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Location: Central Bank of Bahrain Volume 1—Conventional Banks > Part A > High Level Standards > GR General Requirements > GR-5 Controllers > GR-5.1 Key Provisions > GR-5.1.2
  • GR-5.1 Key Provisions

    • GR-5.1.1

      Condition 3 of the CBB's licensing conditions specifies, among other things, that conventional bank licenseesG must satisfy the CBB that their controllersG are suitable and pose no undue risks to the licensee (See Paragraph LR-2.3.1). There are also certain procedures which are set out in Articles 52 to 56 of the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006) ("CBB Law") on controllersG . Licensees and their controllersG must also observe the CBB's Capital Markets requirements in respect of changes in holdings of shares of listed companies. There are differing requirements for locally incorporated licensees ("Bahraini conventional bank licenseesG ") and branches of foreign banks ("overseas conventional bank licenseesG "). The requirements of this Chapter apply in their entirety to Bahraini conventional bank licenseesG . Requirements for overseas conventional bank licenseesG are less onerous and are outlined in Paragraph GR-5.1.10.

      Amended: July 2013
      Amended: October 2011
      October 07

    • GR-5.1.2

      There are strict limits on changes in the holdings of shares held by controllersG in Bahraini conventional bank licenseesG or the extent of voting control exercised by controllersG in Bahraini conventional bank licenseesG . These limits are outlined in Section GR-5.3. Failure to observe these limits may lead to imposition of enforcement provisions of the Rulebook on the licensee and other penalties on the controllerG under the provisions of the CBB Law as outlined in Paragraph GR-5.1.1, including loss of voting power or transfer of shares.

      Amended: July 2013
      Amended: October 2011
      October 07

    • GR-5.1.3

      The approval provisions outlined in Paragraphs GR-5.1.4 and GR-5.1.5 do not apply to existing holdings or existing voting control by controllersG already approved by the CBB. The approval provisions apply to new/prospective controllersG or to increases in existing holdings/voting control as outlined in Paragraphs GR-5.1.4 and GR-5.1.5, following the issuance of Regulation No.(31) for the year 2008.

      Amended: July 2013
      Amended: October 2011
      October 07

    • GR-5.1.4

      Applicants seeking control of a conventional bank licenseG must provide details of their intended control, by submitting a duly completed Form 2 (Application for authorisation of controllerG ). (See Subparagraph LR-3.1.5(a))

      Amended: July 2013
      Amended: October 2011
      Amended: January 2011
      October 07

    • GR-5.1.5

      For purposes of Paragraph GR-5.1.4, prior approval from the CBB must be obtained when any of the following changes relating to controllersG (as defined in Section GR-5.2 and subject to the limits as outlined in Section GR-5.3) apply:

      (a) A new controllerG ;
      (b) An existing controllerG increasing its holding from above 10% and up to and including 20% of issued and paid up share capital;
      (c) An existing controllerG increasing its holding from above 20% and up and including 30% of issued and paid up share capital;
      (d) An existing controllerG increasing its holding from above 30% and up to and including 40% of issued and paid up share capital; or
      (e) An existing controller increasing its holding to above 40% of the issued and paid up share capital of an unlisted bank. In this instance, the controller must be a regulated legal person.
      Amended: July 2013
      Amended: October 2011
      Amended: January 2011
      October 07

    • GR-5.1.6

      For approval under Paragraph GR-5.1.5 to be granted, the CBB must be satisfied that the proposed controllerG or increase in control poses no undue risks to the licensee. The CBB will therefore consider or reconsider the criteria outlined in Paragraphs GR-5.3.6 to GR-5.3.8 in any request for approval. The CBB may impose any restrictions that it considers necessary to be observed in case of its approval of a new controllerG , or any of the changes listed to existing controllersG in Paragraph GR-5.1.5. These restrictions will include the applicable maximum allowed limit of holding or control (as outlined in Section GR-5.3). A duly completed Form 2 (ControllersG ) must be submitted as part of the request for a change in controllersG . An approval of controllerG will specify the applicable period for effecting the proposed acquisition of shares.

      Amended: July 2013
      Amended: October 2011
      October 07

    • GR-5.1.7

      If, as a result of circumstances outside the conventional bank licensee'sG knowledge and/or control, one of the changes specified in Paragraph GR-5.1.5 is triggered prior to CBB approval being sought or obtained, the conventional bank licenseeG must notify the CBB no later than 15 calendar days from the date on which those changes have occurred.

      Amended: January 2017
      October 07

    • GR-5.1.8

      Conventional bank licenseesG are required to notify the CBB as soon as they become aware of events that are likely to lead to changes in their controllersG . The criteria by which the CBB assesses the suitability of controllersG are set out in Section GR-5.3. The CBB aims to respond to requests for approval within 30 calendar days and is obliged to reply within 3 months to a request for approval. The CBB may contact references and supervisory bodies in connection with any information provided to support an application for controllerG . The CBB may also ask for further information, in addition to that provided in Form 2, if required to satisfy itself as to the suitability of the applicant.

      October 07

    • GR-5.1.8A

      The criteria by which the CBB assesses the suitability of controllersG are set out in Section GR-5.3.

      Added: July 2013

    • GR-5.1.8B

      Within 30 days of receiving all required documentation for an application for authorisation for control, the CBB will issue its decision in writing to the applicant. The CBB may extend the period to review the completed application for no more than three months from the date where all required documentation has been submitted.

      Added: July 2013

    • GR-5.1.9

      Conventional bank licenseesG must submit, within 3 months of their financial year-end, a report on their controllersG . This report must identify all controllersG of the licensee, as defined in Section GR-5.2 and the extent of their shareholding interests.

      October 07

    • GR-5.1.10

      In the case of overseas conventional bank licenseesG , the CBB must be notified of any new significant ownership in excess of 50% of the issued share capital of the concerned bank as soon as the branch becomes aware of the new significant ownership. The concerned branch must provide a copy of the relevant approval by the home supervisor of the concerned bank. No other action is necessary unless the CBB makes a subsequent request for information or issues a formal direction. The CBB reserves the right to take any appropriate actions, including withdrawal of the license.

      Amended: January 2011
      October 07

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