Corporate Governance 2026 Comparisons

Persons conducting business in Bahrain may choose from a set list of business structures set out in the Commercial Companies Law (CCL) promulgated by Decree Law No (21) of 2001, which is amended periodically.

The most common types of business entities in Bahrain are limited liability companies, public joint stock companies and closed joint stock companies – all entities in which the shareholders’ liability towards creditors is limited to their shareholding in the capital (ie, limited liability).

Limited Liability Companies

Limited liability companies are companies with one or more owners whose liability is limited only to the extent of the shareholding in the capital. Partners may not resort to public subscription for raising shares or loan capital. This type of company is barred from undertaking insurance activities, banking or fund investment for third parties (shareholders of this kind are referred to as “partners”).

Limited liability companies are not required to have a board of directors unless the number of partners exceeds ten.

Joint Stock Companies

These include the following.

• Closed joint stock company: Established with a minimum of two shareholders and a minimum share capital of BHD50,000 (around USD132,625); the shares of the company may not be publicly offered. The law permits such companies to be established by a single shareholder, subject to conditions to be issued by the Minister of Industry and Commerce.
• Public joint stock company: Established by a number of persons who subscribe to it via negotiable shares.

The latter form is subject to a minimum share capital of BHD1 million (around USD2.6 million).

Certain government-related companies operate under a special legal regime. Companies that are wholly or majority-owned by the state, or established by decree, are not fully subject to the CCL; instead, they are primarily governed by their founding instruments, with the law applying only where it does not conflict with those arrangements.

General Partnerships/Simple Commandite Partnerships

Less regulated types of business entities include general partnerships companies and simple commandite partnerships.

A general partnership company is owned by two or more persons whose liability is unlimited and who are jointly and severally liable to cover the company’s debts and commitments. The company’s name consists of the name of one or more of the partners with the addition of “and Co” to indicate the partnership.

A simple commandite partnership is one established by two types of partners: joint partners and sleeping partners.

In a commandite partnership, the joint partners are involved in the management of the company and have unlimited liability towards creditors. Sleeping partners are not involved in the management of the company and are only liable for the obligations of the company to the extent of their shareholding in the capital.

Branches of Foreign Companies

Another form of business entity is the branch of a foreign company, which must be guaranteed by the head office of the company. The activities of a business entity licensed as a “branch” shall match the activities of the head office. Branches licensed as representative offices are limited to gathering financial, economic and commercial information, carrying out general promotional activities and providing general assistance of a non-specific nature to customers of the parent company.

Holding Companies

Holding companies are very common in Bahrain. They may be in the form of a public or private joint stock company, or a limited liability company. The role of holding companies is limited to the investment of funds, ownership of shares in its subsidiaries, management of its subsidiaries and the provision of financing or guarantees for its affiliates.

Commercial Companies

Commercial companies are mainly governed by the CCL but may be subject to other laws and regulations depending on the nature of their activity. Most importantly, companies licensed to provide regulated financial services by the Central Bank of Bahrain (CBB) are subject to the laws and regulations concerning regulated services.

The main legislation related to corporate governance that must be observed by companies incorporated in Bahrain is as follows.

The CCL

The CCL is the law governing commercial companies, including their types, formation and management. The CCL has been in force since 2001 and has subsequently been amended, with the latest amendment issued in September 2025. It includes rules related to the segregation of powers and the scope of powers of the board of directors and shareholders, as well as accountability and cases of personal liability.

Rules relating to disclosure of interests by board members and avoidance of conflict of interest are included in the CCL.

The Corporate Governance Code

The Corporate Governance Code was issued by Decision No (19) of 2018 by the Minister of Industry and Commerce pursuant to Article 358 bis of the CCL. The Code provides the minimum required standards for corporate governance and applies to all joint stock companies incorporated in Bahrain, with the exception of companies carrying out regulated financial services and licensed by the CBB.

The Code includes 11 main corporate governance principles, as follows:

• the board shall be effective, qualified and have the required expertise;
• the directors and executive management shall have full loyalty to the company;
• there must be rigorous controls for financial audit and reporting, internal control and compliance with the law;
• the requirement for effective procedures for appointment, training and evaluation of the directors;
• fair and responsible remuneration for directors and senior officers;
• the requirement for a clear and efficient management structure with defined job titles, powers, roles and responsibilities;
• shareholder involvement (by encouraging communication and participation);
• disclosure of companies’ corporate governance;
• for companies that offer Islamic services, adherence to the principles of Sharia;
• integrity of financial statements and recognition of the importance of external auditors as a responsibility of the board; and
• social responsibility.

