Key Persons Dealings Policy
As part of its policy to maintain a fair, orderly and transparent securities market, the Bahrain Bourse Co. (BHB) vide circular MA/208/2010 dated 6th of December 2010 and the Central Bank of Bahrain (CBB), vide circular reference CMSL/L038/2011 dated 6th Feb. 2011, informed the Bank to implement and comply with the stipulation of “Key Persons’ Dealing Policy” which regulates the trading of Bank’s securities by members of the Board of Directors, Management staff and others persons, hereinafter defined and referred to as “Key Persons or KPs”. The KP Trading Policy replaces the earlier Insider Trading Policy issued and implemented at the Bank according to CBB’s –formerly known as BMA- stipulation of “Guidelines on Insiders” vide circular reference ODG/282/2004 dated 7th October 2004. This policy is also subject to the stipulations of CBB’s Rulebook 6 MAM (Prohibition of Market Abuse and Manipulation). Trading in debt securities referred to in this policy will be subject to the provisions of CBB’s “Guidelines for the Issuing, Offering and Listing of Debt Securities of 2004”.
The guidelines set forth below are introduced to ensure that KPs are aware of the legal and administrative requirement regarding the holding and trading of the Bank’s securities, with the primary objectives of preventing abuse of inside information.
3.1 Bank/Issuer: Both the Bank and the Issuer shall mean BBK.
3.2 BBK: Shall mean BBK Bahrain, its overseas branches and wholly owned subsidiaries
3.3 Directors: Includes any person who occupies the position of a director or a member of Board of Directors, by whatever name called.
3.4 Executive Management: The executive management includes positions of Chief Executive, Deputy Chief Executives, General Managers, Assistant General Managers or their equivalent, Senior direct reportees to the Chief Executive, direct reportees to Board Committees and the Corporate Secretary.
3.5 Connected person- in relation to
(a) Persons under the guardianship or control of Key Persons ; or
(b) A firm or company in which the individual or any of the persons mentioned in sub-paragraph (a) has control of not less than 10% of the voting power in the firm or company, whether such control is exercised individually or jointly; Connected persons in relation to a firm or company means another firm or company in which the first-mentioned firm or company has control of not less than 10% of the voting power in that other firm or company.
3.5 Inside Information: means information that;
(a) Is precise in nature relating directly or indirectly to one or more of the securities or the issuer thereof;
(b) Has not been made public;’
(c) If made public, is likely to have a significant impact on the price of those securities or their derivatives;
(d) Is, directly or indirectly, related to derivatives of commodities which the traders expect to be disclosed according to the market regulations.
3.6 Market Information
Means any published information about trading or non-trading in certain types of securities, their number, prices, range of price for trading or the identity of those involved or who may be involved, in any capacity, such as trading.
3.7 Dealing and using of Inside Information
Any person who is in possession of inside information shall not use such
a) Deal in any securities to which that information relates;
b) Encourage any person to deal in any securities to which that
c) Disclose inside information to any other person, otherwise than in the proper performance of the functions of his employment, office or profession;
d) Violate the rules governing the publishing of market information.
3.8 KPs/Insider Trading
Refers not only to the purchase or sale of an issuer's equity and debt securities, but also to the purchase or sale of puts, calls or other options with respect to such securities. Such trading is deemed to be done by an insider whenever he has any beneficial interest, direct or indirect, in such securities or options, regardless of whether they are actually held in his name. Included in the concept of "insider trading" is "tipping", or revealing inside information to outside individuals, to enable such individuals to trade in the issuer's securities on the basis of undisclosed information.
(a) Matters of supposition and other matters that are insufficiently definite to warrant being made known to the public;
(b) Matters relating to the intentions, or the likely intentions, of a person;
(c) Matters relating to negotiations or proposals with respect to:
(i) Commercial dealings;
(ii) Dealing in securities; or
(iii) Trading in futures contracts;
(d) Information relating to the financial performance of a company or an issuer, or otherwise;
(e) Information that a person proposes to enter into, or had previously entered into one or more transactions or agreements in relation to securities or has prepared or proposes to issue a statement relating to such securities; and
(f) Matters relating to the future.
Means any person who has obtained inside information;
(a) By virtue of his employment or profession;
(b) Being an officer or shareholder of the issuer of the securities; or
(c) Through illegal means.
A person may be an insider if he is already aware that such information is classified as inside information even though none of the above applies to him.
All persons who have access or come into possession of material inside information before its public release are considered insiders. Such persons include controlling shareholders, "directors and senior management", officers and employees, and frequently should also include any officials of the CBB and the Exchange who have access to such information, outside attorneys, accountants, auditors, underwriters, investment bankers, public relations advisers, advertising agencies, consultants and other independent contractors. The husbands, wives, immediate families and those under the control of insiders may also be regarded as insiders.
