Part I — General Provisions Article (1)

The company is a contract by which two persons or more undertake to participate in a profit-making economic project, with each of them offering a share in the form of money or work to divide the yield of this project, whether profit or loss.


Notwithstanding the provisions of the foregoing paragraph, a company may consist of a single person in accordance with the provisions of this law.


Article (2)

a— A commercial company incorporated in the State of Bahrain shall take one of the following forms:


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


b— 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 therefrom.

Article (3)

The provisions applicable to commercial companies shall also apply to civil companies having a commercial form regardless of its purpose.


Article (4)

Any commercial company of whatever type incorporated or based in Bahrain shall be subject to the provisions of this law.


However, notwithstanding some or all of the provisions of this law, companies may be established, by virtue of a decree or law, between governments of other countries or between the government of Bahrain and another country or other countries.


Any company incorporated in Bahrain shall be domiciled therein, and shall be of Bahraini Nationality without necessarily being entitled to the rights exclusive to Bahrainis.


Article (5)

All commercial companies shall, in general, be subject to the provisions of this Part, without prejudice to the special provisions applicable to each commercial company included in this law.


Article (6)

Except for Associations in participation, the company's memorandum of association and any amendment thereto shall be drawn up in Arabic and legalized by the Notary Public, or else the Memorandum of Association and its amendments shall be null and void.


Companies may not plead before third parties for the nullity of the memorandum of association or the amendment thereto which has not been formalized in the way mentioned above.


Nullity shall not take effect among partners before a partner files a lawsuit to nullify the company's memorandum of association, and the persons who have entered into contract in its name shall be personally and jointly liable for all their acts.


In all cases, the provisions of the memorandum of association shall apply to the liquidation of the company adjudged null and void and to the settlement of partners' rights towards each other.


Article (7)

Except for Associations in Participation, the managers or board members shall publish the company's Memorandum of Association and subsequent amendments thereto according to the provisions of this law; otherwise, the Memorandum of Association shall not take effect towards third parties. If failure to make publication applies only to one particular or more of the Memorandum of Association, only such particulars shall not take effect towards third parties.


The company's managers or board members shall jointly be liable for any damages sustained by the company, partners or third parties as a result of non-registration.


Article (8)

Except for Associations of Participation and unless otherwise provided for in the law, all commercial companies acquire a corporate entity upon registration in the Commercial Registry.


Article (9)

The partner's share may be an amount of money (cash share) or an in-kind share. It may also be in the form of work in cases not specified in the provisions of this law. However, the partner's share shall not be in the form of his influence or financial standing. Cash and in-kind shares only form the capital of the company.


Article (10)

Unless otherwise agreed upon by way of an agreement or in custom, the partners' shares shall be of equal value and relate to property ownership rather than usufruct.


Article (11)

Each partner shall owe the company the value of his share. If he fails to pay this value on the date agreed upon, he shall be liable to pay compensation to the company for any damages that may result from the delay.

If the partners define the compensation value in advance, such compensation shall be subject to the court assessment.


Article (12)

If a partner's share is in the form of a title, usufruct or any other real right, the sale provisions shall apply in respect of registration procedures and insuring the share against destruction or falling due, or when there appears a defect or a shortage therein.


However, if the share is in the form of usufruct of funds, lease provisions shall apply thereto.


Article (13)

If the partner's share is in the form of a claim on a third party, his obligation towards the company shall be discharged only upon the settlement of this claim. Moreover, the partner shall be liable to pay compensation to the company for any damages that may result from the delay in the settlement of this claim.


Article (14)

If the partner's share is in the form of work, he shall undertake the services he pledged and submit an account of the return thereon as from the date at which the company started to exercise the services he pledged as his share. All earnings that result from this work shall belong to the company. However, the partner shall not give up to the company what he might have earned from a patent right unless otherwise agreed upon.


Article (15)

If the company's memorandum of association does not define each partner's dividend in profit and loss, such dividends shall be determined in proportion to the partners' respective shares in the capital.


If the memorandum of association specifies only each partner's dividend in the profit, the same dividend shall apply to the loss, and vice versa.


If a partner's share is in the form of work and the company's memorandum of association does not specify his dividend, he may request an evaluation of his work, and his dividend shall be determined on the basis of this evaluation unless otherwise provided in an established custom.


If a partner provides cash or an in-kind share, in addition to work, he shall receive a dividend for his work and another for the other share.


Article (16)

If it is agreed that a partner shall not have a dividend in the company's profits or shall be exempted from the loss, such an agreement shall be null and void.


However, it can be agreed that a partner whose share is in the form of work be exempted from sharing the loss provided that he receives no remuneration for this work.


Article (17)

A personal creditor of a partner shall not recover his rights out of the partner's share in the company's capital; yet, he may recover his rights out of the partner's dividend in the profits according to the

company's balance sheet. If the balance sheet has not yet been prepared, the creditor may garnish the dividend that may accrue to the partner in the profits.


If the company is wound up, the personal creditor may recover his rights from the share of his debtor in the company's assets upon dissolution, and he may, before dissolution, seek a garnishment over this share.


Article (18)

In all types of commercial companies, the claims against partners shall be time barred after five years from the date of the company's dissolution, or from the date at which a partner withdraws from the company in respect of the claims against this partner.


This period shall start on the date of the company's registration in the Commercial Registry in all cases in which registration is required, and from the date of registering the liquidation in the cases relating to the liquidation itself.


Article (19)

If fictitious profits are distributed among partners, the company's creditors may request each partner to refund what he has received even if the partner may have acted in good faith.


The partner shall not repay the real profits he has actually received even if the company may have made losses in subsequent years.


Article (20)

If any of the shareholders or partners or their representatives withdraws from the meeting of the general assembly after the quorum has been obtained, such withdrawal shall not affect the legality of the meeting or the decisions taken by the general assembly regardless of the number of withdrawing shares or stakes.


Article (21)

The Minister of Commerce and Industry may issue in an order a model for the memorandum of association of some or all types of companies or for their articles of association. The model shall comprise all the particulars and conditions required by law or by its Executive Regulation in this respect, and shall specify the conditions that the founding partners must comply with and those which they may not comply with. The partners may also add any other conditions that do not conflict with the provisions of law and its Executive Regulation.


Article (22)

The particulars that are required by law shall be published as ordered by the Minister of Commerce and Industry in the Official Gazette and in one of the local daily newspapers.


Article (23)

If the provisions of this law require a certain quorum to incorporate a company, and if one partner or more withdraws after its incorporation, the company may continue to exist among the remaining partners without prejudice to the obligations it has undertaken before the withdrawal of any partner.


Article (24)

The provisions of article (333) of the Civil and Commercial Procedures Code shall be observed in the calculation of the periods provided for in this law.


Part II — General Partnership Company Article (25)

A General Partnership company is a company established by two persons or more under a certain name, and in which the partners are jointly liable to the extent of all their property for the company's obligations.


Without prejudice to the provisions of laws regulating self-employment professions, general partnership companies may be formed — regardless of their type — among Bahraini or Non Bahraini partners in accordance with the rules and guidelines decreed by the Minister of Commerce and Industry.


