BAHRAIN Trends and Developments Contributed by: Noor Hassan Radhi, Fatima Al Ali and Saifuddin Mahmood, Hassan Radhi & Associates
From a contractual standpoint, particularly in data-heavy industries, share purchase agree - ments now commonly include warranties regarding the seller’s compliance with data protection laws and indemnities against future claims arising from previous data breaches or non-compliance. In transactions involving business integration, the handling of personal data must strictly com - ply with data security regulations, and data sub - jects must be notified of any new data policies that may affect their rights. After the acquisi - tion, the acquiring company should immediately review and update the target company’s data security policies to ensure full compliance with Bahrain’s PDPL. Overall, adherence to Bahrain’s PDPL ensures that M&A transactions are conducted in a lawful manner that protects the interests of customers and employees whose data is involved in the process. Employment regulations Employment law considerations play a signifi - cant role in M&A transactions, particularly in business transfers. In Bahrain, employment regulations – primarily governed by Law No. 36 of 2012 (Bahrain Labour Law) and the Social Insurance Organization requirements – must be carefully managed throughout the M&A pro - cess. These regulations impact several aspects of employment-related matters in M&A transac - tions. In a business transfer, the first key issue under employment law is the transfer of employees to the acquiring company. Employees do not trans - fer automatically in Bahrain. Instead, employ - ment contracts may either be novated to the new entity or terminated, with a new employ -
ment relationship established with the acquir - ing company, subject to the settlement of the employees’ rights under the law and the employ - ment contract. Employment-related findings during due dili - gence play a crucial role in deal structuring, workforce integration and post-merger opera - tional adjustments. Workforce restructuring post-merger is particularly influenced by fac - tors such as financial terms and risk appetite, employer liabilities and compliance obligations, employment rights and benefits contracts, and redundancies and severance pay. In cross-border M&A transactions, compliance with foreign workforce regulations is essential. This includes work permit transfers and spon - sorship changes, which must be handled in accordance with Bahrain’s immigration laws. These employment regulations ensure that M&A transactions are conducted fairly while protect - ing employee rights, enabling businesses to restructure effectively. Competition law As part of the regulatory frameworks implement - ed to facilitate and oversee M&A transactions, the Competition Promotion and Protection Law was issued in 2018. The law aims to prevent anti-competitive practices, including those aris - ing from M&A that could lead to market monop - olies or unfair competition. Under this law, economic concentration refers to scenarios where control over entities changes due to certain events including M&A. Entities involved in transactions that meet the criteria for economic concentration are required to notify the Competition Authority designated
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