M&A Regulation & Disputes 2026 Comparisons

The investment and regulatory landscape in Bahrain has evolved significantly over the last 12 months. As of January 2026, the environment has shifted from a primarily tax-neutral, traditional framework to one that is increasingly modernised, digitised and integrated into global fiscal standards.

The most notable changes involve a complete overhaul of the Commercial Companies Law, the introduction of a sophisticated international court system and a historic pivot towards corporate taxation.

A Modernised Corporate Framework

The enactment of Decree-Law No 38 of 2025, amending a raft of provisions of the Commercial Companies Law, has had an impact on how M&A transactions are structured and governed.

One of the most critical changes for investors is the introduction of “shadow” or “defactor” manager liability. Regulators now look beyond formal board titles to hold anyone who exercises actual influence over a company’s management personally liable for negligence or legal violations. This has added a significant layer of due diligence for parent companies and private equity sponsors who historically operated with a more “hands-off” approach to their Bahraini subsidiaries.

Also relevant in this context, the former list of specific breaches which could render managers (now including persons actually managing the company), promoters, partners, shareholders, board members and named managers liable has been replaced with a broader test – specifically, where such persons have created obligations upon the company as a result of their negligence or breach of law or breach of the provisions of the constitutional documents of the company.

Furthermore, the law has introduced much-needed flexibility for deal-makers. Single-shareholder closed joint stock companies (CJSCs) are now permitted, eliminating the previous need for “nominee” shareholders to meet the two-party minimum.

Governance has also officially moved into the digital age: virtual board meetings and electronic voting are now the default legal standard, greatly simplifying the administrative burden for international investors managing Bahraini assets from abroad.

The Shift to a Taxable Environment

Perhaps the most profound change in the last year is Bahrain’s transition away from being a “tax-free” jurisdiction. While the 15% domestic minimum top-up tax (DMTT) for large multinational enterprises (those with revenues exceeding EUR750 million) became effective on 1 January 2025, the conversation has recently accelerated. In late December 2025, the Cabinet referred a draft law to the legislature to introduce a 10% corporate income tax (CIT) for local companies with annual revenues over BHD1 million. Although full implementation is targeted for 2027, this announcement has already fundamentally altered M&A valuations and financial modelling for deals currently in the pipeline.

Additionally, a new draft corporate tax law is currently set for review by the Bahrain Parliament, and is due to be implemented in 2027. Some key headlines include the following.

• Who it applies to: Resident legal persons on worldwide business income, and non-residents to the extent attributable to a Bahrain permanent establishment. Withholding tax (WHT) applies to Bahrain‑source income paid to non‑residents. Resident natural persons not carrying on a business, government entities and qualifying non‑profits are exempt.
• Entry thresholds: The regime applies where, in a tax period, revenues exceed BHD1 million or taxable income exceeds BHD200,000 (regardless of revenues). The first tax period begins on or after the law’s effective date (targeted from 2027 per the explanatory memorandum).
• Rates and base: CIT at 0% on the first BHD200,000 of taxable income and 10% on taxable income above BHD200,000. Taxable income starts from accounting profit (International Financial Reporting Standards (IFRS) or prescribed standards) with statutory adjustments (eg, exemptions, non‑deductibles and depreciation per regulations).
• WHT: Applies to Bahrain‑source income paid to non‑residents; 0% on dividends. Rates and categories for other items (including interest, royalties, services and similar payments) will be set in regulations. WHT is final on the covered income, with quarterly filing/remittance by the withholding agent; phased WHT registration is to be set by ministerial decision.

Judicial Sophistication and M&A Litigation

The environment for resolving high-stakes M&A disputes has been transformed by the launch of the Bahrain International Commercial Court (BICC) in November 2025. Modelled after the Singapore International Commercial Court (SICC), the BICC allows for proceedings in English and features a bench of renowned international judges. Most notably, a landmark agreement now allows BICC judgments to be appealed to an international committee of the SICC. This “Singapore link” provides a level of legal certainty and international standard-setting that was largely absent 12 months ago, making Bahrain a more attractive seat for cross-border transactional disputes.

Merger Control and Foreign Direct Investment (FDI)

While Bahrain remains highly open to foreign investment, the Competition Protection Authority (CPA) has become more assertive in its oversight. Under the 2018 Competition Law, the CPA has sharpened its focus on “economic concentration”. For a merger to require notification today, it typically must involve a change of control where the resulting entity holds a market share of at least 40% (or 60% for a group). While these thresholds have not changed in the last year, the CPA’s procedural rigour and the integration of these checks into the Sijilat portal have made “competition clearance” a mandatory and time-sensitive milestone in almost every major local acquisition.

In the financial space, the Central Bank of Bahrain (CBB) has intensified its oversight of market consolidation, particularly as the industry responds to the new 15% global minimum tax.

Meanwhile, the information and communications technology (ICT) sector continues to be a focal point for national security reviews; as Bahrain accelerates its Data Hub initiative, any acquisition involving critical digital infrastructure or dual-use technology now triggers a dual-track approval process involving both the Telecommunications Regulatory Authority (TRA) and the National Cybersecurity Centre to ensure the resilience of the Kingdom’s digital borders.

The healthcare and logistics industries have also seen a spike in regulatory activity, though driven more by domestic policy shifts and competition enforcement. The 2025 roll-out of mandatory health insurance for the private sector has sparked a wave of consolidations among clinics and third-party administrators, leading to the CPA’s first significant interventions to prevent economic concentration in specialised medical services.

In the logistics and manufacturing sectors, the expansion of the gold licence programme has streamlined FDI, but it has simultaneously introduced stricter post-closing monitoring.

Investors in these sectors may now be particularly wary of the new “shadow manager” liability, as many of these firms operate under regional management hubs where de facto control is often exercised from outside Bahrain, a practice that now carries significant litigation risk under the latest amendments to the Commercial Companies Law.