Boards of joint stock companies, closed and public, are required to form a corporate governance committee, which appoints a corporate governance officer to ensure compliance with the corporate governance rules and submit a corporate governance report annually to the Ministry of Industry and Commerce, setting out the measures taken to comply with each principle (and with a special section for related-party transactions).

The principles of the Corporate Governance Code should be observed by all types of companies, including limited liability companies. The reporting requirements, however, are enforced only on closed and public joint stock companies.

The Rulebook of the CBB

The Corporate Governance Code is embedded in the High-Level Control Module of the Rulebook of the CBB, applicable to each category of CBB licensee. This is issued by the CBB, and compliance therewith is supervised by the CBB. The Rulebook includes the first nine principles of the Corporate Governance Code listed in the foregoing.

Constitutional Documents

The memorandum and articles of association of a company (the “Constitutional Documents”), produced by the company’s shareholders, provide company-specific rules pertaining to the authority of the board, the extent of its powers, its duties and remuneration.

Rules, Regulations and Circulars

The rules, regulations and circulars of the CBB and the Bahrain Bourse (the company taking over the powers of the Bahrain Stock Exchange) applicable to listed companies (all public companies and some listed closed companies) are detailed in 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares.

Within the CCL, the provisions for each type of company are included in a separate chapter. The chapter relating to the management of public joint stock companies includes the most stringent rules. For example, the rules relating to the board of directors require a minimum of five directors, which must include independent and non-executive directors. The rules also cover director appointments and elections, the requirement to have an audit committee within the board and the limitation on director remuneration in years when no dividends are to be paid to shareholders. The rules under the CCL are mandatory.

The Corporate Governance Code applies to all types of companies, with an emphasis on the importance of compliance – especially by joint stock companies due to the role they play in the national economy. Compliance with the principles of the Corporate Governance Code is on a comply-or-explain basis, and the standard applied by the Ministry of Industry and Commerce for listed and public joint stock companies is higher than that applied to the other forms of companies.

In addition to the CCL and Corporate Governance Code, additional rules issued by the CBB and the Bahrain Bourse are put in place for listed companies, with the following including provisions related to corporate governance.

Bahrain Bourse Listing Rules

These Listing Rules were approved by Board of Directors Resolution (3/5/2024) in its Meeting (5/2024) dated 30/09/2024. Their purpose is to set out the requirements that must be complied with by all applicants, issuers, directors, officers, advisers and other persons to whom these Listing Rules are directed. The Listing Rules are composed of requirements that have to be met before securities may be listed and continuing obligations that an issuer must comply with after listing.

The principles on which these Listing Rules are based include the following:

• issuers shall have acceptable standards of quality, operations, management experience and expertise;
• investors and their professional advisers shall be kept fully informed by the issuer of all facts and information that might affect their existing or potential interests in the issuer – in particular, full, accurate and timely disclosure shall be made of any information that may reasonably be expected to have a material effect on the price of, value of or market activity in the securities of issuers;
• all holders of any class of securities will be treated fairly and equitably;
• directors, officers and advisers of issuers will maintain the highest standards of integrity, accountability, corporate governance and responsibility; and
• directors of an issuer shall act in the interests of shareholders as a whole.

Disclosure Standards of the Bahrain Bourse

Disclosure Standards were issued by Bahrain Monetary Agency (now known as the CBB) pursuant to its circular dated 3 December 2003. Except for the first chapter, which is superseded by the Offering of Securities Module under Rulebook 6, the Disclosure Standards still apply to listings, public offerings and sales of securities in Bahrain.

The Disclosure Standards provide, inter alia:

• guidelines for trading by directors and senior management; and
• policy pertaining to the immediate public disclosure of material information regarding an issuer’s affairs, or about events or conditions in the market that will affect the issuer’s securities, relating to business that would significantly affect the market price or value of any of the issuer’s securities – or that would reasonably be expected to have a major influence on any investor’s decisions.

Offering of Securities Module Issued by the CBB

This Module contains the CBB’s Directive (as amended from time to time) relating to the issuing and offering of securities. The directive in this Module is applicable to all market participants and relevant persons, including but not limited to:

• issuers of securities or any person acting on their behalf;
• listed companies;
• any person acting for or on behalf of listed companies; and
• shareholders of listed companies.

This Module describes, among other things, the eligibility criteria for issuing securities and the application procedures for obtaining the regulator’s approval. Most importantly, it explains the requirement for companies to prepare a prospectus or offering circular when they offer their securities to the public or on private placement basis. The directors of the company must accept responsibility for the accuracy of the content of such prospectus or offering circular.

