BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali and Saifuddin Mahmood, Hassan Radhi & Associates
4.9 Other Bases for Claims/Enforcement Against Directors/Officers Directors, officers and even shareholders may be held personally liable without limitation if any of the breaches listed under Article 185 and Article 18 bis of the CCL (see 5.4 Shareholder Claims ) are proven. 4.10 Approvals and Restrictions Concerning Payments to Directors/ Officers The Constitutional Documents of a company may set out the procedure and requirements for determining the remuneration of the directors, subject to a maximum remuneration of 10% of the net profit after deducting legal reserves and distributing dividends not less than 5% of the company’s paid-up capital. In the years where no dividends are paid to the shareholders, the company is prohibited from paying remuneration to the directors, unless the specific approval of the Minister of Industry and Commerce for such payment is obtained. In case of CBB licensees, the CBB must approve the payment and value of remuneration to the directors. A detailed report on all payments made to the directors and executive management in a fiscal year must be prepared by the board and sub - mitted to the shareholders. This must detail any and all payments, including salaries, sitting fees, representation fees, allowances, etc. Failure to submit the report subjects the directors to liabil - ity that may include personal liability for failure to comply with the law. 4.11 Disclosure of Payments to Directors/Officers Information on the remuneration, fees or benefits payable to each of the directors and officers is
required to be submitted to the general meeting of the company’s shareholders. Public disclosure of such information is only required in case of offering of securities pursu - ant to the CBB’s Offering of Securities Module. 5. Shareholders 5.1 Relationship Between Companies and Shareholders The Constitutional Documents of a company (Memorandum and Articles of Association) bridge the relationship between the shareholders and the company. Drafted within the frameworks of the CCL, they describe the rights and obliga - tions of the shareholders towards the company. The inherent rights and obligations of the share - holders include the following: Rights: • receiving profit or dividends decided for the shareholders; • receiving a share of the company’s total prop - erty upon liquidation; • participating in the company’s management, whether through the general assemblies or as a member of the board of directors, accord - ing to the company’s constitutional docu - ments; • obtaining a printed booklet comprising the company’s balance sheet for the past fis - cal year, the profit and loss account and the reports of the board of directors and the audi - tor; and • filing lawsuits to nullify any decision issued by the general meeting or by the board of direc - tors in violation of the law, the public order or the constitutional documents of the company.
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