The regulatory landscape for M&A in Bahrain is anchored by a tiered structure of primary legislation and specialised sector-specific resolutions, many of which have been fundamentally reshaped by the 2025 reforms. At the foundational level, the Commercial Companies Law (Decree-Law No 21 of 2001) serves as the primary statute (most recently modernised by Decree-Law No 38 of 2025).

For FDI and national security screening, Bahrain does not utilise a standalone Committee on Foreign Investment in the United States (CFIUS)-style act but instead integrates screening into the commercial registration (Sijilat) process managed by the Ministry of Industry and Commerce (MOIC). Under this framework, any foreign acquisition is subject to a mandatory security clearance by the Ministry of Interior (MOI), which assesses transactions against public order and national security interests. This is often supplemented by the Golden License policy framework, which provides an expedited track for major projects but requires adherence to strict capital and employment “substance” requirements.

Public M&A is tightly governed by Volume 6 (Capital Markets) of the CBB Rulebook, specifically the takeovers, mergers and acquisitions (TMA) module, which dictates the conduct of offerors and targets in the listed space.

Sector-specific approvals continue to be governed by the CBB Law (Decree No 64 of 2006) for the financial sector, Law No 21 of 2015 for private healthcare facilities (National Health Regulatory Authority; NHRA) and the Telecommunications Law for ICT deals, with each regulator issuing its own “no objection” certificates as a condition precedent to closing.

Merger Control: The CPA

Merger control is primarily managed by the CPA, which currently operates under the umbrella of the MOIC. The CPA is responsible for assessing economic concentrations (which include mergers, acquisitions and certain joint ventures) that meet the statutory thresholds of a 40% market share for a single entity or 60% for a group. The authority has the power to block transactions that significantly reduce market competition, impose structural or behavioural remedies (such as divestments), or grant exemptions if the public interest or economic benefits outweigh the anti-competitive harm. In exceptional cases, the MOIC may override a prohibition based on “public interest” considerations, subject to Cabinet approval.

Sectoral Approvals: The CBB, NHRA and TRA

For transactions in regulated industries, power is allocated to specialised sectoral bodies that operate independently of the general competition regime. The CBB is the most powerful of these, overseeing all “changes of control” in the financial sector where an acquirer reaches a “qualified participation” (typically 10% or more). Similarly, the NHRA must approve any change in ownership for hospitals or clinics, focusing on clinical standards and facility licensing. The TRA exercises similar powers over ICT infrastructure, often conducting its own competition test specific to the telecom market. These regulators have the authority to revoke licences or impose heavy fines (up to BHD1 million in the case of the CBB) if a deal proceeds without their prior written no objection.

No response has been provided in this jurisdiction.

Extraterritoriality in Merger Control

The primary instrument for merger control, Law No 31 of 2018 (the “Competition Law”), explicitly adopts the effects doctrine. According to Article 2, the provisions of the law apply to any conduct or arrangement that is intended to, or results in, the prevention, restriction or distortion of competition within Bahrain. This applies even if the parties involved are not established in the Kingdom or if the economic activities are carried out abroad.

In practice, if two international entities with no physical presence in Bahrain merge, but their combined sales into the Bahraini market exceed the market share thresholds (40% for a single dominant position or 60% for a collective one), the CPA asserts the right to review the deal. Over the past year, the CPA has become more diligent in monitoring global “mega-mergers” in sectors like pharmaceuticals and digital services, where offshore consolidation directly impacts the choice and pricing available to Bahraini consumers.

FDI and National Security Nexus

The FDI and national security regime, managed through the Sijilat system and overseen by the MOI, typically requires a local nexus, such as a Bahraini subsidiary or a commercial licence, to trigger a formal filing. However, the scope of what constitutes a “local interest” has expanded. Under Decree-Law No 38 of 2025, the focus has shifted towards the ultimate beneficial owner (UBO) and shadow managers.

If a foreign-to-foreign transaction results in a change of control at the top of a global parent company, and that parent company owns a strategic asset in Bahrain (such as a telecommunications stake or a port operation), the change must be reflected in the local commercial registry. This indirect change of control triggers a mandatory security re-screening of the new global owners. Failure to notify the MOIC of such an offshore shift can lead to the suspension of the local entity’s commercial licence or substantial administrative fines.

Sector-Specific Impacts

The effective extraterritorial application is most aggressive in the financial services and telecommunications sectors. The CBB requires prior approval for any acquisition of a qualified participation (10% or more) in a licensed financial institution. This applies regardless of whether the transaction happens at the level of the local bank or at the level of its foreign parent. Similarly, the TRA maintains a veto over changes in control of international groups that hold Bahraini licenses, viewing offshore transactions as potentially impacting the Kingdom’s critical digital infrastructure and national security.

Under the Competition Law, any transaction that results in a change of control (whether direct or indirect) falls within the scope of the regulator, provided it meets the market share or turnover thresholds. The regime captures a wide array of transaction types, which are broadly categorised as follows.

Share and Asset Deals

Share deals refers to any transfer of stocks or equity that allows the acquirer to exercise decisive influence over the target’s strategic decisions (such as appointing the board or approving the budget).

Regarding asset deals, the regime specifically includes the transfer of assets, rights or obligations. This means that buying a competitor’s business division, customer list or even intellectual property rights can constitute an economic concentration if those assets enable the buyer to exercise market control.

Full-Function Joint Ventures

The creation of a joint venture is subject to merger control if it performs all the functions of an autonomous economic entity on a lasting basis. For a joint venture to be notifiable, it must have its own management and sufficient resources (staff, assets and finance) to operate independently in the market. If a joint venture is merely a vehicle for a specific project or lacks its own independent presence, it may still be scrutinised under the rules prohibiting anti-competitive arrangements rather than merger control.