Takeovers, Mergers and Acquisitions Module of the CBB

This Module applies to persons involved in, engaging in or intending to engage in an offer for, takeover or merger or acquisition of a controlling interest (30% or more) in a company whose primary listing of its ordinary equity securities is on a licensed exchange in Bahrain. Each director of an offeror and the offeree company, as well as those acting in concert and their professional advisers, has a responsibility to ensure, insofar as they are reasonably able, that the requirements of the Module are complied with in transactions that are subject to it.

While this Module applies to listed companies in which control may change, as mentioned previously, there are circumstances – such as where an unlisted company is a target of a listed company (reverse takeover) – in which it is necessary to consider the spirit, general principles, standards and rules of this Module wherever it is applicable. When there is any doubt as to whether a proposed course of conduct accords with the spirit, general principles, standards and rules of this Module, parties or their advisers should consult the CBB in advance.

The most recent amendments to the Bahrain Bourse Listing Rules, made in 2024, have strengthened corporate governance primarily through enhanced disclosure and transparency requirements. The key change is the introduction of mandatory ESG reporting, requiring listed companies to adopt an ESG framework and disclose related information within a set timeframe.

In addition, the rules tighten ongoing disclosure obligations, including more robust reporting of material events, related-party and key person transactions, and capital changes. While the updates do not significantly alter formal board composition requirements, they increase board accountability, particularly around conflicts of interest and oversight. Overall, the changes enhance shareholder transparency and protection, aligning Bahrain’s framework more closely with international governance standards.

The management of the company encompasses:

• the board of directors in joint stock companies, including the committees formed within the board;
• the board of managers in limited liability companies; and
• the general meeting of the shareholders (ordinary and extraordinary, as detailed in 4.3 Shareholder Meetings).

The powers of the board of managers in limited liability companies pursuant to the CCL are determined by the company’s Constitutional Documents.

The board of directors of joint stock companies has the power to run the management of the company subject to certain restrictions that specifically require the approval of the general meeting of the shareholders as detailed in 2.2 Decisions Made by Particular Bodies.

Boards of joint stock companies are required to form an audit committee from amongst the members of the board. The audit committee shall have the mandate of reviewing the audit, accounting and financial practices of the company, and the extent of compliance with the provisions of the law and the Constitutional Documents. To fulfil its mandate, the audit committee shall be able to access all of the company’s records, documents and information, and shall submit a report of its work in the annual report to the shareholders.

The Corporate Governance Code

The Corporate Governance Code requires the companies subject to its provisions to set up audit, remuneration, nomination and corporate governance committees from amongst the board members as required by the Code, and allows the board to decide whether to set up additional specialised committees as necessitated by the activities of the company.

• The audit committee is in charge of reviewing the company’s audit, financial and accounting procedures, and ensuring compliance with the law and the company’s Constitutional Documents.
• The remuneration committee is in charge of reviewing and setting the basis for remunerating directors and senior managers.
• The nomination committee is in charge of making nominations and recommendations for directorship and senior management positions in the company. It is also in charge of reviewing the independence criteria and status of directors on an ongoing basis – this committee may be merged with the remuneration committee (and usually is).
• The corporate governance committee is in charge of reviewing the company’s corporate governance policy and making recommendations to ensure compliance – this committee may be merged with the nomination and remuneration committees.

The board of directors of a joint stock company has the authority, by law, to perform all actions necessary for the management of the company in accordance with its objectives, except as restricted by law, the Constitutional Documents or general meeting resolutions.

The CBB Rulebook provides more detailed guidance on the role of the board, but this guidance can apply to all companies. This role includes:

• setting the overall business strategy of the company;
• ensuring that financial statements are prepared in a manner that accurately reflects the company’s financial position;
• monitoring management performance;
• convening and preparing the agenda for shareholder meetings;
• monitoring conflicts of interest;
• preventing abusive related-party transactions; and
• assuring equitable treatment of all shareholders, including minority shareholders.

Unless allowed by a company’s Constitutional Documents, the board shall not have the power to issue securities, conclude loans for more than three years, sell the company’s assets or business, mortgage such assets, provide guarantees for third parties, discharge the company’s debtors from their liabilities, reach a settlement in respect thereof or donate the company’s assets without approval of the general meeting of the shareholders – unless such actions fall within the essence of the company’s objectives.

The shareholders participate in the management of the company through general meetings. There are two types of general meetings, each with a defined scope of powers, as detailed in 4.3 Shareholder Meetings.

The Shareholders

The shareholders are required to hold one ordinary general meeting within three months from the end of the fiscal year (six months for companies with limited liability), and an extraordinary general meeting whenever required. The details of the process of each type of meeting are found in 4.3 Shareholder Meetings.

