BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali, Saifuddin Mahmood and Hasan Sanad, Hassan Radhi & Associates
• the chairperson and deputy chairperson cannot hold the same position as the most senior execu - tive in the company; • special independence conditions for directors of CBB-licensed companies; and • any restrictions stipulated in the memorandum and articles of association of the company. 3.5 Independence of Directors Independent directors are those deemed by the board to be independent of any specific shareholder and who do not have any significant business interest with the company. Non-independent directors are those who represent a shareholder or have a business interest with the company. A director is considered non-independent if they: • hold 10% or more of the shares of the company, the parent company, or any of its subsidiaries or associates; • represent a legal person who holds 10% or more of the shares of the company, parent, or any of its subsidiaries or associates; • served in an executive position in the company, its parent, or any of its subsidiaries or associates, in the two years preceding their nomination; • are a first-degree relative of an existing director or any person in a key executive management posi - tion in the company, its parent, or any of its sub - sidiaries or associates; • are a director of the company’s parent or any of its subsidiaries or associates; • were employed by any of the company’s contract - ing parties, such as external auditors, major suppli - ers, etc, in the two years preceding their nomina - tion; • were employed by the parent company or any of its subsidiaries or associates in the two years preced - ing their nomination; • have made or received a payment from the compa - ny of over BHD50,000 (around USD132,625), apart from directors’ remuneration (if they are an existing director) in the past year; • are a relative of a partner in the company’s external auditor or an employee thereof, or have been in the past two years; or
• are an employee or partner at a company that pro - vides consulting services to the company, its par - ent or any of its subsidiaries and associates (this does not apply if the parent company is owned at least 75% by the government or is a government entity). Executive directors are those who hold senior man - agement positions within the company. They are not considered independent. Non-executive directors are those who are not involved in the day-to-day manage - ment or control of a company, subsidiary or affiliate thereof. 3.6 Legal Duties of Directors/Officers The legal duties of directors of a company may be summarised as follows: • to participate in the management of the company in a diligent, skilful and efficient manner in accord - ance with the law and the Constitutional Docu - ments; • to serve the company as a representative of the interests of all the shareholders, and not one or a specific group of shareholders; and • to disclose any personal interest they may have in any of the issues discussed in board or general meetings and to refrain from voting in respect of any of these issues. 3.7 Responsibility/Accountability of Directors Once a director is on the board, they owe a duty towards all the shareholders, and the interests of all the shareholders must be considered. However, any stakeholder affected by any decision of the board or a director has the right to lodge a claim at court in accordance with Article 185 and 18 bis of the CCL
(detailed in 4.4 Shareholder Claims ). 3.8 Breach of Directors’ Duties
The consequences of a breach of directors’ duties include dismissal from office, and possibly a claim in court in accordance with Article 18 bis of the CCL (as detailed in 4.4 Shareholder Claims ).
20 CHAMBERS.COM
Powered by FlippingBook