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MANAMA: Bahrain has done away with single person companies and has introduced ‘not for profit’ companies in key amendments to the Bahrain Commercial Companies Law promulgated through Legislative Decree No (28) of 2020.
These amendments cover a range of matters including convertible debt securities, mergers and acquisitions, elimination of single person companies, introduction of ‘not for profit’ companies and increased disclosure requirements, a leading audit and advisory firm told the GDN.
“The legislative decree comes at a time of rapid changes to the regulatory and business landscape internationally, regionally and locally. These challenges have driven a number of regulatory reforms designed to keep pace with international best practices, most recently the introduction of the Reorganisation and Bankruptcy Law in 2018,” said Grant Thornton Abdulaal partner Yaser Abbas.
“Viewed through this prism, the amendments to Bahrain Commercial Companies Law represent pragmatic steps taken by the government to facilitate the ease of doing business whilst maintaining its ongoing drive to adopt international best practices around transparency and corporate governance.”
For instance, article 2 and other related articles of the law have been amended to eliminate single person companies (SPCs) as one of the forms that a commercial company can take.
Simultaneously, article 261 – which previously required limited liability companies (WLLs) to have more than one partner and but no more than 50 partners – has been amended to remove this requirement.
Thus, allowing companies with one partner to be incorporated as with limited liability companies.
This facilities future introduction of additional partners without the need to change the company’s legal form.
Other amendments to the law are designed to regulate matters such as mergers and acquisitions, convertible debt securities, preference shares, and employee share plans as well as the introduction of new concepts such as ‘strategic partners’ and ‘not for profit’ companies.
On the other hand, the recent amendments also built upon the amendments passed in 2018 and simultaneous introduction of the Corporate Governance Code during the same year. Article 184 bis has been amended to require all audit committee members to be members of the board of directors.
Article 174 has been introduced to require companies to disclose specific information on all candidates in upcoming board elections on its corporate website.
Further, Article 188 has been amended to require disclosure of salaries, benefits, sitting fees and dividend distributions received for each member of the board of directors and executive management.
“The amendments just passed introduced more than 35 new or amended articles of Bahrain Commercial Companies Law,” said Grant Thornton Abdulaal managing partner Jassim Abdulaal.
“Therefore, all commercial companies and investors are encouraged to seek professional advice to assess the impact relevant to their specific situation.”
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