The Board

In joint stock companies, the following apply.

• A board is required to meet at least four times a year, by invitation from the chairperson of the board or at least two directors; the board issues resolutions for the management of the company.
• The quorum for the meeting is half the number of directors (minimum of three), unless a higher amount is required in the Constitutional Documents.
• There shall be no attendance by proxy unless allowed by the Constitutional Documents. Decisions are issued by a majority vote of the directors in attendance. In case of a tie, the chairperson shall have the casting vote.
• Any director who objects to a decision must minute their objection. If a case is lodged against the board on the basis of a decision with negative outcome, the minutes will serve to absolve the objecting director of liability.
• Meetings of the board may be attended by video or teleconference if the Constitutional Documents allow.
• Decisions may be issued by circulation if the Constitutional Documents of the company allow for the same.

Regarding the third bullet point, only a director or representative of a corporate shareholder may hold the proxy for a board meeting. A maximum of two directors may attend by proxy, and at least half the directors must attend in person, including the chairperson, for the meeting to be valid (minimum of two in closed companies and three in public companies).

Companies With Limited Liability

Companies with limited liability may be managed by the partners, or by a manager or board of managers appointed by the partners. A board of managers is not required unless the number of partners exceeds ten. The formation of the board of managers and its powers shall be set out in the Constitutional Documents.

Closed Joint Stock Companies

Closed joint stock companies are managed by a board of directors (minimum of three and maximum of 15 directors, maximum term of three years, and renewable by the general assembly).

The boards of closed joint stock companies that are listed in the Bahrain Bourse must include independent and non-executive directors. The Minister of Industry and Commerce and CBB may issue decisions to include more categories of closed joint stock companies to which this requirement is to apply.

Public Joint Stock Companies

Public joint stock companies are also managed by a board of directors (minimum of five and maximum of 15 directors, maximum term of three years, renewable by the general assembly). The board must include independent and non-executive members.

The board of directors of joint stock companies must choose a chairperson and vice-chairperson from among its members by way of secret ballot. The Ministry must be informed of the decision. For CBB licensees, the chairperson is required to be an independent member and must be approved by the CBB for that position.

The board of directors of public companies and some closed companies must form committees from amongst its members, as set out in 3.1 Bodies or Functions Involved in Governance and Management and 6.2 Disclosure of Corporate Governance Arrangements.

Companies licensed by the CBB are subject to the independence requirements set out in the Rulebook volume applicable to their type of licence.

Chairperson

The chairperson is considered the head of the company. The chairperson represents the company before third parties, and their signature alone shall bind the company in its relationship with third parties, unless the Constitutional Documents require the chairperson to have joint signature authority with one director or more. The chairperson must ensure that the decisions of the board are executed.

Vice-Chairperson

The vice-chairperson shall take the role of the chairperson in their absence.

Directors

Jointly, the directors must fulfil the role of the board in the management of the company. Severally, each director must ensure that they work in the best interest of the company and make the decisions and actions required to serve that interest.

In addition to the committees within the board, the roles are set out in 3.1 Bodies or Functions Involved in Governance and Management.

The composition of the board of directors is as set out in 4.1 Board Structure. The board of joint stock companies must include independent and non-executive directors, and may also include non-independent and executive directors, as detailed in 3.5 Rules/Requirements Concerning Independence of Directors. In the case of CBB licensees, half of the board of directors, including the chairperson, are required to be independent.

Directors are nominated by appointment or election by the general meeting of the shareholders. The general meeting of the shareholders is the authority with director removal powers.

Pursuant to the CCL, any shareholder owning at least 10% of the capital of the company has the right to appoint a director, depending on the size of the board and the directorship and approval requirements in case of CBB licensees.

Shareholders not eligible to appoint, or who do not choose to appoint, a director may use their percentage to elect directors by cumulative voting.

There are generally no restrictions on appointment but general guidelines are set out in the CCL, as follows:

• having legal capacity to act;
• not having been convicted of a crime involving negligent or fraudulent bankruptcy, or a crime related to honour, breach of trust or violation of the provisions of the CCL, unless reinstated;
• not being prohibited from being a director in a joint stock company pursuant to the CCL or any other law in force in Bahrain;
• the chairperson and deputy chairperson cannot hold the same position as the most senior executive in the company;
• special independence conditions for directors of CBB-licensed companies; and
• any restrictions stipulated in the memorandum and articles of association of the company.

Independent directors are those deemed by the board to be independent of any specific shareholder and who do not have any significant business interest with the company.

