BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali, Saifuddin Mahmood and Hasan Sanad, Hassan Radhi & Associates
• ensuring that financial statements are prepared in a manner that accurately reflects the company’s financial position; • monitoring management performance; • convening and preparing the agenda for share - holder meetings; • monitoring conflicts of interest; • preventing abusive related-party transactions; and • assuring equitable treatment of all shareholders, including minority shareholders. Unless allowed by a company’s Constitutional Docu - ments, the board shall not have the power to issue securities, conclude loans for more than three years, sell the company’s assets or business, mortgage such assets, provide guarantees for third parties, discharge the company’s debtors from their liabilities, reach a settlement in respect thereof or donate the compa - ny’s assets without approval of the general meeting of the shareholders – unless such actions fall within the essence of the company’s objectives. The shareholders participate in the management of the company through general meetings. There are two types of general meetings, each with a defined scope of powers, as detailed in 4.3 Shareholder Meetings . 2.3 Decision-Making Processes The Shareholders The shareholders are required to hold one ordinary general meeting within three months from the end of the fiscal year (six months for companies with limited liability), and an extraordinary general meeting when - ever required. The details of the process of each type of meeting are found in 4.3 Shareholder Meetings . The Board In joint stock companies, the following apply. • A board is required to meet at least four times a year, by invitation from the chairperson of the board or at least two directors; the board issues resolutions for the management of the company. • The quorum for the meeting is half the number of directors (minimum of three), unless a higher amount is required in the Constitutional Docu - ments.
• There shall be no attendance by proxy unless allowed by the Constitutional Documents. Deci - sions are issued by a majority vote of the directors in attendance. In case of a tie, the chairperson shall have the casting vote. • Any director who objects to a decision must minute their objection. If a case is lodged against the board on the basis of a decision with negative out - come, the minutes will serve to absolve the object - ing director of liability. • Meetings of the board may be attended by video or teleconference if the Constitutional Documents allow. • Decisions may be issued by circulation if the Con - stitutional Documents of the company allow for the same. Regarding the third bullet point, only a director or rep - resentative of a corporate shareholder may hold the proxy for a board meeting. A maximum of two direc - tors may attend by proxy, and at least half the direc - tors must attend in person, including the chairperson, for the meeting to be valid (minimum of two in closed companies and three in public companies). Companies with limited liability may be managed by the partners, or by a manager or board of managers appointed by the partners. A board of managers is not required unless the number of partners exceeds ten. The formation of the board of managers and its pow - ers shall be set out in the Constitutional Documents. Closed Joint Stock Companies Closed joint stock companies are managed by a board of directors (minimum of three and maximum of 15 directors, maximum term of three years, and renewable by the general assembly). The boards of closed joint stock companies that are listed in the Bahrain Bourse must include independent and non-executive directors. The Minister of Indus - try and Commerce and CBB may issue decisions to 3. Directors and Officers 3.1 Board Structure Companies With Limited Liability
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