BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali, Saifuddin Mahmood and Hasan Sanad, Hassan Radhi & Associates
rate Governance Requirements for Companies With Publicly Traded Shares . 1.3 Companies With Publicly Traded Shares Within the CCL, the provisions for each type of com - pany are included in a separate chapter. The chapter relating to the management of public joint stock com - panies includes the most stringent rules. For exam - ple, the rules relating to the board of directors require a minimum of five directors, which must include independent and non-executive directors. The rules also cover director appointments and elections, the requirement to have an audit committee within the board and the limitation on director remuneration in years when no dividends are to be paid to sharehold - ers. The rules under the CCL are mandatory. The Corporate Governance Code applies to all types of companies, with an emphasis on the importance of compliance – especially by joint stock companies due to the role they play in the national economy. Compli - ance with the principles of the Corporate Governance Code is on a comply-or-explain basis, and the stand - ard applied by the Ministry of Industry and Commerce for listed and public joint stock companies is higher than that applied to the other forms of companies. In addition to the CCL and Corporate Governance Code, additional rules issued by the CBB and the Bahrain Bourse are put in place for listed companies, with the following including provisions related to cor - porate governance. Bahrain Bourse Listing Rules These Listing Rules were approved by Board of Direc - tors Resolution (3/5/2024) in its Meeting (5/2024) dat - ed 30/09/2024. Their purpose is to set out the require - ments that must be complied with by all applicants, issuers, directors, officers, advisers and other persons to whom these Listing Rules are directed. The Listing Rules are composed of requirements that have to be met before securities may be listed and continuing obligations that an issuer must comply with after list - ing. The principles on which these Listing Rules are based include the following:
• shareholder involvement (by encouraging commu - nication and participation); • disclosure of companies’ corporate governance; • for companies that offer Islamic services, adher - ence to the principles of Sharia; • integrity of financial statements and recognition of the importance of external auditors as a responsi - bility of the board; and • social responsibility. Boards of joint stock companies, closed and public, are required to form a corporate governance commit - tee, which appoints a corporate governance officer to ensure compliance with the corporate governance rules and submit a corporate governance report annu - ally to the Ministry of Industry and Commerce, setting out the measures taken to comply with each principle (and with a special section for related-party transac - tions). The principles of the Corporate Governance Code should be observed by all types of companies, includ - ing limited liability companies. The reporting require - ments, however, are enforced only on closed and public joint stock companies. The Rulebook of the CBB The Corporate Governance Code is embedded in the High-Level Control Module of the Rulebook of the CBB, applicable to each category of CBB licensee. This is issued by the CBB, and compliance therewith is supervised by the CBB. The Rulebook includes the first nine principles of the Corporate Governance The memorandum and articles of association of a company (the “Constitutional Documents”), produced by the company’s shareholders, provide company- specific rules pertaining to the authority of the board, the extent of its powers, its duties and remuneration. Rules, Regulations and Circulars The rules, regulations and circulars of the CBB and the Bahrain Bourse (the company taking over the powers of the Bahrain Stock Exchange) applicable to listed companies (all public companies and some listed closed companies) are detailed in 1.3 Corpo- Code listed in the foregoing. Constitutional Documents
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