Non-independent directors are those who represent a shareholder or have a business interest with the company. A director is considered non-independent if they:

• hold 10% or more of the shares of the company, the parent company, or any of its subsidiaries or associates;
• represent a legal person who holds 10% or more of the shares of the company, parent, or any of its subsidiaries or associates;
• served in an executive position in the company, its parent, or any of its subsidiaries or associates, in the two years preceding their nomination;
• are a first-degree relative of an existing director or any person in a key executive management position in the company, its parent, or any of its subsidiaries or associates;
• are a director of the company’s parent or any of its subsidiaries or associates;
• were employed by any of the company’s contracting parties, such as external auditors, major suppliers, etc, in the two years preceding their nomination;
• were employed by the parent company or any of its subsidiaries or associates in the two years preceding their nomination;
• have made or received a payment from the company of over BHD50,000 (around USD132,625), apart from directors’ remuneration (if they are an existing director) in the past year;
• are a relative of a partner in the company’s external auditor or an employee thereof, or have been in the past two years; or
• are an employee or partner at a company that provides consulting services to the company, its parent or any of its subsidiaries and associates (this does not apply if the parent company is owned at least 75% by the government or is a government entity).

Executive directors are those who hold senior management positions within the company. They are not considered independent. Non-executive directors are those who are not involved in the day-to-day management or control of a company, subsidiary or affiliate thereof.

The legal duties of directors of a company may be summarised as follows:

• to participate in the management of the company in a diligent, skilful and efficient manner in accordance with the law and the Constitutional Documents;
• to serve the company as a representative of the interests of all the shareholders, and not one or a specific group of shareholders; and
• to disclose any personal interest they may have in any of the issues discussed in board or general meetings and to refrain from voting in respect of any of these issues.

Once a director is on the board, they owe a duty towards all the shareholders, and the interests of all the shareholders must be considered. However, any stakeholder affected by any decision of the board or a director has the right to lodge a claim at court in accordance with Article 185 and 18 bis of the CCL (detailed in 4.4 Shareholder Claims).

The consequences of a breach of directors’ duties include dismissal from office, and possibly a claim in court in accordance with Article 18 bis of the CCL (as detailed in 4.4 Shareholder Claims).

Directors, officers and even shareholders may be held personally liable without limitation if any of the breaches listed under Article 185 and Article 18 bis of the CCL (see 4.4 Shareholder Claims) are proven.

The Constitutional Documents of a company may set out the procedure and requirements for determining the remuneration of the directors, subject to a maximum remuneration of 10% of the net profit after deducting legal reserves and distributing dividends not less than 5% of the company’s paid-up capital.

In the years where no dividends are paid to the shareholders, the company is prohibited from paying remuneration to the directors, unless specific approval of the Minister of Industry and Commerce for such payment is obtained. In case of CBB licensees, the CBB must approve the payment and amount of remuneration to the directors.

A detailed report on all payments made to the directors and executive management in a fiscal year must be prepared by the board and submitted to the shareholders. This must detail any and all payments, including salaries, sitting fees, representation fees, allowances, etc. Failure to submit the report subjects the directors to liability, which may include personal liability for failure to comply with the law.

The Constitutional Documents of a company (memorandum and articles of association) bridge the gap between the shareholders and the company. Drafted within the frameworks of the CCL, they describe the rights and obligations of the shareholders towards the company.

The inherent rights of the shareholders include the rights to:

• receive profit or dividends decided for the shareholders;
• receive a share of the company’s total property upon liquidation;
• participate in the company’s management, whether through the general assemblies or as a member of the board of directors, according to the company’s Constitutional Documents;
• obtain a printed booklet comprising the company’s balance sheet for the past fiscal year, the profit and loss account and the reports of the board of directors and the auditor; and
• file lawsuits to nullify any decision issued by the general meeting or the board of directors in violation of the law, the public order or the Constitutional Documents of the company.

The obligations of the shareholders include:

• payment of accrued instalments and interest following the expiration of the date thereof, without the need to serve a notice upon them;
• payment of expenses incurred by the company in collecting unpaid instalments and sale of shares;
• refraining from any action intended to cause harm to the company; and
• execution of any decision legally passed by the general meeting.

The details of the shareholders are publicly available on Sijilat, the website of the Ministry of Industry and Commerce. The Bahrain Bourse also provides major shareholders’ details on its website for listed companies.

The general meeting of the shareholders is the ultimate decision-making authority in the company. The company’s Constitutional Documents specify the extent of the board of directors’ powers within the company. Some decisions require the approval of the general assembly, such as the decisions set out in 2.2 Decisions Made by Particular Bodies.

