BAHRAIN Trends and Developments Contributed by: Noor Hassan Radhi, Fatima Al Ali and Saifuddin Mahmood, Hassan Radhi & Associates
Bahrain. Instead, employment contracts may either be novated to the new entity or terminated, with a new employment relationship established with the acquiring company, subject to the settlement of the employees’ rights under the law and the employment contract. Employment-related findings during due diligence play a crucial role in deal structuring, workforce inte - gration and post-merger operational adjustments. Workforce restructuring post-merger is particularly influenced by factors such as financial terms and risk appetite, employer liabilities and compliance obliga - tions, employment rights and benefits contracts, and redundancies and severance pay. In cross-border M&A transactions, compliance with foreign workforce regulations is essential. This includes work permit transfers and sponsorship changes, which must be handled in accordance with Bahrain’s immigration laws. These employment regulations ensure that M&A transactions are conducted fairly while protecting employee rights, enabling businesses to restructure effectively. Competition law As part of the regulatory frameworks implemented to facilitate and oversee M&A transactions, the Compe - tition Promotion and Protection Law was issued in 2018. The law aims to prevent anti-competitive prac - tices, including those arising from M&A that could lead to market monopolies or unfair competition. Under this law, economic concentration refers to sce - narios where control over entities changes due to cer - tain events including M&A. Entities involved in transactions that meet the criteria for economic concentration are required to notify the Competition Authority designated by law to regulate mergers from an anti-competition perspective at least 30 days before finalising any agreement or memo - randum of understanding related to the transaction. The notification should include comprehensive details about the transaction to facilitate a thorough assess - ment. At present, the Consumer Protection Directorate
of the Ministry of Industry and Commerce provision - ally performs the duties of the Competition Author - ity. The Competition Authority has a 90-day period to evaluate the proposed transaction, following which it may approve, conditionally approve or reject a trans - action. Economic concentrations may exceptionally be allowed by the Minister in charge, with the approval of the Council of Ministers, if it is deemed necessary for compelling public policy reasons. Listing rules and disclosure requirements In transactions involving publicly traded companies, the Bahrain Bourse regulations must also be observed in addition to other legal and regulatory requirements. Key aspects of requirements triggered in the context of an M&A transaction include the disclosure require - ments pursuant to the CBB Disclosure Standards. The Bahrain Bourse Listing Rules mandate immediate dis - closure of material information, including M&A discus - sions or agreements, to maintain market transparency and protect investor interests. Publicly listed compa - nies must adhere to strict disclosure requirements before, during and after an acquisition or merger to ensure market stability. Certain transactions that do not fall under the scope of the TMA Module may be executed in the special- order market with the Bahrain Bourse. This market is specifically designed to handle large transactions or those with special terms that may not be suitable for the regular market. Buyers and sellers can pre- arrange trades to be executed in the special-order market, whereby both parties are allowed to agree on specific terms in advance, ensuring that the transac - tion is executed efficiently without causing significant disruptions to the regular market. Laws pertaining to dispute resolution Bahrain has developed a framework of dispute resolu - tion mechanisms that enhances its attractiveness to international investors. In 2024, the Bahrain International Commercial Court (BICC) was established, through a collaboration between Bahrain and Singapore, focusing on interna - tional commercial disputes, particularly those involv - ing international parties from different jurisdictions. Proceedings can be conducted in English, catering
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