Bahrain Collective Investment Undertakings (CIU)_Guideline
Bahrain Collective Investment Undertakings (CIU) The first Collective Investments Schemes rules were issued by the CBB in 1992 and were subsequently revamped in June 2007, when the CIU Module within CBB Rulebook Volume 6 was issued. The rules were further revamped and issued in a separate Volume of CBB Rulebook (Volume 7). The new Volume provides comprehensive rules and regulations pertaining to the authorization/registration and supervision of mutual funds domiciled and/or offered for marketing in Bahrain. Portfolios and Investment Funds are Investment schemes offered and marketed in the form of negotiable securities mainly originated for the purpose of raising funds from the public and investing them in specific schemes on the basis of risk distribution. Shares in such schemes shall be directly or indirectly re-purchased, redeemed or repaid for from the assets of the scheme and according to the interest of the investors in any of such scheme. Collective investment undertakings: These are undertakings
All licensed Collective Investment Undertakings must meet the following ongoing obligations at all times to remain compliance with the CBB Law:
- The sole object of which is the collective investment of capital raised from the public in financial instruments or other assets and which operates on the basis of risk-spreading; and
- The holdings of which are re-purchased or redeemed, directly or indirectly, out of those undertakings’ assets.
- A contract of insurance, insurance linked investment products or investments managed as part of a takaful contract of insurance;
- Unrestricted or restricted investment accounts offered by Islamic bank licensees;
- Unilateral arrangements to hold or manage assets on a discretionary basis;
- Arrangements entirely between bodies corporate who are members of the same group, or entirely between family members;
- 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);
- Structured products;
- Cash savings schemes; and
- Special Purpose Vehicles used to issue debt securities.
- Retail – open to all investors and subject to detailed regulation and supervision by the CBB. Retail collective investment undertakings are subject to restrictions on diversification and the types of financial instruments or assets that can be held by the collective investment undertaking. A retail collective investment undertaking must be authorized by the CBB.
- Expert – may only be offered to Expert Investors and require a minimum investment of US$10,000. Expert Investors are individuals or commercial undertakings which have financial assets of at least US$100,000. Expert collective investment undertakings are also subject to restrictions on diversification and the types of assets that can be held but are able to utilize higher aggregated and individual exposure limits than retail collective investment undertakings and may invest in a wider range of asset classes, including among other things, real estate, commodities, unlisted securities and hedge funds. An expert collective investment undertaking must be authorized by the CBB.
- Exempt – may only be offered to Accredited Investors and require a minimum investment of US$100,000. Accredited Investors are individuals or institutions with financial assets having a value of at least US$1,000,000. Exempt collective investment undertakings are subject only to high level disclosure and reporting requirements and not to any restrictions on their investment policies. An exempt collective investment undertaking must register with the CBB prior to being offered to prospective investors. An exempt collective investment undertaking must not quote the CBB as its regulator, must clearly disclose that it is considered exempt for the purposes of the Module and must delegate its administration and custody of assets to third party licensed institutions which are licensed by or otherwise acceptable to the CBB.
|Entity Requirements||In accordance to the Central Bank of Bahrain (CBB) Rulebook, the legal status of the entity making the application can be:
|Operator||An application for authorisation may only be made by the operator of the CIU
In the cases where the operator is not a CBB licensee, an application for authorisation under will only be considered if the operator :
|Director’s Requirements||Depending on the entity type, the following are the requirements:
|Shareholder requirements||The licensee will need at least 2 shareholders.|
|Fund Administrator||An applicant may also appoint the CBB CIU’s proposed fund administrator|
|Fund Manager||An applicant may also appoint CBB CIU’s proposed fund manager.
|Custodian||An applicant may appoint a custodian who has been licensed by the CBB|
|Compliance Officer||Every licensed member must appoint a Compliance Officer. The Compliance Officer is responsible for discharging the legal and regulatory obligations of such member and must be a resident in Bahrain|
|Bahrain Office||A physical office in Bahrain is not mandatory|
|Auditor||Every member shall appoint one or more qualified and experienced external auditors for its accounts for every financial year. Prior written approval by the CBB will be required before appointing an auditor.|
|Minimum Capital Requirements||
|Application Fee||BD 100|
|Annual Fee||BD 2,000|
- Maintain all the conditions set in the license approval letter at all times
- A Licencee shall maintain such accounting and other records as may be specified by the Central Bank and shall have separate records for each branch abroad providing any of the services that are subject to this law.
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