BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali, Saifuddin Mahmood and Hasan Sanad, Hassan Radhi & Associates
Hassan Radhi & Associates Office 91 and 92, 9th Floor, AlBaraka Tower (A) Building 372, Road 4611, Block 346 Bahrain Bay, Sea Front Manama PO Box 5366
Kingdom of Bahrain Tel: +973 1753 5252 Fax: +973 1753 5252
Email: Info@hassanradhi.com Web: www.hassanradhi.com
1. Corporate Governance Requirements 1.1 Corporate Forms and Governance Requirements Persons conducting business in Bahrain may choose from a set list of business structures set out in the Commercial Companies Law (CCL) promulgated by Decree Law No (21) of 2001, which is amended peri - odically. The most common types of business entities in Bah - rain are limited liability companies, public joint stock companies and closed joint stock companies – all entities in which the shareholders’ liability towards creditors is limited to their shareholding in the capital (ie, limited liability). Limited Liability Companies Limited liability companies are companies with one or more owners whose liability is limited only to the extent of the shareholding in the capital. Partners may not resort to public subscription for raising shares or loan capital. This type of company is barred from undertaking insurance activities, banking or fund investment for third parties (shareholders of this kind are referred to as “partners”). Limited liability companies are not required to have a board of directors unless the number of partners exceeds ten.
Joint Stock Companies These include the following.
• Closed joint stock company: Established with a minimum of two shareholders and a minimum share capital of BHD50,000 (around USD132,625); the shares of the company may not be publicly offered. The law permits such companies to be established by a single shareholder, subject to conditions to be issued by the Minister of Industry and Commerce. • Public joint stock company: Established by a num - ber of persons who subscribe to it via negotiable shares. The latter form is subject to a minimum share capital of BHD1 million (around USD2.6 million). Certain government-related companies operate under a special legal regime. Companies that are wholly or majority-owned by the state, or established by decree, are not fully subject to the CCL; instead, they are pri - marily governed by their founding instruments, with the law applying only where it does not conflict with those arrangements. General Partnerships/Simple Commandite Partnerships Less regulated types of business entities include gen - eral partnerships companies and simple commandite partnerships.
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