BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR – Al Ruwayeh & Partners
will bring their ownership alone or their owner - ship together with their minor children, or the accounts standing under their disposal, to 10% or more in any listed security. Any further increase of 1% or more shall also be subject to CBB prior written approval. 4.3 Hurdles to Stakebuilding A company may not introduce different rules; the minimum reporting thresholds are statutory and cannot be changed to lower thresholds in a company’s articles of association. Reporting thresholds are mandatory provisions introduced in the interest of all market participants and are therefore not disposable by a company. The Bahrain disclosure requirements are trig - gered upon the acquisition of 5% or more of any listed securities on the BHB. In addition, the CBB has prescribed certain disclosure require - ments for offerings and initial listings (the CBB Disclosure Standards). Furthermore, the Listing Rules of the BHB provide for certain disclosures in relation to changes in the interests of substan - tial shareholders. 4.4 Dealings in Derivatives In general, dealings in derivatives related to the target company’s securities are allowed, except for people who are privy to confidential takeo - ver information relating to the takeover. These insiders are restricted from trading the target company’s securities (including derivatives) dur - ing a specific window surrounding the takeover announcement. This period typically starts when there is a reason to believe a takeover is being considered, and ends when the takeover is offi - cially announced (or when the discussions fall through and are made public). Equity deriva - tives, however, would likely be deemed unlawful if used to circumvent disclosure standards – for
example, by using cash-settled equity deriva - tives to hide corporate ownership interests. 4.5 Filing/Reporting Obligations There is no specific disclosure requirement for derivatives under securities disclosure. However, if a derivative would give a person control of the proprietary and administrative rights over a list - ed company in excess of the material threshold indicated in 4.2 Material Shareholding Disclo- sure Threshold , then this would likely be subject to disclosure. Bahrain’s TMA regulations mandate that acquir - ers disclose details of all existing derivatives held by themselves or any associated parties on the target company’s securities when making a firm offer announcement. Bahrain’s competition laws do not create filing/ reporting obligations for derivatives. However, there is a general prohibition on mergers that create a monopoly in any economic activity, commodity or product. 4.6 Transparency Generally, shareholders do not have to disclose the purpose of their acquisition or their inten - tion regarding control of the company. Howev - er, there are disclosure requirements in certain circumstances, such as when a shareholder acquires a significant stake in a company (eg, more than 5% of the shares). In Bahrain, potential acquirers (offerors) or those considering an offer (potential offerors) have a responsibility to make public announcements under certain conditions. One such instance is when rumours or speculation about a possible takeover of the target company (offeree com - pany) circulate before any formal approach has been made.
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