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Location: Central Bank of Bahrain Volume 5—Specialised Licensees > Specific Modules (By Type of Licensee) > Type 1: Money Changers Licensees > Part A > High Level Standards > HC Money Changers High-Level Controls Module > HC-2 Approved Persons Loyalty
  • HC-2 Approved Persons Loyalty

    • HC-2.1 Personal Accountability

      • HC-2.1.1

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

        Amended: April 2016
        October 2010

      • HC-2.1.2

        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 licenseeG includes the licensee'sG continued compliance with all relevant rules and regulations, and the interests of employees, clients and other stakeholders. The interest of shareholdersG includes the current and future value of the licenseeG , its status as a going concern, transparency and disclosure of information to the market. The interest of clients includes ensuring that the licenseeG fulfils its obligations under its terms of businessG and treats all clients fairly and pays equal regard to the interests of all clients.

        Amended: April 2016
        October 2010

      • HC-2.1.3

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

        Amended: April 2016
        October 2010

      • HC-2.1.4

        The duty of loyalty includes a duty not to use property of the licensee for his personal needs as though it was his own property, not to disclose confidential information of the licensee or use it for his personal profit, and to serve the licensee's interest in any transactions with the company in which he has a personal interest.

        April 2016

      • HC-2.1.5

        For purposes of Paragraph HC-2.1.4, an approved person is considered to have a "personal interest" in a transaction with the company if:

        (a) He himself;
        (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 controller,

        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.)

        April 2016

      • HC-2.1.6

        A licensee'sG Board must establish and disseminate to all employees of the licenseeG a corporate code of conduct.

        April 2016

      • HC-2.1.7

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

        (a) Honesty;
        (b) Integrity;
        (c) The avoidance or disclosure of conflicts of interest;
        (d) Maintaining confidentiality;
        (e) Professionalism;
        (f) Commitment to the law and best practices; and
        (g) Reliability.
        April 2016

      • HC-2.1.8

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

        April 2016

    • HC-2.2 Segregation of Duties/Avoidance of Conflicts of Interest

      • HC-2.2.1

        LicenseesG must maintain an organisational structure that segregates duties in order to minimise the risk of conflicts of interest arising.

        Amended: April 2016
        October 2010

      • HC-2.2.2

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

        Amended: April 2016
        October 2010

      • HC-2.2.3

        Board members must 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.

        Amended: April 2016
        October 2010

    • HC-2.3 Disclosure of Conflicts of Interest

      • HC-2.3.1

        Each approved person 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 person. The approved persons must understand that any approval of a conflict 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: April 2016
        October 2010

      • HC-2.3.2

        Board members must declare annually in writing all of their interests (and those of their family) in other enterprises or activities (whether as a Director, shareholder, senior executive or other form of participation) to the Board (or appropriate Board sub-Committee).

        Amended: April 2016
        October 2010

      • HC-2.3.3

        Bahraini 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 licenseeG .

        Amended: July 2016
        Amended: April 2016
        October 2010

      • HC-2.3.4

        Overseas 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 to Shareholders

      • HC-2.4.1

        The 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.

        Amended: April 2016
        October 2010

      • HC-2.4.2

        The chief executiveG /general managerG of the Bahraini 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 licenseeG .

        Amended: July 2016
        Amended: April 2016
        October 2010

      • HC-2.4.3

        The chief executiveG /general managerG of the overseas 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 licenseeG .

        Added: July 2016

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