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Location: Central Bank of Bahrain Volume 6—Capital Markets > Archive > Part A > Collective Investment Undertakings > CIU — Collective Investment Undertakings > CIU-8 Appendices > Appendix B — Prospectus
  • CIU-8 Appendices

    • Appendix A — Instrument constituting the CIU

      The instrument constituting the CIUG must contain the following minimum information:

      (a) Name and legal form of the CIUG (i.e. company, trust or other contractual structure);
      (b) Name of operatorG ;
      (c) The governing law;
      (d) Objective of the investment vehicle;
      (e) Classes of holdingsG and, if any rights of any class of holdingsG differ, a statement describing those differences in relation to the differing classes;
      (f) Rules regarding the organizational and operational framework of the CIUG , including provisions on the manner in which meetings are to be conducted, and interests of participantsG protected;
      (g) The date on which the annual accounting period ends; and
      (h) A statement of terms and circumstances in which the CIUG may be wound up, merged with other CIUsG , suspended or otherwise terminated.

    • Appendix B — Prospectus

      The prospectusG of the CIUG must contain the following minimum information:

      (a) Constitution of the CIUG :
      (i) Name
      (ii) Registered address
      (iii) Nature of corporate form
      (iv) If it is a company, particulars of its capital structure
      (v) Date of creation
      (vi) Place of creation
      (vii) Indication of duration if limited
      (b) Governing law of the CIUG :
      (c) Details of any tax levied on the income and capital of the CIUG , including tax deducted on distributions to participantsG (if applicable)
      (d) Investment objectives and restrictions:
      (i) Details of investment objectives and policy;
      (ii) A summary of the different asset classes that may be held, and the extent to which derivatives, borrowings and stock lending may be undertaken;
      (iii) A summary of the risk management policy, processes and limits structure to be applied; and
      (iv) An assessment of the risks that the CIUG may incur, and its overall risk profile.
      (e) OperatorG and principals:
      (i) Names and registered addresses of the following parties (where applicable) and any additional information as stated:
      a. The Directors or trustees (as appropriate) of the CIUG , including a summary of their professional experience and other positions held;
      b. The operatorG , managerG , administratorG and custodianG , plus
      i. Nature of their corporate form;
      ii. If a subsidiary, the name of their ultimate holding company and the country or territory where the holding company is incorporated;
      iii. The address of their registered offices;
      iv. A description of their principal business activity;
      v. The nature of any licenses held, and their lead regulators; and
      vi. A summary of any material provisions, if applicable.
      c. The investment advisor (if applicable)
      i. Their function
      ii. Whether or not it is the holder of a license
      iii. If it is body corporate in a group of which the operatorG or administratorG is a member
      iv. If the advisor's principal activity is not providing services as an investment advisor, what the principal activity is
      v. Main terms of any agreement or arrangement between the advisor and the operatorG
      d. The Kingdom of Bahrain representative
      e. The Kingdom of Bahrain distribution company, if different from d.
      f. The auditors
      g. The registrar
      (f) Characteristics of holdingsG :
      (i) Minimum investment and subsequent investment requirements (if any).
      (ii) A description of the different types of holdingsG , including their currency of denomination, their nominal value and any applicable requirements for minimum level of holdingsG .
      (iii) In relation to each available class of holdingG , the entitlement of the holder to participate in the assets of the CIUG and its income.
      (iv) The voting rights that are exercisable at meetings of participantsG by the participantsG and, if different rights attach to different classes of holdingsG , what those rights are.
      (v) Form of certification.
      (g) Valuation:
      (i) How frequently and at what time of day in a specified country or territory the assets of the CIUG will be valued for the purpose of determining prices at which units in the CIUG may be sold or repurchased.
      (ii) The method of valuation of assets and liabilities of the CIUG and the method of pricing and determination of investment returns of the CIUG .
      (iii) The circumstances under which the method of valuation and pricing may change for a CIUG .
      (h) Seed Capital:
      (i) The amount of any seed capital invested in the CIUG (if any), who by, and the investor's proposed intention regarding retaining the seed capital in the CIUG or redeeming it. Also, a statement must be included that any redemption of seed capital is subject to the CBB's prior approval.
      (i) Application and redemption procedures:
      (i) Names of any Bahraini daily newspapers in which prices will be published, and details of other sources where prices may be published (e.g. website), as applicable.
      (ii) Procedure for subscribing/redeeming holdingsG .
      (iii) The maximum interval between the request for redemption and the dispatch of the redemption proceeds
      (iv) A summary of the circumstances under which dealings in holdingsG may be deferred or suspended.
      (v) A statement that no money will be paid to any financial intermediary in the Kingdom of Bahrain who is not licensed or registered.
      (j) Distribution policy:
      (i) The distribution policy and the approximate dates on which dividends (if any) will be paid (if applicable).
      (k) Fees and charges:
      (i) The level of all fees and charges payable by a participantG , including all charges levied on subscription, redemption and conversion.
      (ii) The level of all fees and charges payable by the CIUG , including management fees, administration fees, custodianG fees and start up expenses.
      (iii) The notice period for fee increases.
      (l) Reports and accounts:
      (i) The date of the CIU'sG financial year.
      (ii) Particulars of what reports will be sent to participantsG and when.
      (iii) When annual and half yearly reports will be published.
      (m) Warnings:
      (i) The following statement should be predominantly displayed in the offering document as follows:
      "Important — if you are in any doubt about the contents of this prospectus, you should seek independent professional financial advice. Remember that all investments carry varying levels of risk and that the value of your investment may go down as well as up. Investments in this collective investment undertaking are not considered deposits and are therefore not covered by the Kingdom of Bahrain's deposit protection scheme. The fact that this collective investment undertaking has been authorised by the Central Bank of Bahrain, does not mean that the CBB takes responsibility for the performance of these investments, nor for the correctness of any statements or representations made by the operator of this collective investment undertaking."
      (n) General information:
      (i) A list of the documents constituting the CIUG and an address in the Kingdom of Bahrain where they can be inspected free of charge.
      (ii) The date of publication of the offering document.
      (iii) A statement that the directors or trustees (as appropriate) of the CIUG , together with the CIU'sG operatorG , accept responsibility for the information contained in the offering document as being accurate at the date of publication.
      (iv) A statement that participantsG will be notified, at least 14 calendar days before the changes take effect, in the following circumstances:
      a. Any changes in the investment policy;
      b. Any changes in the operatorG , managerG , administratorG or custodianG of the CIUG ;
      c. The merger, division or termination of the CIUG ; and
      d. Any major issues that may affect the participantsG of the CIUG .
      (vi) Details of the documentation to be provided by participantsG in order to satisfy applicable AML/CFT requirements.
      (o) Termination of CIUG :
      (i) A summary of circumstances in which the CIUG can be terminated.

