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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > High Level Standards > HC High-Level Controls > HC-2 Approved Persons Loyalty
  • HC-2 Approved Persons Loyalty

    • HC-2.1 Principle

      • HC-2.1.1

        The approved personsG must have full loyalty to the insurance licenseeG .

        January 2011

    • HC-2.2 Personal Accountability

      • HC-2.2.1

        The Board and its members must act with honesty, integrity, due skill and care, and in the best interests of the licensee, its shareholdersG and policyholdersG .

        January 2011

      • HC-2.2.2

        In assessing compliance with Paragraph HC-2.2.1, the CBB will take into account all actions of the Board and its members. The interest of the licensee includes the licensee's continued compliance with all relevant Rules and Regulations, and the interests of employeesG , customersG and other stakeholdersG . The interest of shareholdersG includes the current and future value of the licensee, its status as a going concern, transparency and disclosure of information to the market. The interest of policyholdersG includes ensuring that the licensee fulfils its obligations under its policiesG and treats all policyholdersG fairly and pays equal regard to the interests of all policyholdersG and groups of policyholdersG .

        January 2011

      • HC-2.2.3

        Each member of the board must understand that under the Company Law he is personally accountable to the insurance licenseeG and the shareholders if he violates his legal duty of loyalty to the insurance licenseeG , and that he can be personally sued by the insurance licenseeG or the shareholders for such violations.

        Amended: January 2013
        January 2011

      • HC-2.2.4

        An insurance licensee'sG Board must establish and disseminate to all employeesG and appointed representativesG of the licensee a corporate code of conduct.

        January 2011

      • HC-2.2.5

        The requirements of Paragraph HC-2.2.4 do not apply to captive insurance firmsG , but should be considered as guidance.

        Amended: October 2014
        January 2011

      • HC-2.2.6

        The code of conduct must establish standards by giving examples or expectations of:

        (a) Honesty;
        (b) Integrity;
        (c) Leadership;
        (d) Reliability; and
        (e) Professionalism.
        January 2011

      • HC-2.2.7

        The Board must establish and disseminate to employeesG and appointed representativesG policies and processes for the identification, reporting and prevention or management of potential conflicts of interest, including matters such as:

        (a) Related party transactionsG ;
        (b) The misuse of the licensee's assets; and
        (c) The use of privileged information for personal advantage ('insider trading').
        January 2011

      • HC-2.2.8

        Any transaction in which Board members or any member of management have potential conflicts of interest should either be proscribed or require formal documented approval by the Board, with measures taken to manage those conflicts (See also Paragraph HC-2.4.1).

        January 2011

      • HC-2.2.9

        The Board must ensure that policies and procedures are in place to ensure that necessary customerG confidentiality is maintained.

        January 2011

      • HC-2.2.10

        The duty of loyalty includes a duty not to use property of the insurance licenseeG for his personal needs as though it was his own property, not to disclose confidential information of the insurance licenseeG or use it for his personal profit, not to take business opportunities of the insurance licenseeG for himself, not to compete in business with the insurance licenseeG , and to serve the insurance licensee'sG interest in any transactions with a company in which he has a personal interest, such as in related party transactionsG .

        January 2011

      • HC-2.2.11

        For purposes of Paragraph HC-2.2.10, an approved personG should be considered to have a "personal interest" in a transaction with a company if:

        (a) He himself; or
        (b) A member of his family (i.e. spouse, father, mother, sons, daughters, brothers or sisters); or
        (c) Another company of which he is a director or controllerG ,

        is a party to the transaction or has a material financial interest in the transaction. (Transactions and interests which are de minimis in value should not be included.)

        January 2011

    • HC-2.3 Avoidance of Conflicts of Interest

      • HC-2.3.1

        Each approved personG must make every practicable effort to arrange his personal and business affairs to avoid a conflict of interest with the insurance licenseeG .

        January 2011

      • HC-2.3.2

        Any Board member should absent himself from any discussion or decision-making that involves a subject where he is incapable of providing objective advice, or which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

        January 2011

      • HC-2.3.3

        Bahraini insurance licenseesG must have in place a board approved policy on the employment of relatives of approved personsG and a summary of such policy must be disclosed in the annual report of the Bahraini insurance licenseeG .

        Amended: July 2016
        April 2016

      • HC-2.3.4

        Overseas insurance licenseesG must have in place a policy on the employment of relatives of approved personsG pertaining to their Bahrain operations.

        Added: July 2016

    • HC-2.4 Disclosure of Conflicts of Interest

      • HC-2.4.1

        On an annual basis, each approved personG must inform the entire Board of conflicts of interest as they arise. Board members must abstain from voting on the matter in accordance with the relevant provisions of the Company Law. This disclosure must include all material facts in the case of a contract or transaction involving the approved personG . The approved personsG must understand that any approval of a conflicted transaction is effective only if all material facts are known to the authorising persons and the conflicted person did not participate in the decision.

        Amended: January 2013
        January 2011

      • HC-2.4.1A

        The chief executive/general manager of the Bahraini insurance licenseeG must disclose to the board of directors on an annual basis those individuals who are occupying controlled functionsG and who are relatives of any approved personsG within the Bahraini insurance licenseeG .

        Amended: July 2016
        April 2016

      • HC-2.4.1B

        The chief executive/general manager of the overseas insurance licenseesG must disclose to a designated officer at its head office or regional manager on an annual basis those individuals who are occupying controlled functionsG and who are relatives of any approved personsG within the overseas insurance licenseeG .

        Added: July 2016

      • HC-2.4.2

        The Board of the Bahraini insurance licenseeG should establish formal procedures for:

        (a) Periodic disclosure and updating of information by each approved personG on his actual and potential conflicts of interest; and
        (b) Advance approval by directors or shareholders who do not have an interest in the transactions in which an insurance licensee'sG approved personG has a personal interest. The Board should require such advance approval in every case.
        Amended: July 2016
        January 2011

    • HC-2.5 Disclosure of Conflicts of Interest to Shareholders

      • HC-2.5.1

        The insurance licenseeG must disclose to its shareholders in the Annual Report any abstention from voting motivated by a conflict of interest and must disclose to its shareholders any authorisation of a conflict of interest contract or transaction in accordance with the Company Law.

        January 2011

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