CBB Volume 7: Contents

Central Bank of Bahrain Volume 7—Collective Investment Undertakings
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Location: Central Bank of Bahrain Volume 7—Collective Investment Undertakings
  • Central Bank of Bahrain Volume 7—Collective Investment Undertakings

    • Part A

      Table of Contents
       
        Module Title Module
      Code
      Date last
      changed
       
      Introduction User's Guide UG Jul 17 PDF Version
      Executive Summary ES Jul 17 PDF Version
      High Level Standards Authorisation / Registration Requirements ARR Jul 17 PDF Version
      Relevant Persons RP Jul 17 PDF Version
      Corporate Governance CG Apr 12 PDF Version
      Liquidation / De-registration Requirements LDR Apr 12 PDF Version
      Classification of Undertakings Bahrain Domiciled Retail CIUs BDR Oct 17 PDF Version
      Bahrain Domiciled Expert CIUs BDE Oct 17 PDF Version
      Bahrain Domiciled Exempt CIUs BDX Apr 12 PDF Version
      Bahrain Domiciled Real Estate Investment Trusts (B-REITs) BRT Jan 18 PDF Version
      Overseas Domiciled CIUs ODC Oct 17 PDF Version
      Shari'a Compliant CIUs SCC Apr 12 PDF Version
      Private Investment Undertakings PIU Oct 13 PDF Version
      Reporting Requirements CBB Reporting CRR Jul 17 PDF Version
      Enforcement & Redress Enforcement EN Apr 16 PDF Version

      • Introduction

        • UG User's Guide

          • UG-A Introduction

            • UG-A.1 Purpose

              • Executive Summary

                • UG-A.1.1

                  The Central Bank of Bahrain ('the CBB'), in its capacity as the regulatory and supervisory authority for all financial institutions in Bahrain, issues regulatory instruments that licensees and other specified persons are legally obliged to comply with. These regulatory instruments are contained in the CBB Rulebook. Much of the Rulebook's substantive content was previously issued by the Bahrain Monetary Agency ('the BMA'), and was carried forward when the CBB replaced the BMA in September 2006.

                  April 2012

                • UG-A.1.2

                  The Rulebook is divided into 7 Volumes, covering different areas of financial services activity. These Volumes are being progressively issued. Volumes 1 and 2, covering conventional bank licenseesG and Islamic bank licenseesG respectively, were issued in July 2004 and January 2005; Volume 3, covering insurance licenseesG , was issued in April 2005, Volume 4, covering investment business firmsG was issued in April 2006. Volume 5 covering specialised licenseesG , is being issued in phases, part of which were issued in 2010 and 2011. Volume 6 (capital markets), has also been issued in phases, starting in April 2007. Volume 7 covering collective investment undertakingsG is being issued in April 2012. The Volume 7 content has been drawn from Module CIU which was previously included under Volume 6.

                  April 2012

                • UG-A.1.3

                  This User's Guide provides guidance on (i) the status and application of the Rulebook, with specific reference to Volume 7 (Collective Investment Undertakings); (ii) the structure and design of the Rulebook; and (iii) its maintenance and version control.

                  April 2012

                • UG-A.1.4

                  Volume 7 (Collective Investment Undertakings) covers the types of CIUs authorised or registered by the CBB. It contains authorisation/registration requirements; and corporate governance requirements. Collectively, these requirements are aimed at providing an appropriate level of protection to investors in such CIUs.

                  April 2012

              • Legal Basis

                • UG-A.1.5

                  This Module contains the CBB's Directive (as amended from time to time) regarding the User's Guide for Volume 7 of the CBB Rulebook, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive is this Module is applicable to all CBB licenseesG that are relevant personsG , as defined in Module RP.

                  April 2012

                • UG-A.1.6

                  Relevant personsG that are not CBB licenseesG (because they are not undertaking regulated services within Bahrain) but whose activities fall within the scope of this Module, are also subject to the requirements of this Module with respect to the CIU(s)G concerned.

                  April 2012

                • UG-A.1.7

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • UG-A.2 Module History

              • Evolution of Module

                • UG-A.2.1

                  This Module was first issued in April 2012, as part of the initial release of the contents of Volume 7 (Collective Investment Undertakings). Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

                  April 2012

                • UG-A.2.2

                  A list of recent changes made to this Volume is provided below:

                  Module Ref. Change Date Description of Changes
                  UG-3.2 and Annex 01/2013 Amended as CBB Rulebook only now available on CBB Website.
                  UG-1.3.4 10/2016 Add a paragraph to clarify reference to 'he' 'his' 'she' and 'her'.
                  UG-1.1.2 07/2017 Amended paragraph.
                       
                       

                • UG-A.2.3

                  Guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • UG-1 Rulebook Status and Application

            • UG-1.1 Legal Basis

              • General

                • UG-1.1.1

                  Volume 7 (Collective Investment Undertakings) of the CBB Rulebook is issued by the CBB pursuant to the Central Bank of Bahrain and Financial Institutions Law 2006 ('the CBB Law'). The CBB Law provides for two formal rulemaking instruments: Regulations (made pursuant to Article 37) and Directives (made pursuant to Article 38).

                  April 2012

              • CBB's Rulemaking Instruments

                • UG-1.1.2

                  Regulations are made pursuant to Article 37 of the CBB Law. These instruments have general application throughout the Kingdom and bind all persons ordinarily affected by Bahraini legislative measures.

                  Amended: July 2017
                  April 2012

                • UG-1.1.3

                  Because Regulations have wide general application, they are subject to two important safeguards: (i) the CBB is under a duty to consult with interested parties and to review and consider their comments; and (ii) the finalised Regulations only become effective after they are published in the Official Gazette.

                  April 2012

                • UG-1.1.4

                  Directives are made pursuant to Article 38 of the CBB Law. These instruments do not have general application in the Kingdom, but are rather addressed to specific licenseesG (or categories of licenseesG ), approved personsG or registered personsG . Directives are binding on those to whom they are addressed.

                  April 2012

                • UG-1.1.5

                  Unlike Regulations, there is no duty on the CBB to either consult with addressees or publicise a Directive by publishing it in the Official Gazette (save that an addressee must obviously have actual or constructive notice of a Directive). However, as a matter of general policy, the CBB also consults on Rulebook content issued by way of a Directive.

                  April 2012

                • UG-1.1.6

                  All of the content of the CBB Rulebook has the legal status of at least a Directive, issued pursuant to Article 38 of the CBB Law. Certain of the requirements contained in the CBB Rulebook may also have the status of a Regulation, in which case they are also separately issued pursuant to Article 37 of the CBB Law and published in the Official Gazette. Where this is the case, then the Rulebook cross-refers to the Regulation in question and specifies the requirements concerned.

                  April 2012

                • UG-1.1.7

                  In keeping with the nature of these regulatory instruments, Regulations are used to supplement the CBB Rulebook, either where explicitly required under the CBB Law, or where a particular requirement needs to have general applicability, in addition to being applied to licenseesG , approved personsG or registered personsG .

                  April 2012

            • UG-1.2 Status of Provisions

              • UG-1.2.1

                The contents of the CBB Rulebook are categorised either as Rules or as Guidance. Rules have a binding effect. Guidance is not binding: rather, it is material that helps inform a particular Rule or set of Rules, or provides other general information.

                April 2012

              • UG-1.2.2

                Where relevant, compliance with Guidance will generally lead the CBB to assess that the rule(s) to which the Guidance relates has been complied with. Conversely, failure to comply with Guidance will generally be viewed by the CBB as tending to suggest breach of a Rule.

                April 2012

              • UG-1.2.3

                The categorisation of each Paragraph within the Rulebook is identified by its text format, as follows:

                •   Rules are in bold, font size 12. The Paragraph reference number is also highlighted in a coloured box.
                •   Guidance is in normal type, font size 11.
                April 2012

              • UG-1.2.4

                Where there are differences of interpretation over the meaning of a Rule or Guidance, the CBB reserves the right to apply its own interpretation.

                April 2012

              • UG-1.2.5

                Rule UG-1.2.4 does not prejudice the rights of an authorised person to make a judicial appeal, should it believe that the CBB is acting unreasonably or beyond its legal powers.

                April 2012

              • UG-1.2.6

                All Rulebook content has the formal status of at least a Directive. Some Rulebook content may also have the status of Regulations. Rulebook content that is categorised as a Rule is therefore legally mandatory and must be complied with by those to whom the content is addressed.

                April 2012

              • UG-1.2.7

                Breaches of Rules constitute breaches of the CBB Law. If a licensee or person breaches a Rule to which they are subject, they are liable to enforcement action by the CBB and, in certain cases, criminal proceedings by the Office of the Public Prosecutor.

                April 2012

              • UG-1.2.8

                The CBB's enforcement powers and processes are set out in Module EN.

                April 2012

            • UG-1.3 Application

              • UG-1.3.1

                Volume 7 of the CBB Rulebook applies only to CIUsG , and to relevant personsG of CIUsG .

                April 2012

              • UG-1.3.2

                A few Rules and Guidance have general applicability (and thus also have the formal status of a Regulation): for instance, no person may establish a Bahrain domiciled CIUG , unless the CIUG is either authorised or registered, as required under Volume 7.

                April 2012

              • UG-1.3.3

                Each Module in Volume 7 contains a Scope of Application Chapter, setting out which Rules and Guidance apply to which particular type of CIUG for the Module concerned. In addition, each Rule (or Section containing a series of Rules) is drafted such that its application is clearly highlighted for the user. Finally, each Module, in its Purpose Section, specifies in all cases the rulemaking instrument(s) used to issue the content of the Module in question, and the legal basis underpinning the Module's requirements.

                April 2012

              • UG-1.3.4

                All references in this Module to 'he' or 'his' shall, unless the context otherwise requires, be construed as also being references to 'she' and 'her'.

                Added: October 2016

            • UG-1.4 Effective Date

              • UG-1.4.1

                Volume 7 (Collective Investment Undertakings) of the CBB Rulebook was first issued in April 2012. Its contents have immediate effect, subject to any specific transition arrangements that may be specified.

                April 2012

              • UG-1.4.2

                Module ES (Executive Summary) contains details of the implementation and transition arrangements for Volume 7 (Collective Investment Undertakings).

                April 2012

          • UG-2 Rulebook Structure and Format

            • UG-2.1 Rulebook Structure

              • Rulebook Volumes

                • UG-2.1.1

                  The Rulebook is divided into 7 Volumes, covering different areas of financial services activity, as follows:

                  Volume 1 Conventional Banks
                  Volume 2 Islamic Banks
                  Volume 3 Insurance
                  Volume 4 Investment Business
                  Volume 5 Specialised Activities
                  Volume 6 Capital Markets
                  Volume 7 Collective Investment Undertakings
                  April 2012

                • UG-2.1.2

                  Volume 5 (Specialised Activities), covers money changers; financing companies; representative offices; administrators; trust service providers and micro-finance institutions.

                  April 2012

              • Rulebook Contents (Overview)

                • UG-2.1.3

                  Except for Volumes 5, 6 and 7, the basic structure of each Rulebook is the same. Each Volume starts with a contents page and an introduction containing a User's Guide and Executive Summary. Subsequent material is organised underneath the following headings:

                  •   High-level Standards;
                  •   Business Standards;
                  •   Reporting Requirements;
                  •   Enforcement and Redress; and, where appropriate,
                  •   Sector Guides.
                  April 2012

                • UG-2.1.4

                  Volume 5 is organised by the Category of specialised firm concerned, Volume 6 by subject area (authorised exchanges; issuers of securities etc), whilst Volume 7 is categorised by type of CIUG .

                  April 2012

                • UG-2.1.5

                  The material in Volumes 1-4 is contained in Modules, each covering a specific area of requirements (e.g. capital). In turn, each Module is divided into Chapters, Sections and Paragraphs, as detailed below.

                  April 2012

                • UG-2.1.6

                  Each Volume has its own appendix Volume containing relevant reporting and authorisation forms; a glossary; and any supplementary information. In all cases, the main Volume is called 'Part A' and the appendix Volume is called 'Part B'.

                  April 2012

            • UG-2.2 Volume Structure

              • Modules

                • UG-2.2.1

                  Rulebook Volumes are subdivided into Modules, arranged in groups according to their subject matter, underneath the headings listed in Paragraph UG-2.1.3 above.

                  April 2012

                • UG-2.2.2

                  Each Module in a Volume is referenced using a two or three-letter code, which is usually a contraction or abbreviation of its title. These codes are used for cross-referencing within the text.

                  April 2012

              • Chapters

                • UG-2.2.3

                  Each Module consists of Chapters, categorised into two types:

                  •   Standard introductory Chapters (referenced with a letter: e.g. UG-A); and
                  •   Chapters containing the substantive content of the Module (referenced with a number: e.g. CA-1, ML-2, etc.)
                  April 2012

                • UG-2.2.4

                  The introductory Chapters summarise the purpose of the Module, its history (in terms of changes made to its contents) and, where relevant, lists previously issued circulars and regulations that were replaced by the Rulebook Module. A separate introductory Chapter also prescribes the scope of application of the Module's requirements.

                  April 2012

              • Sections and Paragraphs

                • UG-2.2.5

                  Chapters are further sub-divided into Sections: these extend the Chapter numbering (e.g. FC-1.1, FC-1.2, FC-1.3 etc). In turn, Sections are sub-divided into Paragraphs; these extend the Chapter and Section numbering (e.g. FC-1.1.1, FC-1.1.2, FC-1.1.3 etc.). Where appropriate, sub-Section headings may be used, to guide the reader through a Section; sub-Section headings are italicised and unnumbered, and act purely as an indicator (without limitation) as to the contents of the Paragraphs that follow.

                  April 2012

              • Table of Contents

                • UG-2.2.6

                  Each Volume's contents page lists all the Modules contained within it (Part A) and the information contained in the relevant appendix Volume (Part B).

                  April 2012

                • UG-2.2.7

                  The contents page of each Module lists the Chapters and Sections it contains, and the latest version date of each Section in issue.

                  April 2012

            • UG-2.3 Format and Page Layout

              • Headers

                • UG-2.3.1

                  The top of each page in the Rulebook identifies the Volume, Module and Chapter in question.

                  April 2012

              • Footers

                • UG-2.3.2

                  The bottom of each page in the Rulebook (on the left hand side) identifies the Module in question, its Section and page number. Page numbering starts afresh for each Section: the total number of pages in each Section is shown as well as the individual page number. The bottom right hand side shows an end-calendar quarter issue date. The contents page for each Module, and each Section in a Module, are each given their own issue date. In addition, the Module contents page lists the latest issue date for each Section in that Module. The contents page thus acts as a summary checklist of the current issue date in force for each Section. Further explanation is provided in Section UG-3.1 below.

                  April 2012

              • Defined terms

                • UG-2.3.3

                  Defined terms used in the Rulebook are underlined. Each Volume has its own glossary listing defined terms and giving their meaning. Definitions of terms used apply only to the Volume in question. It is possible for the same term to be used in a different Volume with a different meaning.

                  April 2012

              • Cross-references

                • UG-2.3.4

                  Any cross-references given in a text state the Module code, followed (where appropriate) by the numbering convention for any particular Chapter, Section or Paragraph being referred to. For example, the cross-reference FC-1.2.3 refers to the third Paragraph in the second Section of the first Chapter of the Financial Crime Module. Many references will be quite general, referring simply to a particular Module, Chapter or Section, rather than a specific Paragraph.

                  April 2012

              • Text format

                • UG-2.3.5

                  Each Paragraph is assigned a complete reference to the Module, Chapter, and Section, as well as its own Paragraph number, as explained in Paragraph UG-2.3.4 above. The format of the Paragraph reference and text indicates its status as either a Rule or Guidance, as explained in Paragraph UG-1.2.4 above.

                  April 2012

                • UG-2.3.6

                  When cross-referring to specific Paragraphs, and it is important to make clear the status of the Paragraph in question as a Rule or Guidance, then the words 'Rule' or 'Guidance' may be used instead of 'Paragraph', followed by the reference number (e.g. 'As required by Rule FC-1.1.1, licensees must. .).

                  April 2012

          • UG-3 Rulebook Maintenance and Access

            • UG-3.1 Rulebook Maintenance

              • Quarterly Updates

                • UG-3.1.1

                  Any changes to the Rulebook are generally made on a quarterly cycle (the only exception being when changes are urgently required), in early January, April, July and October. When changes are made to a Module, the amended Sections are given a new version date, in the bottom right-hand page.

                  April 2012

                • UG-3.1.2

                  The contents page for each amended Module is also updated: the table of contents is changed to show the new version date for each amended Section (in the 'Date Last Changed' column), and the contents page itself is also given its own new version date in the bottom right-hand corner. The Module contents pages thus act as a checklist for hard-copy users to verify which are the current version dates for each Section in that Module.

                  April 2012

                • UG-3.1.3

                  A summary of any changes made to a Module is included in the Module History Section of each Module. The table summarises the nature of the change made, the date of the change, and the Module components and relevant pages affected. The Module History can thus be used to identify which pages were updated within individual Sections.

                  April 2012

                • UG-3.1.4

                  Hard-copy users of the CBB Rulebook can check that they have the latest copy of each Module's contents pages, by referring to the overall table of contents for each Volume. The Volume table of contents lists the date each Module was last changed; users can use this table to check the date showing in the bottom right-hand corner of each Module's contents page.

                  April 2012

                • UG-3.1.5

                  The website version of the Rulebook acts at all times as the definitive version of the Rulebook. Any changes are automatically posted to the CBB website, together with a summary of those changes. Licensees are in addition e-mailed every quarter, to notify them of any changes (if any). Hard-copy users are invited to print off the updated pages from the website to incorporate in their Rulebook in order to keep it current.

                  April 2012

              • Changes to Numbering

                • UG-3.1.6

                  In order to limit the knock-on impact of inserting or deleting text on the numbering of text that follows the change, the following conventions apply:

                  (a) Where a new Paragraph is to be included in a Section, such that it would impact the numbering of existing text that would follow it, the Paragraph retains the numbering of the existing Paragraph immediately preceding it, but with the addition of an "A"; a second inserted Paragraph that follows immediately afterwards would be numbered with a "B", and so on.

                  For example, if a new Paragraph needs to be inserted after UG-3.1.6, it would be numbered UG-3.1.6A; a second new Paragraph would be numbered UG-3.1.6B, and so on. This convention avoids the need for renumbering existing text that follows an insertion. The same principle is applied where a new Section or a new Chapter needs to be inserted: for example, UG-3.1A (for a new Section), and UG-3A (for a new Chapter); and
                  (b) Where a Paragraph is deleted, then the numbering of the old Paragraph is retained, and the following inserted in square brackets: '[This Paragraph was deleted in April 2006.]' (The date given being the actual end-calendar quarter date of the deletion.) The same principle is applied with respect to Sections and Chapters.
                  April 2012

                • UG-3.1.7

                  Where many such changes have built up over time, then the CBB may reissue the whole Section, Paragraph, Chapter or even Module concerned, consolidating all these changes.

                  April 2012

            • UG-3.2 Rulebook Access

              • Availability

                • UG-3.2.1

                  The Rulebook is available on the CBB website.

                  Amended: January 2013
                  April 2012

              • Queries

                • UG-3.2.2

                  Questions regarding the administration of the Rulebook (e.g. website availability, the updating of material etc) should be addressed to the Rulebook Section of the Licensing & Policy Directorate:

                  Rulebook Section
                  Licensing & Policy Directorate
                  Central Bank of Bahrain
                  P.O. Box 27
                  Manama
                  Kingdom of Bahrain

                  Tel: +973-17 547 413
                  Fax: +973-17 530 228
                  E-mail: rulebook@cbb.gov.bh
                  Web: www.cbb.gov.bh

                  Questions regarding interpretation of the policy and requirements contained in the Rulebook should be addressed to the licensee's regular supervisory point of contact within the CBB.

                  Amended: January 2013

          • Annex CBB Rulebook Order Form [This form was deleted in January 2013]

            Deleted: January 2013

        • ES Executive Summary

          • ES-A Introduction

            • ES-A.1 Purpose

              • Executive Summary

                • ES-A.1.1

                  The purpose of this Module is to:

                  (a) Provide an overview of the structure of Volume 7 (Collective Investment Undertakings); and
                  (b) Outline the transition rules for the implementation of Volume 7.
                  April 2012

                • ES-A.1.2

                  Volume 7 (Collective Investment UndertakingsG ) sets out the Central Bank of Bahrain's ('CBB') regulatory framework governing collective investment undertakingsG ('CIUs'). Volume 7 sets out requirements relevant to all CIUsG that are domiciled in the Kingdom of Bahrain ('Bahrain domiciled CIUsG '). It also prescribes requirements relating to CIUsG that are domiciled in an overseas jurisdiction ('overseas domiciled CIUsG ') and offered to investors in the Kingdom of Bahrain.

                  April 2012

                • ES-A.1.3

                  CIUsG are defined in Section ARR-1.2 as undertakings the sole object of which is the collective investment of capital raised from the public or through private placement, including investment seeded by the operatorG , in financial instrumentsG and other assets and which operates on the basis of risk-spreading as appropriate; and the holdingsG of which may be re-purchased or redeemed out of those undertakings' assets. The definition of CIUsG further specifies the various legal forms that a CIUG may take.

                  April 2012

                • ES-A.1.4

                  The definition of CIUsG includes closed-ended fundsG as well as open-ended fundsG , and includes funds formed under statute (as investment companies), as well as contract law and trust law (respectively referred to, as common funds and as unit trusts).

                  April 2012

                • ES-A.1.5

                  Module ARR distinguishes between CIUsG that are classified as retail CIUsG , which may be offered to all types of investors, and expert CIUsG , which may only be offered to expert investorsG (as defined in this Module). Retail CIUsG are subject to more restrictive investment rules, aimed at protecting the general retail investor. Module CIUG also defines a category of exempt CIUsG . CIUsG that fall under this category are largely exempt from the requirements contained in this Module; however, they may only be offered to a very restricted investor base ('accredited investorsG '). Additionally, Module ARR addresses the requirements for Bahrain Domiciled Real Estate Investment TrustsG (B-REITsG ). Furthermore, the registration of private investment undertakings (PIUs)G , which may only be offered to high net worth investorsG and institutional investors, is subject to the terms and conditions outlined in Module PIU.

                  Amended: October 2016
                  April 2012

                • ES-A.1.6

                  Bahrain domiciled retail CIUsG and Bahrain domiciled expert CIUsG must be authorised by the CBB prior to being offered to investors. Bahrain domiciled exempt CIUsG need only register with the CBB before being offered to investors.

                  Amended: July 2017
                  April 2012

                • ES-A.1.7

                  Overseas domiciled retail CIUsG and expert CIUsG also require CBB authorisation before being offered to investors in the Kingdom of Bahrain. However, for CIUsG domiciled in recognised jurisdictionsG , retail CIUsG are required to register with the CBB, and expert CIUsG are required to be filed with the CBB, rather than seeking authorisation, on the basis that they have already been adequately vetted in their home jurisdiction. Overseas domiciled exempt CIUsG are required to register with the CBB before being offered, except for those domiciled in a recognised jurisdictionG , where they need to be filed with the CBB.

                  Amended: July 2015
                  April 2012

                • ES-A.1.8

                  Volume 7 replaces previous circulars and other regulatory instruments relating to CIUsG , issued over a number of years (see Rule ES-A.2.4). It updates these previous requirements, which were effectively geared towards the retail investor, and provides for a greater range of CIUsG to be offered, through its provisions regarding expert CIUsG and exempt CIUsG .

                  April 2012

              • Legal Basis

                • ES-A.1.9

                  This Module contains the CBB's Directive (as amended from time to time) relating to transition rules, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). This directive is applicable to all CBB licenseesG that are relevant personsG , as defined in Module RP.

                  April 2012

                • ES-A.1.10

                  Relevant personsG that are not CBB licenseesG (because they are not undertaking regulated services within Bahrain) but whose activities fall within the scope of Volume 7, are also subject to the requirements of Volume 7 with respect to the CIU(s)G concerned.

                  April 2012

                • ES-A.1.11

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • ES-A.2 Module History

              • Evolution of Module

                • ES-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • ES-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • ES-A.2.3

                  A list of recent changes made to this Module subsequent to the [April 2012] revision is provided below:

                  Module Ref. Change Date Description of Changes
                  ES-A.1.7 07/2015 Clarified guidance allowing for filing process for expert CIUs and overseas domiciled exempt CIUs from recognised jurisdictions.
                  ES-A.1.5 10/2016 Amendment to registration of PIUs
                  ES-A.1.6 07/2017 Amended paragraph.
                  ES-1.1.1 07/2017 Deleted 'resident' with respect to investors.

              • Superseded Requirements

                • ES-A.2.4

                  Volume 7 supersedes the requirements contained in Module CIU in Volume 6 (Capital Markets).

                  April 2012

          • ES-1 Structure

            • ES-1.1 Structure of Volume 7 (Collective Investment Undertakings)

              • ES-1.1.1

                The contents of Volume 7 applies to all Collective InvestmentG UndertakingsG , thereafter referred to in the Module as CIUsG , that are:

                (a) Domiciled in the Kingdom of Bahrain (irrespective of the jurisdiction in which they are offered); and
                (b) Domiciled in an overseas jurisdiction, but offered to investors in Bahrain.
                Amended: July 2017
                April 2012

              • ES-1.1.2

                The structure of Volume 7 (Collective Investment UndertakingsG ) is as follows:

                Chapter Heading Type of CIU
                ARR Authorisation/Registration Requirements Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                RP Relevant Persons Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                CG Corporate Governance Bahrain Domiciled CIUs
                LDR Liquidation/De-registration Requirements Bahrain Domiciled CIUs
                BDR Bahrain Domiciled Retail CIUs Bahrain Domiciled Retail CIUs
                BDE Bahrain Domiciled Expert CIUs Bahrain Domiciled Expert CIUs
                BDX Bahrain Domiciled Exempt CIUs Bahrain Domiciled Exempt CIUs
                BRT Bahrain Domiciled Real Estate Investment Trusts (B-REITs) Bahrain Domiciled Expert CIUs
                Bahrain Domiciled Exempt CIUs
                ODC Overseas Domiciled CIUs Overseas Domiciled CIUs
                SCC Sharia Compliant CIUs Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                PIU Private Investment Undertakings (PIUs) Private Investment Undertakings (PIUs)
                CRR CIU Reporting Requirements Bahrain Domiciled CIUs
                Overseas Domiciled CIUs
                EN Enforcement Bahrain Domiciled CIUs
                April 2012

          • ES-2 Transition Rules

            • ES-2.1 Implementation by Existing CIUs

              • ES-2.1.1

                All Bahrain domiciled CIUsG authorised/registered by the CBB and all overseas domiciled CIUsG authorised/registered by the CBB prior to April 2012, are required to meet the provisions of Volume 7 by 31st December 2012.

                April 2012

              • ES-2.1.2

                Where a Bahrain domiciled CIUG was structured as a series of separate offerings, before the issuance of Volume 7 in April 2012, such as an umbrella fund with a series of sub-funds, whereby each is a separate offering and financially independent of others established within the same legal vehicle, each sub-fund is to be treated as a separate CIUG .

                April 2012

              • ES-2.1.3

                The operatorG of the Bahrain domiciled CIUG in question — together with the directorsG or trusteesG of the CIUG (as appropriate) — are required to ensure that each sub-fund or separate offering complies with the applicable Rules prescribed in Volume 7.

                April 2012

      • High Level Standards

        • ARR Authorisation / Registration Requirements

          • AU-A Introduction

            • ARR-A.1 Purpose

              • Executive Summary

                • ARR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) approach to authorising, registering and acknowledging filing of CIUsG in the Kingdom of Bahrain. It also outlines the CBB fees for CIUsG .

                  Amended: July 2015
                  April 2012

              • Legal Basis

                • ARR-A.1.2

                  This Module contains the CBB's Directive and Resolution (as amended from time to time) regarding authorisation, registration and filing requirements applicable to collective investment undertakingsG and is issued under the powers available to the CBB under Articles 38 and 180 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). Module ARR includes the requirements contained in Resolution No (1) of 1987 with respect to determining fees payable to the CBB by CIUs.

