BAHRAIN Law and Practice Contributed by: Noor Radhi, Fatima Alali and Saifuddin Mahmood, Hassan Radhi & Associates
company’s balance sheet and the profit and loss account. The board of directors of a public sharehold - ing company is required to publish the balance sheet, the profit and loss account, an executive summary of the annual report and the full text of the auditor’s report in a local daily newspa - per published in Arabic, at least 15 days before the general meeting. Failure to publish the same gives rise to liability that may extend to personal liability, and will render the invitation invalid, and the general meeting voidable. 7. Audit, Risk and Internal Controls 7.1 Appointment of External Auditors The board of a joint stock company is required to ensure the integrity of the financial statements submitted to shareholders through appointment of external auditors. The general assembly meeting of joint stock companies shall appoint one or more auditors for the company and determine their fees upon the proposal of the board of directors. The audi - tor shall, among others, do the following: • monitor the company’s business; • give opinion on the validity of the company’s financial statements and request to adjust them if there is any impact on their validity; and • verify the company’s ownership of assets and legality of obligations.
Most importantly, the auditor attends the gen - eral assembly meetings, reads their report to the shareholders and answers their questions and queries regarding the financial statements for the year end. 7.2 Requirements for Directors Concerning Management Risk and Internal Controls The board of a joint stock company shall have rigorous controls for financial audit and report - ing, internal control and compliance with law. This is achieved through establishment of an audit committee and development of a whistle- blowing programme. The board of directors shall form an audit com - mittee consisting of at least three directors, the majority of whom shall be independent, and the chairman of the committee shall be an inde - pendent director. The board of directors shall establish a whistle- blowing programme that will allow the compa - ny’s employees to report internally their concerns about any improper or suspicious practices in financial reports, internal control systems or any other matters, and make appropriate arrange - ments for an independent and fair investigation of such practices, while ensuring the confiden - tiality of such reporting in order to protect them against any adverse reaction or damage that may result from the reporting of such practices.
60
CHAMBERS.COM
Powered by FlippingBook