Brunei Darussalam – CM P

2024, Cross-border, Update

Country Manual Products – Update

Brunei Darussalam

BRP SA - Brunei Darussalam CM P
BRP SA – Brunei Darussalam CM P

BRP has updated its Country Manual Products for Brunei Darussalam

Source of changesAnswers
Law / RegulationNo
New Position of the AuthoritiesNo
Evolution of Expert’s InterpretationYes

Definitions & Concepts, Regulatory Overview and Behaviour Template

The Country Manual has been reviewed to ensure that the content of all the documents remains accurate and up to date.

Material changes

In alignment with the Country Manual Private Banking (CM PB), the provision of macroeconomic information/reports is only permitted on an occasional basis onshore in Brunei (at target). Accordingly, the Country Manual Behaviour Template (CM P BT) hence answers the relevant onshore scenarios with “Grey zone/YES”.

In further alignment with the CM PB, the provision of investment research and financial analysis documents/reports is likely to constitute investment advice. Therefore, such activity is not permitted/not recommended onshore in Brunei (at target) and only permitted on a cross-border basis into Brunei (remote) on the basis of an ongoing advisory agreement. The CM P BT therefore answers the relevant onshore scenarios with either “NO/Grey zone/NO” or “Grey zone/YES”.

It is now highlighted that the provision of investment services and product-related marketing activities are generally not permitted by foreign (unlicensed) service providers onshore in Brunei (at target) due to the missing local license. Accordingly, the CM P BT hence answers the relevant onshore scenarios with “NO”.

In alignment with the CM PB, it is further highlighted that the provision of investment advice generally triggers the “local distribution rules” and local licensing requirements. However, an exception is made for the provision of investment advice on a cross-border basis, on the basis of a written advisory agreement, which is requested on the initiative of the investor (i.e. there has been no prior active promotion of the services by the foreign (unlicensed) service provider) and which relates to the relevant financial products. The provision of advice in such a context is not considered to trigger the ‘local distribution rules’ and local licensing requirements and is a ‘current market practice’ of foreign (unlicensed) service providers servicing Bruneian investors. Please note that this approach can only be considered as an interpretation of the local laws and regulations, which are subject to change without notice (depending on future court decisions and/or official statements by the local authorities). Accordingly, a cautious approach is recommended (based on an analysis of the circumstances and any potential risks in relation to each specific business model). Accordingly, the CM P BT therefore answers the relevant cross-border scenarios with “Grey zone/YES – If based on an advisory agreement requested by the investor covering the relevant financial product(s)”.

As a result, in absence of an ongoing advisory agreement, the provision of personalised investment advice, including providing a personalised recommendation list, may only be tolerated on a reverse solicitation basis via remote means of communication into Brunei (remote) (see below). As there are no formal rules or official position regarding this practice, the foreign (unlicensed) service providers have to be aware of the risks resulting from this unofficial tolerated practice. Accordingly, the CM P BT now provides the answers “NO/Grey zone/NO” in the relevant scenarios.

Brunei does not explicitly recognise the concept of ‘reverse solicitation’. However, it is considered that services/products provided from abroad on a one-to-one and cross-border basis at the request of the relevant investor do not trigger the ‘local distribution rules’ and constitute a ‘common market practice’ of foreign (unlicensed) service providers providing services to Bruneian investors. However, this does not apply where an investor requests (1) general information and the service provider provides product-specific information, or where the investor requests (2) specific information on one/several products and the service provider introduces additional products not covered by the request. Therefore, the CM P BT now treats “Reverse solicitation not limited to a specific request” in the same way as “active solicitation”.

Last but not least, the applicable laws and regulations distinguish between ‘Public CIS’, which are registered for public distribution, and ‘Private CIS’, which are registered exclusively for distribution to professional investors (such ‘Private CIS’ may only be offered to a maximum of 50 professional investors). Please note, however, that the CM P BT now only distinguishes between locally registered and unregistered (foreign) funds.

Non-material changes

Some comments and content have been slightly reworded in the CM, without introducing substantive changes to reflect the regulatory situation/current interpretation of the regulatory framework more accurately.

For more information, please contact us: info@brpsa.com

Geneva, October 15th, 2024