Article (26)

The Memorandum of Association of a general partnership company shall comprise the following details:


i— The company's name and trade mark, if any. ii— The company's headquarters and branches. iii— The company's objectives.

iv— The partners' names, titles, nationalities and domiciles.


v— The names of the executive managers and persons authorized to sign for the company and their competence and power limits.

vi— The company's capital and the share of each partner therein.


vii— The manner in which profits and losses are distributed among partners.


viii— The company's term, if any


ix— The beginning and end of the company's financial year.


x— The manner in which the company shall be liquidated and its assets divided up.

Article (27)

The name of a general partnership company shall consist of the names of all partners or the name of one or more of them accompanied by (& Co.) or by a similar word giving the same meaning. The name of the company, wherever mentioned, shall be followed by (A Bahraini Partnership Company); and shall always conform to its current status.


Article (28)

Any non-partner whose name is included in the company's name with his knowledge and consent shall be jointly liable for its obligations towards any other person who has counted in good faith on this name.


Article (29)

The partners may draw up in a written and certified official document articles of association for the company, which shall include the detailed provisions they agree upon for managing the company. A copy thereof shall be attached with the Memorandum of Association of the company.


Article (30)

The company's Memorandum of Association and subsequent amendments thereto shall be notarized by entering it in the Commercial Registry in conformity with the law of this registry. A summary of the company's Memorandum of Association and subsequent amendments thereto shall be published in the Official Gazette at the company's expense.


Article (31)

The summary of the company's memorandum of association shall specifically include the following details:


i— The company's name, objective, headquarters and branches, if any.


ii— The partners' names, domiciles, professions and nationalities.


iii— The company's capital and sufficient definition of each partner's shares and its due date.


iv— The names of the managers and the persons authorized to sign for the company.


v— The date of the company's incorporation and its term.


vi— The beginning and the end of the company's financial year.

Article (32)

Each partner shall have the capacity of a merchant who undertakes trade under the company's name. The bankruptcy of the company shall be deemed bankruptcy of all partners.


Article (33)

The partners' shares shall not take the form of tradable instruments, and the partner shall not assign his share in the company to other persons without the consent of all partners or to the prejudice of the provisions of the company's memorandum of association. Procedures of publication and registration of such assignment shall be undertaken in accordance with the provisions of articles (7&30) of this law. Any agreement that permits unconditional assignment of shares shall be deemed null and void.


Article (34)

The company's employees or affiliates who share profits in lieu of their wages for all or part of their work shall not be considered partners.


Article (35)

The company's creditors shall have a claim on the company's assets, and shall have also a claim on the private assets of any partner who used to be a member of the company at the time of contracting.


All partners shall jointly be liable towards the company's creditors, and any agreement to the contrary shall not be valid towards third parties.


Article (36)

i— If a new partner joins the company, he shall be liable jointly with the other partners, to the extent of his property, for the company's preceding and subsequent obligations, and any agreement to the contrary shall have no effect towards third parties.

ii— If any partner withdraws from the company, he shall not be liable for the company's obligations subsequent to the publication of his withdrawal.


iii— If any partner assigns his share in the company, he shall remain liable for the company's obligations towards its creditors unless they approve this assignment.

Article (37)

A partner's property shall not be subject to execution due to the company's obligations without a court decision against the company and before soliciting the company for the settlement thereof. The court decision shall be evidence against the partner.


Article (38)

i— Any partner shall not, without the consent of the other partners, undertake any activity for himself or for other persons in competition with the company, or be a partner in another general partnership company or a partner or a sleeping partner in a limited partnership company or a limited liability company if such companies are exercising competing activities to those of the company.

ii— If any partner fails to honor his obligations under the foregoing paragraph, the company may claim compensation from him or consider the activities he conducted for himself as conducted for the company. He shall then surrender to the company all the profits resulting from these activities without netting them out with the profits he is entitled to from the company.

Article (39)

i— If any partner takes or retains an amount of money that belongs to the company, he shall refund it without prejudice to the right of compensation if required.

ii— If any partner provides the company with his own money or spends in good faith to its benefit, the company shall refund such money together with compensation equal to the benefit it has gained from such money.

Article (40)

Management of the company shall be undertaken by all partners unless the partners appoint, in the memorandum of association or in a separate contract, a manager or more from among the partners or non-partners to manage the company


Article (41)

The manager shall undertake the day-to-day management of the company as specified in the Memorandum and Articles of Association.


If there is more than one manager without specifying the competence of each of them, and in the absence of a provision confining the management to any of them, each manager may individually take managing actions, provided that the other managers shall have the right to object to these actions before they are completed. In such a case the actions taken shall be passed by the numerical majority of managers and, in the case of equal vote, shall be referred to the partners.


Article (42)

If there is more than one manager without a stipulation that they shall collectively undertake management, their decisions shall be taken unanimously unless the memorandum of association provides for a specific majority. This condition shall not be violated except in the case of urgency where the company may incur a heavy loss or lose a substantial profit if it fulfils it.


Article (43)

In the absence of a provision on the way the company shall be managed, each partner shall be considered authorized by the other partners to manage the company, and he shall take the charge of management without recourse to the other partners provided that they shall have the right to object to any action before it is completed. The majority of partners shall have the right to overrule the objection.


Article (44)

i— If the manager is a partner appointed in the company's memorandum of association, he shall not be dismissed except by a court decision upon application by the majority of partners and on the basis of acceptable justification. Any agreement to the contrary shall be null and void. The company shall be dissolved if the manager is dismissed unless otherwise provided for in the memorandum of association.


ii— If the manager is a partner appointed in a separate contract, or a non-partner appointed in the memorandum of association or in a separate contract, he may be dismissed by the majority of partners. Such dismissal shall not bring the company to dissolution.

iii— If the manager is paid for his job and has been dismissed at an unsuitable time or for unacceptable reasons, he may claim compensation for any damages he may have sustained.


image

image

iv— The dismissal and the appointment of a manager shall be registered in accordance with the provisions of articles (7) & (30) of this law.

Article (45)

i— If the manager is a partner appointed in the memorandum of association, he shall not resign his office for unacceptable reasons, otherwise, he shall be liable to pay compensation. The manager's resignation shall result in dissolving the company unless otherwise provided for in the memorandum of association.


ii— If the manager — whether he is a partner or not — is appointed in a separate contract, he may resign his office, provided that the time is opportune and that he brings his resignation to the notice of the other partners, otherwise he shall be liable to pay compensation. In this case the company shall not be dissolved.

Article (46)

The non-manager partner shall not interfere in the company's management. However, he may monitor the performance of the company at its headquarters and inspect its books and documents. He may also get a summary statement of the financial position of the company from its books and documents and provide the manager with his advice. Any agreement to the contrary shall be null and void.


Article (47)

The company shall be bound by all actions taken by the manager within his powers if he ascribes his actions to the company's commercial name even if he is working for his own interest so long as the third party he deals with is acting in good faith.


Article (48)

i— The decisions of a general partnership company shall be taken by unanimity of the partners unless the memorandum of association provides for the majority. In this case, majority means simple majority unless otherwise indicated in the memorandum of association.

ii— The decisions pertinent to the amendment of the company's memorandum of association shall not be valid if not taken by the unanimity of the partners.

