BAHRAIN Law and Practice Contributed by: Rad El Treki, Noor Al Rayes, Aayush Kainya and Mohamed Al Sari, Al Tamimi & Co.
Al Tamimi & Co. Office 13B, 13th Floor PO Box 60380 Bahrain Financial Harbour Suite 1304, Building 1459 Manama Bahrain Tel: +973 1710 8919 Fax: +973 1710 4776 Email: info@tamimi.com Web: www.tamimi.com
1. Trends 1.1 Regulatory and Enforcement Environment The investment and regulatory landscape in Bahrain has evolved significantly over the last 12 months. As of January 2026, the environment has shifted from a primarily tax-neutral, traditional framework to one that is increasingly modernised, digitised and integrated into global fiscal standards. The most notable changes involve a complete over - haul of the Commercial Companies Law, the introduc - tion of a sophisticated international court system and a historic pivot towards corporate taxation. 1.2 Key Trends A Modernised Corporate Framework The enactment of Decree-Law No 38 of 2025, amend - ing a raft of provisions of the Commercial Companies Law, has had an impact on how M&A transactions are structured and governed. One of the most critical changes for investors is the introduction of “shadow” or “defactor” manager liabil - ity. Regulators now look beyond formal board titles to hold anyone who exercises actual influence over a company’s management personally liable for negli - gence or legal violations. This has added a significant layer of due diligence for parent companies and pri - vate equity sponsors who historically operated with a more “hands-off” approach to their Bahraini sub - sidiaries.
Also relevant in this context, the former list of spe - cific breaches which could render managers (now including persons actually managing the company), promoters, partners, shareholders, board members and named managers liable has been replaced with a broader test – specifically, where such persons have created obligations upon the company as a result of their negligence or breach of law or breach of the pro - visions of the constitutional documents of the com - pany. Furthermore, the law has introduced much-needed flexibility for deal-makers. Single-shareholder closed joint stock companies (CJSCs) are now permitted, eliminating the previous need for “nominee” share - holders to meet the two-party minimum. Governance has also officially moved into the digital age: virtual board meetings and electronic voting are now the default legal standard, greatly simplifying the administrative burden for international investors man- Perhaps the most profound change in the last year is Bahrain’s transition away from being a “tax-free” juris - diction. While the 15% domestic minimum top-up tax (DMTT) for large multinational enterprises (those with revenues exceeding EUR750 million) became effec - tive on 1 January 2025, the conversation has recently accelerated. In late December 2025, the Cabinet referred a draft law to the legislature to introduce a 10% corporate income tax (CIT) for local companies with annual revenues over BHD1 million. Although full aging Bahraini assets from abroad. The Shift to a Taxable Environment
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