Minority Acquisitions

Acquiring a minority stake (less than 50%) is not exempt if it results in de facto control. If a minority shareholder is granted veto rights over strategic matters – such as the business plan, senior management appointments or major investments – the transaction is viewed as a change of control. In the last year, the CBB has been particularly vigilant, requiring prior approval for any qualified participation of 10% or more in financial institutions, regardless of whether it carries board control.

As mentioned in the foregoing, the jurisdictional thresholds for merger control are primarily centred on market share and the concept of economic concentration rather than rigid transaction values or global turnover figures. Under the Competition Law, a mandatory notification is triggered if a transaction results in a change of control that creates or enhances a dominant position within the Kingdom.

A dominant position is statutorily defined as a market share of 40% or more for a single undertaking, or a collective share of 60% or more for two or more undertakings (such as in a joint venture or a group acquisition). Additionally, the CPA exercises broad discretion to review any transaction that might “significantly reduce competition”. In practice, this means any deal where the combined entity would be the largest player in its niche is now being treated as de facto notifiable by sophisticated practitioners to avoid the risk of post-closing unwinding or fines of up to 10% of annual sales.

It is important to distinguish the general competition regime from the stricter CBB requirements for the financial sector. For banks, insurance firms and investment houses, the threshold is significantly lower: any acquisition of a “qualified participation” – defined as 10% or more of the shares or voting rights – requires prior written approval.

As mentioned in the foregoing, merger notification is strictly mandatory and suspensory for any transaction that qualifies as an economic concentration and meets the statutory market share thresholds.

Even if a transaction does not technically hit the thresholds, filing (or at least seeking a formal no objection letter) may be judicious in the following circumstances.

• Ambiguous market definitions: In niche or emerging sectors – such as specialised healthcare or fintech – where market data is scarce, the CPA may define the market more narrowly than the parties do. If there is any risk that the CPA’s calculation could push the parties over the 40% mark, a voluntary notification provides deal certainty and prevents a post-closing investigation.
• Vertical integrations in sensitive sectors: If a deal involves an entity acquiring its own supplier or distributor (eg, a major food importer acquiring a retail chain), the CPA may investigate the deal ex officio (on its own initiative) even if market shares are low. This is particularly true in sectors linked to the gold licence initiative or national food and health security.
• Transactions involving shadow managers: Under the 2025 corporate law amendments, if an acquisition gives a foreign parent de facto control over a Bahraini entity without a majority of shares, the transparency requirements are now much higher. Filing ensures that the shadow manager status is disclosed and cleared upfront, mitigating future litigation risks.

Technically, there is no fixed post-signing deadline (eg, within 30 days of signing). Instead, the timing is dictated by the intended closing date. Once one files, a “standstill” or “suspension” period begins. During this time, the entities must remain entirely separate and independent in the market.

The 90-Day Clock

The CPA has 90 calendar days from the date of a complete application to issue a decision, where the following applies:

• silent approval – if the CPA does not issue a decision within 90 days, the transaction is legally deemed approved; and
• clock stops – if the CPA requests additional information, the 90-day clock is paused until the parties provide the required data.

“Gun-jumping” occurs when parties implement a notifiable deal before receiving clearance. The CPA monitors for two types of violations.

• Procedural: Closing the deal, transferring shares or paying the purchase price before the 90-day clock ends; and
• Substantive       : (i) integrating operations – merging sales teams or IT systems, (ii) information exchange – sharing sensitive data (eg, future pricing, specific customer lists) not strictly necessary for due diligence, and (iii) exercise of control – the buyer vetoing ordinary-course-of-business decisions or appointing managers to the target’s board.

While Bahrain does not currently have a codified short-form or simplified filing procedure similar to those in the EU or Saudi Arabia, for example, the CPA facilitates an expedited review through its no objection process for transactions with no horizontal or vertical overlaps. Intra-group restructurings and incremental acquisitions that do not result in a change of control (eg, increasing a majority stake from 60% to 100%) are fundamentally exempt from notification requirements, as they do not meet the legal definition of an “economic concentration”.

Additionally, Resolution No 106 of 2018 provides specific exemptions for small to medium-sized enterprises (SMEs) to encourage market participation, provided the deal does not create a dominant market position. In practice, for straightforward global deals with minimal local impact, practitioners strongly advise utilising pre-notification consultations with the MOIC to secure a formal confirmation of non-applicability, which effectively serves as a fast-track clearance.

The merger review procedure is structured as a single-block administrative process rather than the formal Phase I/Phase II tiered system found in the EU or Kingdom of Saudi Arabia (KSA). Upon the submission of a notification to the CPA – currently administered by the MOIC – the Authority conducts an initial “completeness check” to ensure all financial and market data meet the requirements of Resolution No 72 of 2019. While there is no statutory split, the review practically functions in two stages: an initial screening of simple no-overlap deals and a deeper, substantive investigation for transactions reaching the 40% (single entity) or 60% (group) market share threshold.

The main statutory timeline is a 90-calendar-day period from the date the application is officially declared complete. A critical feature of the Bahraini regime is the “silent approval” mechanism under Article 11 of the Competition Law: if the Authority fails to issue a written decision within this 90-day window, the transaction is legally deemed approved, and the parties may proceed to close. However, in practice, the timeline often extends beyond 90 days due to “stop-the-clock” requests.

Because the 90-day clock only starts once the filing is complete, a poorly prepared initial submission can lead to significant delays before the statutory review even begins.

The merger notification process is documentation-intensive, requiring a mix of corporate, financial and market-specific data. Parties must submit a formal notification form accompanied by certified corporate records (such as articles of association and updated commercial registrations), audited financial statements for the last three financial years and copies of the transaction documents – eg, the share purchase agreement (SPA) or a signed memorandum of understanding (MOU).