Article (49)

i— Profits and losses and the dividend of each partner therein shall be determined at the end of the company's financial year as per the balance sheet and the profit & loss account.


ii— Each partner shall be deemed a creditor of the company with his dividend in profits upon determining it by approving the balance sheet.

iii— Any reduction in the company's capital resulting from losses shall be covered from the profits of subsequent years unless otherwise agreed upon. In any event, no partner shall be obliged to cover the reduction in his share in the capital without his consent.

Part VII — Limited Liability Company General Provisions

Article (261)

A Limited Liability Company is a company in which the number of partners does not exceed fifty partners, and each of them shall only be liable to the extent of his share in the capital. If the number of the partners falls below two, the company shall turn, by force of law, into a single person company unless the company completes the number within thirty days from the date of pooling the company's shares into the hands of one partner.


The company shall not be incorporated nor its capital be increased nor any borrowing be made through public subscription. It shall not issue negotiable shares or bonds, and the transfer of partners' shares in it shall be subject to their right of retrieval and to the special terms and conditions included in the company's memorandum of association as well as to the provisions of this law.


Article (262)

A Limited Liability Company shall not undertake insurance or banking activities or fund investment for the account of third parties in general.


Article (263)

A Limited Liability Company may have a special name, and such name may be derived from its purposes, and it may include the name of a partner or more. The name of the company shall be followed by the phrase (with Limited liability).


Such particulars shall be mentioned in all the company's contracts, invoices, advertisements, papers and publications, or else the company's managers shall be jointly liable to the extent of their private property towards third parties.


Article (264)

The company's capital must be adequate for realizing its objectives. It shall not be less than what is determined in the Executive Regulation of this law. In all cases the minimum capital must not be less than twenty thousands Bahraini Dinars.

Chapter One — Incorporation of the Limited Liability Company Article (265)

a— The memorandum of association of a Limited liability company shall include the following details:


1— The names, titles and nationalities of partners.


2— The company's headquarters.


3— The company's name and address, with the addition of the phrase (a limited liability Company).


4— The company's objectives.


5— The company's capital, and the cash and in-kind shares provided by each partner with a detailed description of the in-kind shares and their value.


6— The conditions of share assignment.


7— The term of the company, if any.


8— The names of those entrusted with the company's management from among the partners or from others, and the names of the members of the control board in the cases in which law stipulates the existence of such board.

9— Distribution methods of profits and losses.


b— The partners may include in the company's memorandum of Association special provisions regulating the right of retrieval of partners' shares and the evaluation methods thereof when this right is exercised, and the formation of reserves other than the statuary reserve and the organization of the company's finance and accounts and the reasons of the dissolution thereof.


c— The Minister of Commerce and Industry may decree the inclusion of other details than those included in paragraph (A) of this Article.

Article (266)

A limited liability company shall not be incorporated unless all the cash shares are distributed among partners and the value thereof is fully paid and the in-kind shares are delivered to the company.


The cash shares shall be deposited with one of the licensed banks in Bahrain and shall only be withdrawn by the company's managers upon the submission of a certificate proving its registration in the Commercial Registry.


Article (267)

If the share presented by a partner is an in-kind share, the company's memorandum of association shall specify its type, value, agreed upon price by the other partners, and the name of the partner and the amount of his share in the capital against what he has paid.


The provider of the in-kind share shall be liable towards third parties for the estimated value thereof in the company's memorandum of association. If it is overestimated, he shall pay the difference to the company, and the other partners shall be jointly liable for such difference unless they prove that they were not aware of it.


The liability action provided for in the foregoing paragraph shall be barred after the lapse of five years from the date of entering the company in the Commercial Registry.

Article (268)

The company's manager, or whomever the partners delegate, shall register the company in the Commercial Registry and shall publish it in the Official Gazette and in one of the local daily newspapers at the company's expense. The company shall not acquire a corporate entity before registering it, and it shall not undertake its activities before registration. Any act undertaken for the company before registration shall only bind the person who undertakes it, and he shall be liable for it to the extent of all his property. If more than one person undertakes the act, they shall be jointly liable for it.


Article (269)

The capital of a limited liability company shall be divided into equal shares the value of which shall not be less than fifty Bahraini dinars. The share shall be indivisible. However, two persons or more may jointly own one share, provided that one person shall represent them towards the company. The partners in the same share shall be jointly liable for the obligations resulting therefrom.


Article (270)

The capital shares of a limited liability company shall be non-tradable. However, shares may be sold by a written instrument the signatures on which are certified unless otherwise provided for in the company's memorandum of association. Whoever intends to sell his share, or a part of it, shall notify the other partners of the offer he has received and its conditions — in particular the price and the name of the buyer — otherwise the act shall be ineffective. After the lapse of two weeks from the date of notification the partner may sell his share to third parties for the offered price at least if none of the partners requests to buy it. If more than one partner requests to buy the share, it shall be divided among them in proportion to their respective shares in the company's capital. If the assignment of the shares is free of charge, the assigned shares shall not be transferred without the approval of the majority of the partners owning shares of no less than seventy five percent (75%) of the capital after excluding the shares under assignment.


Article (271)

The assignment of a share shall be effective towards the partners and third parties as of the date of the registration thereof in the Commercial Registry and the publication thereof in the Official Gazette.


Article (272)

The share of a partner shall devolve to his heirs or beneficiaries in a will. If the share devolves by way of inheritance or will to more than one person, which increases the number of the partners to more than fifty, the shares of the heirs or beneficiaries shall be considered one share towards the company unless the heirs or the beneficiaries agree to transfer the share to a number of them falling within the maximum number of the partners. If all the company's shares are concentrated in the hands of one person, the company shall turn into a single person company unless it is dissolved.


Article (273)

If a personal creditor of a partner institutes execution proceedings against the share of his debtor, the share shall be offered for sale in a public auction unless the creditor agrees with the debtor and the company on the way and terms of the sale. In the case of sale by public auction, the creditor shall notify the company of the terms and conditions of the sale and the date of the session to be held for considering the objections thereto.

The company may, within ten days from the date of the decision approving the highest bid offered, find a buyer other than the successful bidder to buy the share on the same terms and conditions.


These provisions shall apply in the case of the partner's bankruptcy.


Article (274)

The company shall prepare a special register for the partners at its head office including their names, domiciles, professions, nationalities and the number of shares each one of them owns. It shall also show the assignment of the shares and the date thereof.


Each partner and any interested person shall have the right of access to this register. The details contained in the register and any changes therein shall be forwarded to the Ministry of Commerce and Industry.


Chapter Two — Management of the Company Article (275)

One manager or more, to be appointed from among the partners or non-partners by the founders for the first time and by the general assembly thereafter, shall manage the company.


In all cases the manager(s) may be dismissed with the approval of the partners who own the majority of the capital.


The duties, obligations and responsibilities of the manager(s) shall be the same as those of the members of the board of directors in a joint-stock company.


Article (276)

The company's managers shall have full powers to represent it unless otherwise stipulated in the company's memorandum of association. Any decision issued by the company restricting the powers of the managers or changing them after it has been registered in the Commercial Registry shall not take effect towards third parties before the lapse of five days from the date of it being registered in this registry.