                  Amended: July 2015
                  April 2012

                • ARR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • ARR-A.2 Module History

              • Evolution of Module

                • ARR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • ARR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • ARR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  ARR-2.3, ARR-3.3, ARR-4.3 07/2013 Amended due date and collection process for annual fee.
                  ARR-2.3.6, ARR-3.3.6, ARR-4.3.6 10/2013 Amended to allow payment of fee by way of wire transfer.
                  ARR-A.1.1, ARR-A.1.2, ARR-1.1.2, ARR-1.1.6, ARR-1.1.7, ARR-1.1.9, ARR-5.1.2, ARR-5.1.4, ARR-5.2 07/2015 Amended to reflect the process for filing for exempt and expert CIUs.
                  ARR-1.1.2; ARR-1.1.3; ARR-1.1.4; ARR-1.1.6; ARR-5.1.2; ARR-5.1.3 07/2017 Deleted 'resident' with respect to investors.
                  ARR-2.2.4; ARR-3.2.4; ARR-4.2.5 07/2017 Amended paragraphs.
                  ARR-2.2.5; ARR-3.2.5; ARR-4.2.6 07/2017 Amended paragraphs to reflect application validity deadline.
                  ARR-2.2.6; ARR-3.2.6; ARR-4.2.7 07/2017 Deleted paragraphs.

              • Superseded Requirements

                • ARR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • ARR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • ARR-B Definitions

            • ARR- B.1 Definitions

              • ARR-B.1.1

                Collective investment undertakingsG ('CIUs') are undertakings:

                (a) The sole object of which is the collective investment of capital raised from the public or through private placement, including investments seeded by the operatorG , in financial instrumentsG and other assets and which operates on the basis of risk-spreading as appropriate; and
                (b) The holdingsG of which may be re-purchased or redeemed out of those undertakings' assets, as appropriate.
                April 2012

              • ARR-B.1.2

                For the purposes of this Module, holdingsG mean the unit of measurement of the beneficial interest of participantsG in a CIUG , by whatever name it is called (including 'units' and, in the case of investment trusts or companies, in the form of shares or units). Each holdingG (which may be in fractions of a holdingG ) represents a right to the assets of the CIUG .

                April 2012

              • ARR-B.1.3

                The definition recognises both open-ended fundsG and closed-ended fundsG : unit trusts, investment trusts, mutual funds, SICAV and collective investment schemes are all examples of CIUsG . As further specified in Paragraph ARR-B.1.8, CIUsG may be constituted under contract law (as common funds managed by management companies); trust law (as unit trusts); or under statute (as investment companies).

                April 2012

              • ARR-B.1.4

                Closed-ended fundsG are CIUsG with a limited number of holdingsG . Where the fund vehicle is a company, holdingsG can take the form of shares. New holdingsG are rarely issued after the fund is launched and are not normally redeemable until the fund is liquidated. Typically, an investor can acquire or dispose of holdingsG in a closed-ended fundG by buying or selling them on a secondary market, from a market intermediary or another investor, rather than by dealing with the CIUG itself.

                April 2012

              • ARR-B.1.5

                The following arrangements do not fall within the definition given in Rule ARR-B.1.1 above:

                (a) A contract of insurance, insurance linked investment products or investments managed as part of a takaful contract of insurance;
                (b) Unrestricted investment accounts offered by Islamic bank licensees;
                (c) Restricted investment accounts offered by Islamic bank licensees prior to the effective date of Volume 7;
                (d) Unilateral arrangements to hold or manage assets on a discretionary basis;
                (i) For a licensee to hold or manage assets on a discretionary basis; and
                (ii) To hold or manage assets on behalf of a client on a non-discretionary basis (i.e. at the discretion of the client and not the bank or other licensees).
                (e) Arrangements entirely between bodies corporate who are members of the same group, or entirely between family members;
                (f) Pension, annuity and other employee benefit products, organised and managed for the benefit of employees or for another corporate body, which are governed by separate laws of the Kingdom of Bahrain (e.g. GOSI);
                (g) Structured products;
                (h) Cash savings schemes;
                (i) Special Purpose Vehicles used to issue debt securities; and
                (j) The issue of securities by companies whether publicly or by private placements for the purpose of raising their own capital.
                April 2012

              • ARR-B.1.6

                Where a person is in any doubt as to whether a particular product or structure falls within the definition of a CIUG given in Rule ARR-B.1.1, such matter must be referred to the Directorate of Financial Institutions Supervision at the CBB.

                April 2012

              • ARR-B.1.7

                Bahrain domiciled CIUsG are undertakings where:

                (a) The legal form of the CIUG is established under the laws of the Kingdom of Bahrain; and
                (b) The CIUG documents and contractual agreements are governed by the Laws of the Kingdom of Bahrain, unless otherwise agreed with the CBB.
                April 2012

              • ARR-B.1.8

                Bahrain domiciled CIUsG may be constituted either as:

                (a) Common CIUsG , established under the law of contract;
                (b) Trusts, established under the Financial Trusts Law; or
                (c) Corporates established under the Bahrain Commercial Companies Law.
                April 2012

              • ARR-B.1.9

                Each Bahrain domiciled CIUG must have its separate legal vehicle.

                April 2012

              • ARR-B.1.10

                Bahrain domiciled CIUsG are classified as retail CIUsG , expert CIUsG or exempt CIUs.G Specific definitions of each classification may be found in this Module.

                April 2012

              • ARR-B.1.11

                Overseas domiciled CIUsG are undertakings that are established in and regulated by:

                (a) Recognised jurisdictionsG listed under Chapter ARR-6; or
                (b) Other jurisdictions acceptable to the CBB.
                April 2012

              • Retail CIUs

                • ARR-B.1.12

                  Retail CIUsG are CIUsG that may be offered to all types of investors.

                  April 2012

                • ARR-B.1.13

                  The requirements in Volume 7 are framed such that retail CIUsG are subject to relatively detailed requirements, including restrictions on the types of financial instrumentsG or other assets that may be held by the CIUG , in order to limit risks to the general investor.

                  April 2012

              • Expert CIUs

                • ARR-B.1.14

                  Expert CIUsG are CIUsG that may be offered only to expert investorsG , and impose a minimum initial investment of USD10,000 (or its equivalent in any other currency).

                  April 2012

                • ARR-B.1.15

                  Expert CIUsG are subject to less restrictive requirements than retail CIUsG : specifically, expert CIUsG have greater investment flexibility, notably in terms of asset classes and risk concentration limits. They therefore potentially offer higher risks and are only suitable for expert investorsG , who are better able to assess those risks than less sophisticated investors.

                  April 2012

                • ARR-B.1.16

                  The minimum initial investment requirement specified in Rule ARR-B.1.14 means that the first payment made by an investor into the CIUG must be at least USD 10,000 (or its equivalent in any other currency). Subsequent investments may be for smaller amounts.

                  April 2012

                • ARR-B.1.17

                  Expert investorsG are:

                  (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD100,000 or more;
                  (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD100,000; or
                  (c) Governments, supranational organisations, central banks or other national monetary authorities, local authorities and state organisations.
                  April 2012

              • Exempt CIUs

                • ARR-B.1.18

                  Exempt CIUsG are lightly regulated CIUsG that may be offered only to accredited investorsG , and impose a minimum initial investment of USD 100,000 (or its equivalent in any other currency).

                  April 2012

                • ARR-B.1.19

                  Exempt CIUsG are only regulated to the extent that:

                  (a) They must be registered with the CBB prior to being offered to investors;
                  (b) May only be offered to accredited investorsG ; and
                  (c) Are subject only to high-level disclosure and reporting requirements.

                  They are not subject to any restrictions on their investment policies, as a result of which they may exhibit high risk characteristics, such as high levels of leverage and the taking of large speculative positions. As such, exempt CIUsG may only be offered to a highly restricted investor base (i.e. those defined as accredited investorsG ).

                  April 2012

                • ARR-B.1.20

                  The minimum initial investment requirement specificed in Rule ARR-B.1.18 means that the first investment made by an investor into the CIUG must be at least USD 100,000 (or its equivalent in any other currency). Subsequent investments may be for smaller amounts. Subsciptions on commitment basis must be at the least of USD100,000 (or its equivalent in any other currency).

                  April 2012

                • ARR-B.1.21

                  Accredited investorsG are:

                  (a) Individuals holding financial assets (either singly or jointly with their spouse) of USD1,000,000 or more;
                  (b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD1,000,000; or
                  (c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest in financial instrumentsG (such as state pension funds).
                  April 2012

                • ARR-B.1.22

                  Note that the definition of accredited investors, compared to that of expert investors, not only imposes higher liquid asset thresholds, but also prevents local authorities, as well as state organisations whose main activity is not related to investing in financial instruments, from investing in exempt CIUs. Investors that satisfy the definition of accredited investor also satisfy the definition of expert investor.

                  April 2012

          • ARR-1 General Requirements

            • ARR-1.1 General Requirements

              • ARR-1.1.1

                No person may establish a Bahrain domiciled CIUG , unless the CIUG is either authorised or registered, as required under this Module.

                April 2012

              • ARR-1.1.2

                No person may offer CIUG holdingsG to investors in the Kingdom of Bahrain, unless the CIUG concerned is either authorised, registered or filed, as required under this Module.

                Amended: July 2017
                Amended: July 2015
                April 2012

              • ARR-1.1.3

                For the purposes of this Module, 'offering' CIU holdingsG means, by way of business, soliciting investors to purchase holdingsG , by whatever means. (These may include, but are not limited to, advertising in print or other media, or use of the telephone, face-to-face contact, e-mail or internet). Such activity would be viewed as offering holdingsG to investors in Bahrain, where it could reasonably be viewed as addressed to investors in Bahrain (e.g. advertising in Bahrain print media, or addressing communications to investors in Bahrain).

                Amended: July 2017
                April 2012

              • ARR-1.1.4

                The activity of offering CIUG holdingsG to investors resident in Bahrain is a regulated activity (that of dealing in financial instrumentsG ). As such, it requires the appropriate CBB license to be held (see CBB Rulebook Volumes 1, 2 and 4). It is therefore not possible to offer CIUG holdingsG to investors in Bahrain, on a 'cross-border' basis from outside Bahrain. Where an overseas operatorG of a CIUG wishes to offer an overseas domiciled CIUG to investors in Bahrain, they must themselves hold the appropriate CBB license or appoint an appropriate CBB licenseeG as their distributor.

                Amended: July 2017
                April 2012

              • ARR-1.1.5

                Bahrain domiciled retail CIUsG and Bahrain domiciled expert CIUsG must be authorised by the CBB prior to being established. Bahrain domiciled exempt CIUsG are required only to register with the CBB.

                April 2012

              • ARR-1.1.6

                Overseas domiciled CIUsG must be authorised by the CBB prior to being offered to investors in the Kingdom of Bahrain, unless they are domiciled in a recognised jurisdictionG , in which case retail CIUsG are required to register with the CBB, and expert CIUsG are required to be filed with the CBB. Overseas domiciled exempt CIUsG domiciled in recognised jurisdictionsG are required to be filed with the CBB, while those domiciled in other jurisdictions are required to be registered with the CBB.

                Amended: July 2017
                Amended: July 2015
                April 2012

              • ARR-1.1.7

                All applications for authorisation/registration of CIUsG must be submitted with duly completed Form 1 CIU Application Form and all applications for filing of CIUs must be submitted with duly completed Form 3 ODC Filing Form. Forms must be submitted under cover of a letter signed by an authorised signatory of the applicant, marked for the attention of the Director of Financial Institutions Supervision Directorate of the CBB.

                Amended: July 2015
                April 2012

              • ARR-1.1.8

                The CBB expects the authorised signatory of the applicant to be the CEO or a person of similar standing.

                April 2012

              • ARR-1.1.9

                Form 1 CIU Application Form and Form 3 ODC Filing Form are available under Authorisation Forms, Part B of Volume 7 (Collective Investment Undertakings) of the CBB Rulebook.

                Amended: July 2015
                April 2012

          • ARR-2 Bahrain Domiciled Retail CIUs

            • ARR-2.1 Authorisation Requirements

              • ARR-2.1.1

                Bahrain domiciled retail CIUsG must be authorised by the CBB prior to being offered to investors.

                April 2012

              • ARR-2.1.2

                An application for authorisation may only be made by the operatorG of the CIU.G

                April 2012

              • ARR-2.1.3

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint the CIU'sG proposed fund administratorG /custodianG or a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal councel, prior to submision to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification for any issues.

                April 2012

              • ARR-2.1.4

                In the cases where the operatorG is not a CBB licenseeG , an application for authorisation under Rule ARR-2.1.1 will only be considered if:

                (a) The operatorG :
                (i) Is duly authorised to operate similar CIUsG in its home jurisdiction;
                (ii) Is supervised by an overseas regulatory authority acceptable to the CBB;
                (iii) Has a sound track record and/or experienced management team;
                (iv) Is financially sound according to home country regulatory requirements; and
                (v) Is a reputable financial institution.
                (b) The operatorG has identified appropriate institutions licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements; and
                (c) The operatorG has submitted an acceptably worded undertaking to the CBB, stating that it will abide by the CBB Law and the provisions of Volume 7.
                April 2012

              • ARR-2.1.5

                OperatorsG are expected to maintain the criteria listed in Paragraph ARR-2.1.4 on an ongoing basis. Operators who are CBB licenseesG are also expected to maintain the applicable criteria listed in Paragraph ARR-2.1.4.

                April 2012

            • ARR-2.2 Authorisation Process

              • ARR-2.2.1

                An application for authorisation under Rule ARR-2.1.1 must be made using Form 1 CIU Application Form, submitted under a formal cover letter signed by an authorised signatory of the applicant, together with all the supporting documentation requested.

                April 2012

              • ARR-2.2.2

                The application for authorisation must identify a representative in their capacity as the person responsible for submitting the application for the CIUG . This person must be:

                (a) An officer of the operatorG of the CIUG ; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • ARR-2.2.3

                In addition to the operator'sG contact details, an alternative contact may be provided, such as the the lawyer in-charge of submitting the application.

                April 2012

              • ARR-2.2.4

                The CBB will acknowledge applications made under Rule ARR-2.1.1 within 5 business days of receipt and provide formal feedback on the application within 20 business days of receipt of full set of documents. This feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2017
                April 2012

              • ARR-2.2.5

                The Validity of the application will be for 120 days from the date of the CBB's acknowledgement letter, failing which the CBB reserves the right to cancel the application and request the submission of a new one.

                Amended: July 2017
                April 2012

              • ARR-2.2.6

                [This Paragraph was deleted in July 2017].

                Deleted: July 2017
                April 2012

              • ARR-2.2.7

                If the CBB confirms the application has been satisfactorily completed, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                April 2012

              • Granting of Authorisation

                • ARR.2.2.8

                  To be granted authorisation, an applicant must demonstrate compliance with the applicable requirements of Module BDR of Volume 7. Should an authorisation be granted, the CBB will notify the applicant in writing of the fact. The authorisation may be subject to additional conditions being met.

                  April 2012

                • ARR.2.2.9

                  The CIUG must be launched within a period not exceeding 6 months from the date of authorisation.

                  April 2012

                • ARR.2.2.10

                  Subsequent to granting authorisation, the operatorG is required to submit the following:

                  (a) The final prospectusG (and simplified prospectusG , if applicable) together with all the signed contractual agreements of the CIUG , and the authenticated Memorandum and Articles of Association of the fund companyG (if applicable), or any other constitutional documents, within one month from the date of authorisation; and
                  (b) A written confirmation to the CBB stating that the CIUG has been launched, within a period not exceeding 6 months from the date of authorisation.
                  April 2012

                • ARR.2.2.11

                  Should for any reason the CIUG not be launched within the specified timeframe of 6 months, the operatorG must seek the CBB's approval for an extension to launch the CIUG and confirm in writing to the CBB once the CIUG is launched.

                  April 2012

                • ARR.2.2.12

                  The CBB will normally only exempt a CIUG from the above 6 months rule if exceptional unforeseen circumstances have intervened and delayed the start of the CIU'sG operations, (for instance, due to a sudden downturn in markets), provided that this would not prejudice the interests of potential investors.

                  April 2012

              • Refusal of Authorisation

                • ARR.2.2.13

                  The CBB may refuse to grant authorisation if in its opinion:

                  (a) The requirements of this Module are not met;
                  (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  April 2012

                • ARR.2.2.14

                  Where the CBB proposes to refuse an application for authorisation, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision. The application for appeal must be made to an Executive Director or more senior official of the CBB.

                  April 2012

            • ARR-2.3 CBB Fees

              • Application Fees

                • ARR-2.3.1

                  Each application for authorisation made under Rule ARR-2.1.1 must be accompanied by a non-refundable BD 100 processing fee at the time of submitting the formal application to the CBB.

                  April 2012

              • Annual Fees

                • ARR-2.3.2

                  Each Bahrain domiciled retail CIUG authorised by the CBB is subject to an annual fee of BD 2,000. In the case of umbrella funds, each sub-fund is also charged BD 2,000 a year. The fee is payable on the 15th January of the year for which the annual fee is due.

                  Amended: July 2013
                  April 2012

                • ARR-2.3.3

                  For newly authorised CIUsG , the first annual license fee is payable when the authorisation letter is issued by the CBB. The amount payable is the annual fee of BD 2,000 on a monthly prorata basis as determined by the CBB.

                  April 2012

                • ARR-2.3.4

                  Where authorisation is revoked, (whether at the initiative of the operatorG or the CBB), no refund will be paid for any months remaining in the calendar year in question.

                  April 2012

                • ARR-2.3.5

                  All annual fees are collected by direct debit and all operators/trustees of CIUsG must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • ARR-2.3.6

                  If a CIUG or newly established CIUG does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the CIUG .

                  Added: October 2013

          • ARR-3 Bahrain Domiciled Expert CIUs

            • ARR-3.1 Authorisation Requirements

              • ARR-3.1.1

                Bahrain domiciled expert CIUsG must be authorised by the CBB prior to being offered to investors.

                April 2012

              • ARR-3.1.2

                An application for authorisation may only be made by the operatorG of the CIU.G

                April 2012

              • ARR-3.1.3

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint the CIU'sG proposed fund administratorG /custodianG or a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal councel prior to submission to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the authorisation process, when seeking clarification for any issues.

                April 2012

              • ARR-3.1.4

                In cases where the operatorG is not a CBB licenseeG , an application for authorisation under Rule ARR-3.1.1 will only be considered if:

                (a) The operatorG :
                (i) Is duly authorised to operate similar CIUsG in its home jurisdiction;
                (ii) Is supervised by an overseas regulatory authority acceptable to the CBB;
                (iii) Has a sound track record and/or experienced management team;
                (iv) Is financially sound according to its home regulatory requirements; and
                (v) Is a reputable financial institution.
                (b) The operatorG has identified appropriate institutions licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements; and
                (c) The operatorG has submitted an acceptably worded undertaking to the CBB, stating that it will abide by the CBB Law and the provisions of this Module.
                April 2012

              • ARR-3.1.5

                OperatorsG are expected to maintain the criteria listed in Paragraph ARR-3.1.4 on an ongoing basis. Operators who are CBB licenseesG are also expected to maintain the applicable criteria listed in Paragraph ARR-3.1.4.

                April 2012

            • ARR-3.2 Authorisation Process

              • ARR-3.2.1

                An application for authorisation under Rule ARR-3.1.1 must be made using Form 1 CIU Application Form, submitted under a formal cover letter signed by an authorised signatory of the applicant, together with all supporting documentation requested.

                April 2012

              • ARR-3.2.2

                The application for authorisation must identify a representative in their capacity as the person responsible for submitting the application for the CIUG . This person must be:

                (a) An officer of the operatorG of the CIUG ; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • ARR-3.2.3

                In addition to the operator's contact details, an alternative contact may be provided, such as the lawyer in-charge of submitting the application.

                April 2012

              • ARR-3.2.4

                The CBB will acknowledge applications made under Rule ARR-3.1.1 within 5 business days of receipt and provide formal feedback on the application within 20 business days of receipt of full set of documents. This feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2017
                April 2012

              • ARR-3.2.5

                The Validity of the application will be for 120 days from the date of the CBB's acknowledgement letter, failing which the CBB reserves the right to cancel the application and request the submission of a new one.

                Amended: July 2017
                April 2012

              • ARR-3.2.6

                [This Paragraph was deleted in July 2017].

                Deleted: July 2017
                April 2012

              • ARR-3.2.7

                If the CBB confirms the application to be satisfactorily completed, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                April 2012

              • Granting of Authorisation

                • ARR-3.2.8

                  To be granted authorisation, an applicant must demonstrate compliance with the applicable requirements in Module BDE of Volume 7. Should authorisation be granted, the CBB will notify the applicant in writing of the fact. The authorisation may be subject to additional conditions being met.

                  April 2012

                • ARR-3.2.9

                  The CIUG must be launched within a period not exceeding six months from the date of authorisation.

                  April 2012

                • ARR-3.2.10

                  Subsequent to granting authorisation, the operatorG is required to submit the following:

                  (a) The final prospectusG (and simplified prospectusG , if applicable) together with the all signed contractual agreements of the CIUG , and the authenticated Memorandum and Articles of Association of the fund companyG (if applicable), or any other constitutional documents, within one month from the date of authorisation; and
                  (b) A written confirmation to the CBB stating that the CIUG has been launched, within a period not exceeding 6 months from the date of authorisation.
                  April 2012

                • ARR-3.2.11

                  Should for any reason the CIUG not be launched within the specified timeframe of 6 months, the operatorG must seek the CBB's approval for an extension to launch the CIUG and confirm in writing to the CBB once the CIUG is launched.

                  April 2012

                • ARR-3.2.12

                  The CBB will normally only exempt a CIUG from the above 6 months rule if exceptional unforeseen circumstances have intervened and delayed the start of the CIU'sG operations, (for instance, due to a sudden downturn in markets), provided that this would not prejudice the interests of potential investors.

                  April 2012

              • Refusal of Authorisation

                • ARR-3.2.13

                  The CBB may refuse to grant authorisation if in its opinion:

                  (a) The requirements of this Module are not met;
                  (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  April 2012

                • ARR-3.2.14

                  Where the CBB proposes to refuse an application for authorisation, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision. The application for appeal must be made to an Executive Director or more senior official of the CBB.

                  April 2012

            • ARR-3.3 CBB Fees

              • Application Fees

                • ARR-3.3.1

                  Each application for authorisation made under Rule ARR-3.1.1 must be accompanied by a non-refundable BD100 processing fee at the time of submitting the formal application to the CBB.

                  April 2012

              • Annual Fees

                • ARR-3.3.2

                  Each Bahrain domiciled expert CIUG authorised by CBB is subject to an annual fee of BD2,000. In the case of umbrella funds, each sub-fund is also charged BD2,000 a year. The fee is payable on the 15th January of the year for which the annual fee is due.

                  Amended: July 2013
                  April 2012

                • ARR-3.3.3

                  For newly authorised CIUsG , the first annual license fee is payable when the authorisation letter is issued by the CBB. The amount payable is the annual fee of BD2,000 on a monthly prorata basis as determined by the CBB.

                  April 2012

                • ARR-3.3.4

                  Where authorisation is revoked, (whether at the initiative of the operatorG or the CBB), no refund is paid for any months remaining in the calendar year in question.

                  April 2012

                • ARR-3.3.5

                  All annual fees are collected by direct debit and all operators/trustees of CIUsG must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • ARR-3.3.6

                  If a CIUG or newly established CIUG does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the CIUG .

                  Added: October 2013

          • ARR-4 Bahrain Domiciled Exempt CIUs

            • ARR-4.1 Registration Requirements

              • ARR-4.1.1

                Bahrain domiciled exempt CIUsG must be registered with the CBB prior to their being offered to investors.

                April 2012

              • ARR-4.1.2

                Bahrain domiciled exempt CIUsG are not subject to the CBB's authorisation or on-going supervisory requirements. The registration requirement is to allow the CBB to monitor developments in the financial services sector.

                April 2012

              • ARR-4.1.3

                An application for registration may only be made by the operatorG of the CIU.G

                April 2012

              • ARR-4.1.4

                An applicant may appoint a representative — such as a law firm to prepare and submit the application. An applicant may also appoint the CIUG 's proposed fund administratorG /custodianG or a professional consultant to prepare and submit the application, in which case the application has to be reviewed by a professional law firm or internal legal councel prior to submision to the CBB. In all cases, the applicant retains full responsibility for the accuracy and completeness of the application, and is required to certify the application form accordingly. The CBB also expects to be able to liaise directly with the applicant during the registration process, when seeking clarification of any issues.

                April 2012

              • ARR-4.1.5

                In cases where the operatorG is not a CBB licenseeG , an application for registration under Rule ARR-4.1.1 will only be considered, if:

                (a) The operatorG :
                (i) Is duly authorised to operate similar CIUsG in its home jurisdiction (if applicable);
                (ii) Is supervised by an overseas regulatory authority acceptable to the CBB (if applicable);
                (iii) Has a sound track record and/or experienced management team;
                (iv) Is financially sound according to its home regulatory requirements; and
                (v) Is a reputable financial institution.
                (b) The operatorG has identified appropriate institutions licensed by the CBB, with which it would enter into service agreements in order to satisfy the administration and custody requirements contained in this Module; and
                (c) The operatorG has submitted an acceptably worded undertaking to the CBB, stating that it will abide by the CBB Law and the provisions of this Module (if applicable).
                April 2012

              • ARR-4.1.6

                OperatorsG are expected to maintain the criteria listed in Paragraph ARR-4.1.5 on an ongoing basis. Operators who are CBB licenseesG are also expected to maintain the applicable criteria listed in Paragraph ARR-4.1.5.

                April 2012

            • ARR-4.2 Registration Process

              • ARR-4.2.1

                An application for registration under Rule ARR-4.1.1 must be made using Form 1 CIU Application Form, submitted under a formal cover letter signed by an authorised signatory of the applicant, together with all supporting documentation requested.

                April 2012

              • ARR-4.2.2

                The application for registration must identify a representative in their capacity as the person responsible for submitting the application for the CIUG . This person must be:

                (a) An officer of the operatorG of the CIUG ; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                April 2012

              • ARR-4.2.3

                In addition to the operator'sG contact details, an alternative contact may be provided, such as the lawyer in-charge of submitting the application.

                April 2012

              • ARR-4.2.4

                The CBB's review of applications for registration are mainly limited to satisfying itself that the exemption conditions specified in the Bahrain domiciled exempt CIUsG Chapter of this Module are likely to be complied with. CBB does not review the proposed structure or operations in detail, although it reserves the right to seek appropriate confirmations or additional information from the applicant.

                April 2012

              • ARR-4.2.5

                The CBB will acknowledge applications made under Rule ARR-4.1.1 within 5 business days of receipt and provide formal feedback on the application within 15 business days of receipt of full set of documents. This feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2017
                April 2012

              • ARR-4.2.6

                The Validity of the application will be for 120 days from the date of the CBB's acknowledgement letter, failing which the CBB reserves the right to cancel the application and request the submission of a new one.

                Amended: July 2017
                April 2012

              • ARR-4.2.7

                [This Paragraph was deleted in July 2017].

                Deleted: July 2017
                April 2012

              • ARR-4.2.8

                If the CBB confirms the application to be satisfactorily completed, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                April 2012

              • Granting of Registration

                • ARR-4.2.9

                  To be registered, an applicant must demonstrate compliance with the exemption conditions specified in Module BDX of Volume 7. Should the application for registration be accepted, the CBB will notify the applicant in writing of the fact. The registration may be subject to additional conditions being met.

                  April 2012

                • ARR-4.2.10

                  The CIUG must be launched within a period not exceeding six months from the date of registration.

                  April 2012

                • ARR-4.2.11

                  Subsequent to registration, the operatorG is required to submit the following:

                  (a) The final prospectusG (and simplified prospectusG , if applicable) together with all the signed contractual agreements of the CIUG , and the authenticated Memorandum and Articles of Association of the fund companyG (if applicable), or any other constitutional documents, within one month from the date of registration; and
                  (b) A written confirmation to the CBB stating that the CIUG has been launched, within a period not exceeding 6 months from the date of registration.
                  April 2012

                • ARR-4.2.12

                  Should for any reason the CIUG not be launched within the specified timeframe of 6 months, the operatorG must seek the CBB's approval for an extension to launch the CIUG and confirm in writing to the CBB once the CIUG is launched.

                  April 2012

                • ARR-4.2.13

                  The CBB will normally only exempt a CIUG from the above 6 months rule if exceptional unforeseen circumstances have intervened and delayed the start of the CIU'sG operations, (for instance, due to a sudden downturn in markets), provided that this would not prejudice the interests of potential investors.

                  April 2012

              • Refusal of Registration

                • ARR-4.2.14

                  The CBB may refuse to register a Bahrain domiciled exempt CIUG , if in its opinion:

                  (a) The exemption requirements in the Bahrain domiciled exempt CIUG Chapter of this Module are unlikely to be met;
                  (b) False or misleading information has been provided to the CBB, or information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  April 2012

                • ARR-4.2.15

                  Where the CBB proposes to refuse an application for registration, it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision. The application for appeal must be made to an Executive Director or more senior official of the CBB.