Substantively, the filing must include a detailed market analysis that defines the relevant product and geographic markets, identifies key competitors and calculates the market shares that trigger the 40% (single-entity) or 60% (group) thresholds.

Pre-notification contact with the CPA is not a statutory requirement but is considered critically important in the 2026 regulatory environment to ensure a complete filing. These informal consultations typically focus on clarifying whether a transaction truly constitutes an economic concentration, confirming the CPA’s view on market definitions and identifying potential public interest concerns early on. Discussing these elements upfront helps avoid the risk of the Authority stopping the clock on the 90-day review period due to missing data. Furthermore, for complex vertical integrations or deals in sensitive sectors like food security, pre-filing discussions allow parties to propose voluntary commitments or remedies, often leading to a smoother, more predictable clearance once the formal clock begins.

Please refer to the responses in the foregoing.

The CPA primarily examines theories of harm centred on unilateral effects, assessing whether the merged entity can independently raise prices or reduce quality by removing a direct competitor (particularly when the 40% dominance threshold is met).

Given Bahrain’s strategic focus on the National Digital Economy Strategy 2030 and food security, the Authority has increasingly scrutinised vertical foreclosure – where a merger might allow a company to restrict its rivals’ access to essential upstream inputs (like food imports) or downstream distribution channels (like retail networks).

Parties can rely on efficiencies and, increasingly, the failing firm defence, though the CPA maintains a high evidentiary bar for both. For efficiency claims, parties must demonstrate that the merger will lead to lower prices, improved product quality or enhanced technical progress (innovation) that is “merger-specific” and directly benefits consumers.

Regarding the failing firm argument, the CPA’s 2026 practice aligns with international standards: the parties must provide rigorous evidence that the target firm would inevitably exit the market without the merger, that there are no less anti-competitive alternative purchasers and that the assets would exit the market entirely if the deal were blocked. In practice, the Authority treats these as “rebuttals” rather than automatic exemptions, requiring detailed audited financial distress reports and counterfactual economic modelling during the pre-notification phase to ensure that clearing the deal is less harmful to the Bahraini market than allowing the target to collapse.

In Bahrain, the CPA has broad discretion to impose structural, behavioural or hybrid remedies as a condition for clearing a transaction that would otherwise be rejected for its anti-competitive impact. Structural remedies, such as the divestiture of specific business units or local assets to an independent third party, are generally favoured for horizontal mergers because they provide a permanent “clean break” solution to market concentration. Behavioural remedies, which might include price caps, non-discrimination obligations or “firewall” commitments to protect sensitive data, are more commonly applied in vertical integrations to prevent foreclosure. In complex deals, the CPA may utilise a hybrid approach, requiring a company to sell off a local distribution branch while simultaneously committing to long-term supply agreements for its competitors to ensure market stability during the transition.

The negotiation and monitoring of these remedies are handled through a collaborative but formal administrative process within the MOIC. Parties are encouraged to propose “voluntary commitments” during the pre-notification phase or early in the 90-day review period to address identified concerns proactively.

Third parties such as competitors, customers and suppliers serve as critical sources of market intelligence, primarily through formal “market testing” and the right to lodge complaints. The CPA is empowered to solicit information from any person or entity to evaluate the competitive impact of a deal; in practice, this often involves the CPA issuing written questionnaires to key customers and rivals to verify market shares, barriers to entry and the potential for price increases.

While there is no mandatory public hearing, third parties with a “legitimate interest” can proactively submit complaints or observations that may trigger a deeper investigation or the adoption of specific remedies. Notably, the 2022 decision to unwind a completed merger following a competitor’s complaint underscores the significant weight the Authority gives to third-party grievances.

The handling of confidential information is a strictly guarded administrative process, while it can be said that overall transparency remains relatively limited compared to more established Western regimes.

Under the Competition Law, the CPA is legally bound to protect business secrets and proprietary data gathered during an investigation, and officials can face criminal penalties for the unauthorised disclosure of sensitive information. In practice, parties must submit non-confidential versions of their filings and market studies, which the CPA may use for market testing or limited public consultation.

Transparency regarding the publication of decisions is still evolving; while the law permits the Authority to publish its final rulings, in practice, only summary results or major landmark decisions are typically made public, often with sensitive commercial details redacted.

Furthermore, unlike the EU system, there is no automatic right for third parties to access the file, and the CPA maintains high discretion over which documents are shared with intervenors, prioritising the protection of the notifying parties’ competitive standing during the 90-day review period.

Any party affected by a merger control decision – including prohibitions, conditional clearances or administrative fines – has a two-tiered avenue for challenge: an initial administrative grievance followed by judicial appeal.

Under the Competition Law, parties may first file a grievance directly with the MOIC within 15 days of the decision. If the grievance is rejected (or met with silence for 30 days), an appeal can be lodged before the High Court (Administrative Division) within 60 days.

There is no standalone FDI Act, but national security screening is a mandatory, integrated part of the commercial licensing process administered through the Sijilat system, where the shareholders of a Bahrain entity are individuals in their personal capacities.

Pursuant to the Commercial Companies Law and Ministerial Decision No 40 of 2021, all entities are subject to Bahrain’s foreign ownership framework and must comply with the applicable regulatory requirements. While the government of Bahrain has significantly liberalised the investment regime and permits up to 100% foreign ownership across the majority of commercial activities, certain regulated sectors continue to be subject to ownership restrictions. By way of example, activities such as manpower supply require 100% Bahraini ownership, while specific trading and commercial activities require the participation of at least one share owned by a Bahraini or Gulf Cooperation Council (GCC) national shareholder. In such cases, the Bahraini or GCC shareholder must be a natural person or a legal entity that is owned, directly and ultimately at every level, by GCC nationals.