Where acquisition or other negotiations are concerned, the above relationships apply to other parties to the negotiations as well. Further, for purposes of this Module, insiders include "tippees" who come into possession of material inside information.
3.10 Categories of insiders:
The insiders covered by the procedures are of two categories:
3.10.1."Permanent Insider" means the bank itself, members of the Board of Directors of the Bank, the bank’s Executive Management, which includes the CE, the Deputy Cheif Executives, General Managers, AGMs, , employees directly reporting to the CE and/or to the Board of Directors, all Senior Managers, all employees in the Financial Control and Planning Divisions identified as Insiders and such other persons as decided by the Board to have access to inside information relating to the Bank from time-to-time and all of the above mentioned designations’ connected persons.
3.10.2 “Temporary Insiders”: means any person who is an insider, but not a permanent insider such as advertising agencies, consulting firms and External Auditors and their connected persons.
3.11 Key Persons (KPs): All persons identified as Insiders under clause 3.10 above are considered KPs at BBK.
3.12 Audit & Compliance Committee:
A committee of Board of Directors consisting of minimum three members and in addition to its duties as Audit & Compliance Committee, having responsibility for:
• considering and providing prior approval to requests for trading in Treasury Shares / Securities (for holding, buy-back, supporting market or such other permitted activity). Prior approval of the Committee will not be required for trading by other insiders and key persons in the ordinary shares of the Bank in BHB.
• reviewing and monitoring the Key Persons’ Dealing Policies including any periodical changes made to it and receiving and reviewing the reports of trading done by KPs.
• ensuring compliance with the Bank’s Key Persons Dealings policies.
Means a person appointed by the Audit & Compliance Committee to monitor day to day business of the Committee. The Person-in-Charge at BBK is the Board Secretary.
3.14 KP Register:
Means the register maintained by the ‘Person in Charge’ in accordance with above mentioned BHB circular ref. MA/208/2010 dated 6th of December 2010.
“Register of KPs” includes basic personal data of KPs and information on their holdings and dealings. The Register of KPs is maintained at the Bank’s headquarters and updated by the Person-In-Charge.
- NOTIFICATIONS TO THE KEY PERSONS:
The KP shall be notified of his status as soon as he/she becomes a KP and shall sign the form attached to this policy to this effect (see annex a). The notification for Board of Directors and their connected persons shall be carried out by the Person-in-Charge and for all other KPs by the HRD.
- NOTIFICATIONS OF DEALING:
Unless prior approval from the Audit & Compliance Committee will be required as elaborated under 6.0 below, Key Persons are required to notify the Person–in–Charge on details of the dealing by the end of the next business day of the completion of the dealing for trading Banks, securities and Bonds listed on BHB.
The Person-In-Charge shall immediately file with the BHB such notifications by KPs. BHB reserves the right to disseminate to the public the information contained in the filings.
- RESTRICTIONS ON DEALING BY PERMANENET INSIDERS:
Permanent insiders must refrain from trading and wait until the commencement of the following day’s trading session, or after 24 hours, whichever is less, after the publication of the financial statements have been released in the local newspapers.
7.1 The Audit & Compliance Committee shall:
a) Consider and provide prior approval to requests for trading in Treasury Shares and Securities (for holding, buy-back, supporting market or such other permitted activity). Prior approval of the Committee will not be required for trading by other KPs in the ordinary shares of the Bank in BHB. The Request for Trading form for this purpose is attached to this policy (see annex b)
b) Review and monitor the KPs Dealing Policy including any periodical changes made to it.
c) Ensure compliance with the Bank’s KPs Dealings policy.
d) Receive and review the reports of trading done by Insiders (at the end of each quarter the Committee will be posted of all transactions that took place during that quarter by the Person-in-Charge).
e) Securities trading requests submitted to the Committee to assess any violations to the Policy requirements and to decide on penalties and disciplinary actions.
The Audit & Compliance Committee will meet at least 4 times a year and its agenda shall include matters relating to Key Persons and their dealings.
The specific decision to permit trading as stipulated under 7.1a) is to be conveyed to the KP after 2 business days following the date of the trading request.
To facilitate this process, the ‘person-in-charge’ will circulate the requests as mentioned under 7.1.a) of KPs by e-mail/fax/web interface to all members of the Audit & Compliance Committee.
