Bahrain's financial performance is set to receive a fresh boost to further spur investments and consolidate the kingdom’s status as a favourable destination for investors.
The government has referred the Secured Transactions Bill to the Parliament to enhance Bahrain’s performance in financial services, which is one of the ten key areas covered by the B-READY report.
This new report, issued by the World Bank Group, assesses the business and investment climate in various countries worldwide and supports private sector growth by enabling businesses to maximise the benefits of their assets. This allows them to obtain lower-cost financing by using these assets as collateral while continuing to operate and utilise them.
The bill also seeks to regulate economic transactions, encourage investment in the kingdom, and protect investors’ rights. This will help strengthen Bahrain’s position in global rankings as an attractive investment destination.
It establishes a unified secured transactions framework applicable to all types of movable assets, except those explicitly excluded by the bill. Additionally, the system aims to close any legal loopholes and prevent conflicts between different legal frameworks that may govern security rights.
The bill defines collateral as any tangible or intangible movable assets, whether present or future. However, it excludes certain assets from being used as collateral, including wages, salaries, labour-related compensations, public funds, endowments, and future rights related to inheritance and wills.
Furthermore, the bill specifies penalties for violations. Anyone who creates an enforceable security right against third parties fraudulently or in violation of the law, intentionally provides false information when registering a notice, damages or devalues collateral, or deprives the secured party of their rights will face imprisonment for up to two years and a fine ranging between BD1,000 and BD50,000, or one of these penalties.
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