COMPANIES in Bahrain could be set up in a more dynamic fashion to continue competing with international rivals on a level playing field.
The 2001 Commercial Companies Law is once again under intense scrutiny by the Shura Council’s financial and economic affairs committee with plans to give it a fresher cutting edge.
The legislation has been amended five times over the past five years with Bahrain aiming to keep pace with new company concepts.
“The law has to be more flexible and adaptable in how companies should be formed,” said financial and economic affairs committee chairman Khalid Al Maskati. “We need changes to cope with new online companies for example. There is an agreement that mechanisms need to be made more dynamic.”
He said the review was still in its early stages and conversations were being held with the Industry, Commerce and Tourism Ministry to ensure a unified approach.
Once agreement has been reached with all interested parties the proposal will go through the proper legislative channel or may even need to be referred urgently by the government to His Majesty King Hamad.
Legislators in Parliament and the Shura Council last year approved a royal decree amending the law to allow the creation of new types of companies and give more flexibility to boards and managements.
Parliament financial and economic affairs committee chairman Mahmood Al Bahrani said carrying out amendments on a yearly basis elevates how business is being conducted in Bahrain.
“We clearly agree that the law can sometimes appear stale compared with how things have progressed, but the government is trying its best to cope with how companies have evolved,” he added.
Mr Al Bahrani
“Having an annual review is good as it shows that things are being updated to match the needs of a changing world. The law is solid, it has a strong foundation, and the issue is only with its mechanisms.”
Committee member and Bahrain Bloc president MP Ahmed Al Salloom said carrying out five amendments in the past five years reflects a versatile economy but caution is also a key. “The law is not confused; it is just like having a Ferrari engine on a normal car! Businesses have gone a long way from being a simple shop or outlet to being electronically savvy or multi-country-oriented and this is why rules have to be updated.
Mr Al Salloom
“Words on paper, however, may seem excellent but may be inapplicable in practice and that’s why any amendments that may come this year need to offer value without causing any cracks to the foundation, especially at a time of recovery from the pandemic.”
The current law states that any commercial company incorporated in Bahrain should take the form of a:
1 General partnership company
2 Limited partnership company
3 Association in participation
4 Joint stock company
5 Limited partnership by shares
6 Limited liability company
7 Single person company
8 Holding company
It adds that any commercial company that does not take one of the above forms ‘shall be null and void’ and the persons who have entered into contracts in its name shall be personally and jointly liable to third parties for the obligations resulting from them.
mohammed@gdn.com.bh
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