Updates to Bahrain Commercial Companies Law: What it means for businesses

A major shift is underway in Bahrain’s corporate landscape. Recent reforms to the Commercial Companies Law are reshaping how businesses are structured and governed, raising accountability for directors and managers, introducing new digital tools, and phasing out outdated company forms. The result is a new balance of greater risk for decision-makers alongside greater flexibility and efficiency for companies.

Key developments include:

The policy introduces four key pillars:

• Expanded liability: Directors, managers, and de facto managers can now be held personally liable for damages caused by negligence, gross error, or violations of law or company bylaws.
• Virtual governance:
  – Board and shareholder meetings may now be held via electronic or telecommunication means, with safeguards to ensure authenticity and full participation
  – Companies may adopt e-voting systems in line with ministerial regulations.
• Single shareholder for CJSCs: Closed Joint Stock Companies may now be established by a single shareholder, who assumes the powers of the general assembly.
• Continuity of partnerships: Partnerships may expressly provide for continuation despite the withdrawal, death, or insolvency of a partner, subject to registration.
• Abolition of partnerships by participation: All such entities must restructure within three months.
• Enhanced oversight: Companies and their auditors must provide the Ministry of Commerce with requested records and financial information at any time.

Why it Matters for Business

These reforms create new risks for directors and managers but also open the door to faster decision-making and more flexible structuring. Companies should act quickly to:

• Reassess liability exposure for directors and managers, ensuring decision-making is carefully documented and dissent properly recorded.
• Update governance frameworks and shareholder agreements to reflect the new liability, meeting, and voting options.
• Implement compliant e-meeting and e-voting procedures.
• Restructure prohibited partnership forms before the deadline to avoid legal and regulatory risk.

How ASAR Can Help

Our Bahrain team is assisting clients with:

• Reviewing and amending articles of association and shareholder agreements.
• Advising boards and managers on liability mitigation strategies.
• Establishing compliant digital governance systems.
• Restructuring or converting partnerships by participation within the three-month grace period.

Our team at ASAR Bahrain is closely monitoring these legislative changes. For tailored guidance on these reforms, contact our Corporate Commercial Team at asarbh@asarlegal.com

Legal References: Decree-Law No. 38 of 2025 amending the Commercial Companies Law (Decree-Law No. 21 of 2001)