BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR – Al Ruwayeh & Partners
tions Regulatory Authority, the Ministry of Edu - cation, the Ministry of Health, etc). 2.3 Restrictions on Foreign Investments Bahrain significantly relaxed foreign ownership regulations in 2021. Previously, many commer - cial activities mandated a minimum 51% own - ership by a Gulf Cooperation Council national, but foreign companies can now own a majority stake in a wider range of businesses, provided a Bahraini shareholder is included. The minimum ownership percentage for the Bahraini partner could be as low as one share. The MOIC has discretion to determine this percentage on a case-by-case basis. Foreign-owned companies can now participate in a significantly broader range of business activities. While many activities are now open to majority foreign ownership, there are still limita - tions for certain sectors. Roughly a third of activ - ities that were previously capped at 49% foreign ownership have been liberalised. A small fraction remain capped at 49% foreign ownership, and a very limited number of activities are entirely off Competition and antitrust in Bahrain are regu - lated under Law 31 of 2018 (the “Competition Law” ), which provides that various practices will be deemed to be anti-competitive and unlawful, and outlines issues regarding particular transac - tions that require reporting to and/or approval by the Competition Authority (CPA). limits to foreign ownership. 2.4 Antitrust Regulations Under the Competition Law, persons participat - ing in “economic concentrations” are required to apply to the CPA for approval in certain circum - stances. The Competition Law considers that an “economic concentration” has been created if a change of control resulted from:
• a merger between two establishments or more, fully or partially, that were previously independent; or • an acquisition of direct or indirect “control” over an establishment by: (a) one or more natural persons, controlling one establishment or more; or (b) one or more other establishments. The Competition Law granted the CPA the authority to issue a resolution specifying the terms and conditions that create control, as referred to above. As per the Economic Con - centration Resolution, a merger control filing will be required in Bahrain if a shift in market control occurs as a result of the acquisition of direct or indirect control over another entity, fully or par - tially. For a change of market control to occur, at least 40% of the relevant market would need to be affected in the case of one entity, or 60% of the market in the case of two entities. 2.5 Labour Law Regulations Under the Bahrain Labour Law No 36 of 2012, if a transaction involves the acquisition of assets or a business, as opposed to acquiring the shares of a target company that is the sponsor/ employer of the employees, there is a require - ment to transfer the employees to the acquirer. This transfer is not automatic, and requires the consent of the affected employees. However, if the acquisition only relates to the shares of a target company that sponsors employees, no obligation or legal requirement arises, as there is no change to the sponsor/employer of the employees. It is worth noting that Bahrain imposes a nation - alisation scheme, known as “Bahrainisation” , by which a ratio of Bahraini nationals to foreign nationals would apply if there are more than six employees (for certain industries the requirement
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