BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR – Al Ruwayeh & Partners
7. Disclosure 7.1 Making a Bid Public
The TMA regulations mandate specific proce - dures for announcing an offer or possible offer. The announcement itself must adhere to the guidelines outlined in Appendix B of Part B with - in CBB Rulebook Volume 6. It needs to be dis - seminated through two channels: the licensed stock exchange and two local Bahraini daily newspapers. One of these publications must be entirely in Arabic, while the other can be in either English or Arabic. 7.2 Type of Disclosure Required Shareholders considering a business combina - tion through a securities exchange offer need to be aware of disclosure requirements for two key areas: Merger Benefits Statements and Asset Valuations. 7.3 Producing Financial Statements The offer document and the offeree board circu - lar must clearly disclose the availability and loca - tion for inspection of key financial documents, including audited consolidated financial state - ments, covering the last two years. The specific accounting standards used for preparing these statements depend on the nature of the compa - nies involved. Islamic financial institutions must adhere to the Accounting and Auditing Organi - sation for Islamic Financial Institutions (AAOIFI) standards. For non-Islamic institutions or those following different standards, any accounting standards approved by the CBB are acceptable. There is no local GAAP in Bahrain. All com - panies incorporated in Bahrain prepare their financial statements according to the interna - tional accounting standards (IFRS) or AAOIFI, as applicable. In addition, Appendix E specifies that all reports must be prepared in accordance with IFRS, with AAOIFI standards applying to Islamic institutions.
Takeover offers in Bahrain require CBB approval before a public announcement is made, except for MTOs that are triggered by regulation. The target company (offeree) board is obliged to promptly announce to the stock exchange, mar - ket participants and their shareholders whenever any of the following conditions arise: • the board receives a formal notification of a firm intention to make an offer, regardless of its own position on the matter; • following an initial approach by a potential acquirer, rumours or unusual trading activity begin to surround the possibility of an offer; • negotiations involving more than a limited group of individuals are about to begin regarding a potential offer; • the board becomes aware of discussions between a potential acquirer and a major shareholder holding at least 30% of the vot - ing rights; or • the company itself is actively seeking poten - tial acquirers and this search coincides with rumours, unusual trading activity or the need to approach multiple potential buyers. Strict regulations govern the announcement of MTOs. Even before approaching the target com - pany, a potential acquirer must announce their intentions if rumours or speculation spread about a possible offer. Similarly, unusual trading activ - ity suspected to be caused by the acquirer, or expanding negotiations beyond a select group, necessitate immediate public announcements. Finally, any acquisition that triggers the MTO threshold automatically requires an announce - ment without delay for additional information gathering.
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