                  April 2012

            • ARR-4.3 CBB Fees

              • Application Fees

                • ARR-4.3.1

                  Each application for registration made under Rule ARR-4.1.1 must be accompanied by a non-refundable BD100 processing fee at the time of submitting the formal application.

                  April 2012

                • ARR-4.3.2

                  Each Bahrain domiciled exempt CIUG registered by CBB is subject to an annual fee of BD2,000. In the case of umbrella funds, each sub-fund is also charged BD2,000 a year. The fee is payable on the 15th January of the year for which the annual fee is due.

                  Amended: July 2013
                  April 2012

                • ARR-4.3.3

                  For newly registered CIUsG , the first annual license fee is payable when the registration letter is issued by the CBB. The amount payable is the annual fee of BD2,000 on monthly prorata basis as determined by the CBB.

                  April 2012

                • ARR-4.3.4

                  Where the CIU is de-registered, (whether at the initiative of the operatorG or the CBB), no refund is paid for any months remaining in the calendar year in question.

                  April 2012

                • ARR-4.3.5

                  All annual fees are collected by direct debit and all operators/trustees of CIUsG must ensure that they submit to the CBB the completed Direct Debit Authorisation Form (available under Part B of Volume 7) by 15th October prior to the year for which the fees are due.

                  Amended: October 2013
                  Amended: July 2013
                  April 2012

                • ARR-4.3.6

                  If a CIUG or newly established CIUG does not have a bank account within the Kingdom of Bahrain, it may remit the annual fee on or before the due date of 15th January by wire transfer and inform the CBB when the payment has been made:

                  Beneficiary Name: Central Bank of Bahrain
                  Bank Name: National Bank of Bahrain, Head Office
                  Account No: 99572265
                  Swift Code: NBOBBHBM
                  IBAN: BH83 NBOB 0000 0099 5722 65

                  The amount transferred to the CBB should cover the full amount of the fee. Any other charges must be borne by the CIUG .

                  Added: October 2013

          • ARR-5 Overseas Domiciled CIUs

            • ARR-5.1 Classification of Overseas Domiciled CIUs

              • ARR-5.1.1

                The CBB classifies overseas domiciled CIUsG as retail, expert or exempt, based on the risk profile of the CIUG . As a result of the classification, the CBB may impose a higher minimum investment amount than that prescribed in the offering memorandum.

                April 2012

              • Overseas Domiciled Retail/Expert CIUs

                • ARR-5.1.2

                  Overseas domiciled retail CIUsG and Overseas Domiciled expert CIUsG , domiciled in a recognised jurisdictionG , (see Chapter ARR-6), are required to be registered/filed with the CBB, respectively, prior to being offered to investors in the Kingdom of Bahrain.

                  Amended: July 2017
                  Amended: July 2015
                  April 2012

                • ARR-5.1.3

                  Overseas domiciled retail CIUsG and Overseas Domiciled expert CIUsG , which are not domiciled in a recognised jurisdictionG , (see Chapter ARR-6), must be authorised by the CBB prior to being offered to investors in the Kingdom of Bahrain.

                  Amended: July 2017
                  April 2012

              • Overseas Domiciled Exempt CIUs

                • ARR-5.1.4

                  Overseas domiciled exempt CIUsG are required to be registered with the CBB, unless they are domiciled in a recognised jurisdictionG , in which case exempt CIUsG are only required to be filed with the CBB.

                  Amended: July 2015
                  April 2012

            • ARR-5.2 Authorisation, Registration and Filing Process

              • ARR-5.2.1

                Only CBB licenseesG that are licensed either as conventional bank licensees (Volume 1 of the CBB Rulebook), Islamic bank licensees (Volume 2) or investment firm licensees (Volume 4 — Categories 1 and 2 only), may offer overseas domiciled CIUsG in Bahrain.

                April 2012

              • ARR-5.2.2

                Applications for authorisation, registration or filing may only be made by the CBB licenseeG that is proposing to offer the CIUG to investors in Bahrain.

                Amended: July 2015
                April 2012

              • ARR-5.2.3

                In authorising, registering or acknowledging filing of overseas domiciled CIUsG which are Shari'a compliant, the CBB expects such CIUsG to meet the requirements outlined in Module SCC of Volume 7.

                Amended: July 2015
                April 2012

              • ARR-5.2.4

                Alternatively, the CBB may accept other specific arrangements as having equivalent effect for purposes of Paragraph ARR-5.2.3.

                Amended: July 2015
                April 2012

              • ARR-5.2.5

                An application for registration or authorisation of an overseas domiciled CIUG must be made using Form 1 CIU Application Form. An application for filing of an overseas domiciled expert or exempt CIUG from a recognised jurisdictionG must be made using Form 3 ODC Filing Form. Applications must be submitted under a formal cover letter signed by an authorised signatory of the applicant, together with all supporting documentation requested.

                Amended: July 2015
                April 2012

              • ARR-5.2.6

                The application for authorisation, registration or filing must identify a representative in their capacity as the person responsible for submitting the application. This person must be:

                (a) A senior officer at the CBB licenseeG that is proposing to offer the CIUG to investors in Bahrain; and
                (b) An individual capable of being contacted by the CBB by post, telephone, fax and/or e-mail.
                Amended: July 2015
                April 2012

              • ARR-5.2.7

                The CBB's review of applications for registration is mainly limited to satisfying itself that the applicant satisfies the conditions specified in the relevant Rules pertaining to the category of scheme it falls under (i.e. retail CIUG , expert CIUG or exempt CIU)G . This may require seeking confirmation of the CIU'sG regulatory status from its home regulator, and reviewing the CIU'sG documentation (such as promotional material and its prospectus). The CBB does not however review the proposed structure or operations in detail, although it reserves the right to seek appropriate confirmations or additional information/documentation from the applicant.

                April 2012

              • ARR-5.2.8

                The CBB's review of applications for authorisation is mainly limited to satisfying itself that the CIUG for which authorisation is sought has an equivalent structure to Bahrain domiciled CIUsG falling under the same category. The CBB reserves the right to seek appropriate confirmations or additional information/documentations from the applicant.

                April 2012

              • ARR-5.2.8A

                The CBB's review of applications for filing is mainly limited to satisfying itself that the applicant has done its due diligence to ensure the suitability of the CIU to the profile of the targeted investors (i.e. expert or accredited investorsG ). The supporting documents are submitted to the CBB for filing purposes only. The CBB rely solely on the due diligence process undertaken by the applicants, however, the CBB reserves the right to seek appropriate confirmations or additional information/documentation from the applicant.

                Added: July 2015

              • ARR-5.2.9

                The CBB expects the CBB licenseeG applying for authorisation, registration or filing of an overseas domiciled CIUG to satisfy itself that the CIU'sG operatorG is a licensed and/or authorised entity eligible to undertake the activity of operating CIUsG . The CBB reserves the right to seek information pertaining to the operator'sG regulatory status, including requesting a copy of its license and/or authorisation.

                Amended: July 2015
                April 2012

              • ARR-5.2.10

                The CBB provides feedback on an authorisation/registration application within 15 business days of the application being received by the CBB. The feedback will confirm whether the application is complete, or whether further information/documents are required.

                Amended: July 2015
                April 2012

              • ARR-5.2.11

                Should further information/documents be required, then the applicant has 45 calendar days from the date of the CBB's feedback in which to complete the authorisation/registration application, failing which the CBB reserves the right to cancel the application.

                Amended: July 2015
                April 2012

              • ARR-5.2.12

                When all outstanding information/documents are submitted, the CBB will provide a formal feedback on the submitted information/documents within 15 business days of receipt.

                April 2012

              • ARR-5.2.13

                If the CBB confirms the authorisation/registration application to be complete, then the CBB will take a final decision within 10 business days of the CBB's confirmation that the application is complete.

                Amended: July 2015
                April 2012

              • ARR-5.2.13A

                The CBB provides feedback on a filing application within 3 business days of the application being received by the CBB. The feedback will confirm whether the application is complete, or whether further information/documents are required.

                Added: July 2015

              • ARR-5.2.13B

                Should further information/documents be required, then the applicant has 5 business days from the date of the CBB's feedback in which to complete the filing application, failing which the CBB reserves the right to cancel the application.

                Added: July 2015

              • ARR-5.2.13C

                When all outstanding information/documents are submitted, the CBB will provide a formal feedback on the submitted information/documents within 3 business days of receipt.

                Added: July 2015

              • ARR-5.2.13D

                If the CBB confirms the filing application to be complete, then the CBB will take a final decision within 2 business days of the CBB's confirmation that the application is complete.

                Added: July 2015

              • Granting of Registration or Authorisation/Acknowledging Filing

                • ARR-5.2.14

                  To be authorised, registered or acknowledged, an applicant must demonstrate that it will comply with the conditions specified in Module ODC of Volume 7 pertaining to the category of scheme it falls under (i.e. retail CIUG , expert CIUG or exempt CIUG ). Should the application be accepted, the CBB will notify the applicant in writing of the fact. The authorisation, registration or acknowledgement of filing may be subject to additional conditions being met.

                  Amended: July 2015
                  April 2012

              • Decision to Refuse Authorisation, Registration of Filing

                • ARR-5.2.15

                  The CBB may refuse to authorise, register or acknowledge filing of an overseas domiciled CIUG , if in its opinion:

                  (a) The conditions in the relevant Rules (as appropriate) are not met;
                  (b) False or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                  (c) The CBB believes it necessary in order to safeguard the interests of potential investors.
                  Amended: July 2015
                  April 2012

                • ARR-5.2.16

                  Where the CBB proposes to refuse an application for authorisation, registration or filing it must give the applicant written notice to that effect. Applicants have 30 calendar days from the date of the written notice to appeal the decision.

                  Amended: July 2015
                  April 2012

          • ARR-6 Recognised Jurisdictions

            • ARR-6.1 Recognised Jurisdictions

              • ARR-6.1.1

                Recognised jurisdictionsG for the purposes of this Module are:

                Jurisdiction Fund Type
                Australia A retail fund established and registered under the Managed Investment CIU provisions of the Corporations Act (Chapter 5 C) 2001 where the Australian Securities and Investments Commission ('ASIC') has approved the constitution of the CIU.
                Bermuda An "investment fund" authorised by the Bermuda Monetary Authority as defined under section 3 of the Investment Funds Act 2006.
                Canada A mutual fund which has been authorised by any of the 13 respective Canadian provincial regulatory authorities in accordance with National Instrument 81-101 and National Instrument 81-102 issued by the Canadian Securities Administrators (CSA).
                Cayman Islands A mutual fund that is licensed by the Cayman Islands Monetary Authority under the Mutual Funds Law (2003 Revision) and the Mutual Funds (Amendment) Regulations 2006.
                European Economic Area A UCITS compliant fund or CIU, authorised by the relevant EEA State's regulator as a UCITS fund or CIU. EEA Member States are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
                GCCG Countries Any fund incorporated in a GCCG member state, authorised and supervised by the central bank or other appropriate regulatory authority, to a standard equivalent to those in this Module. GCCG Member States (besides Bahrain) are Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
                Guernsey Any authorised CIU (within the meaning of the Collective Investment CIUs (Class A) Rules 2002, as amended by the Collective Investment CIUs (Class A) Rules 2000 (Amendment) Rules 2003), managed in and authorised under the law of Guernsey.
                Ireland The following CIUs, in addition to any UCITs compliant fund or CIU (see EEA Member States above): non-UCIT funds licensed by the Financial Regulator under the Investment Funds, Companies and Miscellaneous Provisions Act 2005.
                Isle of Man Any CIU which is an authorised CIU within the meaning of the Financial Supervision Act 1988 (an Act of Tynwald) (as last amended by the Corporate Service Providers Act 2000), where the CIU is managed in and authorised under the law of the Isle of Man.
                Jersey Any CIU which is a recognised fund within the meaning of the Collective Investment Funds (Recognised Funds) (Rules) (Jersey) Order 2003, managed in and authorised under the law of Jersey.
                Luxembourg The following CIUs, in addition to any UCITs compliant fund or CIU (see EEA Member States above): (a) Undertaking for Collective Investments (UCIs) as registered under Part II of the Law of 1988 Relating to Undertakings for Collective Investment; and (b) Funds registered under the Law Of 13th February, 2007 Relating To Specialised Investment Funds.
                New Zealand A unit trust authorised under the Unit Trusts Act 1960 and in accordance with the interpretation of section 2 of that act.
                Singapore A collective investment CIU authorised by the Monetary Authority of Singapore under section 286 of the Securities and Futures Act, and whose units may be offered to the general public.
                South Africa A collective investment CIU which is registered with the Financial Services Board under the Collective Investment CIUs Control Act (Act 45 of 2002) of 2002 ("CISCA").
                Switzerland A securities fund which corresponds to a UCITs fund in accordance with the Swiss Investment Fund Act and where the manager is licensed by the Swiss Federal Banking Commission.
                United Kingdom The following CIUs, in addition to any UCITs compliant fund or CIU (see EEA Member States above):
                (a) Unit trust CIUs authorised under section 243 of the Financial Services and Markets Act 2000 (FSMA), authorised open ended investment companies incorporated by virtue of regulations made under section 262 of FSMA in respect of which an authorisation order is in force; and
                (b) Authorised Qualified Investor CIUs whether in the form of a unit trust or an investment company with variable capital.
                United States of America A collective investment CIU registered under the Investment Company Act of 1940, which has also registered the offering of its securities under the Securities Act of 1933 and where the registration statement has become effective in accordance with the Securities and Exchange Commission's Regulations and the Operator is registered with the SEC.
                April 2012

        • RP Relevant Persons

          • RP-A Introduction

            • RP-A.1 Purpose

              • Executive Summary

                • RP-A.1.1

                  This Module sets out the requirements of the Central Bank of Bahrain's (CBB) with respect to the combination, appointment and responsibilities of Relevant PersonsG to CIUsG .

                  April 2012

              • Legal Basis

                • RP-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding relevant personsG under Volume 7 of the CBB Rulebook. It is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). This Directive is applicable to all CBB licenseesG that are relevant persons.G

                  April 2012

                • RP-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • RP-A.2 Module History

              • Evolution of Module

                • RP-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • RP-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • RP-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  RP-12.4.1 07/2015 Amended to reflect the process for filing for exempt and expert CIUs.
                  RP-12.6.2 07/2015 Added requirement for placement agent to retain supporting documentation ensuring suitability of the CIU for the targeted category of investors.
                  RP-3.6.5 10/2016 This paragraph has been deleted in October 2016.
                  RP-1.1.1; RP-1.3.7; RP-12.1.1; RP-12.2.1 07/2017 Deleted 'resident' with respect to investors.

              • Superseded Requirements

                • RP-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • RP-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • RP-1 Appointment of Relevant Persons

            • RP-1.1 General Requirements

              • RP-1.1.1

                A relevant personG for the purpose of Volume 7, is the:

                (a) OperatorG ;
                (b) TrusteeG (if applicable);
                (c) Fund ManagerG ;
                (d) CustodianG ;
                (e) Fund AdministratorG ;
                (f) Registrar/Transfer AgentG ;
                (g) Placement AgentG ;
                (h) Investment AdvisorG (if applicable);
                (i) External AuditorG ; and
                (j) CBB LicenseeG acting as a Placement AgentG offering overseas domiciled CIUG holdingsG to investors in the Kingdom of Bahrain.
                Amended: July 2017
                April 2012

              • RP-1.1.2

                Throughout this Module, reference to relevant personsG (a) to (i) is made in relation to Bahrain domiciled CIUsG . Reference to relevant personG (j) is made in relation to overseas domiciled CIUsG ; however, the CBB expects overseas domiciled CIUsG to have in place relevant persons similar to (a) to (i) appointed in their home jurisdiction.

                April 2012

              • Combination of Relevant Persons

                • RP-1.1.3

                  Where relevant personsG functions are combined and the CIUG is structured as a Common CIUG or Corporate, the following combination of relevant personsG must be observed:

                  Relevant Person OperatorG Fund ManagerG CustodianG Fund Admin.G Registrar/Transfer AgentG Placement AgentG Inv. AdvisorG External AuditorG
                    (a) (c) (d) (e) (f) (g) (h) (I)
                  OperatorG   yes no no no yes yes no
                  Fund ManagerG yes   no no no yes no no
                  CustodianG no no   yes yes no no no
                  Fund Admin.G no no yes   yes no no no
                  Registrar/Transfer AgentG no no yes yes   no no no
                  Placement AgentG yes yes no no no   yes no
                  Investment AdvisorG yes no no no no yes   no
                  External AuditorG no no no no no no no  
                  April 2012

                • RP-1.1.4

                  Where relevant personsG functions are combined and the CIUG is structured as a trust, the following combination of relevant personsG must be observed:

                  Relevant PersonG TrusteeG Fund ManagerG CustodianG Fund Admin.G Registrar/Transfer AgentG Placement AgentG Inv. AdvisorG External AuditorG
                    (b) (c) (d) (e) (f) (g) (h) (i)
                  TrusteeG   no yes yes yes no no no
                  Fund ManagerG no   no no no yes no no
                  CustodianG yes no   yes yes no no no
                  Fund Admin.G yes no yes   yes no no no
                  Registrar/Transfer AgentG yes no yes yes   no no no
                  Placement AgentG no yes no no no   yes no
                  Investment AdvisorG no no no no no yes   no
                  External AuditorG no no no no no no no  
                  April 2012

                • RP-1.1.5

                  In applying Rules RP-1.1.3 and RP-1.1.4 above, relevant personsG who are related parties or from the same group will not be considered independent from each other, and as such will not be permitted to act in the capacity intended.

                  April 2012

                • RP-1.1.6

                  Bahrain domiciled CIUsG must appoint separate entities to act as each of the relevant personsG listed under Rule RP-1.1.1, as appropriate.

                  April 2012

                • RP-1.1.7

                  The appointment of relevant personsG (a), (c), (d), (e), (f), (g) and (i) is mandatory for Bahrain domiciled CIUsG . In the case of CIUsG structured as trusts, the appointment of relevant personG (b) in place of (a) is mandatory in addition to (c), (d), (e), (f), (g) and (i). The appointment of relevant personG (h) is optional for all Bahrain domiciled CIUsG .

                  April 2012

            • RP-1.2 Operator/Trustee

              • RP-1.2.1

                The initial appointment of the operatorG /trusteeG of a Bahrain domiciled CIUG will be approved by the CBB as part of the process of authorisation/registration outlined in Module ARR.

                April 2012

              • RP-1.2.2

                The list of documents required to be submitted along with the initial appointment are listed in Form 1 CIU Application Form.

                April 2012

              • RP-1.2.3

                Termination of the approved operatorG /trusteeG is not permitted by the CBB, without obtaining for the proposed replacement, the necessary prior written approval of the CBB and submitting the documents listed under Rule RP-1.2.4.

                April 2012

              • RP-1.2.4

                The documents that must submitted to the CBB in support of an application for a subsequent appointment of an operatorG /trusteeG include, but are not limited to, the following:

                (a) Board Resolutions from the BODs of the existing and proposed operatorG /trusteeG satisfying the Rule RP-1.2.3;
                (b) A copy of the license certificate of the proposed operatorG /trusteeG (if a non CBB LicenseeG );
                (c) A 'no-objection' letter from the home regulatory authority of the proposed operatorG /trusteeG (if a non CBB LicenseeG );
                (d) The audited financial statements of the proposed operatorG /trusteeG for the last 3 years (if a non CBB LicenseeG ); and
                (e) A Form 1 CIU Application form, duly completed by the proposed operatorG /trusteeG .
                April 2012

            • RP-1.3 Other Relevant Persons

              • RP-1.3.1

                All relevant personsG of a Bahrain domiciled CIUG must be appointed by the operatorG /trusteeG of the CIUG , after it conducts an assessment and is satisfied as to the suitablitly of the relevant personG to undertake that role, prior to entering into an agreement with the operatorG /trusteeG of the CIUG .

                April 2012

              • RP-1.3.2

                The CBB will consider the suitability of the relevant personsG of a CIUG initially, as part of the registration/authorisation process.

                April 2012

              • RP-1.3.3

                The list of documents required to be submitted along with the initial appointment are listed in Form 1 CIU Application Form.

                April 2012

              • RP-1.3.4

                Appointments subsequent to granting authorisation of a Bahrain domiciled retail CIUG or Bahrain domiciled expert CIUG must be approved by the CBB, prior to the termination of the agreement with the existing relevant personG .

                April 2012

              • RP-1.3.5

                The documents that must be submitted to the CBB in support of an application for a subsequent appointment of a relevant personG include, but are not limited, to the following:

                (a) A Board Resolution from the BOD of the CIUG approving the appointment;
                (b) The draft contractual agreement with the relevant personG ;
                (c) The draft amendment to the prospectusG ;
                (d) A copy of license certificate for non-CBB licenseeG relevant personsG ; and
                (e) The audited financial statements for the last 3 years for the fund managerG only, in case the fund managerG is a non-CBB licenseeG .
                April 2012

              • RP-1.3.6

                Appointments subsequent to granting approval for registration of a Bahrain domiciled exempt CIUG must be notified to the CBB 3 months prior to the effective termination date of the agreement with the existing relevant personG .

                April 2012

              • RP-1.3.7

                Overseas domiciled CIUsG must appoint an eligible CBB licenseeG to offer their holdingsG to prospective investorsG in Bahrain.

                Amended: July 2017
                April 2012

          • RP-2 Market Conduct of Relevant Persons

            • RP-2.1 General Requirements

              • RP-2.1.1

                Relevant personsG must maintain proper standards of market conduct, in relation to their role with respect to a CIUG , in addition to any applicable legal and regulatory requirements, such as those imposed on them by virtue of their license and/or authorisation.

                April 2012

              • RP-2.1.2

                To demonstrate compliance with Rule RP-2.1.1 above, relevant personsG must, in relation to their role with respect to a CIUG :

                (a) Observe high standards of integrity and fair dealing, including being honest and straightforward in their dealings with clients;
                (b) Take all reasonable steps to identify, and prevent or manage, potential or actual conflicts of interest that could harm the interests of CIU participantsG (such steps must include, wherever appropriate, declaring such conflicts);
                (c) Act with due skill, care and diligence;
                (d) Act impartially and refrain from any action which may be to the advantage of one CIUG and/or its participantsG , at the expense of another CIUG and/or its participantsG ;
                (e) Observe in full any obligations of confidentiality, including with respect to client information. This requirement does not override lawful disclosures;
                (f) Observe proper standards of market conduct, and avoid action that would generally be viewed as improper;
                (g) Take reasonable care to safeguard the assets of the CIUG for which they are responsible, and ensure that those assets are kept separate from their own assets and are separately identifiable from the assets of other CIUsG with which they are involved;
                (h) Pay due regard to the legitimate interests and information needs of the clients and communicate with them in a fair and transparent manner;
                (i) Act in an open and co-operative manner with the CBB and other regulatory/supervisory bodies under whose authority they come under. They should take reasonable care to ensure that their activities comply with the requirements of Volume 7, all applicable Laws and Regulations (including the Commercial Companies Law), the prospectusG of the CIUG , and the provisions of the contractual agreements signed with the CIU;G
                (j) Take all reasonable steps to rectify any failure to comply with the obligations specified in Sup-paragraph (i), and to notify the CBB of such a breach as soon as it becomes aware of the fact;
                (k) Maintain adequate human, financial and other resources sufficient to run the CIUG in an orderly manner;
                (l) Keep accurate accounts and records for each CIUG for which it holds assets;
                (m) Take reasonable care to ensure that their affairs are managed effectively and responsibly, with appropriate systems and controls in relation to the size and complexity of their operations. Their systems and controls, as far as is reasonably practical, should also be sufficient to manage the level of risk inherent in their business; and
                (n) Ensure that when outsourcing functions, such outsourcing is properly controlled and that ultimate responsibility for the proper discharge of those functions is retained by the relevant personG concerned.
                April 2012

              • RP-2.1.3

                Bahrain domiciled CIUsG must, in their terms of engagement with all relevant personsG , provide for them to report to the CBB in writing without delay, if they become aware of any of the following:

                (a) The information provided to the CIU's participantsG or the CBB does not truly reflect the financial situation of the CIUG ;
                (b) There has been a material breach of the requirements of this Volume 7, the CIUG documents, or any directions issued by the CBB;
                (c) There exist circumstances that may materially affect the ability of the CIUG to fulfill its obligations to the CIU participantsG ;
                (d) There are material defects in the financial systems, controls or accounting records of the CIUG ;
                (e) There are material inaccuracies in any reporting provided to the CBB; or
                (f) In the case of the external auditorG , if they are likely to qualify any opinion they are to provide in relation to the financial statements of the CIUG .
                April 2012

              • RP-2.1.4

                A relevant personG of a Bahrain domiciled CIUG is presumed by the CBB to be liable for losses suffered by a participantG because of that relevant person'sG unjustifiable failure to perform their/its obligations required under the CIUG documents or Volume 7. CBB rules do not permit relevant personsG to rely on disclaimers (written or otherwise) that have the effect of restricting their liability beyond what is reasonable and customary in the fund management industry

                April 2012

              • RP-2.1.5

                All relevant personsG of Bahrain domiciled CIUsG must act in an open and co-operative manner with the CBB and provide it with any information/documentation upon the CBB's request.

                April 2012

          • RP-3 Operator

            • RP-3.1 Definition

              • RP-3.1.1

                An operatorG of a CIUG is the person undertaking the functions of establishing, operating, including full oversight of the corporate governance on the CIUG , or winding up of a CIUG .

                April 2012

            • RP-3.2 Required Country of Domicile

              • RP-3.2.1

                Operators must be domiciled in a reputable jurisdiction acceptable to the CBB.

                April 2012

              • RP-3.2.2

                In the case that the operatorG is not a CBB licenseeG , it must appoint a locally domiciled CIU representativeG , being the custodianG or the fund administratorG , to act as a liaison with the CBB and the CIU participantsG . Such appointment must be stated in the prospectusG .

                April 2012

            • RP-3.3 Required Type of License

              • RP-3.3.1

                The operatorG of a Bahrain domiciled CIUG must be acceptable to the CBB.

                April 2012

              • RP-3.3.2

                OperatorsG must hold an appropriate license from the CBB or from a regulatory authority, acceptable to the CBB and permitting the entity to establish and operate CIUsG .

                April 2012

              • RP-3.3.3

                In applying Rule RP-3.3.2, the CBB will take into account the criteria listed under Rules ARR-2.1.4, ARR-3.1.4 and ARR-4.1.5 of Module ARR.

                April 2012

            • RP-3.4 Duties

              • RP-3.4.1

                The minimum duties of operatorsG of CIUsG authorised or registered under Module ARR, which must be executed through the appointed Board of the CIUG , as appropriate, include but are not limited to the following:

                (a) Take all steps as may reasonably be required for the purposes of registering/authorising, establishing, operating and winding up the CIUG ;
                (b) Maintain all the documents pertaining to the CIUG , consistent, current and updated, in line with applicable laws and regulations, and as approved by or notified to the CBB, as appropriate;
                (c) Make available to the CIU participantG s, on a prompt basis, copies of the following documents, including but not limited to:
                (i) The instrumentG ;
                (ii) The prospectusG or equivalent document;
                (iii) All contractual agreements related to the CIUG ; and
                (iv) All annual and semi-annual financial reports issued by the CIUG .
                (d) Ensure compliance of the CIUG with the requirements of Volume 7, the instrumentG constituting the CIUG , and its prospectusG ;
                (e) Take all reasonable steps to rectify any failure to comply with the obligations specified above, and to notify the CBB of any breach as soon as it becomes aware of the fact;
                (f) Not withdraw as operatorG of the CIUG except upon the appointment of a new operatorG and subject to the prior approval of the CBB;
                (g) Ensure compliance of the relevant personsG with the terms and conditions of the contractual agreements signed with the CIUG ;
                (h) Ensure that all applicable anti-money laundering laws are complied with;
                (i) Liaise with the CBB as necessary from time to time for the purposes of its general oversight of the CIUG ;
                (j) Be diligent in appointing directorsG who are fit and proper and approved by the CBB;
                (k) Ensure that proper corporate governance is in place for the CIUG in line with Module CG;
                (l) Avoid any conflict of interest in all aspects and address any conflict of interest among the other relevant personsG to the CIUG ;
                (m) Consider whether CIU participantsG should be given voting and/or other participatory rights; and
                (n) Ensure that all reports submitted to the CBB and CIU participantsG , by relevant personsG are accurate and submitted on a timely basis. Such reports include but are not limited to:
                (i) The semi-annual and annual financial statements of the CIU(s) for each financial year;
                (ii) In case of CIUsG structured as corporate/contractual, the annual financial statements of the fund company(ies)G for each financial year; and
                (iii) Form CIU (QS), Quarterly Statistical Return.
                April 2012

            • RP-3.5 Reporting Requirements

              • RP-3.5.1

                The operatorG of a Bahrain domiciled CIUG is responsible for all reporting requirements to the CBB and to other parties, as required in Module CRR. Such reporting requirements include but are not limited to:

                (a) Reporting any breach to the requirements of Volume 7, the CIUG documents, or any directions issued by the CBB; and
                (b) Reporting any material amendments to the CIUG documents on a timely basis.
                April 2012

            • RP-3-6 Other Requirements

              • RP-3.6.1

                OperatorsG must promptly provide the CBB, upon request, with any additional information relevant to the CIUG .