Article (277)

The company's memorandum of association may provide for the constitution of a board for the managers and specify the manner in which the board shall operate and the majority by which its resolutions shall be passed.


Article (278)

The managers shall be jointly liable towards the company, the partners and third parties for their breach of the provisions of the law or of the company's memorandum or articles of association and for any mismanagement in accordance with the rules regulating the joint-stock company. Any condition to the contrary shall be deemed non-existent.


Article (279)

The manager shall not, without the consent of the partners' general assembly, assume the management of a company competing with or having similar objectives to those of the company, nor may he

conduct, for his own account or for the account of third parties, any transactions that are competitive or similar to the company's activities.


Violation of this may lead to the removal of the manager and to obliging him to pay compensation.


Article (280)

If the number of partners is more than ten, and the company does not have a board of managers, a control board, consisting of at least three partners, shall be appointed for a specific period in the company's memorandum of association. The partners' general assembly may reappoint them or appoint others from among the partners after the expiration of this period. The managers shall not have the right to vote on the election or dismissal of the members of the control board.


The control board shall have the right to examine the company's books and documents, to make an inventory of the cash money, the stock, securities and documents establishing the company's rights and to request the managers at any time to submit reports on their management.


The board shall also oversee the balance sheet, the profit distribution and the annual report, and shall submit its report in this regard to the partners' general assembly at least fifteen days before its meeting.


The board shall authorize the acts which the company's memorandum of association requires its authorization to undertake them.


Article (281)

The members of the control board shall not be liable for the actions of the managers or the results thereof, unless they knew about the wrongdoings and did not mention them in their report to the partners' general assembly.


Article (282)

If the number of partners does not exceed ten and the memorandum of association does not provide for the establishment of a control board, the non-manager partners shall have the right to control the managers' acts. They may also examine the company's books and documents in accordance with the rules laid down in a rticle (46) of this law. Any condition to the contrary shall be void.


Article (283)

a— A limited liability company shall have a general assembly consisting of all partners.


b— The general assembly shall convene at a call by the managers at least once a year within the four months following the end of the company's financial year.

c— The general assembly may convene at any time at an invitation by the managers, the control board, the auditor, the Ministry of Commerce and Industry or a number of partners representing one-fourth of the capital.


d— The call for the general assembly to convene shall be made by registered mail with a delivery note or by any way proving the knowledge of partners of it at least one week before the date of the meeting.

e— The call for the general assembly to convene shall specify the date, the venue and the agenda of the meeting. The agenda shall particularly include the reports of the managers, of the auditor and of the control board, if any, the approval of the balance sheet and the profit and loss account, and consideration of the managers' recommendations with respect to profit distribution.


Each partner may request the managers to include any issue on the agenda, and if such request is rejected,

the partner may take the matter to the general assembly.


The general assembly meeting shall not debate any matters other than those listed on the agenda; unless serious matters arise during the meeting that require debate.

Article (284)

i— Each partner shall have the right to attend the meetings of the general assembly either in person or by his proxy, provided that the proxy shall not be the company's manager or from among the members of the control board. The proxy shall represent no more than one partner, and each partner shall have a number of votes equal to the shares he owns in the company.

ii— The general assembly meeting shall not be valid unless attended by a number of partners owning more than half the capital, and the resolutions thereof shall be valid if passed by the majority of the shares represented in the meeting unless the company's memorandum of association provides for a bigger majority. If the quorum is not available, the general assembly shall be invited to hold a second meeting within the ten days following the first meeting for the same agenda. This meeting shall be valid regardless of the number of the shares represented thereat. In this case, resolutions shall be passed by the majority of the shares represented in the meeting unless otherwise provided for in the memorandum of association. The company's manager, the auditor and at least one member of the control board, if any, may attend the meeting, however, none of them shall have the right to vote on the resolutions discharging them of responsibility. The competent government authority may send its representative to attend the general assembly meeting.

iii— Minutes shall be drafted for each meeting including an adequate summary of the deliberations and resolutions of the general assembly, and shall be signed by the meeting chairman. Such minutes shall be entered in a special register to be kept at the company's headquarters. The provisions regulating the commercial books shall apply to this register, and the company's manager shall be liable for the accuracy of the data contained therein.

Article (285)

The company's memorandum of association shall not be amended, nor its capital be increased or reduced without a resolution by the company's general assembly to be passed by the numerical majority of the partners who own three fourths of the capital unless the company's memorandum of association provides for a higher percentage. However, the partners' obligations shall not be increased without their unanimous approval.


Chapter Three — Company's Accounts Article (286)

i— The managers shall prepare, for each financial year and within at least three months from the end thereof, the company's balance sheet, profit and loss account and a report on the company's activities and financial position together with their recommendations as regards profit distribution. The managers' report, the balance sheet, the profit and loss account and the other reports shall reflect the company's true financial position.


ii— The managers shall sign the report, the balance sheet and the profit and loss account.


iii— The managers shall forward to the Ministry of Commerce and Industry a copy each of the balance sheet, the profit and loss account, the annual report and the auditor's report within ten days from the date of preparing such documents.


iv— The managers shall not vote on the resolutions discharging them of responsibility for their management.

Article (287)

The company's memorandum of association must provide for the appointment of an auditor or more by the ordinary general assembly every year.


image

image

In respect of their powers, responsibilities and terms of reference, the auditors shall be subject to the provisions of articles (217) to (222) of this law.


Article (288)

The company shall maintain a statuary reserve in accordance with the provisions of a rticle (224) of this law applicable to joint-stock companies.


Part VIII — Single Person Company Article (289)

A single person company means, for the purposes of applying the provisions of this law, every economic activity the capital of which is fully owned by one natural or corporate person.


Article (290)

A single person company shall have articles of association specifying its provisions, particulars and procedures of incorporation and publication. Such articles of association shall be issued by a decree by the Minister of Commerce and Industry. The company shall have a corporate entity after the lapse of thirty days from the date of its publication.


Article (291)

The company shall have a special commercial name, which may be derived from its objectives. The name of the company shall be associated with the name of its owner followed by the phrase (A Single Person Company) (SPC). The company shall have its head office in the State of Bahrain and shall undertake its main activities therein.


Article (292)

The owner of the company's capital shall be liable for its obligations only to the extent of its capital.


Article (293)

The company's capital shall not be less than that specified in the Executive Regulation of this law, and shall be fully paid. The capital may comprise in-kind shares to be evaluated by a specialized expert. In all cases the minimum capital shall not be less than twenty thousand Bahraini dinars.


Article (294)

The capital owner shall manage the company, and he may appoint a manager or more to represent the company before the courts and third parties, and he/they shall be responsible for its management before the owner.


Article (295)

The company shall terminate on the death of its owner unless the shares of the heirs are gathered in one person or if the heirs choose to continue the company in any other legal form within six months at most from the death of the owner. The company shall also terminate on the termination of the corporate person owning its capital.

Article (296)

If the capital owner liquidates the company or suspends its activities, in a mala fide manner, before the expiry of its term or before the realization of its objectives he shall be liable for its obligations to the extent of his personal property.