In addition, where individual shareholders are involved, the MOI mandates the issuance of a security clearance as a prerequisite to approval. Accordingly, the MOIC will not approve a new commercial licence or any change in ownership structure unless the required MOI security clearance has been obtained. This requirement applies irrespective of the size of the shareholding and forms an integral part of the regulatory approval process.

The primary policy objective is to safeguard public order and national security, particularly in strategic sectors like telecommunications, energy and the digital economy, while also ensuring transparency regarding the UBO to prevent money laundering.

This screening serves as a “gatekeeper” function that complements merger control, focusing not on market competition but on the suitability of the investor and the protection of the Kingdom’s critical infrastructure and sovereign interests.

The screening regime covers transactions in critical national infrastructure (CNI) sectors, including oil and gas, electricity, water, financial services and transport. Significant scrutiny is applied to acquisitions in the ICT and defence technology sectors (such as active protection and radar systems), where the state maintains a keen interest in protecting national digital infrastructure and sovereign military capabilities. While 100% foreign ownership is permitted in over 95% of commercial activities, “strategic” sectors – namely oil exploration, media and defence – often require special ministerial approval or a minimum level of Bahraini or GCC direct ownership.

Additionally, wherever a company is to be owned by a natural rather than legal person, that person will undergo a level of security screening. The screening also extends to real estate transactions involving foreign nationals, which are restricted to designated zones and subject to security checks by the MOI to prevent sensitive land acquisition. While GCC and US investors (via the US-Bahrain Free Trade Agreement) receive preferential “national treatment”, the 2026 practice requires all foreign investors to disclose UBOs with more than 10% ownership, ensuring that capital from any country of origin aligns with Bahrain’s anti-money laundering and public order standards.

There is no minimum de minimis threshold for FDI/national security screening; instead, the trigger is any event that modifies the ownership structure or commercial licence of a Bahraini entity involving a foreign (non-Bahraini) person or an entity owned by non-Bahraini nationals.

Under the Commercial Companies Law and the Sijilat electronic system protocols, a security review may be automatically triggered by any acquisition of shares (even a single share), the appointment of new directors or the amendment of a commercial licence by a foreign investor. While the 10% threshold is a key regulatory marker for mandatory UBO disclosure, the MOI’s security clearance is required for the underlying corporate change to be legally effective, regardless of the percentage.

Please refer to the responses in the foregoing.

Typical timelines for straightforward clearances range from a few days to two weeks, but complex cases involving critical infrastructure or UBOs from non-treaty jurisdictions may take longer. This process runs in parallel with merger control, but they are legally distinct.

Please refer to the responses in the foregoing.

The MOI and the CPA utilise a range of mitigation measures to balance foreign investment with national interests. Behavioural conditions are the most frequent, often requiring “information firewalls” to prevent foreign parent companies from accessing sensitive local data or local data storage mandates to ensure compliance with the Personal Data Protection Law (PDPL). In strategic sectors like telecommunications or energy, governance limitations may be imposed, such as requiring a certain percentage of the board to be Bahraini nationals or appointing a government-approved security officer to oversee sensitive operations.

While anecdotally the total number of blocked transactions is historically low due to Bahrain’s pro-investment stance, the 2025–26 trend shows that authorities are more willing to stop the clock or demand intrusive remedies rather than outright prohibition. Outright blocks typically only occur when the UBO fails security vetting or if the deal poses an unmitigable threat to the Kingdom’s critical infrastructure or security supply chains.

Failure to notify a mandatory transaction or breaching agreed-upon conditions in Bahrain carries the risk of legal and financial risks under Law No 31 of 2018. The CPA can impose administrative fines of up to 10% of the total annual sales of the products involved in the violation for a period of up to three years. Beyond fines, any transaction executed without the required clearance is considered null and void under Bahraini law, potentially leading to the judicial unwinding of the deal and stripping the parties of their legal rights over the acquired assets. Criminal liability is also a significant factor; individuals who provide false information or withhold data during a review can face imprisonment for up to one year and personal fines of up to BHD50,000. Crucially, the CPA has the power to review transactions on its own initiative (ex officio) if it suspects a completed deal has created an unlawful economic concentration or significantly reduced competition, even if the parties did not believe they hit the 40% threshold.

The Sijilat 3.0 system provides clear, real-time tracking of a filing’s status – categorised as “security clearance requested”, “approved” or “defected”. The underlying reasons for a rejection are typically not disclosed in detail to the parties.

To challenge a negative decision, parties must first file an administrative grievance with the MOI or the MOIC within 30 days of the notification. If the grievance is rejected, the decision may be appealed to the High Court (administrative division).

As mentioned in the foregoing, highly regulated sectors require mandatory prior approval for any change of control or significant ownership transfer, often independent of standard merger control thresholds.

The CBB oversees the banking, insurance and asset management sectors, requiring prior written consent for any person becoming a “controller” (typically a 10% shareholding or voting power trigger). In the telecommunications sector, the TRA mandates notification for any transaction that results in a change of control of a licensee, as evidenced by recent 2025–26 enforcement actions against unauthorised share transfers. Healthcare facilities must obtain approval from the NHRA for any change in ownership or legal status to ensure the continuity of clinical standards.

Similarly, the Ministry of Information tightly regulates the media sector, where foreign ownership is restricted and any transfer of shares requires ministerial clearance. Other critical sectors, such as aviation (via Civil Aviation Affairs) and energy/utilities, may also require specific departmental no-objection letters to ensure that the new owners meet technical competency and national strategic requirements.

For financial/insurance services, the CBB requires a formal “change of control” application for any investor seeking to become a controller (usually a 10% shareholding trigger), with a statutory requirement to issue a decision within 60 calendar days of the application being deemed complete; however, the end-to-end process, including pre-consultation and “in-principle” approval, generally takes 3–6 months.