                April 2012

              • RP-3.6.2

                OperatorsG of Bahrain domiciled retail CIUsG and Bahrain domiciled expert CIUsG must obtain the CBB's prior written approval for any additional investment in the CIUG , other than the seed capital prescribed in the prospectusG .

                April 2012

              • RP-3.6.3

                OperatorsG of Bahrain domiciled retail CIUsG and Bahrain domiciled expert CIUsG who have introduced seed capital/investment into a CIUG authorised under Module ARR must not seek partial redemption, full redemption or buy back the seed capital/investment without the prior written approval of the CBB.

                April 2012

              • RP-3.6.4

                OperatorsG of Bahrain domiciled exempt CIUsG must notify the CBB prior to committing to any additional investment in the CIUG , other than the seed capital prescribed in the prospectusG .

                April 2012

              • RP-3.6.5

                [This Paragraph has been deleted in October 2016].

                Deleted: October 2016
                April 2012

              • RP-3.6.6

                OperatorsG of Bahrain domiciled exempt CIUsG must keep the seed capital/investment invested in the CIUG for at least a one year period, prior to seeking redemption of the same. In case of Bahrain domiciled exempt CIUsG with no redemption windows, the invested seed capital/investment must be maintained for the duration of the CIUG .

                April 2012

              • RP-3.6.7

                OperatorsG of Bahrain domiciled exempt CIUsG who have introduced seed capital/investment into a CIUG registered under Module ARR must not seek partial redemption, full redemption or buy back the seed capital/investment without the prior written notification to the CBB.

                April 2012

              • RP-3.6.8

                OperatorsG of Bahrain domiciled CIUsG who have made investments into a CIU,G other than the investment prescribed in the prospectusG , or have partially redeemed, fully redeemed or bought back the seed capital/investment, must notify CIU participantsG of the fact, on a timely basis.

                April 2012

              • RP-3.6.9

                OperatorsG of Bahrain domiciled CIUsG must seek CBB's prior approval as soon as reasonably practicable as to any intention to merge, transfer or wind-up a CIUG .

                April 2012

              • RP-3.6.10

                OperatorsG of Bahrain domiciled CIUsG must notify the CBB immediately upon deciding to suspend / resume dealings in a CIUG .

                April 2012

          • RP-4 Trustee

            • RP-4.1 Definition

              • RP-4.1.1

                The trusteeG is the entity to whom the legal title of the trust property/assets is transferred to, in order for the trusteeG to exercise the duties and powers specified in the trust instrument with a view to achieving the purpose of the trust and protecting the rights of the investors.

                April 2012

            • RP-4.2 Required Country of Domicile

              • RP-4.2.1

                The trusteeG must be domiciled in the Kingdom of Bahrain.

                April 2012

            • RP-4.3 Required Type of License

              • RP-4.3.1

                TrusteesG must hold an appropriate Trust Service Providers License from the CBB under CBB Rulebook Volume 5, or CBB Rulebook Volumes 1, 2 or Volume 4 provided that they have specific approval from the CBB to undertake such activity.

                April 2012

              • Form of Appointment

                • RP-4.3.2

                  The agreement appointing the trusteeG must be in the form of a Trust Deed/Instrument.

                  April 2012

            • RP-4.4 Duties

              • RP-4.4.1

                The minimum duties of trusteesG of CIUsG authorised or registered under Module ARR include but are not limited to the following:

                (a) Take all steps as may reasonably be required for the purposes of registering/authorising, establishing, operating and winding up the CIUG ;
                (b) Maintain all the documents pertaining to the CIUG , consistent, current and updated, in line with applicable laws and regulations, and as approved by or notified to the CBB, as appropriate;
                (c) Make available to the CIU participantG s, on prompt basis, copies of the following documents, including but not limited to:
                (i) The instrumentG ;
                (ii) The prospectusG or equivalent document;
                (iii) All contractual agreements related to the CIU; and
                (iv) All annual and semi-annual financial reports issued by the CIU;
                (d) Ensure compliance of the CIUG with the requirements of Volume 7, the instrumentG constituting the CIUG , and its prospectusG ;
                (e) Take all reasonable steps to rectify any failure to comply with the obligations specified above, and to notify the CBB of any breach as soon as it becomes aware of the fact;
                (f) Not withdraw as trusteeG of the CIUG except upon the appointment of a new trusteeG and subject to the prior approval of the CBB;
                (g) Ensure compliance of the relevant personsG with the terms and conditions of the contractual agreements signed with the CIUG ;
                (h) Ensure that all applicable anti-money laundering laws are complied with;
                (i) Liaise with the CBB as necessary from time to time for the purposes of its general oversight of the CIUG ;
                (j) Be diligent in appointing DirectorsG , who are fit and proper and approved by the CBB;
                (k) Ensure that proper corporate governance is in place for the CIUG in line with Module CG;
                (l) Avoid any conflict of interest in all aspects and address any conflict of interest among the other relevant personsG of the CIU;
                (m) Ensure that the legal title of any assets belonging to the CIUG are transferred under its ownership; and
                (n) Ensure that all reports submitted to the CBB and CIU participantsG , by relevant personsG are accurate and submitted on a timely basis. Such reports include but are not limited to:
                (i) 'The semi-annual and annual financial statements of the CIU(s) for each financial year;
                (ii) 'In case of CIUsG structured as corporates/contractual, the annual financial statements of the fund company(ies)G for each financial year ; and
                (iii) 'Form CIU (QS), Quarterly Statistical Return.
                April 2012

            • RP-4.5 Reporting Requirements

              • RP-4.5.1

                The trusteeG of Bahrain domiciled CIUG is responsible for all reporting requirements to the CBB and to other parties, as required in Module CRR. Such reporting requirements include but are not limited to:

                (a) Reporting any breach to the requirements Volume 7, the CIUG documents, or any directions issued by the CBB; and
                (b) Reporting any material amendments to the CIUG documents on a timely basis.
                April 2012

            • RP-4.6 Other Requirements

              • RP-4.6.1

                TrusteesG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

              • RP-4.6.2

                TrusteesG of Bahrain domiciled CIUsG must seek CBB's prior approval as soon as reasonably practicable as to any intention to merge, transfer or wind-up a CIUG .

                April 2012

              • RP-4.6.3

                TrusteesG of Bahrain domiciled CIUsG must notify the CBB immediately upon deciding to suspend/resume dealings in a CIUG .

                April 2012

          • RP-5 Fund Manager

            • RP-5.1 Definition

              • RP-5.1.1

                A fund managerG is a person mandated to allocate and/or manage financial instrumentsG and any other assets held by a CIUG .

                April 2012

            • RP-5.2 Required Country of Domicile

              • RP-5.2.1

                Fund managersG must be domiciled in any reputable jurisdiction acceptable to the CBB.

                April 2012

            • RP-5.3 Required Type of License

              • RP-5.3.1

                The fund managerG of a Bahrain domiciled CIUG must be acceptable to the CBB.

                April 2012

              • RP-5.3.2

                Fund managersG must hold an appropriate license or equivalent from the CBB or from a regulatory authority acceptable to the CBB and permitting the entity to manage financial instrumentsG and any other assets held by a CIUG .

                April 2012

              • RP-5.3.3

                Subsequent to the operator'sG review and assessment of the suitability of fund managersG , the CBB will take into account an institution's financial soundness, relevant experience with respect to CIUsG , and regulatory track record.

                April 2012

              • Form of Appointment

                • RP-5.3.4

                  The agreement appointing the fund managerG must be signed between the fund managerG and the fund companyG or trusteeG , as appropriate.

                  April 2012

            • RP-5.4 Duties

              • RP-5.4.1

                The minimum duties of fund managersG of CIUsG authorised or registered under Module ARR include but are not limited to the following:

                (a) Manage and/or allocate the investments and re-investments of the assets in accordance with the investment objectives and strategy, adhering to all limitations set out in fund management agreement and prospectusG ;
                (b) Continuously carry out and review the investment objectives of the CIUG , and advise the directorsG of the CIU'sG investment program, strategy and overall performance on a prompt and regular basis;
                (c) If required, the fund managerG may appoint suitable investment advisors to assist in certain areas where the fund managerG lacks the relevant expertise;
                (d) If required, the fund managerG may appoint suitable advisers to assist the CIUG in any legal, regulatory, financial or other matters that require professional advice or assistance in managing the CIUG or administering the affairs of the CIUG ;
                (e) Negotiate all borrowing arrangements in line with the prescribed Rules in Volume 7, observing the limits prescribed in the prospectusG of the CIUG and supervising the implementation of such arrangements;
                (f) Select brokers and dealers for execution of portfolio transactions;
                (g) Determine how any voting rights of securities held by the CIUG should be exercised;
                (h) Give instructions to the custodianG of the CIUG concerning any acquisition, disposal of or other dealing in any investments or other assets of the CIUG ; and
                (i) Ensuring that all investments carried out on behalf of Shari'a Compliant CIUsG are in line with Shari'a principles and vetted by the Shari'a Supervisory Board/AdvisorsG .
                April 2012

            • RP-5.5 Reporting Requirements

              • RP-5.5.1

                Fund managersG must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

            • RP-5.6 Other Requirements

              • RP-5.6.1

                Fund managersG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

          • RP-6 Custodian

            • RP-6.1 Definition

              • RP-6.1.1

                A custodianG is a person mandated to hold and safeguard financial instrumentsG and other assets for the account of a CIUG .

                April 2012

            • RP-6.2 Required Country of Domicile

              • RP-6.2.1

                For Bahrain domiciled CIUsG , the custodianG must be domiciled in the Kingdom of Bahrain.

                April 2012

              • RP-6.2.2

                In applying Rule RP-6.2.1, the CBB will allow 'hub and spoke' arrangements, provided that:

                (a) A suitably licensed office is maintained in Bahrain, through which the CBB can access the CIU'sG records;
                (b) The overseas office belongs to the same group as the Bahrain custodianG , and regulated by a reputable regulatory authority acceptable to the CBB;G
                (c) The custodian retains ultimate responsibility for the CIU'sG assets; and
                (d) Suitable outsourcing arrangements have been put in place.
                April 2012

            • RP-6.3 Required Type of License

              • RP-6.3.1

                A custodianG must hold an appropriate license from the CBB permitting it to provide custody services, in accordance with the CBB Rulebook.

                April 2012

              • Form of Appointment

                • RP-6.3.2

                  The agreement appointing the custodianG must be signed between the custodianG and the fund companyG or trusteeG , as appropriate.

                  April 2012

            • RP-6.4 Duties

              • RP-6.4.1

                The minimum duties of the custodianG of CIUsG authorised or registered under Module ARR include, but are not limited to the following:

                (a) To open, maintain, and control CIUG subscription and trading cash accounts with licensed banks in all relevant markets;
                (b) To open and maintain CIUG securities accounts with authorised institutions;
                (c) To ensure that all assets belonging to a CIUG , including cash accounts, are segregated from other accounts of the custodianG or its clients;
                (d) To directly collect and receive all income and other payments, distributions and entitlements pertaining to a CIUG ;
                (e) To make all payments and settlements on behalf of and for the interest of the CIUG , in line with the scheme documents, including the prospectusG ;
                (f) To safeguard all of the assets belonging to a CIUG ;
                (g) To ensure that all assets belonging to a CIUG are held in the name of the CIUG or, where relevant market practices and/or legal requirements dictate, held on behalf of the CIUG , provided that proper legal arrangements are in place;
                (h) To execute any corporate actions;
                (i) To maintain all records and documentation relating to all transactions made on behalf of the CIUG ; and
                (j) To reconcile the CIUG records pertaining to assets held, with statements obtained from sub-custodiansG , brokers and agents, on a regular and timely basis.
                April 2012

            • RP-6.5 Reporting Requirements

              • RP-6.5.1

                CustodiansG must comply with all reporting requirements as stipulated in the relevant legal agreements.

                April 2012

              • RP-6.5.2

                CustodiansG must report to the CBB immediately when they become aware of any breach of the CIU's prospectusG .

                April 2012

              • RP-6.5.3

                CustodiansG must provide the fund managerG and fund administratorG with a statement of assets pertaining to the CIUG , on intervals, as agreed between the parties.

                April 2012

            • RP-6.6 Other Requirements

              • RP-6.6.1

                CustodiansG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

              • RP-6.6.2

                CustodiansG must not be participantsG in a Bahrain domiciled CIUG to which they are contractually engaged to offer custody services to.

                April 2012

              • RP-6.6.3

                CustodiansG may not engage in stock lending of CIUG assets unless permitted by the prospectusG .

                April 2012

          • RP-7 Fund Administrator

            • RP-7.1 Definition

              • RP-7.1.1

                Fund administratorsG are persons who undertake the administration of financial instrumentsG and other assets held by a CIUG . Their activities include but are not limited to the following:

                (a) Fund accounting services;
                (b) Client enquiries;
                (c) Valuation and pricing (including tax returns);
                (d) Regulatory compliance monitoring;
                (e) Record keeping for issuance and redemption of units in a CIUG ; and
                (f) General record-keeping.
                April 2012

            • RP-7.2 Required Country of Domicile

              • RP-7.2.1

                Fund administratorsG must be domiciled in the Kingdom of Bahrain.

                April 2012

            • RP-7.3 Required Type of License

              • RP-7.3.1

                Fund administratorsG must hold an appropriate license from the CBB permitting the entity to administer the books and records of financial instrumentsG and any other assets held by a CIUG .

                April 2012

              • RP-7.3.2

                In applying Rule RP-7.3.1, the CBB will allow 'hub and spoke' arrangements, provided that:

                (a) A suitably licensed office is maintained in the Kingdom of Bahrain, through which the CBB can access the CIU'sG records;
                (b) The overseas office belongs to the same group as the Bahrain fund administratorG , and regulated by a reputable regulatory authority acceptable to the CBB;G
                (c) The fund administratorG retains ultimate responsibility for the CIU'sG administration activities; and
                (d) Suitable outsourcing arrangements have been put in place.
                April 2012

              • Form of Appointment

                • RP-7.3.3

                  The agreement appointing the fund administratorG must be signed between the fund administratorG and the fund companyG or trusteeG , as appropriate.

                  April 2012

            • RP-7.4 Duties

              • RP-7.4.1

                The minimum duties of the fund administratorsG of CIUsG authorised or registered under Module ARR, include but are not limited to the following:

                (a) Fund accounting services for the CIUG and fund company (if applicable);
                (b) Handling of client enquiries;
                (c) Valuation and pricing (including tax returns);
                (d) Regulatory compliance monitoring, including but not limited to the CIU'sG compliance with the investment strategy and guidelines provided in the prospectusG when calculating the Net Asset Value (NAV);
                (e) Record-keeping services;
                (f) Calculation of the NAV at each valuation point;
                (g) Preparation of semi-annual and annual accounts for the CIU, and the annual accounts of the fund company (if applicable);
                (h) Calculation of dividends, service providers' fees, performance fees (if any), and other distributions;
                (i) Liaising with the CIU'sG external auditorG in finalising the audit and review procedure;
                (j) Preparing the Quarterly Statistical Report(Form CIU-QS); and
                (k) Maintaining records of meetings of the CIU'sG Board of DirectorsG .
                April 2012

            • RP-7.5 Reporting Requirements

              • RP-7.5.1

                Fund administratorsG must comply with all reporting requirements as stipulated in the relevant contractual agreements. Such reports should include but are not limited to the following:

                (a) Reporting of the NAV to the operatorG , fund managerG and registrar,G as prescribed in the prospectusG ;
                (b) Reporting of the CIU'sG annual financial statements (within 4 months of the financial year-end of the CIUG ) and semi-annual financial statements (within 2 months of the relevant 6-month period) to the operatorG , fund managerG , and registrarG and to the CBB;
                (c) Reporting of the fund companyG 's annual financial statements (within 3 months of the financial year-end of the CIUG ) to the operatorG , fund managerG and CBB;
                (d) Reporting of all necessary reports of the CIUG , including but not limited to the NAV report, cash accounts statements, assets valuation reports, foreign exchange profit and loss report, dividend report and trial balance, to the fund managerG ;
                (e) In the case retail CIUG or expert CIUsG , report to the CBB, fund managerG and operatorG , if:
                (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date.
                (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIUG ; or
                (iii) The total NAV falls below 50% of the total NAV of the CIUG relative to the previous valuation day.
                (f) Report to the CBB any case in which the investment strategy limits / guidelines are breached;
                (g) Report to the CBB Form CIU (QS) within the deadline required in Module CRR;
                (h) Report to the CBB immediately, any suspension in the determination of the NAV of the CIUG , the reasons for this suspension, and tentative time to recommence determination of the NAV; and
                (i) Meet any reporting requirement as required by the MOIC in accordance with the Bahrain Commercial Companies Law.
                April 2012

              • RP-7.5.2

                Fund administratorsG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

            • RP-7.6 Other Requirements

              • RP-7.6.1

                Fund administratorsG must not be participantsG in a Bahrain domiciled CIUG to which they are engaged to offer fund administration services to.

                April 2012

          • RP-8 Registrar/Transfer Agent

            • RP-8.1 Definition

              • RP-8.1.1

                The registrar/transfer agentG is an entity engaged by the CIUG to maintain the CIU participants'G records, including purchases, sales and account balances.

                April 2012

            • RP-8.2 Required Country of Domicile

              • RP-8.2.1

                The registrar/transfer agentG must be domiciled in the Kingdom of Bahrain.

                April 2012

            • RP-8.3 Required Type of License

              • RP-8.3.1

                A registrar/transfer agentG must be acceptable to the CBB and must hold an appropriate license permitting the entity to provide registry services to a CIUG , in accordance with the CBB Rulebook.

                April 2012

              • Form of Appointment

                • RP-8.3.2

                  The agreement appointing the registrar/transfer agentG must be signed between the registrar/transfer agentG and the fund companyG or trusteeG , as appropriate.

                  April 2012

            • RP-8.4 Duties

              • RP-8.4.1

                The minimum duties of the registrar/transfer agentG of a CIU authorised or registered under Module ARR, include but are not limited to the following:

                (a) Maintain a register of the CIU participantsG of a CIUG ;
                (b) Preserve the confidentiality of the register at all times;
                (c) Facilitate the issuance, transfer, execute the allotment, redemption, conversion and/or redemption of holdingsG in a CIUG ;
                (d) Record in the register of a CIUG the following information:
                (i) Name of the CIU participantG ;
                (ii) Official identification of the CIU participantG (including the type and number);
                (iii) Address and contact details of the CIU participantG ;
                (iv) Number of units held by the CIU participantG ;
                (v) Number(s) of the certificate(s) issued to each CIU participantG ;
                (vi) Date of issuance or transfer of units to the CIU participantG ;
                (vii) Record of redemption of units; and
                (viii) Record of cancellation of units.
                (e) Obtain confirmation from the custodianG and fund administratorG that they have received all payments from all applicants, before facilitiating the issuance of units;
                (f) Execute the issuance and dispatching of certificates (or confirmations) as appropriate; and
                (g) Obtain and safe-keep all signed application forms, along with "know your client" documents for each CIU participantG , in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable Laws and Regulations.
                April 2012

            • RP-8.5 Reporting Requirements

              • RP-8.5.1

                Registrars/Transfer AgentsG must report the NAV to the CIU participants,G as prescribed in the prospectusG .

                April 2012

              • RP-8.5.2

                Registrars/Transfer AgentsG must make available the CIU'sG annual financial statements (within 4 months of the financial year-end of the CIUG ) and semi-annual financial statements (within 2 months of the relevant 6-month period) to the CIU participantsG .

                April 2012

              • RP-8.5.3

                Registrars/Transfer AgentsG are required to notify the CIU participantsG of the following events:

                (a) When the fund managerG shifts from investments into cash and cash equivalents, together with the reason and the expected time by which the stipulated limits will be met; and
                (b) Once the CIUG resumes investing in accordance with the investment limits stipulated in the prospectusG .
                April 2012

              • RP-8.5.4

                Registrars/Transfer AgentsG must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

            • RP-8.6 Other Requirements

              • RP-8.6.1

                Registrars/Transfer AgentsG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

          • RP-9 Placement Agent

            • RP-9.1 Definition

              • RP-9.1.1

                A placement agentG is an entity that acts as agent on behalf of the CIUG in placing units of the CIUG .

                April 2012

            • RP-9.2 Required Country of Domicile

              • RP-9.2.1

                A placement agentG must be based in a reputable jurisdiction acceptable to the CBB.

                April 2012

            • RP-9.3 Required Type of License

              • RP-9.3.1

                Placement agentsG placing units in/from the Kingdom of Bahrain must hold an appropriate license from the CBB under CBB Rulebook Volumes 1, 2, or 4 (Categories 1 and 2 only).

                April 2012

              • RP-9.3.2

                Where the placement agent is not a CBB licenseeG , it must appoint a sub-placement agentG licensed by the CBB, in line with the requirements in Rule RP-9.3.1, to market the CIUG in Bahrain.

                April 2012

              • RP-9.3.3

                Placement agentsG based in a jurisdiction outside the Kingdom of Bahrain and placing units in other jurisdictions, must be appropriately licensed and/or authorised by a regulatory authority, acceptable to the CBB, permitting the entity to market financial instrumentsG in those jurisdictions.

                April 2012

              • Form of Appointment

                • RP-9.3.4

                  The agreement appointing the placement agentG must be signed between the placement agentG and the fund companyG or trusteeG , as appropriate.

                  April 2012

            • RP-9.4 Duties

              • RP-9.4.1

                The minimum duties of the placement agentG of CIUsG authorised or registered under Module ARR include but are not limited to the following:

                (a) To ensure that all investors wishing to subscribe for the units of a CIUG are eligible to subscribe for such units;
                (b) To ensure that all investors of a Bahrain domiciled expert CIUG meet the definition of expert investorsG as defined in Volume 7;
                (c) To ensure that all investors of a Bahrain domiciled exempt CIUG meet the definition of accredited investorsG as defined in Volume 7;
                (d) To provide a copy of the prospectusG and subscription forms of a CIUG to potential investors;
                (e) To ensure that investors submit duly completed subscription forms, together with all required documentation;
                (f) To obtain written confirmation from each CIU participantG , stating that they satisfy the definition of an expert investorG or accredited investorG (as appropriate) and confirming that they understand the higher risks involved in an expert CIUG or exempt CIU;G
                (g) To ensure that a CIUG is marketed by qualified individuals who are able to clearly explain to investors the risks and rewards associated with investing in the CIUG , in a manner that is clear, fair and not misleading;
                (h) To ensure compliance with all applicable local Laws and Regulations of the jurisdictions where the units of the CIUG are being placed, including but not limited to Laws and Regulations relating to public and private offerings of units and securities laws and regulations of those jurisdictions;
                (i) To comply at all times with all the Laws of the Kingdom of Bahrain and the Regulations and directives issued by the CBB from time to time, including those set to prevent and prohibit money laundering and the financing of terrorism;
                (j) To comply with all applicable anti money laundering and "know your client" Laws and Regulations in the jurisdictions where the units of the CIUG are placed; and
                (k) Where placement agentsG appoint sub-placement agentsG , such sub-agents must be eligible to undertake this activity, notwithstanding that the placement agentG will be held accountable for such appointment.
                April 2012

            • RP-9.5 Reporting Requirements

              • RP-9.5.1

                Placement agentsG must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

              • RP-9.5.2

                A placement agentG must report to the fund company'sG Board of directorsG /trusteesG , any issues related to anti-money laundering and terrorist financing.

                April 2012

            • RP-9.6 Other Requirements

              • RP-9.6.1

                Placement agentsG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

          • RP-10 Investment Advisor

            • RP-10.1 Definition

              • RP-10.1.1

                An investment advisorG is the person undertaking the function of advising the fund managerG on the merits of buying, selling, or subscribing for a particular asset or exercising any right conferred by the asset.

                April 2012

            • RP-10.2 Required Country of Domicile

              • RP-10.2.1

                Investment advisorsG must be based in any reputable jurisdiction acceptable to the CBB.

                April 2012

            • RP-10.3 Required Type of License

              • RP-10.3.1

                For investments advisorsG providing services to CIUsG investing in financial instrumentsG , the investment advisorG must hold an appropriate license from the CBB, or equivalent from a regulatory authority recognised by CBB, permitting the entity to engage in investment advisory activities.

                April 2012

              • RP-10.3.2

                For CIUsG investing in assets other than financial instrumentsG , the investment advisorG need not be a regulated entity provided that it has relevant expertise in the asset class the fund is investing into.

                April 2012

              • Form of Appointment

                • RP-10.3.3

                  The agreement appointing the investment advisorG must be signed between the investment advisorG and the fund companyG , trusteeG , or fund managerG , as appropriate.

                  April 2012

            • RP-10.4 Duties

              • RP-10.4.1

                The minimum duties of the investment advisorG of CIUsG authorised or registered under Module ARR include, but are not limited to the following:

                (a) Provide independent/prudent advice as required, to the fund managerG with respect to the investments of the CIUG , after conducting the appropriate due diligence; and
                (b) Refrain from participating in the investment decision-making process of the CIUG .
                April 2012

            • RP-10.5 Reporting Requirements

              • RP-10.5.1

                Investment advisorsG must comply with any reporting requirements stipulated in the relevant legal agreements.

                April 2012

            • RP-10.6 Other Requirements

              • RP-10.6.1

                Investment advisorsG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

          • RP-11 External Auditor

            • RP-11.1 Definition

              • RP-11.1.1

                An external auditorG is the entity responsible for the audit of the books and records of the CIUG and fund companyG (if applicable).

                April 2012

            • RP-11.2 Required Country of Domicile

              • RP-11.2.1

                External auditorsG must be Bahrain-based entities.

                April 2012

            • RP-11.3 Required Type of License

              • RP-11.3.1

                The external auditorG must be acceptable to the CBB, and separate and independent from all other relevant personsG .

                April 2012

              • Form of Appointment

                • RP-11.3.2

                  The agreement appointing the external auditorG must be in the form of an engagement letter between the external auditorG and the fund companyG /trusteeG (as appropriate).

                  April 2012

            • RP-11.4 Duties

              • RP-11.4.1

                The minimum duties of the external auditorG of a CIUG authorised or registered under Module ARR include but are not limited to the following:

                (a) To audit the books and records of the CIUG , including the annual financial statements of the CIUG , in accordance with IFRS or AAOIFI (as appropriate);
                (b) To review the semi-annual financial statements of the CIUG ;
                (c) If the CIUG is structured as a contractual or corporate CIU, to audit the annual financial statements of the fund companyG ; and
                (d) To review the calculation of the NAV in line with the frequency stipulated in the prospectusG but not less than once a year.
                April 2012

            • RP-11.5 Reporting Requirements

              • RP-11.5.1

                External auditorsG must comply with all reporting requirements stipulated in the relevant legal agreements.

                April 2012

              • RP-11.5.2

                External auditorsG must report any material weaknesses in accounting and internal control systems that come to their notice, to the Board of DirectorsG of the fund companyG /trusteesG and to the CBB, in a timely and on a prompt basis.

                April 2012

            • RP-11.6 Other Requirements

              • RP-11.6.1

                External auditorsG must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

          • RP-12 Placement Agent for Overseas Domiciled CIUs

            • RP-12.1 Definition

              • RP-12.1.1

                A placement agent offering overseas domiciled CIU holdingsG to investors in the Kingdom of Bahrain is an entity that acts as agent on behalf of the CIUG in placing units of the CIUG .

                Amended: July 2017
                April 2012

            • RP-12.2 Required Country of Domicile

              • RP-12.2.1

                Placement agents offering overseas domiciled CIU holdingsG to investors in the Kingdom of Bahrain must be domiciled in the Kingdom of Bahrain.