He shall also be liable to the extent of his personal property if he does not separate his personal interests from the interests of the company.


Article (297)

Apart from the provisions of the foregoing articles, the provisions regulating the limited liability company shall apply to the single person company to the extent they do not conflict with its nature.


Part X — Conversion of Companies Article (305)

Any company may convert from one legal form to another. If conversion is to a joint-stock company, at least two financial years must have lapsed since the company was registered with the Commercial Registry. The conversion decision shall not issue before the company's managers prepare a report on the company's assets and liabilities and the results of the balance sheet for the preceding two financial years, to be signed by the auditor and ratified by the Ministry of Commerce and Industry.


Article (306)

Conversion shall be effected by a resolution passed in accordance with the provisions and procedures governing the amendment of the company's Memorandum and Articles of Association. Such resolution shall not be effective before the lapse of sixty days from the date of its publication in the Official Gazette and in at least one of the local daily newspapers and after the completion of the incorporation procedures of the form into which the company is to convert and after the annotation thereof in the Commercial Registry.


Article (307)

The partner who objects to the resolution of conversion may withdraw from the company and recover the value of his share or stake by submitting a written application to the company within sixty days from the date of the publication of the conversion resolution in accordance with the foregoing article. The value of the share or stake to be paid shall be either the actual or the market value at the conversion date whichever is higher.


Article (308)

For companies to convert, they must repay their loans and banking facilities before conversion or obtain the creditors' approval of such conversion before the competent authorities approve it.


Article (309)

A converted company shall not acquire a new corporate entity, but shall maintain its rights and obligations established before conversion. Conversion shall discharge the joint partners from the company's obligations before conversion unless the creditors object to the conversion within sixty days from the date of notifying each of them, by a registered letter with a delivery note, of this decision. The objection shall be submitted by using the normal procedures of filing legal actions, and

shall be heard by the High Civil Court. The joint partners shall continue to be liable towards the objecting creditors until the objection is finally decided on.


Article (310)

Every partner, in the case of conversion, shall have a number of shares or stakes in the converted company equal to the value of the share or stake he owned before conversion. If the conversion was to a limited liability company and the value of the share or stake of a partner is less than the minimum limit for the nominal value of the share in the limited liability company, the partner shall complete the value in cash.


Article (311)

For a joint-stock company that has issued loan bonds to convert it must repay the value of the bonds before the Ministry of Commerce and Industry approves such conversion.


Part XI — Merger of Companies Article (312)

i— Merger shall be effected in one of the following two methods:


1— Acquisition, which is winding up a company or more and transferring its patrimony to an existing company.

2— Consolidation, which is winding up two or more companies and incorporating a new one to which the patrimony of the merged companies shall be transferred.


ii— Each company shall pass a resolution of merging in accordance with the amendment procedures of its Memorandum and Articles of Association.


In all cases, merger shall not result in monopolizing an economic activity, a commodity or a certain product.


Article (313)

The following provisions shall apply to merger by way of acquisition:


i— The merged company shall pass a resolution to dissolve itself.


ii— The merged company shall be evaluated in accordance with the provisions of this law governing the evaluation of in-kind shares.

iii— The merging, or emerging, company shall pass a resolution to amend its capital in accordance with the evaluation results of the merged company.


iv— The capital increase shall be distributed among the partners in the merged company in proportion to their respective shares therein.

v— If the stakes are represented in shares, they may be traded upon their issue if one year has lapsed since the incorporation of the merging or emerging company.

Article (314)

The following provisions shall apply to merger by way of consolidation:


i— Each merged company shall pass a resolution dissolving itself.

ii— A new company shall be incorporated in accordance with the provisions of this law. However, if the new company is a joint-stock company, the experts' report on the evaluation of the in-kind shares shall be relied upon according to a rticle (99) of this law.

iii— Each merged company shall be allotted a number of shares or stakes equal to its shareholding in the new company's capital. These shares shall be distributed among partners in each merged company in proportion to their respective shares therein.

Article (315)

Merger shall be published in the Official Gazette and in one of the local daily newspapers, and shall be recorded in the Commercial Registry.


Holders of rights established before the publication of merger may object thereto within sixty days from the publication date by a registered letter with a delivery note. In this case, the merger results shall not be binding them unless the creditor gives up his objection, or the court, upon filing an action by the company, rejects it, or the company pays the debt if it is due or provides adequate guarantees for its settlement if it is not due.


If no objection is made within the period referred to in the preceding paragraph, the merger shall be effective towards the creditors, and the merging or emerging company shall subrogate the merged companies in all their rights and obligations.


Article (316)

In the case of merger by way of acquisition, the capital shares of the merged company, if it is one of those companies whose shares are tradable, may be traded upon their issue if one year has lapsed since the incorporation thereof.


In case of merger by way of consolidation, the shares of the new company may be traded upon its issue if one year has lapsed since the incorporation of each of the merged companies.


Article (317)

For a joint-stock company, which has borrowed by issuing bonds, to merge, the board of bondholders shall approve the merger resolution by the majority of those representing two-thirds of the loan bonds, otherwise the company shall settle the debt in a way the board accepts by the majority referred to above.


If the board does not approve the merger or the settlement, or if it is impossible for the board to convene, the representative of the board must object to the merger resolution in accordance with the provisions of a rticle (315) of this law.


Article (318)

If the joint-stock company under merger has issued bonds convertible into shares, the bondholders shall have the right to request for converting their bonds into shares in the merging company or the new company as the case may be within the time limit specified in the bond issue. The conversion principles shall be set by determining the exchange rate mentioned in the issue system in light of the percentage specified in the merger agreement for the replacement of the shares in the merged or emerging company with shares in the company issuing the bonds.


Article (319)

image

image

The merging company or the new company shall replace the company issuing the bonds convertible into shares in all its obligations arising from these bonds. The merging company or the new company shall also comply with the provisions of articles (160) and (161) of this law.


Part XII — Termination of the Company 1 — Company Dissolution

Article (320)

The company shall be dissolved for any of the following reasons:


a— Expiry of its specified term unless the company's memorandum or articles of association provides for its renewal.

b— Achieving the objectives for which the company was incorporated.


c— Destruction of all or most of its assets to the extent that it becomes useless for it to continue.


d— A unanimous resolution by all partners to dissolve it before the expiry of its term, unless the company's memorandum or articles of association provides for certain majority.


e— Merging the company with another company.


The registration of the company shall be struck off by an explained decree by the Ministry of Commerce and Industry if the company does not undertake its activities for one year from the date of the completion of its incorporation procedures or if it suspends its activities for a continued period exceeding one year without acceptable justification.


The Ministry of Commerce and Industry shall notify the company the registration of which is to be struck off in accordance with the procedures decreed by the Minister of Commerce and Industry.


Any interested party shall have the right to appeal against the decree to the Minister of Commerce and Industry within a period of no more than thirty days from the date of publication of the decree in the Official Gazette or from the date of notification of the concerned person of that action.


Such appeal shall be decided on within thirty days from the date of its submission, and the lapse of such period without taking a decision shall be deemed rejection thereof.


The appealing party may object to the rejection of his appeal before the High Civil Court within forty- five days from the date of his knowledge of the rejection or from the date of deeming it as rejected.