The involvement of shareholders in the company’s management, and in controlling the activities of the directors, is effected through their participation in the general meetings and the decisions made therein.

There are two types of general meetings of the shareholders of a company – the ordinary general meeting and the extraordinary general meeting – each with different powers. To ensure that all shareholders have the same opportunity to participate in the general meetings, there are specific provisions regarding invitation thereto.

Ordinary General Meeting

The ordinary general meeting of shareholders convenes at the invitation of the chairperson of the board of directors at a time and venue specified in the company’s Constitutional Documents. The meeting must convene at least once per year during the three-month period following the end of the company’s fiscal or financial year in case of listed companies and companies licensed by the CBB, and during the six-month period following the end of the company’s financial year for companies not listed on the Bahrain Bourse or licensed by the CBB. The invitation to convene the ordinary general meeting of shareholders must be sent to the shareholders, and in case of a public joint stock company, the invitation is required to be published in at least two daily local newspapers – one in Arabic and the other in English.

The minimum notice period is 21 days, and the notice of the meeting must include the agenda of the meeting. Copies of the invitation documents must also be forwarded to the Ministry of Industry and Commerce at least ten days before the ordinary general meeting. The ordinary general meeting is presided over by the chairperson of the board of directors or their deputy, or by whoever is delegated by the ordinary general meeting.

Validity

The ordinary general meeting shall not be valid unless it is attended by a number of shareholders who have the right to vote and represent more than half the capital of the company. If this quorum is not attained, an invitation must be sent for a second meeting to be held, with the same agenda, within seven to 15 days from the date fixed for the first meeting.

Second and third meetings

The second meeting shall not be valid unless it is attended by a number of shareholders who have the right to vote and represent more than 30% of the capital of the company.

The third meeting shall be valid regardless of the number of shareholders present. Each shareholder, regardless of their number of shares in the company, shall have the right to attend the ordinary general meeting, and shall have a number of votes equal to the number of their shares. Any provision or decision to the contrary shall be deemed null and void.

Delegates and representatives

Any shareholder may delegate a person, from among the shareholders or third parties, to attend the ordinary general meeting on their behalf, provided that this person is not the chairperson of the board, a board member or an employee of the company. However, this shall not prejudice the right to delegate a first-degree relative by virtue of a written special power of attorney, to be prepared by the company for this purpose.

Members who are lacking capacity or incapacitated (for instance, minors or persons of unsound mind) shall be represented in the meeting by their legal representatives.

Extraordinary General Meeting

The extraordinary general meeting convenes at the invitation of the board of directors, or by virtue of a written request addressed to the board of directors by a number of shareholders representing at least 10% of the company’s capital.

Validity

The extraordinary general meeting shall not be valid unless attended by shareholders representing at least two-thirds of the company’s capital. If this quorum is not present, a second meeting shall be convened within 15 days of the first meeting. The second meeting shall be valid if attended by shareholders representing more than one-third of the capital.

If such quorum is not available at the second meeting, a third meeting shall be convened within 15 days from the date of the second meeting. The third meeting shall be valid if attended by one-quarter of the shareholders. A new invitation is not required to be sent for the last two meetings if their dates have been specified in the invitation to the first meeting, provided that publication is made in at least two daily local newspapers – one in Arabic and the other in English – to the effect that none of these meetings have occurred.

Decisions

The decision of the extraordinary general meeting shall be passed by a two-thirds majority of the shares represented at the meeting, unless the decision relates to (i) an the increase or decrease in the company’s capital; (ii) extension of the company’s term; or (iii) dissolution, conversion or merging with another company, in which case it shall not be valid unless passed by a three-quarters majority of the shares present at the meeting. The extraordinary general meeting’s decisions shall become effective upon the approval of the Ministry of Industry and Commerce.

Other

In addition to the foregoing, the founders shall invite the constituent assembly to convene within a period no later than 21 days from the date of the closing of the subscription (in case of public joint stock company) and seven days from the date of the incorporation approval by the Ministry of Industry and Commerce (in case of closed joint stock company).

The invitation to convene the constituent assembly of shareholders shall be published in at least two daily local newspapers – one in Arabic and the other in English. The minimum notice period is 21 days, and the notice shall include the agenda of the meeting. Copies of the invitation documents shall be forwarded to the Ministry at least ten days before the meeting.

The bases of claim that exist for shareholders against the company are as follows:

• a shareholder may lodge a claim seeking to nullify a decision by the general meeting if such decision is not issued in accordance with the law and the Constitutional Documents of the company;
• pursuant to Article 168 bis of the CCL, a shareholder may lodge a claim against the company if its business is being conducted in a manner that unfairly causes damage to all shareholders or a group of shareholders, or if the company intends to take an action that causes damage to all shareholders or a group of shareholders; and
• pursuant to Article 18 bis of the CCL.

