Bahrain adopts GCC Funds Passporting Regime

Effective January 1, 2025, the Central Bank of Bahrain introduced the ‘Cross-Border Registration Regulation for Investment Funds,’ commonly referred to as the Funds Passporting Regime. This initiative aligns with the 'Regulatory Framework for the Cross-Border Registration of Financial Products between the Regulatory Authorities Regulating GCC Capital Markets,' approved in November 2024. 

This framework is designed to establish a unified regulatory approach among Gulf Cooperation Council (GCC) member states for the passporting of financial products. The agreed-upon standards and requirements focus on ensuring transparency and governance. 

Under the Regulatory Framework, ‘passporting’ is defined as “the process of registering a financial product in both the financial products registry of the registering regulatory authority and the host regulatory authority.” The Funds Passporting Regime applies to passported funds, fund managers, placement agents, and other related parties. 

A fund manager must submit a passporting application to the registered regulatory authority, which is required to decide on the application. If approved, the registered authority notifies the host regulatory authority, which reviews the application and makes a decision. The host authority informs the registered authority of its opinion, which is then communicated to the fund manager, including the effective approval date if granted. 

Both authorities are required to publish the fund's passporting details in their registers, including information about the host regulatory authority. In its turn a placement agent is responsible for promoting the fund in the host jurisdiction and must comply with all applicable local laws and regulations.