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  • Regulation with respect to the General Supervision, Operation and Marketing of Collective Investment Schemes

    • 1. Supervision

      A. In accordance with the powers given to it pursuant to the provisions of Articles 41 and 50 of Decree Law No. (23) of 1973 (the "BMA Law"), the Bahrain Monetary Agency (the "Agency") shall supervise and regulate all collective investment schemes (the "schemes") established and/or marketed in any manner whatsoever in the State of Bahrain ("Bahrain"). In this Regulation, the term "scheme" shall include any scheme, regardless of the form thereof (including, but not limited to, a mutual fund investment company with fixed or variable capital), the sole object of which is the collective investment in transferable securities (or other investments disclosed to, and agreed by, the Agency) of capital raised from the public, which operates on the principle of risk-spreading and the holdings or interests in which are, at the request of the investors in such schemes (the "scheme participants"), repurchased, redeemed, reimbursed or otherwise repaid, directly or indirectly, out of the assets of the scheme.
      B. Only banking firms or financial institutions (herein jointly referred to as "institutions") operating in/from Bahrain and licensed by the Agency shall be entitled to apply to establish and/or market schemes in/from Bahrain. No scheme shall be established and/or marketed in/from Bahrain without the express prior written authorisation and approval of the Agency.
      C. The authorisation and/or approval of a scheme by the Agency shall not constitute a warranty as to the performance of a scheme and the Agency shall not be liable for the performance or default of a scheme.

    • 2. Participation in Schemes

      Both Bahraini and/or non-Bahraini citizens shall be entitled to become scheme participants and, for the purposes of this Regulation, the term "unit" shall mean any holding or interest, regardless of the form thereof (including, but not limited to, a share in a mutual fund investment company), by a scheme participant in a scheme.

    • 3. Applications Authorisation, Approval, and Revocation

      A. Every institution shall submit a written application, in form and substance satisfactory to the Agency, to obtain (i) its authorisation to establish and/or market a scheme in/from Bahrain (and, in the case of an institution incorporated in Bahrain, to establish and/or market a scheme outside of Bahrain) and (ii) (in each case) its approval for the particulars of the scheme itself.
      B. The Agency may, in its discretion and having consulted with other relevant authorities, either authorise and approve (with or without conditions), or refuse its authorisation and approval for such scheme.
      C. Every institution shall obtain the Agency's prior approval to any material changes in the terms and conditions and other features of a scheme originally authorised and approved under this Regulation.
      D. In addition to the general authorisation and approval referred, the Agency's prior express written approval must be obtained as to (i) the identity of any persons involved in the management and operation of a scheme (who shall, in all cases, and unless the Agency otherwise permits, be separate and independent of each other) and (ii) the form and content of all documentation relevant to a scheme.
      E. The Agency may, in whole or in part, revoke or impose conditions upon any authorisation and approval given hereunder.

    • 4. Accounts and other General Supervisory Matters

      A. Every institution shall at all times keep proper, complete and separate accounting systems, books and records of account for an authorised and approved scheme.
      B. The Agency and the relevant institution shall agree on the form and content of all reports, statements and other documentation to be provided to the Agency and the scheme participants, as well as the regularity of, and time periods within which, such reports, statements and documents are to be provided.
      C. The Agency shall be provided each year with a detailed report for each scheme authorised and approved by it. Scheme participants shall be provided each year with such a report for the scheme in which they have participated. Any report to be provided under this paragraph 4. C shall include the financial statements for such scheme, which statements shall be (i) prepared in accordance with standards acceptable to the Agency and (ii) audited by a firm of accountants approved by the Agency. Such auditors shall be and act, at all times and in all respects, independently of the scheme and any person involved in the management and operation thereof.
      D. Every institution shall provide to the Agency, in form and substance satisfactory to it, such information in relation to an authorised and approved scheme as the Agency may require from time to time.

    • 5. Miscellaneous

      A. The Agency may make subsidiary rules and regulations and may issue principles of supervision, operation and marketing for the proper and regular enforcement of this Regulation from time to time. These subsidiary rules and regulations and principles may deal with any matter referred to herein and/or any other matters incidental or additional thereto (including, but not limited to, the principles upon which any persons involved in the management and operation of a scheme shall carry out their duties, the fees which may be charged under a scheme, the method for pricing the units in a scheme, disclosure of certain matters to scheme participants and restrictions on the investment powers of a scheme), and may be applicable to any one or all schemes authorised and approved hereunder.
      B. Any scheme existing on 18th November, 1992, the date of commencement of this Regulation, shall have a period of 24 months from the date in which to comply with this Regulation and any subsidiary rules, regulations and principles which the Agency may issue pursuant hereto in that period.
      C. Without prejudice to the provisions of this Regulation, the Agency may, in its discretion, exempt certain schemes, including those existing at the date of the commencement of this Regulation, from some or all of the requirements hereof.
      D. Save as otherwise provided by the Agency, the provisions of the BMA Law concerning banking firms shall also apply to other financial institutions authorised to establish and/or market schemes under this Regulation.

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