Striking off the registration shall not terminate the responsibility of the members of the board of directors, the managers, the partners and the shareholders. This responsibility shall remain as if the company is still going.


Article (321)

a— Except for public joint-stock companies, the court may decide, at a request by a partner, to dissolve any company if it finds serious reasons justifying such dissolution, and any provision depriving partners from using this right shall be deemed null and void. If such reasons have to do with the acts of any partner, the court may decide to discontinue his membership and to evaluate his share according to the latest inventory, unless the company's memorandum of association provides for another method of evaluation. In this case the company shall continue among the other partners.

b— The court may also decide to dissolve the company at a request by a partner if a partner has not honored his obligations.

Article (322)

a— General partnership companies, limited partnership companies and associations in participation shall be dissolved for any of the following reasons:


1— Withdrawal of a partner from the company if its term is indefinite. However, the partner shall withdraw in good faith and notify the other partners of his withdrawal in a suitable time, failing which a court order may be obtained obliging the partner to continue in the company and to pay compensation if necessary. If the company's term is definite the partner shall not withdraw from the company without a court order.

2— Death of a partner or if a court passes a restraint order against him or if he is adjudged bankrupt or insolvent.


b— The company's memorandum of association may provide for its continuation with the heirs of a deceased partner even if all or some of them are minors. If the deceased partner was a joint partner and the heir is a minor, the minor shall be considered a sleeping partner to the extent of his share in that of his legator. In this case the continuation of the company shall not require a court order to keep the minor's money in the company.

c— The company's memorandum of association may provide for its continuation with the remaining partners in case of withdrawal or death of a partner or if an order of distraint is passed against him or if he adjudged bankrupt or insolvent. If the company's memorandum of association does not contain such a provision, the partners may, within sixty days from the date of withdrawal, death or the order of distraint or adjudication of bankruptcy or insolvency unanimously agree to continue the company among them. Such agreement shall not be binding on third parties before the date of entering it in the Commercial Registry.

d— In all cases of continuation of the company among the remaining partners, the share of the withdrawing partner shall be evaluated by an accredited auditor unless the company's memorandum of association provides for another method of evaluation. Such partner or his heirs shall not have a share in subsequent rights except for those resulting from operations performed before his withdrawal from the company.

Article (323)

A limited partnership by shares shall be dissolved if a joint partner withdraws therefrom or deceased or if a distraint order is passed against him or if he adjudged bankrupt or insolvent, unless otherwise provided for in the company's memorandum of association.


If the company's memorandum of association does not contain a provision in this respect, the extraordinary general assembly may decide to continue the company, and the procedures governing amendments to the company's memorandum of association shall apply.


If all joint partners in a limited partnership by shares withdraw or deceased or if distraint orders are passed against all of them or if they are adjudged bankrupt or insolvent, the company shall be dissolved unless its memorandum of association provides for the conversion thereof into another form of company.


Article (324)

A limited liability company shall not be dissolved if a partner or more withdraws or deceased or if a distraint order is passed against him or if he is adjudged bankrupt or insolvent, unless otherwise provided for in the memorandum of association.


2 — Liquidation of the Company and Division of its Assets Article (325)

a— Every company shall be in a state of liquidation upon dissolution.


b— The powers of the managers or the board of directors shall terminate upon the dissolution of the company. However, the managers shall continue to manage the company, and shall be considered towards third parties as liquidators until a liquidator is appointed and they give him their accounts and all the company's assets, books and documents.

Article (326)

a— The company shall maintain its corporate entity during the liquidation period to the extent necessary for liquidation.


b— The phrase (under liquidation) shall be added to the name of the company during the period of liquidation.


c— The company's bodies shall remain during the period of liquidation, but their powers shall be confined to the liquidation measures falling outside the liquidators' competence.

Article (327)

Relevant provisions in the company's memorandum or articles of association shall apply to liquidation. If they do not contain such provisions, the provisions of the following articles shall apply.


Article (328)

a— The partners or the extraordinary general assembly shall appoint, from among the partners or non-partners, a liquidator or more to undertake the company's liquidation, and determine his remuneration. The liquidator shall be appointed by the simple majority by which the company's resolutions are passed.

b— If the company's dissolution or nullity is decided by the court, the court shall specify the manner of liquidation and appoint the liquidator and determine his remuneration. The liquidator's job shall not terminate upon the partners' death or if they are adjudged bankrupt or insolvent or if a distraint order is passed against them even if he was appointed by them.

Article (329)

a— The liquidator's name and the partners' agreement on the liquidation manner or the court decision thereon shall be marked in the Commercial Registry and shall be published in one of the local daily newspapers.

The liquidator shall follow up the entry procedures.


b— The liquidator appointment or the manner of liquidation shall not be effective towards third parties before the day following the date of publication.

Article (330)

a— The liquidator shall be dismissed in the same way he was appointed.


b— In all cases, the court may, at a request by a partner and for acceptable reasons, decide to dismiss the liquidator.


c— Any decision dismissing the liquidator shall appoint whoever replaces him.


d— The dismissal of the liquidator shall be entered in the Commercial Registry and shall be published in one of the local daily newspapers, and it shall not be effective towards third parties before the day following the date of publication.

Article (331)

a— The liquidator shall, on his appointment and in agreement with the board of directors or the managers, carry out an inventory of the company's rights, assets and liabilities. A detailed list thereof and a balance sheet shall be prepared and signed by the liquidator, the board of directors and the managers.

b— The board of directors or the managers shall submit their accounts to the liquidator and hand him over the company's property, books and documents.


c— The liquidator shall maintain a register to enter therein the liquidation acts, and such register shall be subject to the provisions of the Commerce Code regulating the commercial books.

Article (332)

a— The liquidator shall take the necessary actions to safeguard the company's property and rights.


b— He shall recover the company's rights with third parties; however, he shall not request the partners to pay the unpaid part of their shares unless liquidation so requires and provided that all partners shall be equally treated.

c— The liquidator shall immediately deposit the amounts he receives in the account of the company under liquidation with any of the banks.

Article (333)

The liquidator shall undertake all tasks required for liquidation, and in particular the following:


a— Representing the company towards third parties before the courts of law and accepting reconciliation and arbitration.

b— Selling the company's movable and immovable property by public auction or by any other method unless the liquidator's appointment document provides for other methods of sale.


c— Paying the company's due debts and setting aside the deferred or disputed debts.

Article (334)

a— The liquidator shall not initiate new activities unless they are necessary for the completion of previous activities. If he initiates new activities that are not necessary for liquidation he shall be liable to the extent of all his property for such activities. If there is more than one liquidator they shall be jointly liable.


b— The liquidator shall not sell the assets of the company as a whole without permission from the partners or the ordinary general assembly.

Article (335)

a— The liquidator shall notify all the creditors of the commencement of liquidation and invite them to submit their claims. The notification shall be made by a registered letter with a delivery note or by publishing it in a local daily newspaper if the creditors are not known or if their domiciles are not known.


b— Without prejudice to the rights of the privileged creditors, the liquidator shall pay the company's debts in proportion thereto.

c— If some creditors fail to submit their claims, their debts shall be deposited with the court's treasury.


d— Funds adequate enough to pay the disputed debts shall be deposited with the court's treasury, unless the owners of these debts obtain adequate guarantees or unless the distribution of the company's funds is deferred until the dispute on the said debts is resolved.