                Amended: July 2017
                April 2012

            • RP-12.3 Required Type of License

              • RP-12.3.1

                Placement agentsG must hold an appropriate license from the CBB under CBB Rulebook Volumes 1, 2, or 4 (Categories 1 and 2 only), permitting them to market financial instruments.

                April 2012

              • Form of Appointment

                • RP-12.3.2

                  The agreement appointing the placement agentG must be signed between the placement agentG and the fund managerG of the overseas domiciled CIUG , or an agent representing the overseas domiciled CIUG , as appropriate. However, it is the duty of the placement agentG to ensure that the contractual agreement is signed with the appropriate entity, notwithstanding that a binding agreement must be in place with the issuer of the overseas domiciled CIUG .

                  April 2012

            • RP-12.4 Duties

              • RP-12.4.1

                The minimum duties of the placement agentG of overseas domiciled CIUsG authorised, registered or filed under Module ARR include, but are not limited to the following:

                (a) To ensure that the CIUG is regulated in its home jurisdiction, and is legally separate from its operatorG ;
                (b) To ensure that the CIU's operatorG and fund managerG are eligible regulated entities;
                (c) To ensure that the CIUG has in place relevant personsG appointed in their home jurisdiction, similar to those listed in under Rule RP-B.2.1;
                (d) To ensure that all investors wishing to subscribe for the units of a CIUG are eligible to subscribe for such units;
                (e) To ensure that all investors of an overseas domiciled expert CIUG meet the definition of expert investorsG as defined in this Module;
                (f) To ensure that all investors of an overseas domiciled exempt CIUG meet the definition of accredited investorsG as defined in this Module;
                (g) To obtain written confirmation from each CIU participantG , stating that they satisfy the definition of an expert investorG or accredited investorG (as appropriate) and confirming that they understand the higher risks involved in an expert CIUG or exempt CIU;G
                (h) To provide a copy of the prospectusG and the subscription agreement of the CIUG to potential investors;
                (i) To ensure that investors submit duly executed subscription forms, together with all required documentation;
                (j) To ensure that a CIUG is marketed by qualified individuals who are able to clearly explain to investors the risks and rewards associated with investing in the CIUG , in a manner that is clear, fair and not misleading;
                (k) To be responsible for addressing any client complaints and/or enquiries and to provide any such other information supplementary to the prospectusG as may be reasonably required by existing or potential investors;
                (l) To ensure that the units subscribed for by clients are appropriately identified as clients' holdingsG in the books and records of the issuer; and
                (m) To comply at all times with all the laws of the Kingdom of Bahrain and the regulations and directives issued by the CBB from time to time, including those set to prevent and prohibit money laundering and the financing of terrorism.
                Amended: July 2015
                April 2012

            • RP-12.5 Reporting Requirements

              • RP-12.5.1

                Placement agentsG must comply with any reporting requirements to the CIU participantG s, stipulated in the relevant legal agreements.

                April 2012

              • RP-12.5.2

                Placement agentsG must ensure that the CIUs' prospectusG (and simplified prospectusG where applicable) are kept up-to-date. Most recent copies of the prospectusG (and simplified prospectusG where applicable) must be circulated to existing investors and made available to the CBB within 30 calendar days of any revision.

                April 2012

              • RP-12.5.3

                Placement agentsG must distribute to investors the annual reports of CIUsG and any other reports specified in the CIUs'G prospectusG , within the time scales specified by their home regulator and in accordance with the accounting standards acceptable by the home regulator.

                April 2012

              • RP-12.5.4

                Placement agentsG must notify the CBB and the CIU participantG s in a timely manner of any intention to merge, transfer, wind up or suspend dealings in an overseas domiciled CIUG .

                April 2012

              • RP-12.5.5

                Placement agentsG must file with the CBB Form CIU (QS), the CIU Quarterly Statistical Return, within the deadline specified on the return.

                April 2012

            • RP-12.6 Other Requirements

              • RP-12.6.1

                Placement agentsG must provide the CBB, upon request, with any additional information relevant to overseas domiciled CIUsG , on a prompt basis.

                April 2012

              • RP-12.6.2

                The placement agentG must keep all documents supporting the due diligence process undertaken to ensure suitability of the CIUG to the targeted category of investors within its premises. Such documents must be available to the CBB upon request.

                Added: July 2015

        • CG Corporate Governance

          • CG-A Introduction

            • CG-A.1 Purpose

              • Executive Summary

                • CG-A.1.1

                  Bahrain domiciled CIUsG must maintain an adequate framework for the governance and operation of the CIUG to ensure that the CIUG is governed effectively and in the best interests of the CIU's participantsG .

                  April 2012

                • CG-A.1.2

                  The main aim of the framework should be to ensure that when faced with a conflict of interest, the CIUG respects all applicable rules and contractual obligations from an objective perspective, without favouring CIUG insiders (including relevant personsG ) at the expense of the interests of the CIU's participantsG .

                  April 2012

              • Legal Basis

                • CG-A.1.3

                  This Module contains the CBB's Directive (as amended from time to time) regarding corporate governance applicable to collective investment undertakingsG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • CG-A.1.4

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • CG-A.2 Module History

              • Evolution of Module

                • CG-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • CG-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • CG-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       
                  April 2012

              • Superseded Requirements

                • CG-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • CG-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • CG-1 Governing Body

            • CG-1.1 General Requirements

              • CG-1.1.1

                The governing body of a Bahrain domiciled CIUG is the Board of DirectorsG , appointed by the operatorG or trusteeG , as appropriate.

                April 2012

              • CG-1.1.2

                Bahrain domiciled CIUsG are in addition required to comply with any legal requirements imposed by virtue of the legal form used to create the CIUG .

                April 2012

              • CG-1.1.3

                The Board is responsible for oversight of the management and performance of the CIUG , however, ultimate accountability for ensuring that proper and continued corporate governance is in place for the CIUG , must remain with the operatorG /trusteeG of the CIUG , as appropriate.

                April 2012

              • CG-1.1.4

                The Board must not delegate its oversight responsibilities.

                April 2012

          • CG-2 Members of the Board of Directors

            • CG-2.1 Appointment and Removal of Directors

              • CG-2.1.1

                The operatorG /trusteeG of the CIUG must obtain the CBB's prior approval before a person is formally appointed to the Board. The request for CBB approval must be made by submitting to the CBB a Form 2 CIU Board Member Form with a covering letter, and enclosing the following documentation:

                (a) A board resolution from the operatorG /trusteeG ratifying the appointment;
                (b) A current CV of the proposed board member; and
                (c) A certified and valid passport copy of the proposed board member.
                April 2012

              • CG-2.1.2

                The operatorG /trusteeG must be diligent in verifying that all the information contained in the submitted documents, including previous experience, is accurate.

                April 2012

              • CG-2.1.3

                The operatorG /trusteeG must immediately notify the CBB in case of any material change to the information provided in the request for appointment of a board member.

                April 2012

              • CG-2.1.4

                The operatorG /trusteeG must immediately notify the CBB when it becomes aware of any of the following events, affecting one of the board members:

                (a) The conviction by a court, whether in Bahrain or elsewhere, for a crime affecting honesty;
                (b) A declaration of bankruptcy by a court;
                (c) A court ruling that the board member's legal capacity is totally or partially impaired; or
                (d) A sanction by a professional body of a fine, suspension, expulsion or censure.
                April 2012

              • CG-2.1.5

                The operatorG /trusteeG of the CIUG must immediately notify the CBB when a board member resigns from his position, or if his membership is terminated, together with an explanation as to the reasons why.

                April 2012

              • CG-2.1.6

                The operatorG /trusteeG must ensure that the Memorandum and Articles of Association or Trust Deed, as appropriate, of Bahrain domiciled CIUsG , adequately set out procedures for the appointment, removal and retirement of directorsG .

                April 2012

              • CG-2.1.7

                These should, amongst other things, include procedures for removing directorsG in case of non-attendance or other failure to discharge properly their responsibilities as directorsG . The CBB expects board members who fail to attend at least three-quarters of all board meetings in any twelve-month period to step down, unless the board is able to satisfy the CBB that there are valid reasons for the directorG concerned to remain a board member.

                April 2012

            • CG-2.2 Fit and Proper Criteria

              • CG-2.2.1

                As individuals, directorsG on the board of a Bahrain domiciled CIUG must hold qualifications and have relevant experience to undertake this function.

                April 2012

              • CG-2.2.2

                The acceptable level of qualifications and experience will be considered by the CBB on a case by case basis.

                April 2012

              • CG-2.2.3

                The operatorG /trusteeG must ensure that the board of directorsG of a CIUG demonstrate that it has, when taken as a whole, the necessary expertise required to fulfil the functions of the board.

                April 2012

              • CG-2.2.4

                In assessing the fit and proper criteria for directorsG , the operatorG /trusteeG should take into account the following:

                (a) The relevant experience needed to demonstrate sound business decision-making;
                (b) A good understanding of the industry and its regulatory environment;
                (c) Holding of a relevant professional qualification; and
                (d) A minimum length of service (at least 5 years at directorG or senior management level) in the industry.
                April 2012

          • CG-3 Board Composition and Meetings

            • CG-3.1 Composition of the Board of Directors

              • CG-3.1.1

                Except as provided under Paragraph CG-3.1.2, the board of a CIUG must comprise at least 3 members at all times, appointed from and representing the operatorG .

                April 2012

              • CG-3.1.2

                If the CIUG is structured as a trust, the board must comprise of at least 3 members at all times, to be appointed by the trusteeG , of which the majority must be from and representing the trusteeG . The remaining members must be nominated by the fund managerG .

                April 2012

              • CG-3.1.3

                The members of the board of a CIUG :

                (a) Must hold senior positions at the operatorG /trusteeG ;
                (b) Must be senior in position to individual members managing the CIUG ; and
                (c) Must not be involved in the investment management function of the CIUG .
                April 2012

              • CG-3.1.4

                The board must ensure that collectively it has sufficient expertise to understand the important issues relating to the nature, operation and control of the CIUG .

                April 2012

              • CG-3.1.5

                To fulfil its responsibilities outlined in Chapter CG-5, the board must periodically assess its composition, size and members' contribution to the CIUG .

                April 2012

            • CG-3.2 Meetings and Attendance

              • CG-3.2.1

                The board of a Bahrain domiciled CIUG must meet at regular intervals, but not less than four times a year, taking into account the CIU'sG size and complexity, to review the performance and operations of the CIUG and to discharge its responsibilities effectively.

                April 2012

              • CG-3.2.2

                Board members must attend as a minimum three quarters of all board meetings called for a CIUG and attendance by proxy will not be permitted.

                April 2012

              • CG-3.2.3

                Participation in board meetings by means of video or telephone conferencing is regarded as attendance and may be recorded as such.

                April 2012

              • CG-3.2.4

                Board rules must require members to step down if they are not actively participating in board meetings.

                April 2012

            • CG-3.3 Meeting of CIU Participants

              • CG-3.3.1

                If the CIU participantsG have a right to call for a general meeting of CIU participantsG , the instrument constituting the CIUG must state how the meeting may be convened, and the board must call for such meeting at the CIU participants'G request.

                April 2012

              • CG-3.3.2

                If a general meeting of CIU participantsG is called, the board must ensure that:

                (a) Each CIU participantG is given at least 14 calendar days written notice before the meeting;
                (b) The notice specifies the place, day and time of the meeting; and
                (c) The terms and resolutions to be proposed, as well as a copy of the notice, are sent to the CIU'sG fund administratorG , custodianG and to the CBB.
                April 2012

          • CG-4 Record Keeping Requirements

            • CG-4.1 Record of Board Meetings

              • CG-4.1.1

                The board must maintain adequate records of its meetings, such that key decisions and how they are arrived at can be traced. Such records must be maintained by the CIUG fund administratorG .

                April 2012

          • CG-5 Roles and Responsibilities of the Board

            • CG-5.1 General Requirements

              • CG-5.1.1

                The board must establish and maintain a statement of its responsibilities, defining its functions and tasks. This statement must be clearly communicated to board members.

                April 2012

              • CG-5.1.2

                The board must have effective policies and processes in place, in line with the requirements of the Commercial Companies Law, to prevent, avoid and manage its members' potential or actual conflicts of interest, including matters such as:

                (a) Related party transactions;
                (b) The misuse of assets belonging to the CIUG ; and
                (c) The use of privileged information for personal advantage (including insider trading).
                April 2012

              • CG-5.1.3

                Board members should also absent themselves from any discussion or decision-making that involves a subject where they are incapable of providing objective advice, or which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

                April 2012

              • CG-5.1.4

                The board and its members must act with honesty, integrity, due skill, care and diligence, and in the best interests of the CIUG and CIU participantsG .

                April 2012

              • CG-5.1.5

                In assessing compliance with Rule CG-5.1.4, the CBB will take into account all actions of the board and its members. The interest of the CIUG includes the CIU'sG continued compliance with all relevant rules and regulations. The interest of CIU participantsG includes the current and future value of the assets of a CIUG , transparency, disclosure of information and ensuring that the CIUG fulfils its obligations under its prospectusG and treats all participantsG fairly and pays equal regard to the interests of all CIU participantsG .

                April 2012

              • CG-5.1.6

                The board must ensure that it is supplied with information in a timely manner in a form and of a quality appropriate to enable it to discharge its duties.

                April 2012

              • CG-5.1.7

                There should also be agreed upon procedures by the board, for directorsG to take independent advice if necessary at the CIU'sG expense.

                April 2012

            • CG-5.2 Approval and Review of Prospectus and Constitutional Documents

              • CG-5.2.1

                The board is responsible for the correctness of the information contained in the CIUG prospectusG .

                April 2012

              • CG-5.2.2

                The board must collectively approve the CIU'sG prospectusG , the subscription documents, the CIU'sG documents and its material contracts.

                April 2012

              • CG-5.2.3

                The approval referred to in Paragraph CG-5.2.2 will usually be given at the initial board meeting of the CIUG .

                April 2012

              • CG-5.2.4

                The board is responsible for committing the CIUG to any obligations under the various material contracts entered into by the CIUG .

                April 2012

              • CG-5.2.5

                The board must clearly set out and review on a regular basis the authority of directorsG to commit the CIU to its contractual obligations. In doing so, the Board must:

                (a) Stipulate in writing which directorsG (or which combination of directorsG ) can commit the CIU to its contractual obligations; and
                (b) Ensure that there are always at least two directorsG (or two combinations of directorsG , not dependent on each other) who have the requisite authority to commit the CIU to a contractual obligation.
                April 2012

              • CG-5.2.6

                In order to fulfil the responsibility outlined above, the board is expected to conduct reviews on a periodic basis and whenever material changes or revisions are made, of the CIU'sG prospectusG and subscription documents and of the material contracts, to ensure that they are up to date.

                April 2012

            • CG-5.3 Monitoring Adherence to the Overall Investment Policy and Restrictions

              • CG-5.3.1

                The board must periodically monitor the CIU'sG compliance with its investment policies and restrictions, stated in the prospectusG .

                April 2012

              • CG-5.3.2

                In fulfilling the requirements of Paragraph CG-5.3.1, the CBB expects that the board requests from the fund manager,G reports on the CIU'sG compliance with its investment policies and restrictions as stated in the prospectusG . The frequency and format of such reports should be pre-agreed with the fund managerG and reviewed at each board meeting.

                April 2012

              • CG-5.3.3

                The board must ensure that the fund managerG has systems and procedures in place to detect and remedy investment policy breaches. Such systems and procedures must include provisions for timely reporting of breaches to the board and the CBB, and prompt rectification.

                April 2012

            • CG-5.4 Review of Investment Performance

              • CG-5.4.1

                The board must regulary review the performance of the fund managerG and the investment performance of the CIUG , and compare the performance of the CIUG to its investment objectives, stated in the prospectusG .

                April 2012

              • CG-5.4.2

                In fulfulling the requirements of Paragraph CG-5.4.1, the CBB expects that the board requests copies of all relevant investment reports from relevant personsG on a timely basis. Such reports should explain how the performance was achieved and what risk profile was adopted to generate returns.

                April 2012

            • CG-5.5 Monitoring NAV Calculation Process

              • CG-5.5.1

                The board must have the ultimate responsibility for monitoring the valuation of the CIUG assets, which must be undertaken by the fund administratorG or an acceptable valuator who is expert in the asset class, as appropriate.

                April 2012

              • CG-5.5.2

                The board is responsible for the oversight of the entire NAV calculation process, including but not limited to the pricing of illiquid and exotic instruments.

                April 2012

              • CG-5.5.3

                The board must ensure that there is adequate segregation of duties in the NAV determination process.

                April 2012

              • CG-5.5.4

                In complying with the Rule CG-5.5.3, the board must delegate the calculation, determination and production of the NAV to a suitable independent, competent and experienced fund administratorG .

                April 2012

              • CG-5.5.5

                The board must establish robust controls to manage conflicts of interest in the NAV evaluation process, if they arise.

                April 2012

              • CG-5.5.6

                The board must approve any documented valuation procedures, including valuation practices and controls, in advance of the CIU'sG launch and on a regular basis thereafter. Such procedures must be disclosed in the CIU'sG prospectusG .

                April 2012

              • CG-5.5.7

                Valuation procedures should clearly explain the role of each party in the valuation process, identify the sources for pricing of each instrument type and address the management and reporting of exceptions.

                April 2012

              • CG-5.5.8

                The board must set procedures for reporting any issues that may arise in connection to the valuation (for example, stale pricing, liquidity, difficult trading markets, illiquid assets).

                April 2012

              • CG-5.5.9

                The board is responsible for the decision to suspend and resume the NAV calculation. However, any such decision must be satisfactorily supported by relevant documentation.

                April 2012

            • CG-5.6 Monitoring Marketing and CIU Participant Relations

              • CG-5.6.1

                The board must request and review the plans set by the fund managerG with respect to promoting the CIUG , the target client base, the existing client base and its break-down by type of investor, the legal capacity of the CIUG , the restrictions (if any) on marketing the CIUG in certain jurisdictions.

                April 2012

              • CG-5.6.2

                In fulfulling this responsibility, the CBB expects that the board requests a quarterly report from the fund managerG , summarizing the following:

                (a) Gross and net subscriptions, to monitor the size of the CIUG against its theoretical capacity; and
                (b) A summary of CIU participantsG correspondence, highlighting key issues being raised such as concerns about performance or administration.
                April 2012

              • CG-5.6.3

                The board must ensure that the prospectusG or trust deed of a CIUG , as appropriate, does not allow any discretionary waivers with respect to a CIUG , and that all CIU participantsG are treated equally and fairly.

                April 2012

            • CG-5.7 Anti-Money Laundering (AML) Responsibilities

              • CG-5.7.1

                The board must understand the nature of the AML regulations which apply with respect of the CIUG and must establish and regularly review procedures to monitor the AML measures for a CIUG .

                April 2012

              • CG-5.7.2

                The board must obtain regular feedback from the placement agent(s)G , or sub-placement agent(s)G to ascertain that formal AML procedures in place are being adhered to, and that any suspicious findings were raised and investigated accordingly. All suspicious findings and the results of the subsequent investigation must be promptly reported to the board and to the concerned authority.

                April 2012

              • CG-5.7.3

                The board must be responsible for the following with respect to the AML policies and procedures:

                (a) The AML policies and procedures adopted by the placement agent(s)G or sub-placement agent(s)G must be in compliance with the AML laws and regulations which apply to the CIUG ; and
                (b) Any changes in the applicable AML laws and regulations are promptly addressed and suitable procedures are adopted.
                April 2012

              • CG-5.7.4

                The board must ensure that the following procedures are applied with respect to CIUG subscriptions and redemption monies:

                (a) The AML policy must ensure that, until the AML procedures are completed satisfactorily, any new subscription monies remain in the subscriptions bank account and are not transferred into the CIU'sG account;
                (b) The AML policy must ensure that the prospectusG requires that redemptions are paid into the account from which the original investment was wired. In the event that the redeeming investor requests that redemption proceeds be paid into an account different from that which the investment was paid, the redeeming investor would normally be asked to confirm in writing reason(s) for the request; and
                (c) In the event that a subscription has been accepted without receipt of the full AML documentation, the custodianG must retain the subscription proceeds until the outstanding documentation has been completed and provided.
                April 2012

            • CG-5.8 Review of the Appointment and Performance of Other Service Providers

              • CG-5.8.1

                The board must regularly review the performance of the relevant personsG of a CIUG to ensure that they carry out their roles and responsibilities towards the CIUG effectively.

                April 2012

              • CG-5.8.2

                In fulfulling the requirements of Paragraph CG-5.8.1, the CBB expects the Board to ensure that there is no conflict of interest among the relevant personsG of a CIUG and that each relevant personG adheres to its responsibilities with respect to the CIUG in accordance with the prospectusG and in the best interest of CIU participantsG .

                April 2012

            • CG-5.9 Provision of Information to CIU Participants

              • CG-5.9.1

                The board must oversee the process of disclosure of information to all CIU participantsG .

                April 2012

              • CG-5.9.2

                The board must ensure that all information, including that which the CIU'sG prospectusG states, be provided to CIU participantsG in a fair, transparent, comprehensive and timely manner.

                April 2012

            • CG-5.10 Compliance with Listing Rules and Continuing Obligations

              • CG-5.10.1

                The board must ensure that in the case that a CIUG is listed on a licensed exchangeG , the CIUG is compliant with the requirements and regulations of that exchange.

                April 2012

            • CG-5.11 Reporting to the CBB

              • CG-5.11.1

                The board must be aware of any material breach that may affect the overall operation of the CIUG , including but not limited to any breach to the investment policy of a CIUG and report it to the CBB on a prompt and timely manner, in writing.

                April 2012

              • CG-5.11.2

                The board must report to the CBB, on a prompt basis, any event that may directly or indirectly impact the CIUG .

                April 2012

              • CG-5.11.3

                In the event that the fund managerG foresees, due to adverse market conditions, that it is in the best interest of CIU participantsG to shift from investments into cash and cash equivalents, the boardG is required to:

                (a) Immediately notify the CBB and the registrarG stating the reason and the expected time by which the stipulated limits will be met; and
                (b) Immediately notify the CBB and the registrarG once the CIUG resumes investing in accordance with the investment limits stipulated in the prospectusG .
                April 2012

              • CG-5.11.4

                The board must provide the CBB, upon request, with any additional information relevant to the CIUG , on a prompt basis.

                April 2012

        • LDR Liquidation/De-Registration

          • LDR-A Introduction

            • LDR-A.1 Purpose

              • Executive Summary

                • LDR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) approach to liquidation/De-registration of CIUsG . Furthermore, it distinguishes between the voluntary liquidation/De-registration of a CIUG and instances where the CBB may revoke an authorization or registration of a CIUG .

                  April 2012

              • Legal Basis

                • LDR-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding liquidation/de-registration requirements applicable to collective investment undertakingsG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • LDR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • LDR-A.2 Module History

              • Evolution of Module

                • LDR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • LDR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • LDR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       
                       
                  April 2012

              • Superseded Requirements

                • LDR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • LDR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • LDR-1 Voluntary Liquidation of a CIU

            • LDR-1.1 General Requirements

              • LDR-1.1.1

                A Bahrain domiciled CIUG must continue to meet its contractual and regulatory obligations to CIU participantsG and creditors, throughout the process of liquidation.

                April 2012

              • LDR-1.1.2

                A Bahrain domiciled CIUG must continue to comply with all applicable CBB requirements, until such time as it is formally notified by the CBB that it has been formally removed from the CBB's register of authorised/registered CIUsG . Such requirements include the settlement of CBB annual fees once they fall due, in case the liquidation process is not fully concluded by the end of 31st December of the year of liquidation.

                April 2012

              • LDR-1.1.3

                The CBB reserves the right, to impose any further directions, it considers necessary to effect the fair and orderly liquidation of a CIUG .

                April 2012

            • LDR-1.2 Notification

              • LDR-1.2.1

                Any intention to liquidate a Bahrain domiciled CIUG must first be notified to the CBB by the operatorG together with reasons for having such intent. Notification must be made before entering into any other legally binding commitment to liquidate.

                April 2012

              • LDR-1.2.2

                Following its receipt and acknowlegment of the notification referred to in Paragraph LDR-1.2.1, the operatorG may then seek the formal approvals needed from any person(s) other than the CBB, as required by law, before the liquidation process can be commenced.

                April 2012

            • LDR-1.3 Prior Approval

              • LDR-1.3.1

                Upon finalising the decision to liquidate, the operatorG of a Bahrain domiciled CIUG must seek in writing, the CBB's prior written approval to liquidate. The liquidation must be subject to the terms of the instrumentG constituting the CIUG and any other applicable laws.

                April 2012

              • LDR-1.3.2

                The formal request referred to in Paragraph LDR-1.3.1 must be supported by a Board Resolution ratifying the decision, subject to CBB approval.

                April 2012

              • LDR-1.3.3

                The operatorG may not undertake any step amounting to actual liquidation of the CIUG until it has received a final written approval from the CBB.

                April 2012

              • LDR-1.3.4

                CBB approval in response to a request to liquidate a Bahrain domiciled CIUG will normally be given in the following circumstances:

                (a) The CIUG was not able to operate within 6 months from the CBB's authorisation/registration date (refer to Module ARR);
                (b) The purpose of the CIUG cannot be accomplished;
                (c) The constitutional documents of the CIUG stipulate a specific maturity date;
                (d) The NAV of the CIUG has fallen below a certain size, where the board believes it is not feasible to continue operating the CIUG ; or
                (e) A resolution of a duly convened meeting of the CIU participantsG has been passed to liquidate the CIUG .
                April 2012

            • LDR-1.4 Process

              • LDR-1.4.1

                Bahrain domiciled CIUsG must simultaneously give at least one month's written notice, as a minimum, to CIU participantsG of their intention to liquidate the CIUG , together with an explanation for such intention. A copy of this notice must be provided to the CBB at the time it is issued to CIU participantsG .

                April 2012

              • LDR-1.4.2

                Bahrain domiciled CIUG must comply with all applicable laws and directions issued by the CBB, throughout the liquidation process.

                April 2012

              • LDR-1.4.3

                Subsequent to obtaining CBB approval for the liquidation, the board must hold an Extraordinary General Meeting (EGM) to resolve the following:

                (a) The date upon which the operations of the CIUG and fund companyG (if applicable) will cease and the final accounts will be prepared;
                (b) The appointment of a liquidator, acceptable to the CBB, responsible for liquidating the CIUG and fund companyG (if applicable); and
                (c) The appointment of an external auditorG , acceptable to the CBB, responsible for preparing the final accounts of the CIUG .
                April 2012

              • LDR-1.4.4

                Additionally, the CBB expects the determination of the timeframe whereby the proceeds of the CIUG will be fully distributed to all CIU participantsG , to be ratified at the EGM.

                April 2012

              • LDR-1.4.5

                The appointments of the liquidator and the external auditorG are subject to CBB approval.

                April 2012

              • LDR-1.4.6

                Upon completion of the liquidation process, the operatorG must submit the following to the CBB:

                (a) The final report from the liquidator confirming the completion of the liquidation process and the final audited accounts of the CIUG and fund companyG (if applicable);
                (b) Evidence that the Commercial Registration of the fund companyG , provided by the Ministry of Industry and Commerce has been cancelled (if applicable);
                (c) An independent verification by the external auditorG that the CIU'sG assets have been distributed to CIU participantsG in accordance with the instrumentG constituting the CIUG . For non-operational CIUsG , the audit verification must confirm that the CIUG has not operated; and
                (d) A request for the CIUG to be removed from the CBB's register of authorised/registered CIUsG .
                April 2012

              • LDR-1.4.7

                By virtue of its authorisation/registration with the CBB, the Bahrain domiciled CIUG acknowledges the authority of the CBB to request the CIUG to undergo liquidation or to de-register a CIUG at any time and/or, acting by way of Directive, order its compulsory liquidation. Such powers shall be exercised reasonably. The CIUG also acknowledges that the courts of Bahrain have the authority to order the compulsory liquidation of Bahrain domiciled CIUsG .

                April 2012

          • LDR-2 Revocation of Authorisation

            • LDR-2.1 CBB Revocation of Authorisation Powers

              • LDR-2.1.1

                The CBB may revoke authorisation of a Bahrain domiciled CIUG in the following cases:

                (a) If the CIUG is not in operation within 6 months from the date of its authorisation (Refer to Module ARR);
                (b) If any of the applicable requirements contained in Volume 7 are not met;
                (c) If false or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                (d) If the CBB believes it necessary in order to safeguard the interests of potential investors or the CIU'sG participantsG .
                April 2012

              • LDR-2.1.2

                An authorisation may be revoked by the CBB, subsequent to the ruling of a competent authority, such as a court that has issued an order to liquidate the CIUG .

