BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali, Saifuddin Mahmood and Hasan Sanad, Hassan Radhi & Associates
1.2 Corporate Governance Legislation and Regulation The main legislation related to corporate governance that must be observed by companies incorporated in Bahrain is as follows. The CCL The CCL is the law governing commercial companies, including their types, formation and management. The CCL has been in force since 2001 and has subse - quently been amended, with the latest amendment issued in September 2025. It includes rules related to the segregation of powers and the scope of powers of the board of directors and shareholders, as well as accountability and cases of personal liability. Rules relating to disclosure of interests by board members and avoidance of conflict of interest are included in the CCL. The Corporate Governance Code The Corporate Governance Code was issued by Deci - sion No (19) of 2018 by the Minister of Industry and Commerce pursuant to Article 358 bis of the CCL. The Code provides the minimum required standards for corporate governance and applies to all joint stock companies incorporated in Bahrain, with the excep - tion of companies carrying out regulated financial ser - vices and licensed by the CBB. The Code includes 11 main corporate governance principles, as follows: • the board shall be effective, qualified and have the required expertise; • the directors and executive management shall have full loyalty to the company; • there must be rigorous controls for financial audit and reporting, internal control and compliance with the law; • the requirement for effective procedures for appointment, training and evaluation of the direc - tors; • fair and responsible remuneration for directors and senior officers; • the requirement for a clear and efficient manage - ment structure with defined job titles, powers, roles and responsibilities;
A general partnership company is owned by two or more persons whose liability is unlimited and who are jointly and severally liable to cover the company’s debts and commitments. The company’s name con - sists of the name of one or more of the partners with the addition of “and Co” to indicate the partnership. A simple commandite partnership is one established by two types of partners: joint partners and sleeping partners. In a commandite partnership, the joint partners are involved in the management of the company and have unlimited liability towards creditors. Sleeping partners are not involved in the management of the company and are only liable for the obligations of the company to the extent of their shareholding in the capital. Branches of Foreign Companies Another form of business entity is the branch of a foreign company, which must be guaranteed by the head office of the company. The activities of a busi - ness entity licensed as a “branch” shall match the activities of the head office. Branches licensed as rep - resentative offices are limited to gathering financial, economic and commercial information, carrying out general promotional activities and providing general assistance of a non-specific nature to customers of Holding companies are very common in Bahrain. They may be in the form of a public or private joint stock company, or a limited liability company. The role of holding companies is limited to the invest - ment of funds, ownership of shares in its subsidiaries, management of its subsidiaries and the provision of financing or guarantees for its affiliates. Commercial Companies Commercial companies are mainly governed by the CCL but may be subject to other laws and regulations depending on the nature of their activity. Most impor - tantly, companies licensed to provide regulated finan - cial services by the Central Bank of Bahrain (CBB) are subject to the laws and regulations concerning regulated services. the parent company. Holding Companies
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