Bahrain’s Central Bank has announced it has issued draft insurance aggregator rules. Insurance aggregators are intermediaries with an insurance broker’s license who operate an online platform, whether hosted on an Internet website or available as a smart device application which provides price comparisons and facilitates the purchase of insurance policies from several insurance licensees. By introducing insurance aggregators, customers will be able to find and choose insurance quotes from several insurance companies under a single electronic platform or mobile device application, instead of obtaining quotes individually and purchase insurance online from a single insurance company. The move is the first step towards Insuretech which is a technology-led transformation of the insurance sector. Copies of the directive are available on the Central Bank Website.
Bahrain’s Shoura Council has approved a draft law to regulate hygiene, following Bahrain Royal Decree No. 86/2014. It will apply to waste and its transportation and disposal. It will also cover waste dumping and depositing waste in incorrect facilities. In addition, it will ban abandoning scrap vehicles on streets and leaving vehicles in public streets and squares to sell. Finally it will allow waste to only be transported by licensed companies and institutions.
Bahrain’s Telecommunications Regulatory Authority has launched a final consultation on the reference offer of the split Batelco entity. The consultation ends on 25 April 2019. The new wholesale-only entity (NBNetco BSC) will be formed by the separation of Batelco into two distinct entities. NBNetco will operate and deploy the single national broadband infrastructure in the Kingdom. This is how all telecom services including 5G will be provided. Service providers must therefore be granted access to the infrastructure on fair and reasonable terms.
Bahraini MPs have called on the Government to end the system of flexible work permits used by freelancers immediately and compensate merchants for damage caused by the system. The Labour Minister has said flexible workers do not have the right to establish a private company and added the practice does not hurt Bahraini employment. Workers will not be allowed to move to another sponsor until two years of service and will pay 500 Dinars in insurance when entering the country to cover any claims against them.
Bahrain’s Cabinet has amended standards for health professionals. Doctors qualified to work in public and private hospitals are to be permitted to open and run their own independent clinics, following a training program launched by the Arab Gulf University. The Cabinet amended the requirements for such professionals to permit Bahrainis with at least a masters’ degree in family medicine to become licensed and open private family medicine clinics. The amendments are a part of the National Employment Program, seeking to create more jobs for Bahrainis. The Prime Minister has set a target to employ 240 Bahraini doctors over the coming two years.
Bahrain’s King has approved Bahrain Law No. 1/2019 amending Article 14 of Bahrain Decree-Law No. 21/2015 on private health establishments. Article 14A(2) of Bahrain Law No. 21/2015 now states, ‘Priority must be given in a private health establishment to recruitment of Bahraini physicians, technicians and nursing staff who are in possession of the requisite qualification and experience, with the exception of positions that require unavailable rare specialised expertise’. Private health establishments have to comply with this law once their contracts with non-Bahraini physicians, technicians and nursing staff have expired. The Law has been published in the Official Gazette and came into effect on its publication date.
Bahrain’s Central Bank has issued the final rules on various activities related to Crypto-Assets, including licensing, governance, minimum capital, control environment and risk management. The Rules are the first of their kind in the region and are aimed at ensuring Crypto-Asset activities are regulated effectively. They also cover anti-money laundering and anti-terrorist financing, business conduct standards, avoiding conflicts of interest, reporting and cyber security for these activities.
In addition, there are provisions on supervision and enforcement standards including those provided by a platform operator as a principal, agent, portfolio manager, adviser and a custodian in or outside Bahrain.
Those licensed by the Central Bank as crypto-asset exchanges will have additional regulatory requirements to comply with. These additional requirements relate to order matching, pre and post-trade transparency, measures to avoid market manipulation and market abuse and conflicts of interest. They also state there is a need for enhanced due diligence when onboarding new clients, requirements to ensure no encrypted safe custody accounts or ‘wallets’ are maintained which cannot be retrieved, a mandate to ensure keyman risks are adequately managed including by having the necessary insurance covers and clients are educated and given clear instructions on using safe custody wallets.
Bahrain’s Central Bank has launched a consultation on draft Digital Financial Advice directives. The consultation ends on 20 February 2019. The draft directives state the rights and responsibilities of licensees who want to use digital financial advice tools. They also stipulate the prudential and conduct requirements associated with this digital advice to safeguard client interests. In addition, the draft directives will allow FinTech firms who focus solely on robo-advice to get a license from the Bank. If approved, they will enable licensees to use technology to offer financial advice to their clients.
The Legislative and Legal Affairs Committee of Bahrain’s Parliament has recommended implementing a draft law limiting the property ownership rights of foreigners. If approved, it will only allow foreigners to own properties in tourism and investment areas. It will replace Article 1 of Bahrain Decree-Law No. 2/2001 on the ownership of land by non-Bahrainis. It is intended to limit the rise in real estate prices in some areas by concentrating non-Bahraini ownership in others. The Government had requested the Committee review the draft law, which will also require adjustments to other Government policies.
This week the spotlight is on tax and finance developments in Bahrain, where VAT came into force on 1 January 2019. Elsewhere, a Bahraini lawyer brought a claim against the Electricity and Water Authority before the High Civil Court requesting the annulment of a VAT decision issued by the Authority.
The lawyer benefits from water and power services for non-commercial purposes who sent a utility bill requesting payment of 5% VAT on these services. He cited Article 9 of Bahrain Decree Law No. 48/2018 on VAT which says the Authority cannot charge VAT if it was offering the service as a sovereign body. They can only charge VAT if it is offering commercial activities like those offered by the private sector.
The court accepted the lawyer’s arguments and said the Authority didn’t have the right to charge nationals VAT for power and water if it is for non-commercial activities. The court requested the Authority cancel the decision and pay legal costs.