In the telecommunications sector, the TRA follows a similar timeline, often involving a public consultation phase that can last 30–60 days if the transaction significantly impacts market structure.

For healthcare, the NHRA focuses on the technical and clinical suitability of the new owners, with timelines for licence transfer typically ranging from four to eight weeks, provided all facility standards remain met. Overall, the process across these regulators involves submitting a detailed business plan, vetting “approved persons” (directors and senior management) and proving financial solvency, with the final approval being a mandatory prerequisite for the MOIC to finalise the company’s commercial registration.

The CBB utilises a fit and proper test for all controllers (ownership of 10% or more), assessing the integrity, solvency and professional competence of the acquirer to ensure the financial stability of the Kingdom’s banking and insurance systems. In the telecommunications sector, the TRA evaluates whether a change of control could undermine the availability of services or compromise national security and public interest, often requiring commitments to maintain investment in local infrastructure. For healthcare, the NHRA focuses on the technical capability of the new owner to uphold clinical safety and patient care standards.

While Bahrain has liberalised many sectors to allow 100% foreign ownership (eg, manufacturing, ICT and healthcare), strategic industries like oil and gas, media and defence remain subject to strict ownership caps or require a minimum Bahraini partnership to protect media plurality and sovereign resources. These assessments often include a review of the investor’s global reputation and the UBO to mitigate risks of money laundering or foreign interference.

In practice, co-ordination of M&A approvals in Bahrain is managed through a “parallel-track” system where the Sijilat 3.0 electronic portal acts as the central hub for procedural synchronisation. While the CPA conducts the substantive economic review and the MOI handles national security screening, sector-specific regulators (like the CBB or TRA) operate under their own autonomous mandates; however, no transaction can be legally finalised in the Commercial Register maintained by the MOIC until all “electronic no objections” are toggled to “approved” within Sijilat. This means that while the filings are distinct, they are functionally interdependent: a CPA clearance is often a condition precedent for a final sector-specific licence amendment, and a “security defect” from the MOI will automatically freeze the entire application regardless of antitrust or prudential approvals.

Please refer to the responses in the foregoing.

Consistent with the approach taken in most sophisticated jurisdictions, conditions precedent (CPs) are typically bifurcated into mandatory regulatory clearances and deal-specific commercial protections. Regulatory CPs almost always include, for example, the receipt of no-objection certificates from the CPA, the MOI for security screening, and sector-specific regulators like the CBB or the TRA. Litigation-related outcomes are frequently included as CPs to protect the buyer from “successor liability”; these often mandate the final settlement or dismissal of specific material lawsuits disclosed during due diligence, or the absence of any new injunctions that would restrain the transaction. Long-stop dates (the “outside date” by which CPs must be satisfied) are negotiated by balancing the statutory review periods – such as the CPA’s 90-day window” – with a buffer for administrative delays in the Sijilat system.

The level of effort required to obtain regulatory approvals is a highly negotiated contractual point, with the standard typically scaling based on the perceived “deal risk”. For most transactions, “reasonable best efforts” or “commercially reasonable efforts” is generally the market norm, requiring the parties to take diligent steps to fulfil filing requirements without being forced to accept remedies that would fundamentally alter the deal’s commercial value.

However, in “high-stakes” deals or those involving critical infrastructure, sellers often demand a “Hell or High Water” (HOHW) standard. Under a HOHW clause in the Bahraini context, the buyer commits to taking “any and all actions necessary” to secure clearance from the CPA or the MOI, which may include litigating against a prohibition or agreeing to divest key local assets.

Regulatory and litigation risks are primarily allocated through a combination of financial penalties, structural commitments and price-bridging mechanisms. To address the risk of a deal being blocked by the CPA or failing MOI security clearance, parties may negotiate reverse break fees (RBFs), which in the 2026 market typically range from 3% to 6% of the transaction value, serving as the buyer’s “option fee” to walk away if approvals are denied.

Ticking fees are also increasingly used to compensate sellers for the time value of money and business erosion during protracted regulatory reviews, often adding a daily or monthly premium to the purchase price once the long-stop date is exceeded. For litigation risks – such as successor liability for pending labour or environmental disputes – buyers often demand specific indemnities or escrow hold-backs rather than simple price adjustments, ensuring a dedicated fund is available to cover potential court awards. Furthermore, where a deal poses a dominant position risk (exceeding the 40% threshold), the risk is shifted to the buyer through divestiture obligations, which define the specific “perimeter” of assets the buyer must be willing to sell to satisfy the CPA.

Interim operating covenants are structured to preserve the target’s value during the suspensory period while strictly prohibiting the premature transfer of decisive influence or beneficial ownership, which constitutes gun-jumping under Law No 31 of 2018. To balance these needs, agreements typically employ “ordinary course” covenants that allow the seller to manage day-to-day operations independently, while granting the buyer narrow consent rights only for extraordinary actions such as major capital expenditures, disposal of material assets or changes to senior management.

To facilitate legitimate integration planning without violating antitrust standstill obligations, parties utilise “clean team” arrangements, where competitively sensitive information (CSI) – such as future pricing, customer-specific margins or detailed R&D pipelines – is shared only with non-operational personnel or external advisors who are not involved in the buyer’s daily commercial decisions.

Co-ordinating multi-jurisdictional reviews in 2026 creates “procedural whiplash”, where a single deal faces diverging timelines – such as the CBB’s 60-day clock running alongside the EU’s Phase II or the US Hart-Scott-Rodino (HSR) waiting periods. The primary issue is the risk of remedy friction, where one regulator (eg, the Bahraini CPA) demands a behavioural fix like “local data residency”, while another (eg, the UK CMA) mandates a structural divestiture of that same global business line.