                April 2012

              • LDR-2.1.3

                In the case that the CIUG did not operate within 6 months from the date of its authorisation, the CIUG must return back any monies collected from potential CIU participantsG together with all subscription fees charged, and confirm the same in writing to the CBB.

                April 2012

              • LDR-2.1.4

                Where the CBB proposes to cancel a CIU'sG authorisation, it will give the CIUG concerned a written notice of its intention to do so and the reasons for such action. The CIUG has 30 calendar days from the date of the written notice to appeal the decision.

                April 2012

          • LDR-3 Revocation of Registration

            • LDR-3.1 CBB Revocation of Registration Powers

              • LDR-3.1.1

                The CBB may revoke registration of a Bahrain domiciled exempt CIUG in the following cases:

                (a) If the CIUG is not in operation within 6 months from the date of its registration (Refer to Module ARR);
                (b) If any of the applicable requirements contained in Volume 7 are not met;
                (c) If false or misleading information has been provided to the CBB, or significant information which should have been provided to the CBB has not been so provided; or
                (d) If the CBB believes it necessary in order to safeguard the interests of potential investors or the CIU'sG participantsG .
                April 2012

              • LDR-3.1.2

                A registration may be revoked by the CBB, subsequent to the ruling of a competent authority, such as a court that has issued an order to liquidate the CIUG .

                April 2012

              • LDR-3.1.3

                In the case that the CIUG did not operate within 6 months from the date of its registration, the CIUG must return back any monies collected from potential CIU participantsG together with all subscription fees charged, and confirm the same in writing to the CBB.

                April 2012

              • LDR-3.1.4

                Where the CBB proposes to cancel a CIU'sG registration, it shall give the CIUG concerned a written notice of its intention to do so and the reasons for such action. The CIUG has 30 calendar days from the date of the written notice to appeal the decision.

                April 2012

      • Classification of Undertakings

        • BDR Bahrain Domiciled Retail CIUs

          • BDR-A: Introduction

            • BDR-A.1 Purpose

              • Executive Summary

                • BDR-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Retail CIUsG .

                  April 2012

              • Legal Basis

                • BDR-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain domiciled retail CIUsG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BDR-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BDR-A.2 Module History

              • Evolution of Module

                • BDR-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • BDR-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BDR-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  BDR-7.1.3 10/2017 Added sub-paragraph (g) on annual valuation.
                  BDR-12.1.1A 10/2017 Added a new Paragraph on Exchange Traded Fund.
                  BDR-12.1.6 10/2017 Added a new Paragraph.
                       
                       

              • Superseded Requirements

                • BDR-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • BDR-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BDR-B: Definition

            • BDR-B.1 Definition

              • Bahrain Domiciled Retail CIUs

                • BDR-B.1.1

                  Bahrain domiciled retail CIUsG are defined under Paragraph ARR-B.1.7 as CIUsG that may be offered to all types of investors.

                  April 2012

              • Authorisation Requirements

                • BDR-B.1.2

                  Bahrain domiciled retail CIUsG must be authorised by the CBB prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-2 of Module ARR.

                  April 2012

          • BDR-1: Documents Constituting the CIU

            • BDR-1.1 General Requirements

              • BDR-1.1.1

                Every Bahrain domiciled retail CIUG must be constituted by way of documents, containing the information listed in Supplementary Information document ARR(i), in Part B of Volume 7.

                April 2012

              • BDR-1.1.2

                In the case of CIUsG established as Common CIUsG established under the laws of contract, the documents are the Memorandum and Articles of Association of the fund companyG and the CIUG instrument. In the case of Corporates established under the Bahrain Commercial Companies Law, the documents are the Memorandum and Articles of Association. In the case of CIUsG established as Trusts under the Financial Trust Law, the legal document is the trust deed.

                April 2012

              • BDR-1.1.3

                The operatorG of a Bahrain domiciled retail CIUG together with the directorsG of the CIUG concerned, or trusteesG , as appropriate, must ensure that the documents constituting the CIUG :

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the operatorG , fund managerG and other relevant personsG to the CIU; and
                (c) Are not unfairly prejudicial to the interests of the CIU participantsG , either generally or to a particular class of CIU participants.G
                April 2012

              • BDR-1.1.4

                The operatorG of a Bahrain domiciled retail CIUG together with the directorsG of the CIUG concerned, or trusteesG , as appropriate, must maintain the documents constituting the CIUG .

                April 2012

              • BDR-1.1.5

                Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the documents. An updated copy of the documents must be made available to the CBB within 30 calendar days of the revision being approved.

                April 2012

          • BDR-2: Prospectus

            • BDR-2.1 General Requirements

              • BDR-2.1.1

                Every Bahrain domiciled retail CIUG authorised under Chapter ARR-2 must publish a prospectusG containing, as a minimum, the information set out in Supplementary Information document ARR(ii) in Part B of Volume 7.

                April 2012

              • BDR-2.1.2

                The board of the CIUG , or trusteesG , as appropriate, must ensure that the information contained in the prospectusG :

                (a) Is complete and transparent;
                (b) Is not false, misleading, or unfairly prejudicial to the interests of the CIU participantsG generally or to the participantsG of other classes of instruments issued by the CIUG ; and
                (c) Does not contain any provision that conflicts with any Rule in Volume 7, or other legal or regulatory requirements that apply to the CIUG or other relevant personsG connected to the CIUG .
                April 2012

              • BDR-2.1.3

                The documents constituting the Bahrain domiciled retail CIUG must form an integral part of the prospectusG and must be annexed to it. Alternatively, the prospectusG must specify where the documents constituting the Bahrain domiciled retail CIUG may be obtained.

                April 2012

              • BDR-2.1.4

                The board of the CIUG must keep the prospectusG up-to-date, such that the information it contains is materially current.

                April 2012

              • BDR-2.1.5

                Once the CIUG is authorised, prior approval must be obtained from the CBB for any subsequent material changes to the prospectusG . An updated copy of the prospectusG must be made available to the CBB within 30 calendar days of the revision being agreed, and CIU participantsG must be notified of the changes at least 30 calendar days before they take effect, given that a window for redemption is made available to CIU participantsG within this timeframe.

                April 2012

              • BDR-2.1.6

                For the purposes of the Paragraph BDR-2.1.5, material changes include, but are not limited to:

                (a) Changes in the relevant personsG ;
                (b) A change in legal structure;
                (c) A change to the investment strategy; or
                (d) A change in fees.
                April 2012

              • BDR-2.1.7

                The CIUG must provide a copy of its most recent prospectus,G free of charge, to any existing and potential CIU participantsG .

                April 2012

              • BDR-2.1.8

                The CIUG must, upon request, provide explanations and such other information supplementary to the prospectusG as may reasonably be required by any existing and potential CIU participantsG .

                April 2012

            • BDR-2.2 Simplified Prospectus

              • BDR-2.2.1

                Where a simplified prospectusG is published by a Bahrain domiciled retail CIUG , it must include, as a minimum, the information specified in Supplementary Information document ARR(iii) in Part B of Volume 7. It must also include a statement stating that more detailed information on the CIUG is contained in the prospectusG , a copy of which must be made available free of charge to existing and potential CIU participantsG upon request.

                April 2012

              • BDR-2.2.2

                A simplified prospectusG must contain a summary of the key features of the CIUG , including its investment policy and fee structure. It must not be misleading.

                April 2012

              • BDR-2.2.3

                A simplified prospectusG must be kept up to date, such that the information it contains is materially current and accurately represents the full prospectusG .

                April 2012

              • BDR-2.2.4

                There is no requirement for a simplified prospectusG to be approved by the CBB, nor for any subsequent material changes to be approved or notified. However, the simplified prospectusG must accurately reflect the full prospectusG , which is subject to approval requirements (see Rule BDR-2.1.5).

                April 2012

          • BDR-3: CIU Holdings

            • BDR-3.1 Rights

              • BDR-3.1.1

                If a Bahrain domiciled retail CIUG has different classes of holdingsG , the documents constituting the CIUG must clearly set out:

                (a) The different features of each class of holdingsG , including their respective rights;
                (b) The allocation of expenses and fees; and
                (c) How the proportion of the value of the assets of the CIUG and the proportion of income available for allocation attributable to each such class is to be calculated.
                April 2012

              • BDR-3.1.2

                For the purposes of this Module, the interest of the CIU participantsG in a Bahrain domiciled retail CIUG (by whatever name these interests are called), are deemed to consist of holdingsG (including fractions of a holding), each holdingG representing one undivided share of the entitlement in the CIU'sG assets.

                April 2012

              • BDR-3.1.3

                The documents constituting the CIUG may provide for different classes of holdingsG to be issued in an authorised CIUG and, in the case of umbrella CIUsG , may provide that different classes of holdingsG may be issued for each sub-CIUG .

                April 2012

            • BDR-3.2 Issue, Purchase and Redemption of Holdings

              • BDR-3.2.1

                HoldingsG may not be created or issued unless the equivalent of the net issue price is paid into the assets of a Bahrain domiciled retail CIUG within the usual time limits. This does not preclude the distribution of bonus holdingsG .

                April 2012

              • BDR-3.2.2

                No direct or indirect lending should be made to CIU participantsG for the purpose of purchasing holdingsG in a Bahrain domiciled retail CIUG , unless the CIU participant is classified as an accredited investorG and the lending is incidental to the investment.

                April 2012

              • BDR-3.2.3

                CIU participantsG must, in accordance with the CIUG documents, either be:

                (a) Issued with registered certificates evidencing title to holdings;G or
                (b) Provided with written confirmation of entry in a register for such holdingsG which must be kept current and up-to-date at all times and must contain full details of the names and addresses of the CIU participantsG , the number of holdingsG held by them, and the date of acquisition of such holdingsG .
                April 2012

              • BDR-3.2.4

                HoldingsG in a CIUG must be redeemed, repurchased, reimbursed or repaid (as may be appropriate) at the request of the CIU participantsG and in accordance with the Bahrain domiciled retail CIU'sG documents.

                April 2012

              • BDR-3.2.5

                HoldingsG may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate):

                (a) In accordance with the prospectusG constituting the Bahrain domiciled retail CIU;G and
                (b) At a price arrived at by dividing the NAV of the CIUG by the number of holdingsG outstanding, after taking into account any charges as stated in the prospectusG .
                April 2012

              • BDR-3.2.6

                The prospectusG constituting the Bahrain domiciled retail CIUG must clearly state the frequency and basis for calculation of the issue price, repurchase price and other appropriate prices of the holdingsG in the CIUG .

                April 2012

          • BDR-4: Investments

            • BDR-4.1 Risk Management

              • BDR-4.1.1

                Bahrain domiciled retail CIUsG must operate on the principle of risk spreading and must maintain and implement investment and risk management policies aimed at the prudent risk control.

                April 2012

              • BDR-4.1.2

                The prospectusG must summarise the policies and limits which the Bahrain domiciled retail CIUG will apply, including (but not limited to):

                (a) The type of assets which the CIUG may invest in;
                (b) The aggregate limits for each asset class;
                (c) Geographic allocation, limits per country, and sectors limits (if applicable);
                (d) Permitted individual exposures under each asset class; and
                (e) A description of remedial measures to be taken in the event of limit exceptions.
                April 2012

              • BDR-4.1.3

                As further guidance, reference should be made to Supplementary Investment document, ARR(ii) which sets out the minimum information to be contained in the prospectusG , and Supplementary Investment document, ARR(iv) which sets out the admissible assets and limits for Bahrain domiciled retail CIUsG .

                April 2012

              • BDR-4.1.4

                Bahrain domiciled retail CIUsG may only invest in the type of assets specified in and in accordance with the limits prescribed in ARR(iv), unless otherwise agreed and approved in writing by the CBB. However, such limits do not apply until the expiry of a period of six months from the date of the initial offering of the CIUG .

                April 2012

              • BDR-4.1.5

                Where such approvals are given, the fact must be notified to CIU participantsG as an amendment to the prospectusG (and simplified prospectusG where applicable).

                April 2012

              • BDR-4.1.6

                The CBB may allow a Bahrain domiciled retail CIUG to broaden its investment policy to allow investments in financial assets other than those specified in ARR(iv), if it is satisfied that such assets are sufficiently liquid and the interests of the CIU participantsG are not prejudiced. The CBB may similarly also approve limits beyond those specified in ARR(iv), if it is satisfied that such approval is in the interests of the CIU participantsG .

                April 2012

              • BDR-4.1.7

                If the name or particulars of a Bahrain domiciled retail CIUG indicates a specific objective, asset class, geographic region or market, the CIUG must invest at least 60% of its assets in investments that reflect the specific objective, asset class, region or market. The remaining balance of the CIU'sG assets may only be held in cash or cash equivalents.

                April 2012

            • BDR-4.2 Derivative Transactions

              • BDR-4.2.1

                A Bahrain domiciled retail CIUG may enter into permitted financial derivative transactions, provided that the following conditions are adhered to at all times:

                (a) The underlying positions continue to satisfy the limits specified in ARR(iv);
                (b) The transactions are consistent with the stated investment objectives;
                (c) The counterparties are licensed financial institutions or licensed exchangesG or clearing houses;
                (d) The prospectusG of the CIUG clearly specifies the use and rationale of such transactions (i.e. for hedging purposes or for achieving investment goals), and provides a clear description of the associated risks, including the risk of volatility in NAVs;
                (e) The derivative positions and balances allow independent and reliable daily valuations and can be sold, liquidated or closed by an offsetting transaction at any time, at their fair value and at the initiative of the CIUG ;
                (f) The transactions are subject to sound and documented risk management policies and practices; and
                (g) The arrangement is consistent with good market practice.
                April 2012

            • BDR-4.3 Significant Influence / Conflicts of Interest

              • BDR-4.3.1

                Bahrain domiciled retail CIUsG must not acquire securities issued by a relevant personG , unless exempted in writing by the CBB.

                April 2012

              • BDR-4.3.2

                Exemption from Rule BDR-4.3.1 will normally only be given by the CBB in cases where a Bahrain domiciled retail CIUG is pursuing a market index strategy, such that it is obliged to invest in a relevant person'sG securities in order to replicate a market index.

                April 2012

              • BDR-4.3.3

                Bahrain domiciled retail CIUsG must not invest in any security (of any class) in a company or other undertaking, if any directorG of the CIUG or of any relevant personG and its affiliates individually or collectively owns more than 5% of those securities.

                April 2012

              • BDR-4.3.4

                The prohibition in Paragraph BDR-4.3.3 also applies where the ownership of the directorsG of the CIUG or of any relevant personG and its affiliates, is in the parent, subsidiary or other associated undertaking of the company in which the CIU is to make the investment.

                April 2012

              • BDR-4.3.5

                Bahrain domiciled retail CIUsG must not invest in other CIUsG which have the same operatorG , as the Bahrain domiciled retail CIUG .

                April 2012

              • BDR-4.3.6

                Bahrain domiciled retail CIUsG must not enter into a transaction where one of the relevant personsG is a counterparty to the transaction.

                April 2012

            • BDR-4.4 Other Restrictions on Investments

              • BDR-4.4.1

                Bahrain domiciled retail CIUsG must not:

                (a) Assume, guarantee, endorse or otherwise become directly or contingently liable for the obligations or indebtedness of any person, except in accordance with its prospectusG or instrumentG constituting the CIUG ; or
                (b) Acquire any asset which involves the assumption of any liability which is unlimited.
                April 2012

            • BDR-4.5 Non-compliance with and Breaches of Investment Limits

              • BDR-4.5.1

                If the investment limits and risk management policies specified in the prospectusG are breached because of a reason other than a market change or movement, the Bahrain domiciled retail CIUG must take all necessary steps to remedy the situation immediately, without jeopardizing the interests of CIU participantsG .

                April 2012

              • BDR-4.5.2

                Any breach of investment limits and risk management policies, that has occurred because of a reason other than a market change or movement, must be reported to the CBB in writing by the boardG of the CIUG , the custodianG and the fund administratorG , in a timely manner and accompanied by a plan and time-frame whereby the breach would be rectified.

                April 2012

              • BDR-4.5.3

                If the breach occurs as a result of a market change or movement, the Bahrain domiciled retail CIUG must take all necessary steps to remedy the situation, if possible, but without jeopardizing the interests of CIU participantsG , and to notify the CBB of the same.

                April 2012

              • BDR-4.5.4

                The CBB does not consider it a breach in the event that the fund managerG foresees, due to adverse market conditions, that it is in the best interest of CIU participantsG to shift from investments into cash and cash equivalents. In such case, the following notifications must be made:

                (a) The boardG is required to immediately notify the CBB and the registrarG stating the reason and the expected time by which the stipulated limits will be met;
                (b) The boardG is required to immediately notify the CBB and the registrarG once the CIUG resumes investing in accordance with the investment limits stipulated in the prospectusG ; and
                (c) The registrarG is required to notify the CIU participantsG of the information above.
                April 2012

          • BDR-5: Borrowing, Lending and Short Selling

            • BDR-5.1 Borrowing

              • BDR-5.1.1

                A Bahrain domiciled retail CIUG may only borrow subject to the following conditions:

                (a) The borrowing is temporary;
                (b) The borrowing is to be repaid out of the assets of the CIUG ;
                (c) The assets of the CIUG , other than those pledged for the purpose of the borrowing transaction are not pledged;
                (d) The borrowing does not at any time exceed 20% of the CIU'sG assets;
                (e) The circumstances for such borrowing are disclosed in the prospectusG ; and
                (f) The borrowing is made on an exceptional basis to assist with liquidity management, rather than to leverage returns.
                April 2012

            • BDR-5.2 Lending

              • BDR-5.2.1

                A Bahrain domiciled retail CIUG must not lend its assets to a relevant personG of the CIUG .

                April 2012

              • BDR-5.2.2

                A Bahrain domiciled retail CIUG may only lend its assets by entering into a stock lending agreement.

                April 2012

              • BDR-5.2.3

                A Bahrain domiciled retail CIUG may only enter into stock lending arrangements in respect of any securities held by it, provided that:

                (a) The counterparty is a licensed financial institution;
                (b) The arrangement is consistent with best market practice;
                (c) Acceptable collateral with a value equal to the securities lent is obtained to secure the obligation;
                (d) The current realisable value of the securities and of the relevant collateral is monitored daily in order to make-up the difference when the current realisable value of the collateral falls below that of the securities lent;
                (e) The aggregate value of stocks lent does not at any time exceed 20% of the net asset value of the CIU'sG assets; and
                (f) The circumstances for such lending are disclosed in the prospectusG .
                April 2012

            • BDR-5.3 Short Selling

              • BDR-5.3.1

                A Bahrain domiciled retail CIUG must not engage in short selling of securities.

                April 2012

          • BDR-6: Fees and Dividends

            • BDR-6.1 Fees

              • BDR-6.1.1

                All costs and charges, including fees to relevant personsG , payable from the assets of a Bahrain domiciled retail CIUG must be clearly stated and disclosed in the prospectusG and must include the following:

                (a) The breakdown of such costs and charges;
                (b) The estimated or actual amount of costs and charges payable;
                (c) The nature and the basis for their calculation; and
                (d) The maximum amounts payable, expressed as percentages of the CIU'sG assets, on a per annum basis.
                April 2012

              • BDR-6.1.2

                Where a performance fee is charged by way of deduction from the assets of a Bahrain domiciled retail CIUG , the following must be stated in the prospectusG :

                (a) The frequency of charging the performance fee to the CIUG ; and
                (b) The basis upon which the performance fee is calculated.
                April 2012

              • BDR-6.1.3

                If a performance fee is levied, the fee may only be payable:

                (a) Not more frequently than annually;
                (b) If the NAV per holdingG exceeds the NAV per holdingG on which the performance fee was last calculated and paid; and
                (c) From an audited NAV.
                April 2012

              • BDR-6.1.4

                Costs, charges and fees which have not been disclosed in a Bahrain domiciled retail CIU'sG prospectusG must not be paid from the CIU'sG assets.

                April 2012

            • BDR-6.2 Dividends

              • BDR-6.2.1

                All requests for distribution of dividends on holdingsG , must be approved in writing by the CBB prior to announcing the proposed dividend by way of a press announcement or any other means of communication and prior to submitting a proposal for distribution to CIU participantsG of a Bahrain domiciled retail CIUG .

                April 2012

          • BDR-7: Valuation of Assets

            • BDR-7.1 General Requirements

              • BDR-7.1.1

                The board of Directors must ensure that an independent, fair and regular valuation of all the CIU'sG assets, is conducted by appropriately qualified valuators.

                April 2012

              • BDR-7.1.2

                The valuation principles to be applied must be stated in the CIU'sG prospectusG and must include details of the methods and frequency of the valuation of assets.

                April 2012

              • BDR-7.1.3

                The CBB expects the scope of the valuation policy:

                (a) To reflect 'good practice' industry standards;
                (b) Wherever possible, to be based on multiple and independent price sources;
                (c) Where unavoidable, valuations based on trader, broker or pricing models, input should be sufficiently tested and controlled, and declared, such that conflicts of interest are minimised;
                (d) Procedures should be developed to identify stale prices or illiquid assets;
                (e) The valuation of such assets should be performed by an expert in the asset class; and
                (f) Valuations should normally be undertaken at least on a monthly basis.
                (g) In the case of CIUsG structured as B-REITsG , the valuation must be undertaken at least annually.
                Amended: October 2017
                April 2012

              • BDR-7.1.4

                The fund administratorG must notify the CBB, in writing, if:

                (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date;
                (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIUG ; or
                (iii) The total NAV falls below 50% of the total NAV of the CIUG relative to the previous valuation day.
                April 2012

          • BDR-8: Books and Records

            • BDR-8.1 General Requirements

              • BDR-8.1.1

                Bahrain domiciled retail CIUsG must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The CIUG and its relevant personsG , as appropriate, to comply with the Rules in this Module; and
                (b) The CIUG to demonstrate at any time that such compliance has been achieved.
                April 2012

              • BDR-8.1.2

                The records referred to in Paragraph BDR-8.1.1, include but are not limited to, the minutes of the board of director'sG meetings (see Paragraph CG-4.1.1), the prospectusG , contractual agreements, documents constituting the CIUG and annual audited statements.

                April 2012

              • BDR-8.1.3

                Bahrain domiciled retail CIUsG must maintain, through the appointed registrarG , a register of holdingsG in the CIUG . The register must be kept up to date at all times and must contain the following information:

                (a) Name of the CIU participantG ;
                (b) Official identification of the CIU participantG (including the type and number);
                (c) Address and contact details of the CIU participantG ;
                (d) Number of units held by the CIU participantG ;
                (e) Number(s) of the certificate(s) issued to each CIU participantG ;
                (f) Date of issuance or transfer of units to the CIU participantG ;
                (g) Record of redemption of units; and
                (h) Record of cancellation of units.
                April 2012

              • BDR-8.1.4

                Bahrain domiciled retail CIUsG must, through the appointed registrarG , obtain and safe-keep all signed application forms, along with KYC documents for each CIU participantG , in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable laws and regulations.

                April 2012

              • BDR-8.1.5

                The operatorG of a Bahrain domiciled retail CIUG must make available for public inspection in Bahrain, free of charge, the following documents:

                (a) The documents constituting the CIUG ;
                (b) The prospectusG (and simplified prospectusG if applicable);
                (c) All annual and semi-annual reports issued by the CIUG ; and
                (d) Copies of all CBB approvals, where required.
                April 2012

          • BDR-9: Financial Statements and Disclosure Requirements

            • BDR-9.1 General Requirements

              • BDR-9.1.1

                Bahrain domiciled retail CIUsG must prepare semi-annual (interim) and annual audited financial statements for each financial year.

                April 2012

              • BDR-9.1.2

                The annual audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or AAOIFI Standards, as applicable, by a qualified independent external auditorG located in Bahrain and acceptable to the CBB. The semi-annual (interim) financial statements must be subject to an independent review by the same auditor.

                April 2012

              • BDR-9.1.3

                The annual audited financial statements must be disclosed and distributed to CIU participantsG and submitted to the CBB, within 4 months of the end of the CIU'sG financial year.

                April 2012

              • BDR-9.1.4

                The semi-annual (interim) financial statements must be disclosed and distributed to CIU participantsG and submitted to the CBB, within 2 months of the period end.

                April 2012

              • BDR-9.1.5

                Both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) of Part B of Volume 7.

                April 2012

              • BDR-9.1.6

                Publication of semi-annual and annual audited financial statements on the CIU'sG or operator'sG website is encouraged.

                April 2012

              • BDR-9.1.7

                The annual audited financial statements of the fund companyG (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund companyG .

                April 2012

              • BDR-9.1.8

                Bahrain domiciled retail CIUsG must disclose their NAV to all CIU participantsG and potential investors, in accordance with the prospectusG .

                April 2012

          • BDR-10: Advertisements

            • BDR-10.1 General Requirements

              • BDR-10.1.1

                The operatorG /fund managerG , as appropriate, is responsible to ensure that all advertisements in respect of Bahrain domiciled retail CIUsG must:

                (a) Be fair, transparent and not misleading;
                (b) Be clear and self-explanatory (describing the nature or type of CIUG to which the advertisement relates);
                (c) State any assumptions, forecasts and projections, on which claims in advertisements are based. Where an advertisement contains any forecast or projection, it must make clear the basis upon which that forecast or projection is made;
                (d) Contain risk warnings, including the potential for loss, in a manner that such warning is prominently presented and not obscured or disguised. The font used for risk warnings must be readable, bold and not less than the font of the advertisement;
                (e) Not describe CIUsG as "guaranteed" unless there is a legally enforceable capital guarantee;
                (f) Not include any comparisons which may be misleading, considering the circumstances of the CIUG ; and
                (g) Include a statement informing the client that more detailed information on the CIUG is contained in the prospectusG , a copy of which must be made available to the client, free of charge.
                April 2012

              • BDR-10.1.2

                For the purposes of this Module, advertising may include, but is not limited to, advertising in print or other media, e-mail or internet.

                April 2012

          • BDR-11: Access to Premises

            • BDR-11.1 General Requirements

              • BDR-11.1.1

                Relevant personsG of Bahrain domiciled retail CIUsG must permit representatives of the CBB, or persons appointed by the CBB to have access, with or without notice, duing reasonable business hours to any of their business premises to allow the CBB to carry out inspection or investigation of the CIUG at any point of time, in order for the CBB to discharge its regulatory obligations.

                April 2012

          • BDR-12: Listing Requirements

            • BDR-12.1 General Requirements

              • BDR-12.1.1

                Bahrain domiciled retail CIUsG may only be listed on a licensed exchangeG and must state such intention in the prospectusG .

                April 2012

              • BDR-12.1.1A

                An example of a listed Bahrain domiciled retail CIU include Exchange Traded Funds ((ETFs). ETFs are effectively mutual funds that are traded like stocks on a stock exchange. An ETF is a marketable security that tracks an index, a commodity, bonds or a basket of securities.

                Added: October 2017

              • BDR-12.1.2

                In the case that a Bahrain domiciled retail CIUG intends to be listed subsequent to being authorised by the CBB, it must:

                (a) Amend the prospectusG after obtaining the CBB's approval; and
                (b) Notify the CIU participantsG of such intention.
                April 2012

              • BDR-12.1.3

                Subsequent to fulfilling the requirements listed in Paragraph BDR-12.1.2, the operatorG of the CIUG must:

                (a) Obtain CBB's non-objection to be listed;
                (b) Obtain the required approvals from the licensed exchangeG ; and
                (c) Thereafter, notify the CBB of the effective date of listing.
                April 2012

              • BDR-12.1.4

                In the event of listing, the prospectusG of the listed CIUG must be made available to potential subscribers.

                April 2012

              • BDR-12.1.5

                Listed CIUsG must at all times observe the definition of "eligible investors" as per indicated in the prospectusG .

                April 2012

              • BDR-12.1.6

                The listed Bahrain domiciled retail CIUG must follow the listing rules provided by the licensed exchangeG .

                Added: October 2017

          • BDR-13: Mergers and Transfers

            • BDR-13.1 General Requirements

              • BDR-13.1.1

                A Bahrain domiciled retail CIUG must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled retail CIU.G

                April 2012

              • BDR-13.1.2

                The request for approval above must be supported by the following information:

                (a) The reasons for the proposed merger or transfer;
                (b) The alternatives available to CIU participantsG (including a right to redeem without charge, or switch into another Bahrain domiciled retail CIUG without charge); and
                (c) The estimated costs of the merger or transfer, and information on who is expected to bear such costs.
                April 2012

              • BDR-13.1.3

                All CIU participantsG must be informed, at least 15 business days prior to the intention to merge or transfer to another Bahrain domiciled retail CIUG in order for them to make an informed decision.