    • Appendix C — Simplified Prospectus

      The simplified prospectusG must contain at the very least the following information:

      (a) The nature of the CIUG , including a brief description of the legal status of the CIUG , the date it was established and how long it will continue;
      (b) The CIUG objectives, investment strategy or management style or policy;
      (c) The significant benefits to which a client in the CIUG will or may become entitled, including details about the circumstances and times at which these benefits will or may be provided, and the way these benefits will or may be provided;
      (d) The significant risks associated with investing in the CIUG ;
      (e) The costs, fees and other charges or expenses associated with an investment in or redemption of the CIUG , including a brief description of how they are determined and whether they are payable directors by clients or the CIUG ;
      (f) Key details about the pricing of the CIUG interest and how current pricing information may be obtained;
      (g) The date of issue and expiry (if applicable) of the simplified prospectusG ;
      (h) How a client can ask for a full prospectusG or other detailed information about the CIUG with an explanation that such information can be obtained free of charge;
      (i) Key details about the CIUG operatorG (including contact information), managerG , administratorG , custodianG , and auditor including their domicile, their key obligations to investors and their relationship to the CIUG operatorG ;
      (j) In summary form, selected financial information of the CIUG — including historic;
      (k) Performance of the CIUG over various time periods, compared to established and consistent benchmarks;
      (l) In summary form, the key operating rules of the CIUG , including the key client rights, such as ability to purchase holdingsG , redemption right or cooling off rights; and
      (m) The statement:
      "Important — if you are in any doubt about the contents of this simplified prospectus, you should refer to the full prospectus, or else seek independent professional financial advice. Remember that all investments carry varying levels of risk and that the value of your investment may go down as well as up. Investments in this collective investment undertaking are not considered deposits and are therefore not covered by the Kingdom of Bahrain's deposit protection scheme. The fact that this collective investment undertaking has been authorized by the Central Bank of Bahrain, does not mean that the CBB takes responsibility for the performance of these investments, nor for the correctness of any statements or representations made by the operatorG of this collective investment undertaking."