The manager of the company, or a member of the board of directors or board of managers of a joint stock company, closed joint stock company or limited liability company, as well as the person in charge of the actual management of the company – whether overtly or covertly – shall be liable in all his or her personal assets for any damage to the company, partners, shareholders or third parties if the evidence establishes that he or she has caused the company to incur obligations due to gross negligence or error on his or her part – or to his or her violation of the law, or of the company’s memorandum or articles of association.

Any person whose ownership in a publicly traded company, alone or together with their minor children, through accounts under their disposal or associated or affiliated companies, amounts to 5% or more of any listed security of a joint stock company must notify the licensed exchange (Bahrain Bourse) forthwith, which shall in turn notify the CBB of this fact. The CBB may declare the name of the person who owns such stake.

All persons must obtain prior written approval from the CBB to execute any order that will bring their ownership, alone or together with their minor children, or through the accounts under their disposal, to 10% or more in any listed security. Any further increase of 1% or more shall also require prior written approval from the CBB.

Companies are further required to disclose ultimate beneficial owner (UBO) information to the Ministry of Industry and Commerce.

The 5% notification rule is a market disclosure obligation, not a UBO rule. It requires “any Person” to notify the licensed exchange when their holdings, including those of their minor children or through accounts under their disposal – or associate/affiliate companies – reach 5% or more of a listed security. While this captures some indirect holdings, it does not require a full look-through to identify the natural person who ultimately controls a chain of entities, unlike the customer due diligence provision.

Capital market licensees must enquire as to the structure of the legal entity or trust to determine and verify the identity of the UBO of the funds or securities, and the ultimate provider and ultimate controller of the funds or securities (if different).

Limited liability companies, branches of foreign companies and joint stock companies are required to submit the audited financial statements of the company to the Ministry of Industry and Commerce.

Joint stock companies shall annually prepare a detailed list, approved by the chairperson and the managing director, of the names and powers of the chairperson and members of the board, and of the managers of the company. The company shall keep a copy of this list, and the original shall be sent to the Ministry of Industry and Commerce, accompanied by the annual report prepared by the board of directors, the company’s balance sheet and the profit and loss account.

A company licensed by the CBB must submit the reports thereto in accordance with the Rulebook volume applicable to its type of licence. The CBB issued the Environmental, Social and Governance Requirements Module (the “ESG Module”) in November 2023, which requires listed companies and CBB licensees to submit an ESG report to the CBB on an annual basis.

Joint stock companies are required to disclose their corporate governance arrangements, which may be achieved by fulfilling the following requirements.

• The board shall adopt written corporate governance guidelines covering the matters stated in the Corporate Governance Code and any other corporate governance matters deemed appropriate by the board; such guidelines shall include or refer to the principles and instructions of the Corporate Governance Code.
• The company shall publish the guidelines and instructions mentioned in the preceding bullet point on its website.
• At each annual shareholders’ meeting, the board shall report on the company’s governance according to the form prepared by the Ministry of Industry and Commerce, available on its website, which covers the topics listed in Appendix 5 to the Corporate Governance Code, explaining the extent of its compliance with the guidelines and instructions of the Code, and the reasons for non-compliance if applicable.
• The board shall establish a corporate governance committee comprising at least three independent directors.
• The company shall appoint an employee as the company’s corporate governance officer. They shall undertake the tasks of verifying the company’s compliance with corporate governance rules, laws, regulations and decisions. They shall also co-ordinate with the corporate governance committee in relation to all corporate governance matters, and follow up and co-ordinate with the relevant department.

The Ministry of Industry and Commerce is the body through which companies are incorporated or registered. Joint stock companies are required to prepare a detailed list, approved by the chairperson and the managing director, of the names and capacity of the chairperson and members of the board, and the managers of the company, on an annual basis.

The company shall keep a copy of this list, and the original shall be sent to the Ministry of Industry and Commerce, accompanied by the annual report prepared by the board of directors, the company’s balance sheet and the profit and loss account.

The board of directors of a public shareholding company is required to publish the balance sheet, the profit and loss account, an executive summary of the annual report and the full text of the auditor’s report in a local daily newspaper, published in Arabic, at least 15 days before the general meeting. Failure to publish the summary gives rise to liability, which may extend to personal liability, and will render the invitation invalid and the general meeting voidable. The Ministry of Industry and Commerce may, among other things, inspect accounts, suspend or delete commercial registrations, and impose administrative fines.