Article (336)

If there is more than one liquidator, their acts shall not be valid unless they unanimously agree thereon in case the document of their appointment does not provide otherwise. This provision shall not be effective towards third parties before the date of its publication in one of the local daily newspapers.


Article (337)

The company shall be bound by the liquidator's acts undertaken in its name if such acts are necessary for liquidation purposes, even if he uses the company's signature for his own account unless the person he contracted with is mala fide.


Article (338)

Debts arising from liquidation shall have priority in payment from the company's funds over other debts.


Article (339)

a— The liquidator shall complete liquidation within the period specified in his appointment document. If such period is not specified, each partner may take the matter to the competent court to specify the period within which liquidation shall be completed.


b— However, the period specified for liquidation may be extended by a resolution by the partners or by the general assembly after considering the liquidator's report in which he states the reasons justifying the incompletion of liquidation in the specified period. If the liquidation period is specified by the court, it shall not be extended without the permission thereof.

Article (340)

a— The liquidator shall submit every six months to the partners or to the general assembly an interim account on liquidation.

b— He shall furnish the partners with the details and information they request to the extent that does not cause any harm to the company's interests or delay liquidation.

Article (341)

a— The company's funds shall be distributed on all partners after the payment of the debts referred to in a rticle

(338) of this law and after honoring the rights of the company's creditors.


b— Each partner shall receive an amount equivalent to the value of the share he provided in the capital as stated in the memorandum of association or in the resolution of the general assembly approving its evaluation, or equivalent to the value of this share at the time of subscription if the value is not stated in the memorandum of association.


c— If the partner's share is in the form of work or usufruct he shall get nothing.


d— The remaining part of the company's funds shall be distributed among partners in proportion to their respective dividends in profits.

e— If the net value of the company's assets is not sufficient to pay the partners' shares in full, the loss shall be distributed among them with the same percentages specified for loss distribution.

Article (342)

The relevant provisions in the company's memorandum or articles of association shall apply to the distribution of the company's funds. If the memorandum or articles of association does not include

such provisions, the provisions of the Civil Code regulating the distribution of common funds shall apply.


Article (343)

a— The liquidator shall submit to the partners or to the general assembly a final account on liquidation.


b— Liquidation shall be completed on the approval of the final accounts.


c— The liquidator shall enter the completion of liquidation in the Commercial Registry and publish it in one of the local daily newspapers. Completion of liquidation shall not be effective towards third parties before the date of publication.


d— The liquidator shall, on the completion of liquidation, apply for striking off the company from the Commercial Registry.

Article (344)

The company's books and documents shall be maintained for ten years from the date of striking off its name from the Commercial Registry at the place specified by the partners or the general assembly.


Part XIII — Foreign Capital Companies Article (345)

Notwithstanding the provisions of this law and with due consideration of the competence of the Bahrain Monetary Agency in respect of banking and financial institutions, the Minister of Commerce and Industry, in agreement with the relevant minister, may decide to incorporate companies provided for in this law, to be fully or partially owned by Bahraini or non-Bahraini partners. They may be in non-Bahraini currencies, provided that they shall be denominated in the Bahraini currency. The activities of these companies shall be specified in an order of the Ministry of Commerce and Industry.


The Minister of Commerce and Industry may also exempt the companies provided for in this article from the minimum limit of capital specified in the Executive Regulation of this law. He may authorize the board of directors and the ordinary and extraordinary general assemblies of these companies to convene outside the Sate of Bahrain, provided that such companies shall comply in all their meetings with the provisions of this law.


Part XIV — Branches, Offices and Agencies of Foreign Companies Article (346)

Without prejudice to the special agreements concluded by the government and some companies, the provisions of this law, except for those governing the incorporation of companies, shall apply to the foreign companies incorporated abroad and undertaking their activities in Bahrain.


Article (347)

a— Subject to other legislations that are not in conflict with this law, the companies incorporated abroad may establish branches, agencies or offices in the State of Bahrain on the following conditions:


1— The foreign company shall obtain a license to establish a branch, an agency or an office from the Minister of Commerce and Industry.

2— The foreign company incorporated abroad shall have a Bahraini sponsor, who may be a businessman or a company. However, the Minister of Commerce and Industry may exempt the company from this

provision if the company's branch or office shall use Bahrain as a regional center or a representative office for the company's activities.

b— The branch, agency or office shall be registered in the Commercial Registry in accordance with the provisions of law.


c— If the branch, agency or office undertakes its activities before the completion of the procedures provided for in the foregoing paragraph, the persons who have undertaken such activities shall be liable personally and jointly therefor.

Article (348)

a— The branch, agency or office must provide a guarantee to ensure performance of its obligations


b— The guarantee shall be either a sponsorship by the Head Office or by the Bahraini sponsor or a bank deposit. The Minister of Commerce and Industry shall define the guarantee required from each branch, agency or office and he shall designate the bank with which the money shall be deposited if the guarantee is a deposit.

c— If the guarantee is a deposit, it shall be in the name of the branch, the agent or the office representative and to the order of the Minister of Commerce and Industry.


d— The depositor shall in all cases complete any reduction in the deposit if an attachment is placed thereon as a result of actions related to its commercial activities.

Article (349)

Each branch, agency or office of a foreign company must print on all its papers, documents and publications, in legible Arabic, the full name of the company and its address and head office and the name of the agent.


Article (350)

image

image

The provisions of articles (21) and (68) of this law shall apply to the branches, agencies and offices referred to in the foregoing article.


Part XV — Control and Inspection Article (351)

Without prejudice to the companies being subject to the rules and regulations governing supervision and licensing by the authorities concerned with their respective activities, the Ministry of Commerce and Industry shall supervise the companies subject to the provisions of this law in respect of the implementation thereof and the proper enforcement of its provisions and the provisions of the articles of association of these companies.


The duties of supervision, attendance of the general assemblies and drafting reports on violations of the provisions of this law shall be undertaken by whomever the Minister of Commerce and Industry designates for this purpose, who shall have the powers of judicial enforcement. The reports shall be submitted to the general prosecutor upon a decision by the Minister of Commerce and Industry or by whomever the Minister designates.


Article (352)

The Minister of Commerce and Industry may, when necessary or at a request by partners representing one fourth of the company's capital, designate a staff member of the Ministry of Commerce and

Industry or any other person to inspect the accounts and all activities of the companies subject to the provisions of this law.


Article (353)

Partners owning at least one fourth of the capital may apply with the Minister of Commerce and Industry to inspect a company in respect of any violations they attribute to the chairman and members of the board of directors and managers or auditors in performing the duties assigned to them by law or in the articles of association, if there are serious reasons justifying their request. After paying the fees defined in an order by the Minister of Commerce and Industry, the Ministry of Commerce and Industry shall, after verifying the reasons included in the request, inspect the company according to the foregoing provisions.


