BAHRAIN Trends and Developments Contributed by: Noor Hassan Radhi, Fatima Al Ali and Saifuddin Mahmood, Hassan Radhi & Associates
Conclusion Bahrain’s M&A landscape reflects a dynamic and investor-friendly business environment, underpinned by forward-looking policies, regulatory clarity and political stability. The country continues to solidify its position as a regional hub for corporate growth and investment. As laws and regulations evolve, agree - ments must continually adapt to remain aligned with the latest legal and market developments. The government’s pro-business policies and long- term economic vision foster an active and expanding M&A market. Building on the foundations of Economic Vision 2030, Bahrain has initiated the development of Economic Vision 2050, aimed at driving further eco - nomic diversification, digital transformation and the integration of artificial intelligence. As an extension and evolution of Vision 2030, Vision 2050 underscores Bahrain’s commitment to continual development and adaptation to emerging global trends. This strategic direction is likely to fuel increased acquisition activ - ity, particularly in the technology sector, as investors seek opportunities in Bahrain’s rapidly evolving digital economy.
Bahrain’s M&A landscape has been notably active, reflecting the nation’s strategic economic initiatives. Ongoing and Future Considerations Price adjustment mechanisms in M&A agreements While price adjustments due to warranty breaches are common in M&A transactions in Bahrain – allowing for direct adjustments to account for such breaches – warranty and indemnity insurance remains uncom - mon in the market. However, it has begun to surface in recent M&A discussions, possibly reflecting a growing appetite for its use in managing transaction risks. Tax considerations Following the introduction of value-added tax in 2019, Bahrain enacted Decree-Law No. 11 of 2024, requiring multinational enterprises (MNEs) with global revenues exceeding EUR750 million to pay a 15% minimum corporate tax. As a result, MNEs acquiring Bahraini companies must now account for this tax in their deal valuations, ensuring compliance and adjusting finan - cial projections accordingly. Dealing with business counterparties In the context of merger and transfer of business, particularly within institutions with a large customer base, it is important to note that Bahrain’s laws do not provide a mechanism for the automatic transfer of agreements with customers and other counterparties to the buyer. Therefore, existing agreements should be reviewed to account for potential future mergers or transfers. One approach is to incorporate clauses that secure customer approval for the transfer of agree - ments and personal data. However, such provisions may be subject to regulatory restrictions, which must be carefully considered and observed.
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