New expanded CIU Module for Bahrain funds
The Central Bank of Bahrain (CBB) has recently acted to replace the existing funds regime with an enhanced set of rules to provide more detail on the roles and responsibilities of key stakeholders and provide greater consistency of content for fund documentation. The new rules have been issued for consultation and are likely to be adopted early in 2012.
Alongside the reshaping of the funds regime, the CBB has acted to prevent the use of restricted investment accounts (known as “RIAs”). RIAs have been extensively used by Islamic financial institutions as a simple way of raising money for a variety of projects avoiding the extensive disclosure required by fund documentation. RIAs have not been subject to the same degree of CBB scrutiny and regulation that funds have been subject to. The actions of the CBB bring an end to this disparity.
In addition, the CBB has introduced rules to accommodate new financial products such as Bahrain Real Estate Investment Trusts (B-REITs) and Private Investment Undertakings (PIUs). B-REITs will form a special sub-set of collective investment undertaking with their own asset class restrictions. PIUs will be subject to a limited number of high-level regulatory controls commensurate with the high minimum investment threshold for such funds (USD 3 million).
For more information, please contact:
Adrian Woodcock or Rayhana Sheikh Kapadia