In line with Bahrain’s Economic Recovery Plan and the Kingdom's drive to support development of the financial sector and to position itself in the region as a fund friendly environment, the Central Bank of Bahrain (the “CBB”) has recently amended and updated Volume 7 of its rulebook in relation to collective investment undertakings ("CIU") (“Volume 7”).
As amended, Volume 7 is more comprehensive in defining collective investment undertakings, and more explicit in its applications. Furthermore, Volume 7 brings best practices to the industry, and is in line with international covenants, aimed at attracting foreign investors’ interest into funds domiciled in the Kingdom of Bahrain as well as key market players in the selection of the Kingdom's as their jurisdiction is to established fund.
A key feature of Volume 7 is classifying collective investment undertakings into two main categories. The first category focuses on retail investors that can be offered to all types of investors and requires pre-authorisation from CBB. The second category, “exempt collective undertakings”, can be offered to accredited investors with a net worth of more than USD1,000,000. CIUs in this category are monitored by the CBB and are only required to notify the CBB on investments by a placement agent.
Consequently, when simplifying procedures for accredited investors by allowing them to only notify the CBB, it opens the door for the Kingdom of Bahrain to be the desired regional jurisdiction of choice for the establishment of investment funds. Notably, the simplifying of procedures in respect of "exempt collective undertakings" as introduced in the revised Volume 7, and in particular the need to only notify the CBB, has assisted greatly in this aim.
Conceptually, the revised Volume 7 represents a simplified approach: it is easier to understand and more market focused, through categorising what were previously separate sections into a new complete module.
This recognition of the necessity of simplifying processes and fast nature of investments that are taken into consideration in Volume 7, together with solid governance sets, pushes the Kingdom of Bahrain straight for fund domiciliation in the global market, serving the CBB’s previously-announced Financial Services Development Strategy 2022-2026.
