BAHRAIN Law and Practice Contributed by: Noor Radhi, Mohamed Ali Shaban and Mohamed Altraif, Hassan Radhi & Associates
Hassan Radhi & Associates Office 91 & 92 Al Baraka Tower (A), 9th floor Building 372, Road 4611 Block 346, Manama, Sea Front
Kingdom of Bahrain Tel: +973 1753 5252 Fax: +973 1753 3358
Email: info@hassanradhi.com Web: www.hassanradhi.com
them in order to enhance the benefit therefrom for the entity’s or individual’s creditors. Legislative Decree No 21 of 2001 promulgating the Commercial Companies Law (the “Commercial Com - panies Law” or CCL) will apply in the event of vol - untary liquidation for both CBB Licensees and other entities taking one of the forms of companies set out under the CCL. 1.2 Types of Insolvency Voluntary Process Voluntary liquidation is provided for under the CCL. The company will dissolve in the event that the part - ners or shareholders unanimously decide to dissolve it, the duration of the company expires, or the assets of the company are destroyed, rendering its continu - ation pointless (Article 320 of the CCL). Under Article 325 of the CCL, every company in a dissolution posi - tion will be liquidated. The process of voluntary liqui - dation is supervised and controlled by the sharehold - ers or partners, who will be empowered to appoint the liquidator. The process will generally be supervised and monitored by the Ministry of Industry and Com - merce (MOIC). Involuntary Process Involuntary liquidation will be done through the CBB for CBB Licensees. The CBB may place the CBB Licensee under administration under the CBB’s super - vision or request the competent court place the CBB Licensee under liquidation, as need be. The request to place a CBB Licensee under liquidation may also be made by the CBB Licensee itself or one of its credi -
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework The legal framework for reorganisation, liquidation and insolvency of entities in the Kingdom of Bahrain comprises of several laws, depending on the activity of the entity and the nature of the action in question. When it comes to financial institutions licensed by the Central Bank of Bahrain (the “CBB Licensees”), Law No 64 of 2006 promulgating the Central Bank of Bah - rain and Financial Institutions Law (the “CBB Law”) provides for a regime of administration and liquidation that applies specifically to insolvent CBB Licensees and which will be conducted under the supervision of the Central Bank of Bahrain (CBB), which is the regu - lator. The process provided for under the CBB Law commences with a period of administration, where the CBB-appointed administrator will attempt to restore and enhance the entity’s position, failing which the CBB Licensee will then move to the liquidation phase through a court process. With regard to other commercial entities or individuals practising a commercial activity in Bahrain, Law No 22 of 2018 (the “Bankruptcy Law”) will apply when those entities become insolvent. The objective under this law is, where possible, to restore the entity or indi - vidual’s financial position to the extent possible, and to capitalise on the assets thereof and try to protect
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