To address these inconsistencies, transaction documentation now frequently utilise “regulatory hierarchy” clauses, which pre-agree which jurisdiction’s demands take precedence if remedies become mutually exclusive, and “remedy scoping” language that defines a “material adverse effect on the deal’s synergies should certain assets be carved out.

Furthermore, as with most major/sophisticated jurisdictions, modern SPAs drafted for Bahrain include co-operation covenants that mandate a unified global strategy led by the buyer, ensuring that filings in Bahrain’s Sijilat system are synchronised with international stop-the-clock events to prevent a “closing gap”, where the deal is legally completed in one territory but blocked in another.

In Bahrain, formal litigation specifically arising from M&A deals remains relatively rare compared to other major financial hubs, as parties predominantly favour private settlement or international arbitration via the Bahrain Chamber for Dispute Resolution (BCDR) to maintain confidentiality and speed.

The most common triggers for these disputes include post-closing price adjustments (often centred on working capital calculations or “locked-box” leakages) and breaches of representations and warranties, particularly regarding financial statements, tax liabilities or undisclosed “off-balance sheet” encumbrances. A rise in shareholder challenges involving minority squeeze-out rights in public takeovers and disputes over earn-out targets is also being seen, where sellers allege that buyers have intentionally hindered the target’s performance to avoid deferred payments.

In Bahrain, transactions are occasionally challenged based on process defects or disclosure failures, but such claims rarely result in the unwinding of a deal due to the Kingdom’s strong “certainty of contract” principles. Fiduciary duty claims and minority shareholder suits are the primary vehicles for these challenges, often brought under the Commercial Companies Law, which allows shareholders to sue directors personally for gross negligence or self-dealing in a merger context. While process defects – such as improper notice of a general assembly or failure to follow the CBB Rulebook – can lead to a court-ordered stay or suspension of a deal, the most common outcome is a claim for monetary damages rather than rescission.

Conflicts of interest, particularly in related party transactions, are a high-risk area; if a director fails to disclose a personal interest in an acquisition, the transaction can be declared voidable at the request of any interested party.

In Bahrain, courts and tribunals generally uphold the principle of contractual freedom under the Civil Code, but they approach material adverse change (MAC) and termination rights with a high degree of strictness, requiring clear, objective evidence of a “material” shift rather than a buyer’s change of heart.

For disputes over closing conditions, Bahraini law treats CPs as binding triggers: if a regulatory approval or a specific commercial condition is not satisfied, the contract is typically deemed not to have come into effect, provided the party invoking the failure acted in good faith. However, because Bahraini courts often favour the stability of contracts, they may scrutinise termination attempts to ensure they are not an “unlawful exercise of right” intended solely to harm the other party, especially where conditions are vague or the alleged adverse effect is considered a foreseeable business risk.

Disputes concerning obligations to seek regulatory approvals (such as CBB or MOIC clearances) or to offer remedies are primarily resolved through court if it has jurisdiction, including the BCDR where the value is over BHD500,000.

Parties typically include “best efforts” or “reasonable endeavours” clauses in their contracts, and failure to meet these standards is treated as a breach of contract, allowing the aggrieved party to seek specific performance or damages.

While parties may agree to litigate adverse regulatory decisions by appealing to the relevant authority’s internal appeals committee or the High Court, most commercial agreements favour arbitration under UNCITRAL rules to maintain confidentiality and technical expertise in resolving “broken-deal” disputes.

Forums normally include courts, unless there is an arbitration agreement. Available interim remedies include prejudgment attachments, freezing orders and travel bans issued by the Court of Urgent Matters or an arbitral tribunal. Final remedies typically focus on damages (compensating for lost profit and wasted expenditure), but Bahraini law also recognises specific performance – compelling a party to complete a share transfer or fulfil contractual obligations – and injunctions (both prohibitory and mandatory), though these are discretionary and usually granted only when monetary compensation is deemed inadequate.

In Bahrain, judicial challenges to merger control or national security decisions are highly infrequent, reflecting both the Kingdom’s pro-business orientation and the high degree of deference courts grant to the state on matters of sovereign discretion.

Prohibitions are exceptionally rare because the CPA and the MOI prefer to negotiate conditional clearances (remedies) behind closed doors rather than issue a flat rejection. Consequently, the most frequently contested decisions are conditional approvals where an investor believes the imposed mitigation measures – such as local data storage or divestiture of sensitive assets – are disproportionate or commercially unviable. These cases are usually first channelled through a mandatory administrative grievance process before reaching the High Administrative Court, where the legal standard for reversal is notoriously high, requiring proof that the regulator acted with “manifest error” or “abuse of power”.

Standing to challenge regulatory decisions is primarily granted to the notifying parties and any person or entity who can demonstrate a “direct and personal interest” in the decision, a standard strictly applied by the Administrative Court. Under the Competition Law, third parties such as competitors have a recognised pathway to intervene, as they can file complaints with the Consumer Protection Directorate (acting as the interim competition authority) regarding economic concentrations or anti-competitive arrangements that adversely affect their market position. Consumer groups may also have standing if they can prove that a regulatory decision (such as a merger approval) directly harms consumer welfare or violates the Consumer Protection Law.

However, for a challenge to be admissible in court, the petitioner must typically exhaust administrative grievance procedures – such as filing an appeal with the relevant Ministry or the CBB – within the statutory 30-day window before seeking judicial review to annul the decision.

In Bahrain, the standard of review applied by the courts to regulatory decisions is primarily a legality review centred on administrative law principles rather than a full de novo review of merits. Bahraini courts, particularly the Administrative Court, assess whether a regulator acted within its statutory jurisdiction, followed due process and avoided abuse of power or manifest error of assessment.