The CCL does not contain specific provisions dealing with global or international AML reporting requirements. However, as per the Rulebook (eg, for bank licensees) issued by the CBB, financial groups must implement group-wide programmes including policies for sharing information within the group for AML/CFT purposes; this is applicable to all branches and subsidiaries.

The board of a joint stock company is required to ensure the integrity of the financial statements submitted to shareholders through the appointment of external auditors.

The general assembly meeting of joint stock companies shall appoint one or more auditors for the company and determine their fees according to the proposal of the board of directors. The auditor shall, among other things:

• monitor the company’s business;
• give opinions on the validity of the company’s financial statements and request adjustments as necessary; and
• verify the company’s ownership of assets and legality of obligations.

Most importantly, auditors attend the general assembly meetings, read their report to the shareholders, and answers questions and queries regarding the year-end financial statements.

The CCL does not specifically address geopolitical risk or international sanctions oversight. However, the CBB Rulebook (eg, for bank licensees) requires the board to approve and oversee a risk management framework covering all material risks, including country/geographic risk. Licensees must assess country risk factors such as jurisdictions subject to UN sanctions or with weak AML regimes. Regarding sanctions, licensees must comply with United Nations Security Council Resolutions (UNSCRs), freeze designated assets without delay and report sanctioned holdings to the CBB’s Compliance Directorate. Board-approved AML/CFT systems must be reviewed annually.

Companies with environment-related activities are subject to the rules and regulations governing this sector and are required to adhere to the laws on Environment and Public Health, as well as the regulations and standards of the Supreme Council for Environment. Ensuring compliance with the law is considered good governance and is the responsibility of the company and its board of directors.

Social responsibility is one of the principles of corporate governance detailed in 1.1 Sources of Corporate Governance Requirements. Companies are considered to have social responsibility, and the board of directors is expected to have a code in place that sets out the social responsibilities of the company. A report on activities undertaken in this respect shall be included in the company’s annual report.

Generally, companies make voluntary contributions to the environment as part of their social responsibility. The CBB issued the ESG Module in November 2023, which requires listed companies and CBB licensees to submit an ESG report to the CBB on an annual basis.

No material shift has been noted in Bahrain in the context of the current global political climate.

Bahrain does not currently have a dedicated AI law setting out AI-specific board composition requirements or committee mandates, nor does it have a standalone AI governance regime.

In practice, AI oversight is typically addressed through existing governance frameworks. For regulated entities, particularly CBB-regulated financial institutions, AI-related oversight generally falls within the established corporate governance, risk management and internal controls expectations under the CBB Rulebook. For other entities, the primary constraints are the generally applicable legal regimes that AI use can involve – most commonly personal data protection, cybersecurity and IP.

Additionally, certain public-sector entities are subject to internal government guidance on AI use, including the Information and eGovernment Authority policy and related procedures. This guidance sets out principles, roles and accountability for government AI initiatives.

Please see the overview in 8.1 Board Oversight of AI. While Bahrain does not currently have a single, comprehensive AI governance framework, AI-related risks are typically managed through existing regulatory regimes and the internal policies and guidelines of the entity in question.

The most significant practical development in 2025 was the “General Policy for the Use of Artificial Intelligence” of the Information & eGovernment Authority (iGA), which sets out internal government principles and pillars, and allocates roles and responsibilities for AI use across government entities.

In practice, AI oversight is usually handled through the existing governance structure rather than through a dedicated AI committee. The board typically retains oversight through its ordinary governance processes, while management remains responsible for implementation and day-to-day use. The risk, compliance and internal audit functions generally support this, in line with the entity’s broader risk and controls framework.

Please see the overview in 8.1 Board Oversight of AI. As Bahrain does not currently have a single AI-specific law, the board and officers typically face AI-related liability exposure under existing legal and regulatory regimes, depending on the AI use case and the nature of the harm.

In broad terms, the key issues typically involve personal data and privacy, cybersecurity, misleading statements or confidentiality breaches. Enforcement will depend on the underlying regime and the sector, and may include action by the relevant regulator or authority, as well as civil or criminal proceedings in some cases.

Please see the overview in 8.1 Board Oversight of AI. There is no single Bahrain-wide AI-specific disclosure requirement obliging companies to describe their AI strategy, governance, risks, incidents or controls in their reports.

In practice, any disclosure obligation is usually derived from existing requirements pertaining to AI use or AI-related incidents, including sector-specific expectations for regulated entities. Separately, government entities may have internal reporting and documentation expectations under the iGA AI policy and related procedures, even in the absence of a nationwide AI disclosure framework.