BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali, Saifuddin Mahmood and Hasan Sanad, Hassan Radhi & Associates
3.9 Other Claims/Enforcement Against Directors/Officers Directors, officers and even shareholders may be held personally liable without limitation if any of the breaches listed under Article 185 and Article 18 bis of the CCL (see 4.4 Shareholder Claims ) are proven. 3.10 Payments to Directors/Officers The Constitutional Documents of a company may set out the procedure and requirements for determin - ing the remuneration of the directors, subject to a maximum remuneration of 10% of the net profit after deducting legal reserves and distributing dividends not less than 5% of the company’s paid-up capital. In the years where no dividends are paid to the share - holders, the company is prohibited from paying remu - neration to the directors, unless specific approval of the Minister of Industry and Commerce for such pay - ment is obtained. In case of CBB licensees, the CBB must approve the payment and amount of remunera - tion to the directors. A detailed report on all payments made to the direc - tors and executive management in a fiscal year must be prepared by the board and submitted to the share - holders. This must detail any and all payments, includ - ing salaries, sitting fees, representation fees, allow - ances, etc. Failure to submit the report subjects the directors to liability, which may include personal liabil - ity for failure to comply with the law. The Constitutional Documents of a company (memo - randum and articles of association) bridge the gap between the shareholders and the company. Drafted within the frameworks of the CCL, they describe the rights and obligations of the shareholders towards the company. The inherent rights of the shareholders include the rights to: • receive profit or dividends decided for the share - holders; 4. Shareholders 4.1 Companies and Shareholders
• receive a share of the company’s total property upon liquidation; • participate in the company’s management, whether through the general assemblies or as a member of the board of directors, according to the company’s Constitutional Documents; • obtain a printed booklet comprising the company’s balance sheet for the past fiscal year, the profit and loss account and the reports of the board of direc - tors and the auditor; and • file lawsuits to nullify any decision issued by the general meeting or the board of directors in viola - tion of the law, the public order or the Constitu - tional Documents of the company. The obligations of the shareholders include: • payment of accrued instalments and interest fol - lowing the expiration of the date thereof, without the need to serve a notice upon them; • payment of expenses incurred by the company in collecting unpaid instalments and sale of shares; • refraining from any action intended to cause harm to the company; and • execution of any decision legally passed by the general meeting. The details of the shareholders are publicly available on Sijilat , the website of the Ministry of Industry and Commerce. The Bahrain Bourse also provides major shareholders’ details on its website for listed com - panies. 4.2 Role of Shareholders The general meeting of the shareholders is the ulti - mate decision-making authority in the company. The company’s Constitutional Documents specify the extent of the board of directors’ powers within the company. Some decisions require the approval of the general assembly, such as the decisions set out in 2.2 Decisions Made by Particular Bodies . The involvement of shareholders in the company’s management, and in controlling the activities of the directors, is effected through their participation in the general meetings and the decisions made therein.
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