    • Appendix D — Admissible Assets and Limits (Retail CIU)

      Admissible assets Descriptions and Limits
      Cash and cash equivalents (including bank deposits and certificates of deposit — i.e. assets that may be realised in cash immediately).
      •   Not more than 20% of total value of the CIU'sG assets may be placed with a single party (or group of connected counterparties).
      Transferable securities including equity and debt securities.
      •   Not more than 10% of the total assets of the CIUG may be placed with a single party. (Where a stock represents more than 10% of a market index, and the CIU'sG investment objective is to replicate that market index, then the CIUG can hold up to the market weight of the stock in the index.)
      •   Not more than 20% of the total assets of the CIUG may be placed with a single group of connected parties.
      •   Securities not regularly traded on a recognised exchange are limited to 10% of the total assets of the CIUG .
      Government and public sector securities issued by GCCG and OECDG countries.
      •   Not more than 20% of total value of the CIU'sG assets may be with a single party.
      Authorised and regulated funds of the open ended type.
      •   Retail CIUsG with a 'fund of funds' investment strategy may invest up to 100% of their assets in authorised/regulated open-ended fundsG , providing the investment objectives of these funds is consistent with the investment objective of the CIUG , and providing its exposure to any single fund (or group of connected funds) does not exceed 10% of its assets.
      •   Other CIUsG may only invest in authorized/regulated open ended fundsG , consistent with their investment objectives, up to 20% of the total value of the CIU'sG assets. The CIU'sG exposure to any single fund (or group of connected funds) must not exceed 10% of its assets.
      REITsG listed on a recognised exchange
      •   Not more than 20% of total assets of the CIUG may be invested in this asset class. Single exposure limit is 10% of the CIU'sG total assets.
      Physical commodities and commodity based investments traded on a recognised market.
      •   Not more than 20% of total assets of the CIUG may be invested in this asset class. Single exposure limit is 10% of the CIU'sG total assets
      Approved financial derivatives and positions are (i) exchange traded options — long positions; (ii) long positions in forwards and futures; and (iii) sold positions in exchange traded options, forwards and financial futures if matching long positions exist or for hedging purposes. Underlying assets of the derivatives are:
      •   Any of the above, subject to limits specified above.
      •   With respect to interest rate or foreign exchange derivatives, the value of the underlying assets must be restricted to 20% of the total assets of the CIUG .
      Cash and cash equivalents (including bank deposits and certificates of deposit — i.e. assets that may be realised in cash immediately).
      •   Not more than 20% of total value of the CIU'sG assets may be placed with a single party (or group of connected counterparties).
      Transferable securities including equity and debt securities
      •   Not more than 10% of the total assets of the CIUG may be placed with a single party. (Where a stock represents more than 10% of a market index, and the CIU'sG investment objective is to replicate that market index, then the CIUG can hold up to the market weight of the stock in the index.)
      •   Not more than 20% of the total assets of the CIUG may be placed with a single group of connected parties.
      •   Securities not regularly traded on a recognised exchange are limited to 20% of the total assets of the CIUG .
      Government and public sector securities issued by GCCG and OECDG countries.
      •   Not more than 20% of total value of the CIU'sG assets may be with a single party.
      Collective Investment Undertakings
      •   Expert funds with a 'fund of funds' investment strategy may invest up to 100% of their assets in other CIUG (whether regulated or not), providing the investment objectives of these funds is consistent with the investment objective of the expert fund, and providing their exposure to any single fund (or group of connected funds) does not exceed 10% of their assets.
      •   Expert funds without a 'fund of funds' strategy may only invest in other CIUsG , consistent with their investment objectives, up to 20% of the total value of their assets
      REITsG and real estate holdings
      •   Allowed up to 100% of the CIU'sG assets. Single exposure limit is 10% of the CIU'sG total assets.
      Physical commodities and commodity based investments traded on a recognised market.
      •   Allowed up to 100% of the CIU'sG assets. Single exposure limit is 10% of the CIU'sG total assets.
      Approved financial derivatives and positions are: (i) exchange traded options — long positions; (ii) long positions in forwards and futures; and (iii) sold positions in exchange traded options, forwards and financial futures if matching long positions exist or for hedging purposes Underlying assets of the derivatives are:
      •   Any of the above, subject to limits specified above.
      •   With respect to interest rate or foreign exchange derivatives, the value of the underlying assets must be restricted to 20% of the total assets of the CIUG .

    • Appendix E — Contents of Financial Reports

      •   Annual reports must contain all the information required in this Appendix as well as a report issued by the administratorG .
      •   Half-year reports must contain at the very least the Statement of Assets and Liabilities and the Investment Portfolio Statement.
      •   All reports must contain the comparative figures for the previous period except for the Investment Portfolio Statement.
      •   All reports must be prepared in accordance with International Financial Reporting Standards.

