Post by Sapphire Capital on Oct 23, 2008 5:41:51 GMT 4
Central Bank of Bahrain
MINIMUM REQUIREMENTS
FOR PRIVATE PLACEMENT
MEMORANDUM FOR
OFFERINGS OF FINANCIAL
INSTRUMENTS IN THE
KINGDOM OF BAHRAIN
MINIMUM REQUIREMENTS FOR PRIVATE PLACEMENT MEMORANDUM
6th October 2008
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MINIMUM REQUIREMENTS FOR PRIVATE PLACEMENT MEMORANDUM
FOR OFFERINGS OF FINANCIAL INSTRUMENTS IN THE KINGDOM OF
BAHRAIN
Section 1: Scope and Filing Requirements
Section 2: Required Statements
Section 3: Disclosure of Fees and Utilisation of Proceeds
Section 4: Suitability of Investors
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Section 1: Scope and Filing Requirements
1.1 These requirements apply to any invitation made by way of a Private
Placement for investment in financial instruments in the Kingdom of
Bahrain to residents by the following:
1.1.1 Licensees of the CBB on their own account, for purposes other
than raising regulatory capital.
1.1.2 Bahraini issuers, using a CBB licensee as a lead manager of
the concerned issuer.
1.1.3 Foreign issuers, promoted by CBB Licensees on behalf of the
concerned foreign issuer (including offers of financial
instruments issued by SPVs) other than private placements
relating to collective investment undertakings (CIUs) which
are covered by separate requirements (Rulebook Volume 6
Module CIU issued by the Central Bank of Bahrain (CBB)
with effect from 1st June 2007).
1.1.4 Foreign issuers, promoted by a non Licensee (including offers
of securities issued by SPVs) other than private placements
relating to collective investment undertakings (CIUs).
If the PPM is offered in the Bahrain market, the PPM document
should state that the PPM is in compliance with this CBB regulation.
If the PPM is only offered outside Bahrain, the PPM document
should state the following:
Whether the PPM is in compliance with any
relevant foreign country’s existing regulations on
PPMs or not, and
That the PPM is not falling under the regulation of
the CBB.
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All such private placement memorandum (“PPMs”) marketed or
promoted in the Kingdom of Bahrain must comply with the minimum
requirements in this document.
These requirements refer primarily to ensuring that PPMs are only
issued to "accredited investors" and that certain minimum disclosures on
risk and the utilisation of proceeds have been made. The
requirements are not exhaustive and do not limit or prescribe any other
information that may be contained in a PPM. The requirements stated in
this document are required in addition to any other relevant financial and
risk information that may have impact on the potential investor’s
decision.
1.2 All offers that satisfy the conditions in paragraph 1.3 below are
exempted from the specified requirements contained in the CBB
Disclosure Standards dated 3rd December 2003 or in the CBB Guidelines
for the issuing, offering and listing of debt securities dated 10th March
2005, and the requirements of the Bahrain Stock Exchange Law and
BSE Internal Regulation dated 25th February 1987 and 24th December
1988 respectively (and associated resolutions and regulations).
1.3 For the purpose of this document, a private placement has the following
characteristics:
a. It is a private solicitation for funds and is not made available to
retail investors by public offer or advertising (e.g. in the local press,
radio, television, or other electronic media such as unsolicited texts
or e-mails to persons other than “accredited investors”). General
brand awareness of the financial institution is allowed but nothing
relating to any private placements should be made public.
b. It is made only to (1) “accredited investors” and/or (2) entities
whose shareholders are all “accredited investors” and /or (3) the
issuer’s or promoter’s directors, management and staff
members.(see section 4).
c. It is made for denominations of at least $100,000 or equivalent in
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other currencies.
d. The solicitation is made by way of a memorandum (PPM) offering
financial instruments including:
Shares( by way of a private offering by a third party issuer), bonds,
warrants or notes;
Any other securities giving the right to acquire or sell any such
securities, or giving rise to a cash settlement determined by
reference to securities, currencies, interest rates or yields,
commodities or other indices or measures;
Money market instruments including commercial paper;
Credit derivatives issued as securities which are transferable and/or
negotiable (e.g. credit-linked notes);
Any financial instrument giving rights to, or interests in real estate
property;
Islamic financial instruments including sukuks and murabaha
certificates. (Sukuk are also subject to additional specific
requirements stated under the CBB regulation “Registration of
Private Placement Sukuk Issues with CBB); and
Any other securities or investment instruments deemed to be a
financial instrument for the purposes of this Regulation.
If an offer of financial instruments in Bahrain does not satisfy all of
the above conditions, then the offer will be subject to the relevant
Stock Exchange or CIU requirements, concerning the public
offering of Financial Instruments.
1.4 All PPMs concerning offers of financial instruments referred to under
paragraph (1.1) above must be filed with the CBB within 2 days of being
distributed to investors in Bahrain. The concerned licensee must also
maintain a compliance report for the concerned PPM stating that the
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financial institution is complying with the CBB PPM regulations which
must be available for inspection at the financial institution’s premises.
