all questions
common structure
Types of products offered* | Product description |
---|---|
Mudaraba savings account | a Mudaraba The ordinary savings account is sharia unlimited principle Mudaraba.under Mudaraba In principle, the customer acts as a capital provider and the bank acts as a capital provider. mudarib Banks pool and invest all their customers’ funds with their own capital. shariaInvestment mode according to. The profits obtained are divided between the bank and the customer according to predetermined ratios. Mudaraba is a profit-and-loss sharing product, and the better the bank’s performance, the higher the profit it earns. |
Term investment deposit (Mudarabah) | Fixed investment deposits are sharia unlimited principle Mudaraba.under Mudaraba As a rule, customers are investors (rab-al).-Maru) The bank acts as the agent for a certain period of time. mudarib (Entrepreneur) Leverage that expertise. Banks pool and invest all their customers’ funds with their own capital. sharia– Compliant investment for a specified investment period and expected rate of return. The resulting profits are divided between the bank and the customer according to mutually agreed ratios in advance. |
Izdihar savings account | Ann Izdihar The account is a savings account based on Islamic unlimited principles. MudarabaIn other words, customers benefit from the savings they make. Funds are placed in a common investment pool and invested strictly in accordance with the following rules: sharia Principles for generating the highest possible profits. The profits earned from the investment are divided between the bank and the customer according to a pre-agreed profit sharing ratio. |
current account (qard hasan) | Current accounts are based on Islamic contracts. Card Hasan (interest-free loan). People who are depositors become lenders, and banks become borrowers.Deposited funds will be invested in halal Activities only. Regardless of the profits or losses the bank generates from such investments, the funds are guaranteed to be paid out on demand without profit or penalty. |
Investing in Wakala | Wakara Investing is based on Islamic concepts. Wakala Istimalthat person becomes the principal (Mwakil) and the bank becomes the investment agent (Wakel) funds.Banks invest these funds in sharia– Compliant financing and investment activities. The target profit earned from the investment will be distributed to the customer upon account maturity. bank (as) Wakel) agreed agency fee (Wakara commission), and upon maturity, pays out both the target profit amount and the principal funds to the customer in accordance with the terms of the Wakalah contract. |
* With respect to certain mudarabah, wakalah or musharakah based savings accounts and products where principal is not guaranteed, the customer’s return is not guaranteed and there is even a possibility of loss of principal. CBB has strict standards for offering this type of product, including appropriate disclosures (i.e. product overview, risk factors). Therefore, the customer has to bear the full performance risk, but in practice it is rare that the bank does not return the expected profit and principal. |
i Private equity investment
In the case of a Bahrain-based private equity fund, whether it will be established or not. shariacompliant method or generally established as a traditional fund and does not use any specific structure.
A common structure is a Cayman Islands exempt limited partnership (in the form of a partnership or a Cayman Islands exempt corporate fund). It is also possible to set up an investment as a private investment business in Bahrain. This is a flexible type of fund, requiring only registration with the CBB rather than CBB approval, and is very limited in investment capacity, but very limited in investor type and minimum number of investors. There is a high threshold. Amounts relating to investments in such funds.
Generally, all funds established are sharia-To be compliant, fatwa and make an investment shariacompliant products and comply with various doctrines. sharia.
ii Real estate investment
Real estate funds do not have any special structure and are established with the same considerations as traditional funds. shariaA real estate fund compliant with the .
Common structures include offshore limited partnerships and companies, locally based funds and real estate investment trusts.trust law15 was introduced at the end of 2016 and allows for the establishment and listing of a real estate investment trust known as Bahrain Real Estate Investment Trust (BREIT). BREIT is regulated by the Trust Law of the CBB Rulebook, Volume 7 (Collective Investment Businesses) and the BREIT Listing Rules issued by the Bahrain Stock Exchange.
A BREIT can be set up as a specialized collective investment entity (CIU) or an exempt CIU. Expert CIU is only offered to expert investors who need to deposit at least USD 10,000. Tax-free CIUs are less regulated but are only available to accredited investors who invest at least US$100,000. BREITs are attracting increasing attention in Bahrain, but few have been launched so far.
GCC nationals and wholly owned GCC legal entities may own land in Bahrain on a freehold basis. Non-Bahraini individuals or legal entities may own property or land in certain designated areas where foreign ownership is permitted.
iii investment funds
Investment funds are typically established in Bahrain as a company, partnership or trust. We do not use any particular type of fund structure. sharia-Compliant.
