Key Persons
Dealings policy

1.0 INTRODUCTION:

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 6^th of December 2010 and the Central Bank of Bahrain (CBB), vide circular reference CMSL/L038/2011 dated 6^th Feb. 2011, 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”. This policy is also subject to the stipulations of CBB’s Rulebook 6 MAM (Prohibition of Market Abuse and Manipulation) and other regulation in this regards.

2.0 OBJECTIVES:

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.

3.0 DEFINITIONS:

3.1 Bank/Issuer: Both the Bank and the Issuer shall mean BBK.

3.2 BBK: Shall mean Bank of Bahrain and Kuwait

3.3 Covered Persons:
This Policy covers all directors, officers at GM level and above, and some other employees of the Bank and their respective family members and any outsiders whom the person in charge of Insider Trading or the concerned committee may designate as Insiders because they have access to material nonpublic information concerning the Bank (Insiders).

3.4 Covered Transactions:
The Policy applies to any and all transactions in the Bank’s securities.

3.5 Connected person- in relation to
(a) Persons under the guardianship or control of Key Persons which include the individual’s spouse and his/her son, adopted son, stepson, daughter, adopted daughter, step-daughter, father, step-father, mother, step-mother, brother, step-brother and sister or step-sister.
(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.

3.6 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.

3.7 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.

3.8 Dealing and using of Inside Information
“Dealing”, where referred to in this policy, includes (whether as principal or agent) marking or offering to make with any person, or inducing or attempting to induce any person to enter into or to offer to enter into an agreement for or with a view to acquiring, disposing of, subscribing for, or underwriting securities of the Bank. Dealing includes (but is not limited to) on-Exchange and off-Exchange transactions, including subscriptions of securities of the Bank.Any person who is in possession of inside information shall not use such information to:

a) Deal in any securities to which that information relates;
b) Encourage any person to deal in any securities to which thatinformation relates;
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.

3.9 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/she 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.
“Information” includes:
(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.

3.10 Insiders
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.
Where acquisition or other negotiations are concerned, the above relationships apply to other parties to the negotiations as well. Further, insiders include “tippees” who come into possession of material inside information.

3.11 Categories of insiders:
The insiders covered by the procedures are of two categories:
3.11.1.”Permanent Insider” means The Bank itself, any employee involved in treasury stock trading, the stock brokerage staff, the Board of Directors, the Group CE, the Deputy CE’s, Group Chief Officers, all General Managers, Deputy Chief Risk Officer, Head of Enterprise Risk, the Head of business development,  all employees of level Manager and above in the Financial Control and Planning Division, the GM Audit, the Group Head of Compliance and AML, the Group Head of Corporate Secretariat and Assistant Group Head of Corporate Secretariat, the Head of Corporate Communications and Marketing and Head Corporate Communication Department, all other approved persons at the Bank and the persons under the guardianship or control of all the persons mentioned herewith.

3.11.2 “Temporary Insiders”: means any person who is an insider, but not a permanent insider namely: The External Auditor firm, the Advertising agency firm, the share registrar and the Employee shares trustee firm.

3.12 Key Persons (KPs)
All persons identified as Insiders under clause 3.10 above are considered KPs at BBK.

3.13 Audit & Compliance Committee:
A committee of Board of Directors consisting of minimum four members and in addition to its duties as Audit & Compliance Committee, having responsibility for overall monitoring of KP dealings as elaborated under clause 7.1 of this policy.

3.14 Person-in-Charge:
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 Head of Group Corporate Secretariat.

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 Group Corporate Secretary.

3.15 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 Board Secretariat.

4.0 NOTIFICATIONS TO THE KEY PERSONS:

The KP shall be notified of his/her 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.

5.0 NOTIFICATIONS OF DEALING:

Unless prior approval from the Audit & Compliance Committee will be required as elaborated under 7.0 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 by submitting the form KP2. BHB reserves the right to disseminate to the public the information contained in the filings.

6.0 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.

7.0 MONITORING:

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 KPs (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) Review securities trading requests submitted to the Committee to assess any violations to the Policy requirements and to decide on penalties and disciplinary actions.

7.2 Meetings:
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.

7.3 Decisions:
The specific decision to permit trading as stipulated under 7.1a) is taken by the Audit & Compliance Committee during a meeting or by circulation as elaborated below and conveyed to the KP accordingly.

Approvals obtained by circulation:
The ‘person-in-charge’ will circulate the requests as mentioned under 7.1.a) of KPs by e-mail /web interface to all members of the Audit & Compliance Committee. Members will advise their approval/objection to the Person-in-Charge within the next 2 business days. The validity period of approval will be in line with the CBB approval period.   In case of any objection/rejection by any one member, it will be deemed that the request is declined by the Committee. All such decisions will be ratified by the Committee in the next meeting.

8.0 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 as elaborated under clause 5.0 of this policy. 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.

9.0 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.

10.0 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.

11.0 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.

c. The register should be maintained and kept for a minimum period of 5 years.

12.0 REPORTING:

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.

13.0 DISCLOSURE:

• 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.

14.0 NON-COMPLIANCE:

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.

15.0 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 BHB, Rules and Regulations as prevailing at the relevant time.
16.0 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.

17.0 This policy shall be reviewed every three years or as and when required. Any amendments to this policy shall be recommended by the Audit & Compliance Committee and must be approved by the Board.