BAHRAIN Trends and Developments Contributed by: Noor Hassan Radhi, Fatima Al Ali and Saifuddin Mahmood, Hassan Radhi & Associates
particularly where the incorporation of a com - pany will have a strategic economic significance or is expected to yield a profitable return for the economy, especially where there is a void in the Bahraini market. To ensure a secure investment environment, entry to the market in Bahrain will remain subject to measures and standards nec - essary for the protection of national security and the maintenance of public order. These regulatory aspects play a crucial role in fostering a business-friendly ecosystem that supports M&A activities, particularly those trans - actions with a cross-border element. The authorities in Bahrain, especially the Eco - nomic Development Board (EDB), continuously monitor the market and engage with stakehold - ers to identify opportunities for policy enhance - ments aimed at promoting Bahrain as an invest - ment and business expansion hub in the region. The EDB also proposes new laws, regulations or amendments to existing laws to support this objective. Strengthening financial services The regulatory frameworks established by the CBB ensure a robust, stable financial mar - ket that is characterised by transparency and adherence to international financial standards. Through such regulatory frameworks, the CBB plays a vital role in overseeing the financial sec - tor, regulating M&A within the industry and gov - erning transactions involving public companies in Bahrain. The key CBB regulations governing M&A are outlined in the CBB Rulebook Volume 6, the Takeovers, Mergers and Acquisitions (TMA) Module. This module establishes a structured framework for conducting takeovers, merg - ers and acquisitions within defined thresholds
involving publicly listed companies in Bahrain. It provides detailed guidelines on the approval and execution processes, covering aspects such as disclosure requirements, corporate governance, and the fair and equal treatment of shareholders. Additionally, the Rulebook details the approval procedures for mergers across specific sectors, including conventional banking, Islamic banking and insurance, as detailed in Volumes 1, 2 and 3, respectively. Effective from January 2024, additional meas - ures have been introduced under the TMA to ensure transparency and fairness. These meas - ures aim to enhance the protection of share - holder interests, particularly in the context of evaluating the merits of offers or recommenda - tions made to shareholders regarding potential acquisitions. Key amendments include the introduction of provisions for the establishment of an independ - ent committee within the offeree company’s board of directors to handle offers, when con - flicts of interest arise among board members. The committee must consist of non-executive directors without any direct or indirect interest in the offer to handle responsibilities related to the offer. If forming such a committee is not fea - sible, the primary responsibility for representing independent shareholders’ interests falls on the independent professional adviser appointed by the offeree company’s board to advise the board on the merits of the offer. Additionally, the amendments set out a non- exhaustive list of scenarios that the CBB con - siders as constituting conflicts of interest for the purpose of handling an offer by the offeree’s board, further reinforcing governance standards in M&A transactions.
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