BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali and Saifuddin Mahmood, Hassan Radhi & Associates
Commercial Companies Commercial companies are mainly governed by the CCL and may be subject to other laws and regulations depending on the nature of their activity. Most importantly, companies licensed to provide regulated financial services by the Central Bank of Bahrain (CBB) are subject to the laws and regulations concerning the regulated services. 1.2 Sources of Corporate Governance Requirements The main legislations related to corporate gov - ernance that must be observed by companies incorporated in Bahrain are as follows. The CCL The CCL is the law governing commercial com - panies, their types, formation and manage - ment. The CCL has been in force since 2001 and has subsequently been amended, with the latest amendment issued in September 2021. It includes rules related to the segregation of pow - ers and scope of powers of the board of direc - tors and the shareholders, as well as account - ability and cases of personal liability. Rules relating to disclosure of interests by board members and avoidance of conflict of interest are included in the CCL. The Corporate Governance Code The Corporate Governance Code was issued by Decision No (19) of 2018 by the Minister of Industry and Commerce pursuant to Article 358 bis of the CCL. This code provides the minimum required standards for corporate governance and applies to all joint stock companies incorpo - rated in Bahrain, with the exception of compa - nies carrying out regulated financial services and licensed by the Central Bank of Bahrain, which
• A general partnership company is owned by two or more persons whose liability is unlim - ited and who are jointly and severally liable to cover the company’s debts and commit - ments. The company’s name consists of the name of one or more of the partners with the addition of “and Co” to indicate the partner - ship. • A simple commandite partnership is one which is established by two types of partners: joint partners and sleeping partners. Regarding a commandite partnership, joint part - ners are those who are involved in the manage - ment of the company and have unlimited liabil - ity towards creditors. Sleeping partners are not involved in the management of the company and are only liable for the obligations of the company to the extent of their shareholding in the capital. Branches of Foreign Companies Another form of business entity is a branch of a foreign company, which must be guaranteed by the head office of the company. The activities of a business entity licensed as “branch” shall match the activities of the head office. Branches licensed as a representative office are limited to gathering financial, economic and commercial information, carrying out general promotional activities and providing general assistance of a non-specific nature to customers of its parent company. Holding Companies Holding companies are very common in Bahrain. They may be in the form of a public or private joint stock company, or a limited liability com - pany. The role of holding companies is limited to the investment of funds, ownership of shares in its subsidiaries, management of its subsidiaries and the provision of financing or guarantees for its affiliates.
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