      Statement of Assets and Liabilities:

      The following must be separately disclosed

      (a) Total value of investments
      (b) Bank balances
      (c) Dividends and other receivables
      (d) Amounts receivable on subscription
      (e) Bank loans and overdrafts or other forms of borrowings
      (f) Amounts payable on redemption
      (g) Distributions payable
      (h) Total value of all assets
      (i) Total value of all liabilities
      (j) Net asset value
      (k) Number of holdingsG in issue
      (l) Net asset value per holdingG

      Revenue Statement:

      (a) Total investment income net of withholding tax, broken down by category
      (b) Total other income, broken down by category
      (c) Equalisation on issue and cancellation of holdingsG
      (d) An itemized list of various costs debited to the CIUG including:
      a. Fees paid to the operatorG
      b. Remuneration of the administratorG , custodianG and managerG (as appropriate)
      c. Fees paid to the investment advisor (if any)
      d. Other amounts paid to any connected personsG of the CIUG
      e. Director's fee and remuneration
      f. Safe custody and bank charges
      g. Auditor's remuneration
      h. Interest on borrowings
      i. Legal and other professional expense
      j. Other
      (e) Amounts transferred to and from the capital account
      (f) Net income to be carried forward for distribution

      Distribution Statement:

      (a) Amount brought forward at the beginning of the period
      (b) Net income for the period
      (c) Interim distribution per holdingG and date of distribution
      (d) Final distribution per holdingG and date of distribution
      (e) Undistributed income carried forward

      Statement of Movements in Capital Account:

      (a) Value of the CIUG as at the beginning of the period
      (b) Number of holdingsG issued and the amounts received upon such issuance
      (c) Number of holdingsG redeemed and the amount paid on redemption
      (d) Any items resulting in an increase/decrease in value of the CIUG including:
      a. Surplus/loss on sale of investments
      b. Exchange gain/loss
      c. Unrealised appreciation/diminution in value of investments
      d. Net income for the period less distribution
      (e) Value of the CIUG as at the end of the period

      Notes to the accounts:

      The following matters should be set out in the notes to the accounts:

      (a) Principal accounting, investment and risk management policies
      (b) Transactions with connected persons
      (c) Details of any soft commission arrangements relating to dealings in the assets of the CIUG
      (d) Borrowings are secured or unsecured and the duration of the borrowings
      (e) Contingent liabilities and commitments
      (f) If the free negotiability of any asset is restricted by statutory or contractual requirements, this must be stated

      Contents of the Auditor's Report

      The report of the Auditor should state:

      (a) Whether, in the auditor's opinion, the accounts prepared for that period have been properly prepared in accordance with the relevant provisions of the rules in this Module;
      (b) Whether in the auditor's opinion, a true and fair view is given of the financial position of the CIUG at the period-end, and of its financial performance and its cash flows for the period then ended, in accordance with International Financial Reporting Standards;
      (c) Whether, in the auditor's opinion, proper books and records have been kept by the CIUG and the accounts prepared are in agreement with the CIU'sG books and records; and
      (d) Whether, in the auditor's opinion, the CIUG has complied with all applicable laws and regulations.
      (e) If an auditor of a CIUG :
      a. has reason to believe that the information provided to its participantsG or to the CBB does not truly describe the financial situation of the CIUG , or
      b. has reason to believe that there has been some breach of the CIUG documents, applicable laws and regulations or the CBB's directions, or
      c. has reason to believe that there exist circumstances which are likely to affect materially the ability of the CIUG to fulfill its obligations to its participantsG or to meet any of its financial obligations under the CIUG documents, applicable laws and regulations, or the CBB's directions, or
      d. has reason to believe that there are material defects in the financial systems, controls or accounting records of the CIUG , or has reason to believe that there are material inaccuracies in, or omissions from, any returns of a financial nature made by the CIUG and/or, as may be appropriate, any one or more of the relevant personsG , to the CBB, or
      e. proposes to qualify any certificate which he is to provide in relation to the financial statements or returns of the CIUG under Bahrain law and these rules
      he shall report the matter to the CBB in writing, with a copy to the CIUG and its relevant personsG , as appropriate, without delay.
      (f) The auditor of a CIUG shall, if requested by the CBB, furnish to it, with a copy to the CIUG and/or (as may be appropriate) the relevant personsG , a report stating whether in his opinion and to the best of his knowledge the CIUG has complied with the CIUG documents, applicable laws and regulations, and/or any relevant directions of the CBB. The auditor may be requested by the CBB to supply it with information available to him as a result of his audit of the CIUG .

      Investment Portfolio

      (a) Number or quantity of each investment together with the description and market value
      (b) The total investment stated at cost
      (c) The value of each investment as a percentage of the net asset value
      (d) Statement of movements in portfolio investments since the end of the preceding accounting period

      Performance Table

      (a) A comparative table covering the last 3 financial years and including, for each financial year, at the end of the financial year :
      a. The total net asset value; and
      b. The net asset value per holdingG .
      (b) A performance record over the last 10 financial years; or of the CIUG has not been in existence during the whole of that period, over the whole period in which it has been in existence, showing the highest issue price and the lowest redemption price of its holdingsG during each of those years.

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