The following are common structures used when selling funds to retail investors: shariaSpecialist funds in accordance with. This type of fund requires a minimum investment of $10,000 and can only be offered to investors who already have at least $100,000 in financial assets. Expert funds can be leveraged by borrowing up to 20% of the value of the assets under management.
Further examples of the types of investment funds used in Bahrain are: shariaexemption funds pursuant to . It can only be sold to an accredited investor (one who already owns assets worth USD 1 million) and the minimum investment amount is his USD 100,000. This type of fund is less regulated.
Bahrain introduces investment partnership law16 This makes it the first country in the GCC region to introduce domestic legislation that allows for the formation of limited partnerships in a manner comparable to the structures utilized in trusted offshore fund domiciles. The main features of this law include that the general partner of the Bahrain Investment Limited Partnership can be established as a subsidiary of the investment business or a special purpose vehicle (SPV). This allows sponsors to avoid undue exposure in terms of liability while using one of the recommended and widely recognized international models of private equity funds. The law also aims to make Bahrain a more attractive market for investors by setting higher liability standards for general partners. Limited partners are expressly prohibited from participating in the management of the partnership. Limited partners are not liable for the obligations and debts of the partnership in excess of their capital contribution. However, a limited partner may be required to return any share of profits paid within six months of the partnership’s bankruptcy to the extent necessary to satisfy the partnership’s debts or obligations.17 Investment limited partnerships can only carry out certain activities within the financial sector, including private investment operations, collective investment operations, securitization and insurance captives, and other activities subsequently approved by the CBB.18
Protected Cell Company Law;19 Enacted in Bahrain in 2016, it allows the establishment of protected mobile phone companies (often referred to as separate portfolio companies or sub-funds). Both limited partnership funds and segregated portfolio funds. shariacompliant funds. A custodial cell company is a corporate structure that consists of a single legal entity as the core legal entity, under which multiple separate cells or portfolios exist. A protected cell company allows each cell to be managed by a single or separate investment manager. New cells can be established as the fund develops, expands and targets under different asset classes. This allows for long-term flexibility and provides fund promoters and managers with the opportunity to expose investors to new asset classes and sectors at lower costs. The assets of each cell are ring-fenced so that they are available or exposed only to creditors and shareholders of each specific cell. The protected mobile phone carrier has the option of entering into agreements with third parties, in which case the third party will provide recourse against the assets of the core entity in respect of any liability that may arise during the course. You will have the right. that you are dealing with any of the cells of a protected cell company in addition to the assets of the relevant cell;20 The enactment of the Investment Partnership Law and the Protected Cell Company Law demonstrate Bahrain’s intention to develop its fund industry.
As of the end of July 2023, the number of mutual funds was 1,671 funds, of which 64 funds were domiciled in Bahrain, compared to 1,690 funds as of July 2022. shariaCompliant funds were 107 as of July 2023.twenty one The net asset value of the investment trust was USD 11,478 million as of the end of March 2023, an increase of more than 7% year-on-year. Of this, US$1.2 billion was sharia-Compliant funds.
iv SPV
All Bahrain Islamic Banking Licensees must apply if they intend to become involved in an SPV in the capacity of originator, sponsor or administrator of the SPV, or if they intend to participate in the establishment of an SPV, or if they intend to acquire an SPV. If so, you must obtain CBB’s prior specific written approval. Holding more than 20% of the equity capital of the SPV. Every Bahrain Islamic Banking Licensee must, in advance of being appointed as a candidate shareholder of an SPV or holding voting rights by proxy arrangement of her SPV on behalf of other investors, Must seek approval from her CBB. A Bahrain Islamic Banking licensee involved in an SPV, in addition to providing the necessary information to the CBB when seeking approval, must not permit such SPV to:
- Obtaining conventional financing.
- Give Love Al all kinds of financial guarantees, guarantees and compensations-Maru (capital provider), Mwakil (principal) or investor of the SPV.and
- Confirm that there are no restrictions regarding the availability of financial or other information relating to the SPV or access to its offices or records.
v trust
The Trust Law replaces the Bahrain Financial Trust Law of 2006 and aims to provide detailed guidance on the creation and management of financial trusts within the Kingdom. Although such trusts are widely used in other jurisdictions, they are new to the Middle East, and Bahrain is one of the first countries to introduce this type of legal framework. The Trust Law provides certainty for foreign investors wishing to establish a trust in Bahrain, as it formally recognizes trusts that are governed by the laws of other jurisdictions.twenty two This development will enable land-based development. shariaA compliant structure for holding assets, especially for families who have traditionally tended to use offshore jurisdictions to hold assets. These trusts will also be used to develop his BREIT, which can be established in accordance with the CBB Fund regulations.