1.5 Any CBB licensee in Bahrain which distributes PPMs stated under
paragraphs (1.1.1, 1.1.2 & 1.1.3) above which do not satisfy the
minimum requirements in this regulation will be subject to the
Enforcement provisions of Module EN of the CBB Rulebook.
Section 2: Required Statements
The PPM or accompanying literature must contain the following statements:
2.1 Suitability of Investors
THIS OFFER IS A PRIVATE PLACEMENT. IT IS NOT SUBJECT TO
THE REGULATIONS OF THE CENTRAL BANK OF BAHRAIN THAT
APPLY TO PUBLIC OFFERINGS OF SECURITIES, AND THE
EXTENSIVE DISCLOSURE REQUIREMENTS AND OTHER
PROTECTIONS THAT THESE REGULATIONS CONTAIN. THIS
MEMORANDUM IS THEREFORE INTENDED ONLY FOR
"ACCREDITED INVESTORS” AS DEFINED IN THE GLOSSARY TO
THIS MEMORANDUM.
THE FINANCIAL INSTRUMENTS OFFERED BY WAY OF PRIVATE
PLACEMENT MAY ONLY BE OFFERED IN MINIMUM
SUBSCRIPTIONS OF $100,000 (OR EQUIVALENT IN OTHER
CURRENCIES).
THE CENTRAL BANK OF BAHRAIN ASSUMES NO RESPONSIBILITY
FOR THE ACCURACY AND COMPLETENESS OF THE STATEMENTS
AND INFORMATION CONTAINED IN THIS DOCUMENT AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY
LOSS HOWSOEVER ARISING FROM RELIANCE UPON THE WHOLE
OR ANY PART OF THE CONTENTS OF THIS DOCUMENT.
THE BOARD OF DIRECTORS AND THE MANAGEMENT OF THE
ISSUER ACCEPTS RESPONSIBILITY FOR THE INFORMATION
CONTAINED IN THIS DOCUMENT. TO THE BEST OF THE
KNOWLEDGE AND BELIEF OF THE BOARD OF DIRECTORS AND
THE MANAGEMENT, WHO HAVE TAKEN ALL REASONABLE CARE
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TO ENSURE THAT SUCH IS THE CASE, THE INFORMATION
CONTAINED IN THIS DOCUMENT IS IN ACCORDANCE WITH THE
FACTS AND DOES NOT OMIT ANYTHING LIKELY TO AFFECT THE
RELIABILITY OF SUCH INFORMATION.
2.2 Statements on Risk:
The PPM must contain statements to the effect that all prospective
investors should make their own investigation into the offer, and
consult their own advisors concerning the risks of the investment and
the suitability of the financial instruments for their individual
requirements. There must also be a statement as to the liquidity and
possible lack of a public market for the financial instruments on offer.
The memorandum must also outline the particular types of risks
associated with the financial instruments to be issued as a result of the
PPM. The list of requirements in this document is not intended to be
exhaustive. Issuers have an obligation to ensure that all relevant
financial and risk information is placed in the PPM to allow investors to
make an informed decision.
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Section 3: Disclosure of Fees and Utilisation of Proceeds
3.1 The PPM must disclose the estimated total amount of the proceeds of
the issue, and the proposed timetable for their utilization.
3.2 The PPM must disclose the total amount of fees payable by the
investors, up-front discount or placement commission agreed by the
underwriters or other placement or selling agents and the issuer or
selling shareholders, as well as the percentage such up-front discounts
or placement commissions represent of the total amount of the offering,
and the amount of up-front discount or placement commission per
financial instrument.
3.3 The document must show to the investor the ultimate dilution of
proceeds through the disclosure of fees, offering expenses or up-front
discounts or placement commissions. There must be a statement of the
major categories of expenses incurred in connection with the issuance
and distribution of financial instruments to be offered, and by whom the
expenses are payable, if other than by the issuer. If any of the financial
instruments are to be offered for the account of an existing holder of
shares or financial instruments in the issuer, the PPM must indicate the
portion of expenses incurred by him.
3.4 Any private placements of financial instruments offered in the
Kingdom of Bahrain should set fees within reasonable and justifiable
levels that do not materially compromise the interests of the issuer or
the investor.
3.5 The above disclosures of fees and dilution and utilisation of proceeds
must be made prominently and clearly for the attention of potential
investors.
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Section 4: Suitability of Investors
4.1 The PPM must only be distributed to accredited investors (as defined
below). An offeror distributing a PPM in Bahrain must obtain a
signed "status confirmation" as follows from the investor
accompanying his application form for the private placement.
"I/we confirm that I/we am/are (an) accredited investor(s) (as defined
below, and further confirm that I/we have read and understood the
definition of "accredited investor" as set out below. Furthermore
I/we have read the "risk analysis" section of the Private Placement
Memorandum dated _______________, and understand the risk
nature of the financial instruments on offer".
4.2 An accredited investor is defined as:
a. Individuals holding financial assets (either singly or jointly with
their spouse) of USD 1,000,000 or more;
b. Companies, partnerships, trusts or other commercial
undertakings, which have financial assets available for
investment of not less than USD 1,000,000; or
c. Governments, supranational organisations, central banks or
other national monetary authorities, and state organisations
whose main activity is to invest in financial instruments (such
as state pension funds).