Parties can generally obtain interim relief to stay the execution of administrative prohibitions, remedies or fines while an appeal is pending, typically by filing a “stay of execution” request before the Administrative Division of the High Court or the relevant appellate chamber.

Judicial review and follow-on damages actions interact through a bifurcated process where the Administrative Division of the High Court serves as the primary gatekeeper for reviewing regulatory conduct. In the context of M&A, if a regulator issues a decision that stalls or collapses a deal, the aggrieved party must typically first challenge the lawfulness of that decision through judicial review to seek an annulment. While Bahraini law – primarily the Civil and Commercial Procedure Code and the Civil Code – allows for civil claims and “follow-on” damages, these are often contingent upon establishing a “fault” or “wrongful act” by the regulator.

In Bahrain, follow-on or standalone damages actions for conduct related to mergers (such as gun-jumping or the exchange of CSI) are legally possible but historically rare in practice. Under the Competition Law, any entity harmed by an “unapproved economic concentration” or “anti-competitive arrangement” can seek civil compensation by invoking the general liability provisions of the Bahrain Civil Code.

While the CPA focuses on administrative fines (up to 10% of sales) and procedural sanctions, a standalone civil suit would require the claimant to prove specific “harm, fault, and causation” – a high evidentiary bar for third parties or competitors.

Bahraini law does not currently recognise collective redress mechanisms such as opt-out class actions or formal group litigation. Under the Civil and Commercial Procedures Law, litigation is primarily an individualist process based on the concept of “personal and direct interest”. While procedural joinder (Articles 60 and 61) allows multiple claimants with a shared legal cause to consolidate their claims into a single case, each claimant must be specifically named and represented, and the court renders its judgment based on the individual merits of each joined party’s position. In the context of M&A-related competition or regulatory claims, there is no precedent for class-style suits; instead, enforcement is driven by the MOIC or the CBB acting in the public interest.

While consumer groups or competitors can file administrative complaints, any subsequent claim for damages following a regulatory breach must be pursued by affected parties through individual or joined civil actions rather than a collective class vehicle.

Limitation questions often concern when time starts to run – whether from the date of the infringement, the claimant’s knowledge or the final regulatory decision – and whether limitation is suspended while regulatory investigations or appeals are ongoing; causation requires claimants to show a sufficiently direct causal link between the regulatory breach or transaction misconduct (such as misrepresentation, information asymmetry or gun-jumping) and the specific loss suffered, which is frequently contested where multiple market or commercial factors intervene.

Quantification of damages is often the most complex aspect, involving counterfactual analysis of what would have happened absent the misconduct, the use of economic models and expert evidence to assess overpayment, loss of value or lost opportunity, and disputes over remoteness, mitigation, and whether losses are speculative or adequately proven.

For purely commercial disputes arising from M&A – such as breach of warranty or post-closing price adjustments – arbitration is the dominant standard due to private nature of the proceedings. However, for regulatory competition disputes (eg, challenges to a merger block by the MOIC), formal settlements are less common than in Western jurisdictions because the Competition Law is relatively young.

While parties often engage in informal consultations or pre-notification discussions with the regulator to offer voluntary remedies (like divestitures) to secure approval, formal mediation of antitrust decisions is rare. Instead, if an impasse is reached, parties typically pivot to the Administrative Court.

Bahrain’s regulatory landscape is undergoing a significant transformation driven by the implementation of the National Cyber Security Strategy (2025–28) and a new wave of fiscal and corporate reforms. Investors should anticipate more rigorous FDI screening for CNI as the National Cyber Security Centre (NCSC) formalises risk-based requirements for acquisitions in the energy, finance and telecommunications sectors.

As mentioned in the foregoing, on the corporate front, recent amendments to the Commercial Companies Law have introduced the concept of “shadow managers”, expanding personal liability for de facto directors and significantly affecting M&A litigation by broadening the scope of fiduciary duty claims. Additionally, the launch of the BICC, with its unique transnational appeal mechanism to the SICC, is expected to increase the frequency of high-stakes M&A disputes being resolved via judicial proceedings rather than private arbitration. Finally, the 2027 roll-out of a 10% corporate income tax for large local companies will likely trigger a surge in pre-closing restructuring and price-adjustment disputes as parties look to mitigate the impact of new tax liabilities on deal valuations.

Deal-makers in Bahrain should prioritise early and informal engagement with the CBB or the MOIC, as the “spirit of the law” and pre-notification consultations are often as critical as formal filings for ensuring a smooth timeline. Practically, counsel should account for a 30-business-day statutory review period for new applications – though sector-specific approvals can extend this. From a litigation and documentation perspective, it is vital to draft CPs with extreme specificity regarding the “satisfied” state to prevent “good faith” disputes in a jurisdiction that strictly upholds contractual stability.

Additionally, all share transfer instruments should be prepared for local notarisation, and long-stop dates should realistically buffer for potential administrative delays in government-linked registrations.

When structuring cross-border transactions with a nexus to Bahrain, international investors must prioritise multi-agency regulatory co-ordination, particularly between the MOIC, the CBB for financial assets and the TRA for digital infrastructure. While Bahrain permits 100% foreign ownership in most sectors, buyers should conduct deep-dive due diligence into UBO requirements and localised economic substance rules, as failure to comply can freeze commercial registrations.

From a geopolitical and sanctions perspective, while Bahrain is highly integrated with global markets via the US-Bahrain Free Trade Agreement, investors must rigorously screen for nexus to sanctioned entities in the wider region to prevent “de-risking” by correspondent banks, which remains a primary hurdle for capital repatriation. Furthermore, the introduction of a 15% DMTT (effective 2025) for large multinationals, and the potential for a broader CIT, means that historical tax-neutral assumptions must be replaced with robust, forward-looking fiscal modelling.