Kingdom of Bahrain through recent amendments via Legislative Decree No. 1 of 2018 amended law on Commercial Companies Law ("CCL"), and its most recent amendments in Legislative Decree No. 1 of 2018.
- Flexibility Provided for
The amendment amends Article 18 permitting a shareholder in any one company to be a shareholder of another competing company but subject to Corporate Governance Code as well as the company constitutional documents.
- Joint Stock Companies
CCL under its Articles 172 and 240 require Board of Directors of Joint Stock Companies (public or a closed company) to have compulsorily independent and non-executive directors.
- Issue of Personal Interest
The board of directors (BOD) shall be informed of any direct/indirect personal interest of a board member in any matter. The new amendments cast this duty on the Chairman to have a thorough description of such interests.
- Audit Committee
Under the new Article 184, a Joint Stock company is required to form an audit committee through a decision of the Board of Directors. The audit committee will have the authority to revise all financial and accounting documents related to the company and ensure compliance with all internal and external policies.
- Wider Interpretations
Holding Companies: The definition of holding company is defined as company that acquires stock/shares in Bahraini or foreign companies.
Name of General Partnership: Article 27 is amended so now the name of a General Partnership can be any name which Ministry of Trade Affairs may accept.
In conclusion, greater restrictions are included in the CCL in an effort to decrease the level of violations within a company also simultaneously increase protection of interest of the company and its stakeholders.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.