Members will advise their objection to the Person-in-Charge immediately with in 2 business days. In case of any objection/rejection by any one member, it will be deemed that the request is declined by the committee and the ‘Person-in-Charge’ will advise the KP accordingly.
In case no objection is received from any member with in 2 business days then it will be assumed by the Person-in-Charge (on behalf of Committee) that the request is approved and he would advise the KP accordingly. All such decisions will be ratified by the Committee in the next meeting. In case the Committee meets to decide on requests and there is no need to adopt the circulation process as above then the appropriate decision of the Committee will be conveyed by the Person-in-Charge.
- ROLE OF THE PERSON-IN-CHARGE:
The Person-in-Charge shall have the delegated responsibility of the Committee for day to day monitoring, administration, reporting, maintenance of records and KP register. He would carry functions on behalf of the Committee. The authority to grant approval or reject approval is not delegated to the Person-in-Charge.
The Person-In-Charge shall inform the BHB and the CBB of any KP trading transaction on the day of receipt of notification from the KP, which should not be later than the following business day on which the said transaction occurs. The Person-In-Charge shall organize regular supervision (at least annually) of the Permanent Insiders to verify the information declared to the company and the trading of the Permanent Insiders.
- INTERNAL MONITORING:
For internal administration purposes, the GM, HRD shall monitor activities relating to the staff identified as KPs and the Person–in–Charge shall handle the same for all other KPs. The Person–in–Charge shall continue to be the overall liaison person for KPs Trading. Furthermore, the Internal Audit Department shall perform an annual verification of the KP register and report the results of such verification to the CBB within 10 days after the date of the Bank’s AGM.
- KP FORMS:
KP forms are attached as Annexure. The forms KP-1 and KP-2 (see annex c) contain detailed instructions to complete them. All these forms are to be submitted by the person-in-charge to the BHB and CBB. KPs shall be requested to update their information on annual basis.
- MAINTENANCE OF REGISTER OF KEY PERSONS:
The Person-in-Charge shall at all times maintain an updated Register of Key Persons containing the following:-
a. basic personal data of KPs of the Issuer Group; including any connected persons declared by the KP.
b. Key Persons holdings and interests in the Issuer; and details regarding dealings by Key Persons in securities of the Issuer.
The Person-in-Charge shall submit an updated and complete Register of Key Persons to the BHB as soon as practicable but not more than 10 calendar days after the following:-
(1) the start of trading when it is first listed on BHB;
(2) the conclusion of its Annual General Meeting; and
(3) upon request by BHB.
The Person-in-Charge shall further notify the BHB of any changes to its Register of KPs within 10 calendar days of such change. Form KP1 should be used for initial filings of the Register of Key Persons with the Bahrain Bourse, and Form KP2 should be used for filings of changes to the Register of Key Persons.
(4) On quarterly basis the Committee will be posted of all transactions that took place during that quarter by the Person-in-Charge.
(5) On a monthly basis The Person-in-Charge shall send to the attention of BHB a report on the updates on the KPs register and details of all Trading that took place during the previous month. The report should be submitted not later the 10th of each month.
13.1 The approved policy shall be posted on the Bank’s web site.
13.2 A copy of the approved policy will be made available to all KPs. A copy will also be available on request to all shareholders and other interested parties.
13.3 The annual report will contain a statement on the KP policy and also details of interest of directors in the shares of BBK.
Any instances of breach of compliance by KPs with the Bank’s procedures will be dealt with by the ‘Audit and Compliance Committee’ and severe penalties including termination will be enforced on the violating KP. The Audit and Compliance Committee shall recommend the course of action to the Board for its consideration. Any violation to the policy and the CBB’s MAM module shall be reported immediately to the CBB.
- MISCONDUCT BY KPS AND DISCIPLINARY ACTIONS:
1) The disciplinary actions imposed on the staff who are considered KPs shall be according to the bank’s approved disciplinary code.
2) For all other KPs the Audit & Compliance Committee shall submit recommendations to the Board of Directors about the disciplinary action for disclosing and/or abusing inside information. The Board shall take final decision on the same.
3) Any disciplinary action under 1) or 2) above shall be according to the provisions of the Labour law of the Kingdom of Bahrain (concerning staff only) and CBB and Bahrain Bourse Guidelines.
4) The bank holds the right to take the KP who has carried out the misconduct of disclosing and/or abusing the inside information relating to the bank to the court for damages according to the nature and extent of damage.
5) The above is without prejudice to the penalties prescribed by the CBB and the Exchange Law, Rules and Regulations as prevailing at the relevant time.
- All policy provisions given here shall be subject to CBB/BHB regulations in force from time to time and no exceptions will be allowed with respect to CBB/BHB regulations.