BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali and Saifuddin Mahmood, Hassan Radhi & Associates
are subject to a designated corporate govern - ance code. This code includes 11 main corporate govern - ance principles as follows: • the board shall be effective, qualified and have the required expertise; • the directors and executive management shall have full loyalty to the company; • there must be rigorous controls for financial audit and reporting, internal control and com - pliance with the law; • the requirement for effective procedures for appointment, training and evaluation of the directors; • fair and responsible remuneration for direc - tors and senior officers; • the requirement of a clear and efficient management structure with defined job titles, powers, roles and responsibilities; • shareholder involvement by encouraging communication and participation; • disclosure of companies’ corporate govern - ance; • for companies that offer Islamic services, adherence to the principles of Sharia; • integrity of the financial statements and the importance of external auditors as a responsi - bility of the board; and • social responsibility. Boards of joint stock companies, closed and public, are required to form a corporate govern - ance committee to appoint a corporate govern - ance officer to ensure compliance with the cor - porate governance rules and submit a corporate governance report annually to the Ministry of Industry and Commerce, setting out each princi - ple and the measures taken to comply therewith, with a special section for related-party transac - tions.
The principles of the Corporate Governance Code are advised to be observed by all types of companies, including limited liability compa - nies. The reporting requirements, however, are enforced on closed and public joint stock com - panies. The Rulebook of the CBB The Corporate Governance Code is embedded in the High-Level Control Module of the Rule - book of the CBB applicable to each category of CBB licensee. This is issued by the CBB and the compliance therewith is supervised by the CBB. This code includes the first nine principles of the Corporate Governance Code listed above. Constitutional Documents The memorandum and articles of association of a company (the “Constitutional Documents” ), produced by the company’s shareholders, pro - vide company-specific rules that include the authority of the board, the extent of its powers, its duties and remuneration. Rules, Regulations and Circulars The rules, regulations and circulars by the CBB and the Bahrain Bourse (the company taking over the powers of the Bahrain Stock Exchange) applicable to listed companies (all public com - panies and some listed closed companies) are detailed in 1.3 Corporate Governance Require- ments for Companies With Publicly Traded Shares . 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Within the CCL, the provisions for each type of company are included in a separate chap - ter. The chapter relating to the management of public joint stock companies includes the most
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