“As a part of its responsibility to develop the regulatory and supervisory framework of the capital market in the Kingdom of Bahrain, the CBB is proud to provide the industry with a comprehensive set of provisions related to the primary market operations covering the issuing, floating and subscribing in securities,” the Governor of CBB Rasheed Al Maraj said.
“The infrastructure of the capital market to be in line with the international standards and best practices, enhancing the level of transparency, maintaining the market integrity and the investors’ confidence on Bahrain’s Capital Market,” Al Maraj, said.
“Among the above mentioned initiatives included in the OFS Module, the CBB declares its commitment to shorten the time frame required to grant its approval on issuing and offering of securities applications upon receiving the required declaration provided by the involved parties including the issuer’s board of directors regarding the accuracy and comprehensiveness of the information provided to the investors in all types of securities including sharia compliant securities, newly established Small and Medium Enterprises (SME’s), private placement and extending certain flexibility to the private equity funds, as well as the mutual recognition of the approval granted by the overseas securities regulator to overseas issuer application if such regulator is acceptable to the CBB,” the Governor added.
“The most important initiative is the CBB’s decision to accept all application submitted by the GCC issuers to the CBB prepared in accordance with the Unified Standards issued by the Gulf Cooperation Council, to facilitate the integration of the GCC securities markets which is a major objective of the CBB.”
“The OFS Module is considered as the most important module of the Capital Market Rulebook Volume 6 as its objective is to develop securities primary market operation in Bahrain through adapting all standards and requirements that enable the Bahrain’s market to be used as the most preferable center for issuing of securities by the local and international issuer whether to finance their existing companies or projects or to floating their new projects at a competitive cost of fund raising, under full transparency environment and maintaining the confidence, credibility and professionalism in the securities primary market operation by enhancing the role and responsibility of the capital market advisory service providers,” Abdul Rahman Al Baker, Executive Director – Financial Institution Supervision, said.
“This Module came as the result of the continued development program pursued by the CBB since 2003 regarding reviewing and developing the existing laws, rules and regulations. Therefore, the CBB looks forward to private sector companies and institutions to benefit from using this module for establishing their new companies or financing the expansion of their existing projects, enhancing their role and contribution in the economic development, creating more employment opportunities and attracting more foreign direct investment, and therefore expanding and activating the Bahrain’s securities primary market,” he added.
The Central Bank of Bahrain (CBB) has issued the Regulatory and Supervisory Module on Issuing and Offering of Securities and Sharia Compliant Sukuk (OFS Module) offered through public offering or private placements, in or from the Kingdom of Bahrain. This module is a major part of the CBB’s Capital Market Rulebook Volume 6 and has been circulated to industry participants at the beginning of December 2013 after consultation with such parties.
The OFS Module contains the regulatory and supervisory provision that covers the issuing, offering, floating and subscribing to different types and classes of securities, whether conventional or Sharia compliant securities. The provisions also covers different stages of issuing , offering, floating and subscription in securities as well as the standards and criteria for designating or appointment of the capital market advisory service providers which includes legal, sharia, financial, technical or any other services. The Module provides the procedure and documentation that needs to be prepared by the issuer for the submission of their application to obtain the CBB approval in accordance with article 81 of the CBB Law.
The main purpose of the OFS Module is to regulate the operations of issuing, offering, floating and subscription in securities. It encourages the shareholding companies and all other issuer entities, whether issuing ordinary shares, sharia compliant securities, debt instruments or any other type of securities issued by shareholding company, whether for the incorporation of new companies or projects, or subsequent issues for financing the existing business or projects, or to capitalize on the investment opportunities that the market may provide inside or outside of the Kingdom of Bahrain to enhance the value of investment of the shareholders or investors in companies licensed or operating in or from Bahrain.
The OFS Module specifies the role and responsibilities of the parties involved in the issuing, floating and subscribing in securities, their responsibility in adherence to the standards and requirements regarding the setup of the fair value of subscription price particularly their responsibilities to provide accurate, comprehensive, no omission of information that is required to maintain full transparency environment which will enable the investors to establish their well informed investment decision, and protecting their rights being stipulated in the Laws, Rules and Regulations applicable in the Kingdom of Bahrain to be in line with the international standard and best practices issued by international organizations particularly those provided by International Organization of Securities Commission (IOSCO).
The OFS Module contains nine (9) sections and 11 appendices. The 1st section specifies the minimum and general requirement applicable to all types of securities along with the specific and additional requirements related to each type or class of securities.
The 2nd section specifies the requirements related to each method of issuing, floating and subscribing in securities including public offering, private placement, preemptive right, book building, underwriting or any other method of the offering. Whereas the 3rd section of the OFS Module provides provisions on the standards and requirements for designating or appointment of any capital market advisory services providers, that covers the regulatory, sharia principal, financial, accounting, qualification and experience requirements that needs to be observed at the time of such appointment.
The 4th section specifies the information, statistics and contents of the documents and procedures to submit the application to the CBB to obtain its approval. Whereas the 5th section provides the minimum requirement related to the information, statistics and content of the prospectus, where the appendices provide details on such required information, statistics and content that is related to each type and method of issuing and offering of securities.
The 6th section of the OFS Module stipulates the requirements related to the disclosures, announcements, advertisements and invitation for the subscription, particularly with respect to the public offering. The 7th section stipulate the requirement related to the allotment or allocation of subscribed securities along with the procedures and time frame for the issuing of certificate or ownership evidence, dispatching and refunding of excess subscription amount, as well as the requirements for depositing of issued securities with a licensed clearing house. All of these functions need to be performed within the pre-determined time frame provided in the offering documents.