Article (354)

If the Ministry of Commerce and Industry responds to the partners' request to inspect the company, it shall designate a person from among its staff or others to inspect the company's activities and accounts to ensure that the company is not in breach of the provisions of law. The person entrusted with inspection shall have the right of access to the company's books, records, documents, and all the data he deems necessary for inspection. He may also request the chairman or the members of the board or any other staff member of the company to provide him with data and information he deems appropriate for inspection. On the completion of inspection, the Ministry of Commerce and Industry shall notify the company and the applying partners of the results thereof.


Article (355)

If the Ministry of Commerce and Industry rejects the partners' request to inspect the company or if it did not take a decision in this regard within thirty days from the date of submitting the request, the partners may apply with the judge of summary proceedings court to order the requested inspection and to commission an expert to undertake this task and determine his fees, which shall be borne by the inspection applicants or by whoever is proved to have committed the violations mentioned in the application. In this case the provisions of this law shall apply to such inspection.


Article (356)

Any interested party may appeal against the results of inspection before the High Civil Court within thirty days from the notification date.


If the appellant is the inspection applicant, the appeal must contain evidence substantiating the reasons justifying his appeal and that he has not filed his appeal to inflict damage or defamation.


Article (357)

The members of the board of directors, the managers, the staff members and the auditors of the company shall make available to whoever is charged with the task of inspection in accordance with the provisions of the foregoing articles everything related to the company's activities, including books, documents and papers which they have in their custody or those which they have the right of access thereto.


In all cases, the board of directors, the managers or the auditors shall submit to the Ministry of Commerce and Industry any documents, papers, balance sheets or business results at any time the Ministry may need.


Article (358)

If the Minister of Commerce and Industry or the competent court finds that what the applicants for inspection have attributed to the members of the board of directors or the auditors is untrue, they may order the publication of all this in the Official Gazette and charging the applicants with the expenses without prejudice to their liability for paying compensation, if necessary. However, if they find that the violations attributed to the chairman and members of the board or the managers or the auditors are true, they shall order taking immediate measures and call the general assembly to meet. The meeting in this case shall be chaired by whoever is delegated by the Minister of Commerce and Industry.


The general assembly may decide to dismiss the chairman and the members of the board or the managers or the auditors, and to file liability action against them. The decision shall be valid if approved by the partners holding half the capital after excluding the shares of the board members or managers who are considered for dismissal.


The dismissed persons shall not be reelected members of the board of directors or appointed managers before the lapse of five years from the date of the decision dismissing them.


Article (359)

a— Any concerned party may apply to have access to the data kept at the Ministry of Commerce and Industry in respect of the companies subject to its supervision and control and may have copies thereof against fees to be determined in a decision by the Minister of Commerce and Industry.


b— The Ministry of Commerce and Industry may reject the request referred to in the foregoing paragraph if disclosing the requested data inflicts damages to the company or to any other party or to the public interest.

Article (360)

image

image

image

The Minister of Commerce and Industry shall specify in a decision the party who shall bear the inspection expenses of whoever he delegates from other than the Ministry staff in case the articles (352), (353), and (354) of this law are enforced.


Part XVI — Penalties Article (361)

Without prejudice to any severer penalty provided for in the Penalties Code or in any other law, imprisonment and a fine not less than five thousands Bahraini Dinars and not exceeding ten thousands Bahraini Dinars or either of these two penalties shall be imposed on:


a— Any person who has stated in the company's memorandum or articles of association or in the subscription prospectus or in any other documents of the company false data or data in violation of the provisions of this law and any person who has willfully signed these documents or distributed them.


b— Any founder, manager or board member who has invited the public to subscribe for shares or bonds in contravention of the provisions of this law and whoever has offered these shares or bonds for subscription for the account of the company with his knowledge of this violation.

c— Any partner or non-partner who has fraudulently evaluated in-kind shares at more than their real value.


d— Any board member, manager or auditor who has participated in preparing or approving a balance sheet that does not reflect the true financial position of the company or a profit and loss account that does not properly represent the profits or the losses of the company for the financial year.


e— Any board member, manager or auditor who has distributed profits or interests that are not true or are in contravention of the provisions of this law or the company's articles of association or has approved the distribution thereof.

f— Any manager or board member who has taken remuneration more than that provided for in this law or in the company's memorandum or articles of association.

g— Any manager, board member, liquidator or auditor who has stated false or untrue data in the balance sheet or in the profit and loss account or in the reports he has prepared for the partners or for the general assembly or who has failed to submit these reports or who has willfully ignored essential facts in these statements which renders the company's financial position untrue.


h— Any manager, member of the board of directors, member of the control board, consultant, expert, auditor or any of his assistants or employees, or any government officer or any person entrusted with the task of inspecting the company who has disclosed what he has known ex-officio of the company's secrets or has exploited these secrets to serve his own interest or that of others.

i— Any person appointed by the Ministry of Commerce and Industry to inspect the company and has willfully stated false facts about inspection in his reports or has willfully ignored in these reports essential data, which affects the results of inspection.

Article (362)

Without prejudice to any severer penalty provided for in the Penalties Code or in any other law, a fine not exceeding five thousands Bahraini Dinars shall be imposed on:


a— Any person who has issued shares, subscription receipts, interim certificates or bonds or has offered them for trading in contravention of the provisions of this law.

b— Any person who has been appointed member of the board of directors or managing director of a joint stock company and has remained in office or has been appointed controller therein, and any person who has held an office in it and who has obtained a guarantee or a loan therefrom in contravention of the provisions of this law.

c— Any person who has established a company contrary to the provisions of this law governing the percentage requirements for the Bahraini capital.


d— Any manager, board member, auditor or liquidator who has willfully ignored essential facts in the balance sheet or in the profit and loss account that affects the company's financial position.

e— Any person who has willfully ignored to call the general assembly or the partners to convene if the company has sustained losses to the extent provided for in this law or in the company's memorandum of association with his knowledge of such loss.


f— Any person who has refrained from inviting the general assembly to convene or from listing matters on its agenda in the cases in which the law requires the general assembly to convene or the said issues to be included in the agenda.

g— Any board member who has prepared a report or a balance sheet or an account contrary to the decision referred to in a rticle (195) and any auditor who has prepared a report contrary to the data referred to in

a rticle (219) of this law.


h— Any board member, manager, or employee of any of the companies subject to the provisions of this law who has issued orders for spending or has spent an amount of the company's funds without supporting documents indicating the reasons of spending and the receiving party.


i— Any person assigned by the Ministry of Commerce and Industry or the court to inspect the company who has ignored essential facts that affect the results of inspection.

j— Any person who has willfully refrained from enabling the partners, the auditors or the staff of the Ministry of Commerce and Industry delegated by the Minister of Commerce and Industry or those who have the powers to undertake inspection to have access to the books and documents which they are permitted to have access thereto in accordance with the provisions of this law.

k— Any person who has willfully refrained from enforcing any order provided for in this law.

Article (363)

The partners of any company established before the provisions of this law come into effect contrary to its provisions shall amend its memorandum of association to conform to the provisions of this law within a period not exceeding three years from the date of the law coming into effect, otherwise, the partners shall liquidate its activities, except for the companies exempted by a resolution by the Council of Ministers.