There is a move in Bahrain among sole enterprises or family companies to go public.
According to the law, among important duties to be undertaken by the founders of the new public company are to prepare a memorandum of understanding and the articles of association for the new company. Public investors depend on the information available in such documents and decide to join forces or not.
The resolution, to go public, shall give necessary directives.
Above documents shall include, inter alia, name of the new company, place of work, duration of the company, objects of the company, names of directors and personal information about them such as occupation, nationality, capital of the company and number of shares into which the capital is divided, value of each share and any other information related to such shares such as price and so on.
Also, among the information to be mentioned is the amount to be paid by directors regarding the company and an undertaking by all to finalise incorporation formalities within the permissible time.
The directors (founders), after obtaining the go-ahead to establish the new company, are required to call the public at large for subscription. The invitation along with the prospectus shall be published in the media.
The prospectus shall be exhaustive and informative, however, it normally includes the following: A statement to show the founders have paid their shares as declared; maximum number of shares to be subscribed by each person or potential investor; number of shares required by each person to qualify for board membership; dates, places and other conditions for subscription; shares to be owned by nationals and foreigners if any; the directors/founders of the company shall sign the prospectus and, legally speaking, they are jointly responsible regarding the accuracy and all contents of the prospectus.
Before publishing the prospectus, the directors shall forward to the official authorities, all documents to show that they have paid their subscribed shares. The prospectus informs the public about the names of banks identified to enable interested persons to subscribe and take shares. After closing the prospectus process, the equity shares of the company shall be allotted according to the law.
This explains, very briefly, the main legal steps required for establishment of public companies or when existing legal entities are planning to go public.
The author is a legal consultant. He can be reached at firstname.lastname@example.org