                April 2012

              • BDR-13.1.4

                In all cases, a merger or transfer of a Bahrain domiciled retail CIUG must be in accordance with the instrumentG constituting the CIUG and all other applicable laws.

                April 2012

          • BDR-14: Suspension of Dealing in CIU Holdings

            • BDR-14.1 Suspension of Dealing

              • BDR-14.1.1

                A Bahrain domiciled retail CIUG must notify the CBB and all CIU participantsG upon the suspension of dealing in the CIUG holdingsG and provide the rationale for such decision.

                April 2012

            • BDR-14.2 Resumption of Dealing

              • BDR-14.2.1

                A Bahrain domiciled retail CIUG must notify the CBB and all CIU participantsG upon the resumption of dealing in the CIUG holdingsG and provide the date on which the dealing was resumed.

                April 2012

        • BDE Bahrain Domiciled Expert CIUs

          • BDE-A Introduction

            • BDE-A.1 Purpose

              • Executive Summary

                • BDE-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Expert CIUsG .

                  April 2012

              • Legal Basis

                • BDE-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain Domiciled expert CIUsG applicable to collective investment undertakingsG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BDE-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BDE-A.2 Module History

              • Evolution of Module

                • BDE-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • BDE-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BDE-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  BDE-7.1.3(g) 10/2017 Deleted subparagraph on annual valuation.
                       
                       
                       
                       

              • Superseded Requirements

                • BDE-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • BDE-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BDE-B Definition

            • BDE-B.1 Definition

              • Bahrain Domiciled Expert CIUs

                • BDE.B.1.1

                  Bahrain domiciled expert CIUsG are defined under section Paragraph ARR-B.1.14 as CIUsG that may be offered only to expert investorsG , and impose a minimum initial investment of USD10,000 (or equivalent in any other currency).

                  April 2012

                • BDE.B.1.2

                  A Bahrain domiciled expert CIUG must be able to demonstrate that each of its participantsG falls within the definition of an expert investorG . It should also be able to demonstrate that the risk exposure potentially represented by a Bahrain domiciled expert CIUG have been clearly communicated and understood by the CIU participantsG .

                  April 2012

                • BDE.B.1.3

                  To help demonstrate compliance with Rule BDE-B.1.2, the CBB would expect to see a written confirmation from each CIU participantG , stating that they satisfy the definition of an expert investorG and confirming that they understand the higher risks involved in an expert CIUG .

                  April 2012

              • Authorisation Requirements

                • BDE.B.1.4

                  Bahrain domiciled expert CIUsG must be authorised by the CBB prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-3.

                  April 2012

          • BDE-1 Documents Constituting the CIU

            • BDE-1.1 General Requirements

              • BDE-1.1.1

                Every Bahrain domiciled expert CIUG must be constituted by way of documents, containing the information listed in Supplementary Information document ARR(i), in Part B of Volume 7.

                April 2012

              • BDE-1.1.2

                In the case of CIUsG established as Common CIUsG established under the laws of contract, the documents are the Memorandum and Articles of Association of the fund companyG and the CIUG instrument. In the case of Corporates established under the Bahrain Commercial Companies Law, the documents are the Memorandum and Articles of Association. In the case of CIUsG established as Trusts under the Financial Trust Law, the legal document is the trust deed.

                April 2012

              • BDE-1.1.3

                The operatorG of a Bahrain domiciled expert CIUG together with the directorsG of the CIUG concerned, or trusteesG , as appropriate, must ensure that the documents constituting the CIUG :

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the operatorG , fund managerG and other relevant personsG to the CIUG ; and
                (c) Are not unfairly prejudicial to the interests of the CIU participantsG , either generally or to a particular class of CIU participants.G
                April 2012

              • BDE-1.1.4

                The operatorG of a Bahrain domiciled expert CIUG together with the directorsG of the CIUG concerned, or trusteesG , as appropriate, must maintain the documents constituting the CIUG .

                April 2012

              • BDE-1.1.5

                Once authorised, prior approval must be obtained from the CBB for any subsequent material changes to the documents. An updated copy of the documents must be made available to the CBB within 30 calendar days of the revision being approved.

                April 2012

          • BDE-2 Prospectus

            • BDE-2.1 General Requirements

              • BDE-2.1.1

                Every Bahrain domiciled expert CIUG authorised under Chapter ARR-3 must publish a prospectusG containing, as a minimum, the information set out in Supplementary Information document ARR(ii), in Part B of Volume 7.

                April 2012

              • BDE-2.1.2

                The board of the CIUG , or trusteesG , as appropriate, must ensure that the information contained in the prospectusG :

                (a) Is complete and transparent;
                (b) Is not false, misleading, or unfairly prejudicial to the interests of the CIU participantsG generally or to the participantsG of other classes of instruments issued by the CIUG ; and
                (c) Does not contain any provision that conflicts with any Rule in Volume 7, or other legal or regulatory requirements that apply to the CIUG or other relevant personsG connected to the CIUG .
                April 2012

              • BDE-2.1.3

                The documents constituting the Bahrain domiciled expert CIUG must form an integral part of the prospectusG and must be annexed to it. Alternatively, the prospectusG must specify where the documents constituting the Bahrain domiciled expert CIUG may be obtained.

                April 2012

              • BDE-2.1.4

                The board of the CIUG must keep the prospectusG up-to-date, such that the information it contains is materially current.

                April 2012

              • BDE-2.1.5

                Once the CIUG is authorised, prior approval must be obtained from the CBB for any subsequent material changes to the prospectusG . An updated copy of the prospectusG must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participantsG must be notified of the changes at least 30 calendar days before they take effect, given that a window for redemption is made available to CIU participantsG within this timeframe.

                April 2012

              • BDE-2.1.6

                For the purposes of the Paragraph BDE-2.1.5, material changes include, but are not limited to:

                (a) Changes in the relevant personsG ;
                (b) A change in legal structure;
                (c) A change to the investment strategy; or
                (d) A change in fees.
                April 2012

              • BDE-2.1.7

                The CIUG must provide a copy of its most recent prospectus,G free of charge, to any existing and potential CIU participantsG .

                April 2012

              • BDE-2.1.8

                The CIUG must, upon request, provide explanations and such other information supplementary to the prospectusG as may reasonably be required by any existing and potential CIU participantsG .

                April 2012

            • BDE-2.2 Simplified Prospectus

              • BDE-2.2.1

                Where a simplified prospectusG is published by a Bahrain domiciled expert CIUG , it must include, as a minimum, the information specified in Supplementary Information document ARR(iii), in Part B of Volume 7. It must also include a statement stating that more detailed information on the CIUG is contained in the prospectusG , a copy of which must be made available free of charge to existing and potential CIU participantsG upon request.

                April 2012

              • BDE-2.2.2

                A simplified prospectusG must contain a summary of the key features of the CIUG , including its investment policy and fee structure. It must not be misleading.

                April 2012

              • BDE-2.2.3

                A simplified prospectusG must be kept up to date, such that the information it contains is materially current and accurately represents the full prospectusG .

                April 2012

              • BDE-2.2.4

                There is no requirement for a simplified prospectusG to be approved by the CBB, nor for any subsequent material changes to be approved or notified. However, the simplified prospectusG must accurately reflect the full prospectusG , which is subject to approval requirements (see Rule BDE-2.1.5).

                April 2012

          • BDE-3 CIU Holdings

            • BDE-3.1 Rights

              • BDE-3.1.1

                If a Bahrain domiciled expert CIUG has different classes of holdingsG , the documents constituting the CIUG must clearly set out:

                (a) The different features of each class of holdingsG , including their respective rights;
                (b) The allocation of expenses and fees; and
                (c) How the proportion of the value of the assets of the CIUG and the proportion of income available for allocation attributable to each such class is to be calculated.
                April 2012

              • BDE-3.1.2

                For the purposes of this Module, the interest of the CIU participantsG in a Bahrain domiciled expert CIUG (by whatever name these interests are called), are deemed to consist of holdingsG (including fractions of a holding), each holdingG representing one undivided share of the entitlement in the CIU'sG assets.

                April 2012

              • BDE-3.1.3

                The documents constituting the CIUG may provide for different classes of holdingsG to be issued in an authorised CIUG and, in the case of umbrella CIUsG , may provide that different classes of holdingsG may be issued for each sub-CIUG .

                April 2012

            • BDE-3.2 Issue, Purchase and Redemption of Holdings

              • BDE-3.2.1

                HoldingsG may not be created or issued unless the equivalent of the net issue price is paid into the assets of a Bahrain domiciled expert CIUG within the usual time limits. This does not preclude the distribution of bonus holdingsG .

                April 2012

              • BDE-3.2.2

                No direct or indirect lending should be made to CIU participantsG for the purpose of purchasing holdingsG in a Bahrain domiciled expert CIUG , unless the CIU participant is classified as an accredited investorG and the lending is incidental to the investment.

                April 2012

              • BDE-3.2.3

                CIU participantsG must, in accordance with the CIUG documents, either be:

                (a) Issued with registered certificates evidencing title to holdings;G or
                (b) Provided with written confirmation of entry in a register for such holdingsG which must be kept current and up-to-date at all times and must contain full details of the names and addresses of the CIU participantsG , the number of holdingsG held by them, and the date of acquisition of such holdingsG .
                April 2012

              • BDE-3.2.4

                HoldingsG in a CIUG must be redeemed, repurchased, reimbursed or repaid (as may be appropriate) at the request of the CIU participantsG and in accordance with the Bahrain domiciled expert CIU'sG documents.

                April 2012

              • BDE-3.2.5

                HoldingsG may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate):

                (a) In accordance with the prospectusG constituting the Bahrain domiciled expert CIU:G and
                (b) At a price arrived at by dividing the NAV of the CIUG by the number of holdingsG outstanding, after taking into account any charges as stated in the prospectusG .
                April 2012

              • BDE-3.2.6

                The prospectusG constituting the Bahrain domiciled expert CIUG must clearly state the frequency and basis for calculation of the issue price, repurchase price and other appropriate prices of the holdingsG in the CIUG .

                April 2012

          • BDE-4 Investments

            • BDE-4.1 Risk Management

              • BDE-4.1.1

                Bahrain domiciled expert CIUsG must operate on the principle of risk spreading and must maintain and implement investment and risk management policies aimed at the prudent risk control.

                April 2012

              • BDE-4.1.2

                The prospectusG must summarise the policies and limits which the Bahrain domiciled expert CIUG will apply, including (but not limited to):

                (a) The type of assets which the CIUG may invest in;
                (b) The aggregate limits for each asset class;
                (c) Geographic allocation, limits per country, and sectors limits (if applicable);
                (d) Permitted individual exposures under each asset class; and
                (e) A description of remedial measures to be taken in the event of limit exceptions.
                April 2012

              • BDE-4.1.3

                As further guidance, reference should be made to Supplementary Information document, ARR (iii) which sets out the minimum information to be contained in the prospectusG , and Supplementary Information document, ARR (iv) which sets out the admissible assets and limits for Bahrain domiciled expert CIUsG .

                April 2012

              • BDE-4.1.4

                Bahrain domiciled expert CIUsG may only invest in the type of assets specified in and in accordance with the limits prescribed in ARR(iv), unless otherwise agreed and approved in writing by the CBB. However, such limits do not apply until the expiry of a period of six months from the date of the initial offering of the CIUG .

                April 2012

              • BDE-4.1.5

                Where such approvals are given, the fact must be notified to CIU participantsG as an amendment to the prospectusG (and simplified prospectusG where applicable).

                April 2012

              • BDE-4.1.6

                The CBB may allow a Bahrain domiciled expert CIUG to broaden its investment policy to allow investments in financial assets other than those specified in ARR(iv), if it is satisfied that such assets are sufficiently liquid and the interests of the CIU participantsG are not prejudiced. The CBB may similarly also approve limits beyond those specified in ARR(iv), if it is satisfied that such approval is in the interests of the CIU participantsG .

                April 2012

              • BDE-4.1.7

                If the name or particulars of a Bahrain domiciled expert CIUG indicates a specific objective, asset class, geographic region or market, the CIUG must invest at least 60% of its assets in investments that reflect the specific objective, asset class, region or market. The remaining balance of the CIU'sG assets may only be held in cash or cash equivalents.

                April 2012

            • BDE-4.2 Derivative Transactions

              • BDE-4.2.1

                A Bahrain domiciled expert CIUG may enter into permitted financial derivative transactions, provided that the following conditions are adhered to at all times:

                (a) The underlying positions continue to satisfy the limits specified in ARR(iv);
                (b) The transactions are consistent with the stated investment objectives;
                (c) The counterparties are licensed financial institutions or licensed exchangesG or clearing houses;
                (d) The prospectusG of the CIUG clearly specifies the use and rationale of such transactions (i.e. for hedging purposes or for achieving investment goals), and provides a clear description of the associated risks, including the risk of volatility in net asset values;
                (e) The derivative positions and balances allow independent and reliable daily valuations and can be sold, liquidated or closed by an offsetting transaction at any time, at their fair value and at the initiative of the CIUG ;
                (f) The transactions are subject to sound and documented risk management policies and practices; and
                (g) The arrangement is consistent with good market practice.
                April 2012

            • BDE-4.3 Significant Influence / Conflicts of Interest

              • BDE-4.3.1

                Bahrain domiciled expert CIUsG must not acquire securities issued by a relevant personG , unless exempted in writing by the CBB.

                April 2012

              • BDE-4.3.2

                Exemption from Rule BDE-4.3.1 will normally only be given by the CBB in cases where a Bahrain domiciled expert CIUG is pursuing a market index strategy, such that it is obliged to invest in a relevant person'sG securities in order to replicate a market index.

                April 2012

              • BDE-4.3.3

                Bahrain domiciled expert CIUsG must not invest in any security (of any class) in a company or other undertaking, if any directorG of the CIUG or of any relevant personG and its affiliates individually or collectively owns more than 5% of those securities.

                April 2012

              • BDE-4.3.4

                The prohibition in Paragraph BDE-4.3.3 also applies where the ownership of the directors of the CIUG or of any relevant personG and its affiliates, is in the parent, subsidiary or other associated undertaking of the company in which the CIUG is to make the investment.

                April 2012

              • BDE-4.3.5

                Bahrain domiciled expert CIUsG must not invest in other CIUsG which have the same operatorG , as the Bahrain domiciled expert CIUG .

                April 2012

              • BDE-4.3.6

                Bahrain domiciled expert CIUsG must not enter into a transaction where one of the relevant personsG is a counterparty to the transaction.

                April 2012

            • BDE-4.4 Other Restrictions on Investments

              • BDE-4.4.1

                Bahrain domiciled expert CIUsG must not:

                (a) Assume, guarantee, endorse or otherwise become directly or contingently liable for the obligations or indebtedness of any person, except in accordance with its prospectusG or instrumentG constituting the CIUG ; or
                (b) Acquire any asset which involves the assumption of any liability which is unlimited.
                April 2012

            • BDE-4.5 Non-Compliance with and Breaches of Investment Limits

              • BDE-4.5.1

                If the investment limits and risk management policies specified in the prospectusG are breached because of a reason other than a market change or movement, the Bahrain domiciled expert CIUG must take all necessary steps to remedy the situation immediately, without jeopardizing the interests of CIU participantsG .

                April 2012

              • BDE-4.5.2

                Any breach of investment limits and risk management policies, that has occurred because of a reason other than a market change or movement, must be reported to the CBB in writing by the board of the CIUG , the custodianG and the fund administratorG , in a timely manner and accompanied by a plan and time-frame whereby the breach would be rectified.

                April 2012

              • BDE-4.5.3

                If the breach occurs as a result of a market change or movement, the Bahrain domiciled expert CIUG must take all necessary steps to remedy the situation, if possible, but without jeopardizing the interests of CIU participantsG , and to notify the CBB of the same.

                April 2012

              • BDE-4.5.4

                The CBB does not consider it a breach in the event that the fund managerG foresees, due to adverse market conditions, that it is in the best interest of CIU participantsG to shift from investments into cash and cash equivalents. In such case, the following notifications must be made:

                (a) The boardG is required to immediately notify the CBB and the registrarG stating the reason and the expected time by which the stipulated limits will be met;
                (b) The boardG is required to immediately notify the CBB and the registrarG once the CIUG resumes investing in accordance with the investment limits stipulated in the prospectusG ; and
                (c) The registrarG is required to notify the CIU participantsG of the information above.
                April 2012

          • BDE-5 Borrowing, Leveraging, Lending and Short Selling

            • BDE-5.1 Borrowing

              • BDE-5.5.1

                A Bahrain domiciled expert CIUG may only borrow subject to the following conditions:

                (a) The borrowing is temporary;
                (b) The borrowing is to be repaid out of the assets of the CIUG ;
                (c) The assets of the CIUG , other than those pledged for the purpose of the borrowing transaction are not pledged;
                (d) The borrowing does not at any time exceed 20% of the CIU'sG assets;
                (e) The circumstances for such borrowing are disclosed in the prospectusG ; and
                (f) The borrowing is made on an exceptional basis to assist with liquidity management, rather than to leverage returns.
                April 2012

            • BDE-5.2 Leveraging

              • BDE-5.2.1

                A Bahrain domiciled expert CIUG may only borrow up to 20% of the CIU'sG assets for the purpose of leveraging returns.

                April 2012

              • BDE-5.2.2

                The aggregate borrowing and leveraging limit permitted for Bahrain domiciled expert CIUsG must not exceed 30% of the CIU'sG assets at any time.

                April 2012

            • BDE-5.3 Lending

              • BDE-5.3.1

                A Bahrain domiciled expert CIUG must not lend its assets to a relevant personG of the CIUG .

                April 2012

              • BDE-5.3.2

                A Bahrain domiciled expert CIUG may only lend its assets by entering into a stock lending agreement.

                April 2012

              • BDE-5.3.3

                A Bahrain domiciled expert CIUG may only enter into stock lending arrangements in respect of any securities held by it, provided that:

                (a) The counterparty is a licensed financial institution;
                (b) The arrangement is consistent with best market practice;
                (c) Acceptable collateral with a value equal to the securities lent is obtained to secure the obligation;
                (d) The current realisable value of the securities and of the relevant collateral is monitored daily in order to make-up the difference when the current realisable value of the collateral falls below that of the securities lent;
                (e) The aggregate value of stocks lent does not at any time exceed 20% of the net asset value of the CIU'sG assets; and
                (f) The circumstances for such lending are disclosed in the prospectusG .
                April 2012

            • BDE-5.4 Short Selling

              • BDE-5.4.1

                A Bahrain domiciled expert CIUG must not engage in short selling of securities.

                April 2012

          • BDE-6 Fees and Dividends

            • BDE-6.1 Fees

              • BDE-6.1.1

                All costs and charges, including fees to relevant personsG , payable from the assets of a Bahrain domiciled expert CIUG must be clearly stated and disclosed in the prospectusG and must include the following:

                (a) The breakdown of such costs and charges;
                (b) The estimated or actual amount of costs and charges payable;
                (c) The nature and the basis for their calculation; and
                (d) The maximum amounts payable, expressed as percentages of the CIU'sG assets, on a per annum basis.
                April 2012

              • BDE-6.1.2

                Where a performance fee is charged by way of deduction from the assets of a Bahrain domiciled expert CIUG , the following must be stated in the prospectusG :

                (a) The frequency of charging the performance fee to the CIUG ; and
                (b) The basis upon which the performance fee is calculated.
                April 2012

              • BDE-6.1.3

                If a performance fee is levied, the fee may only be payable:

                (a) Not more frequently than annually;
                (b) If the NAV per holdingG exceeds the NAV per holdingG on which the performance fee was last calculated and paid; and
                (c) From an audited NAV.
                April 2012

              • BDE-6.1.4

                Costs, charges and fees which have not been disclosed in a Bahrain domiciled expert CIU'sG prospectusG must not be paid from the CIU'sG assets.

                April 2012

            • BDE-6.2 Dividends

              • BDE-6.2.1

                All requests for distribution of dividends on holdingsG , must be approved in writing by the CBB prior to announcing the proposed dividend by way of a press announcement or any other means of communication and prior to submitting a proposal for distribution being announced or distributed to CIU participantsG of a Bahrain domiciled expert CIUG .

                April 2012

          • BDE-7 Valuation of Assets

            • BDE-7.1 General Requirements

              • BDE-7.1.1

                The board of Directors must ensure that an independent, fair and regular valuation of all the CIU'sG assets, is conducted by appropriately qualified valuators.

                April 2012

              • BDE-7.1.2

                The valuation principles to be applied must be stated in the CIU'sG prospectusG and must include details of the methods and frequency of the valuation of assets.

                April 2012

              • BDE-7.1.3

                The CBB expects the scope of the valuation policy:

                (a) To reflect 'good practice' industry standards;
                (b) Wherever possible, to be based on multiple and independent price sources;
                (c) Where unavoidable, valuations based on trader, broker or pricing models, input should be sufficiently tested and controlled, and declared, such that conflicts of interest are minimised;
                (d) Procedures should be developed to identify stale prices or illiquid assets;
                (e) The valuation of such assets should be performed by an expert in the asset class;
                (f) Valuations should normally be undertaken at least on a monthly basis.
                (g) [This subparagraph was deleted in October 2017].
                Amended: October 2017
                April 2012

              • BDE-7.1.4

                The fund administratorG must notify the CBB, in writing, if:

                (i) The NAV per unit falls below 60% of the initial value per unit, at any valuation date.
                (ii) The total NAV falls below 60% of the total NAV reported in the last audited financials of the CIUG ; or
                (iii) The total NAV falls below 50% of the total NAV of the CIUG relative to the previous valuation day.
                April 2012

          • BDE-8 Books and Records

            • BDE-8.1 General Requirements

              • BDE-8.1.1

                Bahrain domiciled expert CIUsG must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The CIUG and its relevant personsG , as appropriate, to comply with the Rules in this Module; and
                (b) The CIUG to demonstrate at any time that such compliance has been achieved.
                April 2012

              • BDE-8.1.2

                The records referred to above, include but are not limited to, the minutes of the board of director'sG meetings (see Paragraph CG-4.1.1), the prospectusG , contractual agreements, documents constituting the CIUG and annual audited statements.

                April 2012

              • BDE-8.1.3

                Bahrain domiciled expert CIUsG must maintain, through the appointed registrarG , a register of holdingsG in the CIUG . The register must be kept up to date at all times and must contain the following information:

                (a) Name of the CIU participantG ;
                (b) Official identification of the CIU participantG (including the type and number);
                (c) Address and contact details of the CIU participantG ;
                (d) Number of units held by the CIU participantG ;
                (e) Number(s) of the certificate(s) issued to each CIU participantG ;
                (f) Date of issuance or transfer of units to the CIU participantG ;
                (g) Record of redemption of units; and
                (h) Record of cancellation of units.
                April 2012

              • BDE-8.1.4

                Bahrain domiciled expert CIUsG must, through the appointed registrarG , obtain and safe-keep all signed application forms, along with KYC documents for each CIU participantG , in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable laws and regulations.

                April 2012

              • BDE-8.1.5

                The operatorG of a Bahrain domiciled expert CIUG must make available for public inspection free of charge in Bahrain, the following documents:

                (a) The documents constituting the CIUG ;
                (b) The prospectusG (and simplified prospectusG if applicable);
                (c) All annual and semi-annual reports issued by the CIUG ; and
                (d) Copies of all CBB approvals, where required.
                April 2012

          • BDE-9 Financial Statements and Disclosure Requirements

            • BDE-9.1 General Requirements

              • BDE-9.1.1

                Bahrain domiciled expert CIUsG must prepare semi-annual (interim) and annual audited financial statements for each financial year.

                April 2012

              • BDE-9.1.2

                The annual audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or AAOIFI Standards, as applicable, by a qualified independent external auditorG located in Bahrain and acceptable to the CBB. The semi-annual (interim) financial statements must be subject to an independent review by the same auditor.

                April 2012

              • BDE-9.1.3

                The annual audited financial statements must be disclosed and distributed to CIU participantsG and submitted to the CBB, within 4 months of the end of the CIU'sG financial year.

                April 2012

              • BDE-9.1.4

                The semi-annual (interim) financial statements must be disclosed and distributed to CIU participantsG and submitted to the CBB, within 2 months of the period end.

                April 2012

              • BDE-9.1.5

                Both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) of Part B of Volume 7.

                April 2012

              • BDE-9.1.6

                Publication of semi-annual and annual audited financial statements on the CIU'sG or operator'sG website is encouraged.

                April 2012

              • BDE-9.1.7

                The annual audited financial statements of the fund companyG (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund companyG .

                April 2012

              • BDE-9.1.8

                Bahrain domiciled expert CIUsG must disclose their NAV to all CIU participantsG and potential investors, in accordance with the prospectusG .

                April 2012

          • BDE-10 Advertising

            • BDE-10.1 General Requirements

              • BDE-10.1.1

                The operatorG /fund managerG , as appropriate, is responsible to ensure that all advertisements in respect of Bahrain domiciled expert CIUsG must:

                (a) Be fair, transparent and not misleading;
                (b) Be clear and self-explanatory (describing the nature or type of CIUG to which the advertisement relates);
                (c) State any assumptions, forecasts and projections, on which claims in advertisements are based. Where an advertisement contains any forecast or projection, it must make clear the basis upon which that forecast or projection is made;
                (d) Contain risk warnings, including the potential for loss, in a manner that such warning is prominently presented and not obscured or disguised. The font used for risk warnings must be readable, bold and not less than the font of the advertisement;
                (e) Not describe CIUsG as "guaranteed" unless there is a legally enforceable capital guarantee;
                (f) Not include any comparisons which may be misleading, considering the circumstances of the CIUG ; and
                (g) Include a statement informing the client that more detailed information on the CIUG is contained in the prospectusG , a copy of which must be made available to the client, free of charge.
                April 2012

              • BDE-10.1.2

                For the purposes of this Module, advertising may include, but is not limited to, advertising in print or other media, e-mail or internet.

                April 2012

          • BDE-11 Access to Premises

            • BDE-11.1 General Requirements

              • BDE-11.1.1

                Relevant personsG of Bahrain domiciled expert CIUsG must permit representatives of the CBB, or persons appointed by the CBB to have access, with or without notice, duing reasonable business hours to any of their business premises to allow the CBB to carry out inspection or investigation of the CIUG at any point of time, in order for the CBB to discharge its regulatory obligations.

                April 2012

          • BDE-12 Listing Requirements

            • BDE-12.1 General Requirements

              • BDE-12.1.1

                Bahrain domiciled expert CIUsG may only be listed on a licensed exchangeG and must state such intention in the prospectusG .

                April 2012

              • BDE-12.1.2

                In the case that a Bahrain domiciled expert CIUG intends to be listed subsequent to being authorised by the CBB, it must:

                (a) Amend the prospectusG after obtaining the CBB's approval; and
                (b) Notify the CIU participantsG of such intention.
                April 2012

              • BDE-12.1.3

                Subsequent to fulfilling the requirements listed in Paragraph BDE-12.1.2, the operatorG of the CIUG must:

                (a) Obtain CBB's non-objection to be listed;
                (b) Obtain the required approvals from the licensed exchangeG ; and
                (c) Thereafter, notify the CBB of the effective date of listing.
                April 2012

              • BDE-12.1.4

                In the event of listing, the prospectusG of the listed CIUG must be made available to potential subscribers.

                April 2012

              • BDE-12.1.5

                Listed CIUsG must at all times observe the definition of "eligible investors" as per indicated in the prospectusG .

                April 2012

          • BDE-13 Mergers and Transfers

            • BDE-13.1 General Requirements

              • BDE-13.1.1

                A Bahrain domiciled expert CIUG must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled expert CIU.G

                April 2012

              • BDE-13.1.2

                The request for approval above must be supported by the following information:

                (a) The reasons for the proposed merger or transfer;
                (b) The alternatives available to CIU participantsG (including a right to redeem without charge, or switch into another Bahrain domiciled expert CIUG without charge); and
                (c) The estimated costs of the merger or transfer, and information on who is expected to bear such costs.
                April 2012

              • BDE-13.1.3

                All CIU participantsG must be informed of the intention to merge or transfer to another Bahrain domiciled expert CIUG , sufficiently prior to the event taking place, in order for them to make an informed decision.

                April 2012

              • BDE-13.1.4

                In all cases, a merger or transfer of a Bahrain domiciled expert CIUG must be in accordance with the instrumentG constituting the CIUG and all other applicable laws.

