INSIDER POSITION BY BSE'S MEMBERS
      Form: Ins/Mem-2 BSE MEMBERS' EMPLOYEE'S INFORMATION DECLARATION
      Form: Ins/Mem-3 BSE MEMBERS' DECLARATION SECURITIES OWNERSHIP
      Form: Ins/Mem-4 BSE MEMBERS' CHANGE IN SECURITIES OWNERSHIP(S)

Back to top