Bahrain Commercial Companies Law: Overview of the 2025 amendments

NEW REGIME 

The manager, board member or any individual managing a joint stock company, closed joint stock company or limited liability company, whether in an apparent or hidden manner, is personally liable for damages to the company, its partners, shareholders or third parties. This liability arises if evidence shows that the individual caused obligations due to negligence, gross error or violations of the law or the company’s articles of association.

OLD REGIME 

The founder, partner, capital owner, manager or board member of a joint stock company, closed joint stock company or limited liability company is personally liable for any damages caused to the company, its partners, shareholders or third parties.

DLA PIPER COMMENTARY

By eliminating personal liability for founders, partners and capital owners, the new regime encourages entrepreneurship and investment by reducing the personal financial risks associated with starting and managing a business. However, the inclusion of shadow and de facto directors in the liability framework emphasizes the importance of accountability among all individuals exercising control over the company. More importantly this rule change is indicative of the regulators willingness to pierce the corporate veil, if needed and to further enhance the corporate governance rules of Bahrain.

This change may also make derivative claims more common, especially where a minority shareholder may fear unfair prejudice.

NEW REGIME 

Any meetings scheduled under the Companies Law may be conducted through electronic or telephone communication, provided appropriate measures are taken.

The company may implement an electronic voting system, subject to the terms and conditions issued by the Minister of Industry and Commerce.

OLD REGIME 

The company’s memorandum of association or articles of incorporation may allow for meetings to be conducted via telephone or electronic communication, provided appropriate measures are taken.

The company’s articles of association may stipulate the adoption of an electronic voting system, subject to the terms and conditions issued by the Minister of Industry and Commerce.

DLA PIPER COMMENTARY

By eliminating the specific reference to the company’s constitutional documents, it broadens the scope for conducting meetings and voting electronically, enhancing flexibility and adaptability to various circumstances.

By legislating the flexibility of remote meetings, companies can now, as a matter of right, request meetings, and register voting, by telephonic means. The processes to seek approval for the same could, if this rule was not in the constitutional documents or if Ministry of Industry and Commerce approval was required, have been cumbersome.

The automatic right does not eliminate the in-person meetings, but allows for flexibility to holding timely meetings, and takes into account issues such as a pandemic or political unrest that may have otherwise made in-person meetings burdensome.

NEW REGIME 

A closed joint stock company must consist of at least two natural or legal persons who subscribe to negotiable shares available for public subscription.

In addition, the company may be established by a single natural or legal person, subject to the terms and conditions issued by the Ministry of Industry and Commerce. This individual will hold the powers of both the founding assembly and the general assembly.

OLD REGIME 

A closed joint stock company must consist of at least two natural or legal persons who subscribe to negotiable shares available for public subscription.

DLA PIPER COMMENTARY

While the terms and conditions of a single person or legal entity being able to establish a closed joint stock company are yet to be determined, the potential to establish a closed joint stock company by a single natural or legal person creates significant opportunities for company formation, accommodating entrepreneurs and fostering a more open and inclusive business environment.

NEW REGIME 

For partners who have seen the departure of one partner for any reason, the timeframe has been extended from 60 days to 90 days to come to a determination as to whether the company should be wound up or it should be continued with amended provisions and steps taken to confirm the departure of the outgoing partner to the authorities, as well as creditors, debtors and clients.

OLD REGIME 

The memorandum of association may stipulate that the company continues with the remaining partners in the event of a partner’s withdrawal, death, interdiction, or bankruptcy. If no such provision exists, the remaining partners can unanimously agree to continue the company within 60 days of the event. However, this agreement will not be effective against third parties until it is registered in the commercial register.

DLA PIPER COMMENTARY

This adjustment provides partners with additional time to evaluate their options and make a more informed decision regarding the company’s continuity, which can be particularly beneficial in complex situations.

NEW REGIME 

Retains the same provision, however includes the phrase “individuals who are effectively managing the company”.

OLD REGIME 

The directors, managers, personnel and auditors of the company must provide all relevant books, documents and papers to those designated for inspection. Additionally, the board of directors, managers and auditors are required to submit any requested documents, books, balance sheets or reports to the Ministry of Industry and Commerce upon request.

DLA PIPER COMMENTARY

As with the changes in relation to personal liability, discussed above, the regulations are trying to ensure greater degree of compliance and accountability to any person who may have material impact on the management and operation of a company.

The inclusion of “individuals who are effectively managing the company” reinforces accountability and demonstrates the regulator’s willingness to identifying and addressing any potential wrongdoers.

NEW REGIME 

Repeals ‘joint venture’ company as a type of legal structure. All related provisions are repealed. 

Partners in joint ventures established before the provisions of this law came into effect must adjust their status in accordance with its provisions within a period not exceeding three months from the date of its entry into force.

OLD REGIME 

Previously recognised.

DLA PIPER COMMENTARY

Generally, a joint venture is a form of collaboration rather than a specific legal structure.

The removal of this type of business entity could have significant impact on many forms of investment and collaborations between separate legal entities and may be indicative of further changes to foreign direct investment, M&A, as well as competition regulations.