                April 2012

          • BDE-14 Suspension of Dealing in CIU Holdings

            • BDE-14.1 Suspension of Dealing

              • BDE-14.1.1

                A Bahrain domiciled expert CIUG must notify the CBB and all CIU participantsG upon the suspension of dealing in the CIUG holdingsG and provide the rationale for such decision.

                April 2012

            • BDE-14.2 Resumption of Dealing

              • BDE-14.2.1

                A Bahrain domiciled expert CIUG must notify the CBB and all CIU participantsG upon the resumption of dealing in the CIUG holdingsG and provide the date on which the dealing was resumed.

                April 2012

        • BDX Bahrain Domiciled Exempt CIUs

          • BDX-A Introduction

            • BDX-A.1 Purpose

              • Executive Summary

                • BDX-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Exempt CIUsG .

                  April 2012

              • Legal Basis

                • BDX-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain domiciled exempt CIUsG applicable to collective investment undertakingsG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BDX-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BDX-A.2 Module History

              • Evolution of Module

                • BDX-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • BDX-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BDX-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                       
                       
                       
                       
                       
                  April 2012

              • Superseded Requirements

                • BDX-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference
                  Volume 6 Module CIU
                  April 2012

                • BDX-A.2.5

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BDX-B Definition

            • BDX-B.1 Definition

              • BDX-B.1.1

                Bahrain domiciled exempt CIUsG are defined in Rule ARR-B.1.18 as CIUsG that are lightly regulated and may be offered only to accredited investorsG , and impose a minimum initial investment of USD100,000 (or equivalent in any other currency).

                April 2012

              • BDX-B.1.2

                A Bahrain domiciled exempt CIUG must be able to demonstrate that each of its participantsG falls within the definition of an accredited investorG . It should also be able to demonstrate that the risk exposure potentially represented by a Bahrain domiciled exempt CIUG has been clearly communicated and understood by the CIU participantsG .

                April 2012

              • BDX-B.1.3

                To help demonstrate compliance with Rule BDX-B.1.2, the CBB would expect to see a written confirmation from each CIU participantG , stating that they satisfy the definition of an accredited investorG and confirming that they understand the higher risks involved in an exempt CIU.G

                April 2012

              • Registration Requirements

                • BDX-B.1.4

                  Bahrain domiciled exempt CIUsG must be registered by the CBB prior to being offered to investors, in accordance with the requirements set out in Chapter ARR-4 of Module ARR.

                  April 2012

          • BDX-1 Document Constituting the CIU

            • BDX-1.1 General Requirements

              • BDX-1.1.1

                Every Bahrain domiciled exempt CIUG must be constituted by way of documents, containing the information listed in Supplementary Information document ARR(i), in Part B of Volume 7.

                April 2012

              • BDX-1.1.2

                In the case of CIUsG established as Common CIUsG established under the laws of contract, the documents are the Memorandum and Articles of Association of the fund companyG and the CIUG instrument. In the case of Corporates established under the Bahrain Commercial Companies Law, the documents are the Memorandum and Articles of Association. In the case of CIUsG established as Trusts under the Financial Trust Law, the legal document is the trust deed

                April 2012

              • BDX-1.1.3

                The operatorG of a Bahrain domiciled exempt CIUG together with the directorsG of the CIUG concerned, or trusteesG , as appropriate, must ensure that the documents constituting the CIUG :

                (a) Do not contain information that is false or misleading;
                (b) Do not contain any provisions that conflict with either CBB requirements or other laws and regulations, that may apply to the operatorG , fund managerG and other relevant personsG to the CIU; and
                (c) Is not unfairly prejudicial to the interests of the CIU participantsG , either generally or to a particular class of CIU participants.G
                April 2012

              • BDX-1.1.4

                The operatorG of a Bahrain domiciled exempt CIUG together with the directorsG of the CIUG concerned, or trusteesG , as appropriate, must maintain the documents constituting the CIUG .

                April 2012

              • BDX-1.1.5

                Once registered, any subsequent material changes to the documents must be notified to the CBB 10 business days prior to execution. An updated copy of the documents must be made available to the CBB within 30 calendar days of executing such changes.

                April 2012

              • BDX-1.1.6

                In the case that any subsequent changes to the documents that are not made in accordance with the requirements stipulated in this Module, the CBB reserves the right to request a reversal of any such change.

                April 2012

          • BDX-2 Prospectus

            • BDX-2.1 General Requirements

              • BDX-2.1.1

                Every Bahrain domiciled exempt CIUG registered under Chapter ARR-4 must publish a prospectusG containing, as a minimum, the information set out in Supplementary Information document ARR(ii), in Part B of Volume 7.

                April 2012

              • BDX-2.1.2

                The board of the Bahrain domiciled exempt CIUG , or trusteesG , as appropriate, must ensure that the information contained in the prospectusG :

                (a) Is complete and transparent;
                (b) Is not false, misleading, or unfairly prejudicial to the interests of the CIU participantsG generally or to the participantsG of other classes of instruments issued by the CIUG ; and
                (c) Does not contain any provision that conflicts with any Rule in Volume 7, or other legal or regulatory requirements that apply to the Bahrain domiciled exempt CIUG or other relevant personsG connected to the CIUG .
                April 2012

              • BDX-2.1.3

                The documents constituting the Bahrain domiciled exempt CIUG must form an integral part of the prospectusG and must be annexed to it. Alternatively, the prospectusG must specify where the documents constituting the Bahrain domiciled exempt CIUG may be obtained.

                April 2012

              • BDX-2.1.4

                The board of the Bahrain domiciled exempt CIUG must keep the prospectusG up-to-date, such that the information it contains is materially current.

                April 2012

              • BDX-2.1.5

                The prospectus of a Bahrain domiciled exempt CIUsG must clearly display a statement to the fact that the CIUG is considered an exempt CIUG for the purposes of the CBB's Volume 7 (Collective Investment Undertakings) Rulebook.

                April 2012

              • BDX-2.1.6

                Once a Bahrain domiciled exempt CIUG is registered, prior approval must be obtained from the majority of the CIU participantsG for any subsequent material changes to the prospectusG . An updated copy of the prospectusG must be made available to CBB within 30 calendar days of the revision being agreed, and CIU participantsG must be notified of the changes at least 14 calendar days before they take effect.

                April 2012

              • BDX-2.1.7

                For the purposes of Paragraph BDX-2.1.6:

                (a) Material changes include, but are not limited to:
                (i) Changes in the relevant persons,G except for the placement agentG ;
                (ii) A change in legal structure;
                (iii) A change to the investment strategy; or
                (iv) A change in fees; and
                (b) The majority of the CIU participantsG is expected to be not less than two-thirds of the CIU participantsG in terms of number of participants and number of units held.
                April 2012

              • BDX-2.1.8

                The Bahrain domiciled exempt CIUG must provide a copy of its most recent prospectusG free of charge to any existing and potential CIU participantsG .

                April 2012

              • BDX-2.1.9

                The Bahrain domiciled exempt CIUG must, upon request, provide explanations and such other information supplementary to the prospectusG as may reasonably be required by any existing and potential CIU participantsG .

                April 2012

          • BDX-3 CIU Holdings

            • BDX-3.1 General Requirements

              • BDX-3.1.1

                If a Bahrain domiciled exempt CIUG has different classes of holdingsG , the documents constituting the CIUG must clearly set out:

                (a) The different features of each class of holdingG , including their respective rights;
                (b) The allocation of expenses and fees; and
                (c) How the proportion of the value of the assets of the CIUG and the proportion of income available for allocation attributable to each such class is to be calculated.
                April 2012

              • BDX-3.1.2

                CIU participantsG must, in accordance with the CIUG documents, either be:

                (a) Issued with registered certificates evidencing title to holdingsG ; or
                (b) Provided with written confirmation of entry in a register for such holdingsG which shall be kept current and up-to-date at all times and shall contain full details of the names and addresses of the CIU participantsG , the number of holdingsG held by them, and the date of acquisition of such holdingsG .
                April 2012

              • BDX-3.1.3

                HoldingsG may only be created, issued or sold, and redeemed, repurchased, reimbursed or repaid (as may be appropriate), in accordance with the prospectusG constituting the Bahrain domiciled exempt CIUG .

                April 2012

          • BDX-4 Investments

            • BDX-4.1 Risk Management

              • BDX-4.1.1

                Bahrain domiciled exempt CIUsG should operate on the principle of risk management and be diligent in maintaining and implementing investment and risk management policies aimed at the prudent risk control.

                April 2012

              • BDX-4.1.2

                The prospectusG must disclose the investment policies of the Bahrain domiciled exempt CIUG .

                April 2012

            • BDX-4.2 Significant Influence / Conflicts of Interest

              • BDX-4.2.1

                Bahrain domiciled exempt CIUsG may only enter into related party transactions provided they are clearly disclosed and permissible in accordance with the initial prospectusG .

                April 2012

            • BDX-4.3 Breaches of Investment Limits

              • BDX-4.3.1

                The fund managerG must abide by the prescribed limits within the prospectusG and any breach that occurs must be reported to the CIU participantsG on a prompt basis.

                April 2012

          • BDX-5 Lending

            • BDX-5.1 General Requirements

              • BDX-5.1.1

                A Bahrain domiciled exempt CIUG must not lend its assets to any relevant personG of the CIUG .

                April 2012

              • BDX-5.1.2

                A Bahrain domiciled exempt CIUG must not lend its assets, except as otherwise needed in relation to stock lending, for the purposes of meeting margin requirements where the CIUG is using financial derivatives, or where it is an incidental part of the investment deals provided for in the investment objective stated in the prospectusG of the CIUG .

                April 2012

          • BDX-6 Fees

            • BDX-6.1 General Requirements

              • BDX-6.1.1

                All costs and charges, including fees to relevant personsG , payable from the assets of a Bahrain domiciled exempt CIUG must be clearly stated and disclosed in the prospectusG .

                April 2012

          • BDX-7 Valuation of Asset

            • BDX-7.1 General Requirements

              • BDX-7.1.1

                The board of directorsG must ensure an independent, fair and timely valuation of all the CIU'sG assets, is conducted by appropriately qualified valuators, in line with the prospectusG .

                April 2012

          • BDX-8 Books and Records

            • BDX-8.1 General Requirements

              • BDX-8.1.1

                Bahrain domiciled exempt CIUsG must prepare, retain for 10 years and make available to the CBB upon request, such records that enable:

                (a) The CIUG and its relevant personsG , as appropriate, to comply with the rules in this Module; and
                (b) The CIUG to demonstrate at any time that such compliance has been achieved.
                April 2012

              • BDX-8.1.2

                The records referred to under Rule BDX-8.1.1, include but are not limited to, the minutes of the board of directors'G meetings (see Paragraph CG-4.1.1), the prospectusG , contractual agreements, documents constituting the CIUG and annual audited statements.

                April 2012

              • BDX-8.1.3

                Bahrain domiciled exempt CIUsG must, through the appointed registrarG , obtain and safe-keep all signed application forms, along with KYC documents for each CIU participantG , in original form or in the form of a certified copy, at the office in Bahrain, in line with applicable laws and regulations.

                April 2012

          • BDX-9 Financial Statements

            • BDX-9.1 General Requirements

              • BDX-9.1.1

                Bahrain domiciled exempt CIUsG must prepare semi-annual (interim) and annual audited financial statements for each financial year.

                April 2012

              • BDX-9.1.2

                The annual audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or AAOIFI Standards, as applicable, by a qualified independent external auditorG located in Bahrain and acceptable to the CBB. The semi-annual (interim) financial statements must be subject to an independent review by the same auditor.

                April 2012

              • BDX-9.1.3

                The annual audited financial statements must be disclosed and distributed to CIU participantsG and submitted to the CBB, within 4 months of the end of the CIU'sG financial year.

                April 2012

              • BDX-9.1.4

                The semi-annual (interim) financial statements must be disclosed and distributed to CIU participantsG and submitted to the CBB, within 2 months of the period end.

                April 2012

              • BDX-9.1.5

                Both the annual and semi-annual reports must contain as a minimum the information specified in Supplementary Information document CRR(i) of Part B of Volume 7.

                April 2012

              • BDX-9.1.6

                The annual audited financial statements of the fund companyG (if applicable) must be submitted to the CBB, within 3 months of the financial year-end of the fund companyG .

                April 2012

          • BDX-10 Promotion

            • BDX-10.1 General Requirements

              • BDX-10.1.1

                The promotion of Bahrain domiciled exempt CIUsG must be limited to accredited investorsG and no public offering or mass marketing is permitted.

                April 2012

          • BDX-11 Access to Premises

            • BDX-11.1 General Requirements

              • BDX-11.1.1

                Relevant personsG of Bahrain domiciled exempt CIUsG must permit representatives of the CBB, or persons appointed by the CBB to have access, with or without notice, duing reasonable business hours to any of their business premises to allow the CBB to carry out inspection or investigation of the CIU at any point of time, in order for the CBB to discharge its regulatory obligations.

                April 2012

          • BDX-12 Mergers and Transfers

            • BDX-12.1 General Requirements

              • BDX-12.1.1

                A Bahrain domiciled exempt CIUG must seek prior written approval from the CBB in order to merge with, or else transfer its assets to another Bahrain domiciled exempt CIU.G

                April 2012

              • BDX-12.1.2

                The request for approval above must be supported by the following information:

                (a) The reasons for the proposed merger or transfer;
                (b) The alternatives available to CIU participantsG (including a right to redeem without charge, or switch into another Bahrain domiciled exempt CIUG without charge); and
                (c) The estimated costs of the merger or transfer, and information on who is expected to bear such costs.
                April 2012

              • BDX-12.1.3

                All CIU participantsG must be informed, at least 15 business days prior to the intention to merge or transfer to another Bahrain domiciled exempt CIUG in order for them to make an informed decision.

                April 2012

              • BDX-12.1.4

                In all cases, a merger or transfer of a Bahrain domiciled exempt CIUG must be in accordance with the instrumentG constituting the CIUG and all other applicable laws.

                April 2012

          • BDX-13 Suspension of Dealing in CIU Holdings

            • BDX-13.1 Suspension of Dealing

              • BDX-13.1.1

                A Bahrain domiciled exempt CIUG must notify the CBB and the CIU participantsG upon the suspension of dealing in the CIU holdingsG and provide the rationale for such decision.

                April 2012

            • BDX-13.2 Resumption of Dealing

              • BDX-13.2.1

                A Bahrain domiciled exempt CIUG must notify the CBB and the CIU participantsG upon the resumption of dealing in the CIU holdingsG and provide the date on which the dealing was resumed.

                April 2012

        • BRT Bahrain Domiciled Real Estate Investment Trusts (B-REITs)

          • BRT-A Introduction

            • BRT-A.1 Purpose

              • Executive Summary

                • BRT-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Bahrain Domiciled Real Estate Investment Trusts (B-REITS)G .

                  April 2012

              • Legal Basis

                • BRT-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding Bahrain domiciled real estate investment trusts (B-REITs)G and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • BRT-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • BRT-A.2 Module History

              • Evolution of Module

                • BRT-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • BRT-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • BRT-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  BRT-1.1.2
                  BRT-1.1.4
                  BRT-2.2.1
                  10/2017 Added Bahrain Domiciled retail CIU.
                  BRT-2.3.2 10/2017 Amended paragraph on leveraging requirement.
                  BRT-2.3.4 10/2017 Added paragraph on market making arrangements.
                  BRT-4.1.1AA 10/2017 Added paragraph on the requirement to appoint an external appraiser.
                  BRT-4.1.1A 10/2017 Added paragraph on valuation requirement.
                  BRT-2.1.1 01/2018 Amended paragraph.

                • BRT-A.2.4

                  Further guidance on the implementation and transition to Volume 7 (Collective Investment Undertakings) is given in Module ES (Executive Summary).

                  April 2012

          • BRT-B Definition

            • BRT-B.1 Definition

              • BRT-B.1.1

                Bahrain domiciled real estate investment trusts (B-REITs)G are defined as collective investment undertakingsG the objectives of which are acquiring, holding, administering, managing and selling income generating local and foreign real estate properties, either directly or indirectly.

                April 2012

              • BRT-B.1.2

                Indirect holding would be through holding of units or shares of another REIT.

                April 2012

          • BRT-1 General Requirements

            • BRT-1.1 General Requirements

              • Documents Constituting a B-REIT

                • BRT-1.1.1

                  A B-REITG must be constituted as a Trust, established under the Financial Trust Law of Bahrain and in accordance with a Trust Deed or a Trust Instrument.

                  April 2012

              • Authorisation/Registration Requirements

                • BRT-1.1.2

                  A B-REITG may be established in the form of a Bahrain domiciled retail CIUG or a Bahrain domiciled exempt CIUG and must be authorised/registered by the CBB prior to being offered to eligible investors, in accordance with the requirements set out in applicable Sections of Module ARR.

                  Amended: October 2017
                  April 2012

              • Liquidation/De-Registration of B-REITs

                • BRT-1.1.3

                  B-REITsG intending to undergo liquidation/de-registration must comply with all the Rules outlined in Module LDR.

                  April 2012

              • Regulatory Requirements

                • BRT-1.1.4

                  B-REITsG in the form of Bahrain domiciled retail CIUsG or Bahrain Domiciled exempt CIUsG are subject to the Rules outlined in Module BDR for Bahrain domiciled retail CIUsG and Module BDX dealing with Bahrain domiciled exempt CIUsG , in addition to the other requirements outlined in Volume 7 applicable to their CIUG category. B-REITsG are also subject to the specific requirements and restrictions outlined in this Module, which prevail if different from the requirements in Modules BDR or BDX.

                  Amended: October 2017
                  April 2012

                • BRT-1.1.5

                  The trusteeG /fund managerG must appoint a qualified property manager(s) responsible for the management of the properties under the B-REITG and for raising regular reports to the trusteeG /fund managerG on the performance of such property.

                  April 2012

          • BRT-2 Specific Requirements

            • BRT-2.1 Restrictions on Investment Policy

              • BRT-2.1.1

                B-REITsG established as Bahrain domiciled retail CIUsG must be subject to the following restrictions on their investment policy:

                (a) Unless otherwise agreed with the CBB, the B-REITG must hold a minimum of 2 real estate properties, comprising of at least 80% of the B-REIT'sG NAV;
                (b) A maximum of 20% of the B-REIT'sG NAV may be invested in the development of existing owned property;
                (c) A maximum of 20% of the B-REIT'sG NAV may be invested in other REITs, subject to 10% investment per REIT; and
                (d) Other assets of the B-REITG must be held in cash and cash equivalents.
                Amended: January 2018
                April 2012

              • BRT-2.1.2

                B-REITsG established as Bahrain domiciled exempt CIUsG must invest in the following assets only:

                (a) Real estate properties;
                (b) Development of existing owned property;
                (c) Other REITsG , subject to a maximum of 20% of the B-REITG NAV; and
                (d) Other assets of the B-REITG must be held in cash and cash equivalents.
                April 2012

              • BRT-2.1.3

                Immovable assets may either be held directly or indirectly. Immovable assets situated outside the Kingdom of Bahrain may also be held through foreign special purpose vehicles, which must be consolidated.

                April 2012

              • BRT-2.1.4

                B-REITsG are not permitted to invest in undeveloped land and mortgages.

                April 2012

            • BRT-2.2 Listing Requirements and Prohibitions

              • BRT-2.2.1

                The units of a B-REITG established as a Bahrain domiciled retail CIUG must be listed on a licensed exchange(s),G within six months from the date of starting of operations, and in accordance with the provisions set in the offering document.

                Amended: October 2017
                April 2012

              • BRT-2.2.2

                For B-REITsG established as Bahrain domiciled exempt CIUsG , listing of the units of a B-REITG is optional.

                April 2012

            • BRT-2.3 Other Requirements

              • Minimum Size of a B-REIT

                • BRT-2.3.1

                  The minimum value of a B-REITG must be US$ 20 million or its equivalent in another currency, at the initial closing.

                  April 2012

              • Leveraging

                • BRT-2.3.2

                  A B-REITG established as a Bahrain domiciled retail CIUG , must limit its leverage to a maximum of 50% of its NAV for investment purposes.

                  Amended: October 2017
                  April 2012

              • Dividend Policy

                • BRT-2.3.3

                  A B-REITG must distribute annual dividends of not less than 90 % of its audited net realised income to its participantsG , within six months from the end of its financial year.

                  April 2012

              • Market Making Arrangements

                • BRT-2.3.4

                  A B-REITG established as a Bahrain domiciled retail CIUG , must appoint one or more market makers that are acceptable to the CBB, for a minimum period of one year effective from the launch date of the B-REITG .

                  Added: October 2017

          • BRT-3 Reporting and Disclosure Requirements

            • BRT-3.1 General Requirements

              • Jointly Controlled Entities

                • BRT-3.1.1

                  If a B-REITG jointly controls and owns the property, the following information must be disclosed in the audited financial report:

                  (a) Name (if applicable) and a brief physical description of the property;
                  (b) Description of business activity;
                  (c) Percentage ownership;
                  (d) Accounting period (if different from the CIUG );
                  (e) Material restrictions on repayments;
                  (f) Divided schedule (if applicable);
                  (g) Details of debt and extent to which there is recourse to the organization;
                  (h) Relationship with other partners (e.g. pre-emptive rights etc); and
                  (i) Narrative on performance.
                  April 2012

              • Financing and Debt Position

                • BRT-3.1.2

                  B-REITsG must include in their audited financial report:

                  (a) An explanation of the net finance charge in their accounts;
                  (b) An explanation of the market valuations of their hedging instruments and/or debt;
                  (c) Proportion of fixed versus floating debt;
                  (d) Maturity profile of debt;
                  (e) An analysis of the proportion of debt that is secured by specific assets versus unsecured assets; and
                  (f) Details of the weighted average cost of debt.
                  April 2012

              • Historical Financial Results

                • BRT-3.1.3

                  If applicable, B-REITsG must include in their audited financial report financial data on a consolidated basis for each of the past five years. At a minimum this historical data should include:

                  (a) Gross revenues;
                  (b) Net profit (both absolute and per share);
                  (c) Net assets (both absolute and per share); and
                  (d) Gearing percentage (debt to total assets).
                  April 2012

              • Portfolio Performance

                • BRT-3.1.4

                  B-REITsG must disclose in their annual report, the following information on investment assets to the CIU participantsG :

                  (a) Address of the asset;
                  (b) Acquisition date;
                  (c) Type of property including the respective proportion allocated to office/retail/residential/parking;
                  (d) Land area;
                  (e) Gross/lettable building space;
                  (f) Current valuation;
                  (g) Valuation cap rate;
                  (h) Average passing rent per square meter;
                  (i) Current level of leasing incentives for each asset;
                  (j) Annualized net rent based on current rent roll;
                  (k) Vacant space of a building and any large impending lease expiries;
                  (l) Operating profit (after property expenses);
                  (m) Internal rate of return since acquisition;
                  (n) Percentage of ownership (and commentary on control provisions);
                  (o) Form of ownership (e.g. freehold or leasehold ownership);
                  (p) Duration remaining on leasehold;
                  (q) Year of construction completion/major refurbishment; and
                  (r) Impending capital expenditure costs.
                  April 2012

          • BRT-4 Valuation of Assets

            • BRT-4.1 General Requirements

              • BRT-4.1.1AA

                At least one external appraiser must be appointed to carry out the valuation of the B-REIT's assets.

                Added: October 2017

              • BRT-4.1.1

                The valuation of investment properties held by B-REITsG must be acceptable to the CBB and in accordance with the prevailing market value.

                April 2012

              • BRT-4.1.1A

                The CBB has the right to require a second opinion on the valuation of property assets or valuation report, given that the appointment of the second independent valuator is acceptable to the CBB.

                Added: October 2017

              • BRT-4.1.2

                It is recommended that valuation report formats be prepared in line with internationally acceptable standards such as the standards required by the International Valuation Standards Committee (IVSC). A standard valuation format is provided in Appendix 1 of this Module and may be used as a guideline.

                April 2012

              • Investment Property — Appraiser Fee Basis

                • BRT-4.1.3

                  In order to ensure that the external appraiser is independent and objective, B-REITsG must agree upon a fee basis that is independent of the outcome of the valuation process and appraised value.

                  April 2012

                • BRT-4.1.4

                  The valuation report must disclose the following:

                  (a) The basis for appraiser fees (e.g. a fee based upon hours spent, as a result of appraised value or a fixed fee amount);
                  (b) The amount of annual non-valuation fees that have been paid to the appraiser(s); and
                  (c) Whether the fee for each appraiser accounts for more than 10% of that appraiser's turnover.
                  April 2012

          • Appendix 1 Standard Valuation Report Format

            The following represents a sample of the recommended content for reporting on the valuation of a completed asset, which may be applied as deemed applicable:

            •   Executive summary and/or valuation certification:
            1. Introduction
            2. Instructions
            3. Qualifications and assumptions
            4. Date of inspection
            5. Basis of valuation (including definition of market value).
            •   Property details:
            1. Location details, including surrounding development
            2. Formal site identification
            3. Physical features e.g. size, configuration, frontage, topography
            4. Site services
            5. Area planning particulars
            6. Statutory assessment
            7. Environment considerations.
            •   Improvements :
            1. General description
            2. Gross lettable area and net lettable area
            3. Construction and finishes
            4. Services and amenities
            5. Age and condition, state of repair.
            •   Financial summary:
            1. Occupational/tenancy details
            2. Lease expiry analysis
            3. Leasing status (vacant tenancies, monthly tenancies, rental arrears etc.)
            4. Rental income and analysis
            5. Other income
            6. Outgoings
            7. Capital expenditure
            8. Net income summary
            •   Market overview:
            1. Economic overview
            2. Market sector overview
            3. Sales and rental analyses
            •   Valuation rationale:
            1. Valuation methodologies
            2. Valuation reconciliation
            3. Risk analysis.
            April 2012

            • Disclosure of Information Contained within Property Valuation

              Valuation reports must not be misleading. The purpose and intended use of the valuation should be clearly reported, and full disclosure should be made of the basis for the valuation estimate, its applicability and its limitations.

              April 2012

            • Frequency of valuations

              (a) Valuations should be performed with sufficient regularity to as to be a valid estimate of value at the reporting date;
              (b) B-REITsG should have the portfolio valued by an external valuer(s) at least once a year. The valuation should state the method of valuation followed;
              (c) B-REITsG should be encouraged to undertake a half-yearly update in the form of a "short" form report detailing any key changes to the property;
              (d) Valuation companies should be asked to tender on the portfolio every two years. The previous valuation company should be prohibited from submitting a tender for a period of two year from the end of the contract; and
              (e) The valuer(s) undertaking the property valuation should have relevant experience of at least five years in valuing properties of a similar asset class within the country.
              April 2012

        • ODC Overseas Domiciled CIUs

          • ODC-A Introduction

            • ODC-A.1 Purpose

              • Executive Summary

                • ODC-A.1.1

                  This Module sets out the Central Bank of Bahrain's (CBB) requirements for Overseas Domiciled CIUsG .

                  April 2012

              • Legal Basis

                • ODC-A.1.2

                  This Module contains the CBB's Directive (as amended from time to time) regarding overseas domiciled CIUsG and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law').

                  April 2012

                • ODC-A.1.3

                  For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                  April 2012

            • ODC-A.2 Module History

              • Evolution of Module

                • ODC-A.2.1

                  This Module was first issued in April 2007, as part of the initial release of the contents of Volume 6 (Capital Markets); it was given an effective date of 1 June 2007, with a one-year transition for existing CIUsG .

                  April 2012

                • ODC-A.2.2

                  The Module was subsequently revised in April 2012, by the addition of several sections catering for the role and responsibilities of relevant personsG , the registration and authorisation requirements, corporate governance, and other relevant Chapters and has been reissued as Volume 7.

                  April 2012

                • ODC-A.2.3

                  A list of recent changes made to this Module subsequent to the April 2012 revision is provided below:

                  Module Ref. Change Date Description of Changes
                  ODC-1.1.1, ODC-6.1.1, ODC-6.2 07/2015 Amended to reflect the process for filing for exempt and expert CIUs.
                  ODC-5.1.2 07/2015 Added requirement for placement agent to retain supporting documentation ensuring suitability of the CIU for the targeted category of investors.
                  ODC-B.1.2 07/2017 Deleted "resident" with respect to investors
                  ODC-3.1.1; ODC-3.1.2 07/2017 Deleted "Bahrain resident" and added "CIU participants in Bahrain".
                  ODC-7 10/2017 Added new section on 'Listing Requirements'.

              • Superseded Requirements

                • ODC-A.2.4

                  This Module supersedes the following provisions contained in circulars or other regulatory instruments:

                  Circular / other reference