Bahrain Stock Exchange Law 1987: Contents
Chapter 2 Exchange Administration
The Stock Exchange shall be administered by a Board, which shall be chaired by the Minister of Commerce and shall comprise of the following:1— A member representing the Ministry of Commerce, who shall be the Deputy Chairman.2— A member representing the Ministry of Finance and National Economy.3— A member representing the Bahrain Monetary Agency.4— Three members to be elected by the Bahrain Chamber of Commerce and Industry, from amongst experienced and competent figures.5— Two members representing national banks and auditing firms, to be selected by the Chairman.
The membership of the Stock Exchange Board shall be determined by a Resolution of the Council of Ministers upon the submission of the Minister of Commerce, and the Board members' term of office shall be three years, which is renewable.
The Board may invite any person concerned with the Stock Exchange to attend any of its meetings.
The Stock Exchange shall have a Director, assisted by an adequate number of staff, technical personnel, administrators and employees, who shall be subject to the civil service laws and regulations, pending the issue of new rules and regulations applicable to them.
The Board of Directors shall exercise all the powers required for the administration of the Exchange, and in particular the following:1— Drawing up the overall policies and strategies of the Exchange.2— Laying down the rules regulating trading in securities on the Exchange, and supervising the enforcement thereof, as well as supervising transactions and trading in the said securities. In all cases, any transactions concluded with respect to such securities shall, upon the transfer of the ownership thereof, be registered on the Exchange's records. A company whose securities have been subject to transactions executed outside the Exchange, shall give notice to the Exchange's Board of the transactions that took place. The Exchange's regulations shall determine the cases to be exempt from trading on the floor of the Exchange. Any trading in securities that is contrary to the provisions of this Article shall be deemed null and void.3— Examining applications for the registration of stock brokers, listing shares of Bahraini joint stock companies, or any other securities on the Exchange, and adopting decisions in respect thereof.4— Approving the Exchange's annual budget estimates and final accounts, and appointing the Auditors.5— Proposing the Exchange's internal rules and regulations, which shall be promulgated by a Resolution issued by the Minister of Commerce.6— Taking the appropriate action towards suspicious transactions, in accordance with the provisions of the Internal Regulations.7— Ordering a temporary suspension of trading on the Exchange, or in the shares of one company or several companies, in the event of exceptional circumstances threatening the proper and regular conduct of business.8— Forming specialised committees from amongst the Board members or others, whether on a permanent or temporary basis, as may be deemed fit by the Board.9— Any other matters necessary for ensuring the proper and regular conduct of business at the Exchange, with a view to attaining its objectives.
Without prejudice to the provisions of the preceding Article, the Exchange's Board may, in the event of an occurrence of serious circumstances, decide by a two-thirds majority vote of its members to determine a minimum and a maximum price for the securities at the close of the day preceding such a decision.
The decision shall be notified on the same day to the Minister of Commerce, who may repeal the decision, suspend its execution, or uphold it. In such a case he may then prescribe the manner of determining prices and maintaining control over the work of the Exchange.
The Minister of Commerce may, from his own initiative in the aforementioned circumstances, take any action he deems fit by a Ministerial Resolution to be issued by him in this respect.
The Chairman of the Board shall have the authority and powers as determined by Law and those specified in the Internal Regulations of the Exchange. The Chairman of the Board shall submit to the Council of Ministers a bi-annual detailed report about the Exchange's work and the state of investors. This report shall contain information on the performance of the Exchange in light of the general State policy.
The Director of the Exchange shall implement the Resolutions of the Exchange's Board, and he may submit to the Board the proposed regulations and directions he deems appropriate. He shall have the power to supervise all the Exchange's technical, administrative and financial units, and to issue the necessary instructions for the discharge of his duties, in accordance with the responsibilities and authorities entrusted to him by the provisions of the Exchange's Internal Regulations, as stipulated by a Resolution of the Board.
The Director shall be the legal representative of the Exchange before the Court and in its relations with others. He shall have the power to sign on behalf of the Exchange.
The Exchange's employees shall be appointed pursuant to the nomination of the Director of the Exchange and the approval of the Board.
The Exchange's administration shall endeavour to develop, train and qualify the required personnel for the proper operation of the Exchange, according to the latest administrative and technical methods. This shall apply also to the stockbrokers, market makers and other such related parties, and to promote investment awareness among investors in securities.
The Board shall establish the necessary specialized technical bodies for the performance of the Exchange's functions, including the following:1. A trading, clearing and settlement department.2. A price monitoring department, which shall monitor and analyse the movements of the securities listed or admitted for trading on the Exchange.3. A futures sales department that will be responsible for monitoring and evaluating future transactions, and the relationship of such transactions with spot sales.4. A department responsible for information compilation, data analysis and publications relevant to the Exchange, traded securities, and listed companies.5. A monitoring and investigation department.6. A research, studies and development department.7. An administrative and finance department.
An arbitration panel shall be established at the Exchange by a Resolution of the Exchange's Board, and shall consist of a judge who shall be nominated by the Minister of Justice & Islamic Affairs as chairman, and two members, one of whom shall be a non-board member. The panel shall be responsible for settling all disputes relating to transactions concluded on the Exchange.
Trading on the Exchange shall be deemed as an acceptance of arbitration and this fact shall be recorded in the documents of the transactions. The awards passed by the panel shall be binding upon both parties of a dispute.
The Exchange's regulations shall set forth the procedures to be followed for reference and settlement of disputes and remuneration of the panel members.
The Exchange shall have a disciplinary board which shall be responsible for deciding on violations of the provisions of this law, regulations and resolutions regulating the Exchange, as well as any violation affecting the proper conduct of business and order therein.
The disciplinary board shall consist of three members appointed by a Resolution of the Chairman of the Board, and shall be presided over by the Director.
The disciplinary board shall be empowered to inflict the following penalties:1. Reprimand2. Warning3. Confiscating all or part of the bank guarantee provided by the stockbroker.4. Suspension of trading in respect of the violating company, for a period not exceeding four months.5. Striking off listed and unlisted companies from the Exchange, or conversion of a listed company into an unlisted company whose securities are admitted for trading.6. Suspension of the activities of stockbrokers, market makers and other parties of similar status, for a period not exceeding four months.7. Cancellation of the membership of stockbrokers, market makers and others from the Exchange.
The deliberations of the disciplinary board shall be held in camera, and its decisions shall be passed by a majority vote, and shall be notified to the persons concerned by a registered letter, with an acknowledgement slip.
The Internal Regulations shall set forth the procedures to be followed on the disciplinary board.
The decisions passed by the disciplinary board referred to in sub-articles 4–7 of the preceding Article, may be appealed to the Disciplinary Board of Appeal, which shall be presided over by a judge to be selected by the Minister of Justice and Islamic Affairs.
The Chairman of the Exchange Board shall pass a resolution for the constitution of the Disciplinary Board of Appeal.
The Resolution issued for the formation of the Board shall put forth the procedures to be followed therein.