Bahrain Company Law

The Bahrain Company Law with the decree no 28 of the year 1975 shall be repelled even if any other provision that may conflict with the provision mentioned in the attached law. The Minister of Commerce of the country should provide excessive regulation and take necessary orders that it is necessary to implement the laws that mentioned in the provisions. In this article, we are going to discuss in details about the aspects of Bahrain Company Law.

What is the Bahrain Company Law?

According to Bahrain Company Law, the company is a contract between two persons or more that are engaging in profit-making financial projections. In this project, each of the partners contributes their shared amount, which can be in the form of money or work, and at the end, they may divide the yield from the project (which may be profit or maybe the loess). There is a foregoing paragraph with the law and according to that, the company that consists of a single person and he may run the activity of the business.

The forms of the Company

The Bahrain Company Law describes the forms of the commercial companies that incorporated in the Kingdom of Bahrain and the list given in below.

  • General Partnership Company
  • Limited Partnership Company
  • Association of Participation
  • Joint Stock Company
  • Limited Partnership by Share
  • Limited Liability Company
  • Single Person Company
  • Holding Company

According to the article 2B of the company law, if there is any company that does take the form other than above then the state of that company should be considered as Null or Void and income tax return Bahrain. The persons that may involve with the contract in these companies are jointly liable to the third parties for any form of obligation and resulting, therefore. According to article 3 of the provision, the company law is applicable for all commercial companies that have commercial form and regardless of the goal of the company. Article 4 of the provision supports the article 3 by stating that, the commercial companies of Bahrain should be subject to these laws regardless of the type of incorporation.

Requirements of Memorandum of Association

According to article 6, the memorandum of association of the company should write in Arabic and notary with the legal notary public. Else, the memorandum of association document for that company shall be invalid. The company should not plead to the third party for the nullity of the memorandum of association. According to the article, seven of the provision, the managers or the board of the directors of the Bahrain company should publish the memorandum of association of the company and if not then the document should not have any effect on the third parties. The managers and the board of the directors of the company are jointly liable for any form damages that may be sustained by the company or their partners or the third parties for the result of non-registration.

Commercial Companies Law Bahrain - Share among the partners

The partners of the company may share the amount of cash or in-kind share. The share may also be the form of work and that may not be mentioned in the provision of the law. The article 9 of the provision describes the share of the company and according to the law, the partners may not have a share based on their influence or the financial standing in the company. The cash and in-kind share should consider as the only form of capital in the company. Unless mentioned otherwise the share of each partner should be in equal value and that may relate to the property ownership. According to the article 11 of the provision, if the partner of the company fails to pay the amount that is on the date agreed upon when he/she should be personally liable and pay compensation for the damage that may occur resulting from a delay. The partners of the company define the compensation value in advance then the court of the country assesses the value.

Profit and Loss of the Partners

Based on the Bahrain Company Law, the memorandum of association should define the profit and loss for each partner of the company. If any case the memorandum of association does not define the partner’s dividend in terms of profit or the proportion of shares in the capital should determine loss then the dividends of each partner. On another hand, the memorandum of the article should define the dividend in profit and the same is applies to the loss and vice versa. Article 15 of the provision defines these issues and by law, the partners may have shared in the form of work. The memorandum of an article of the company should not define this basis of evaluation unless otherwise provides. If any partner of the company provides work and the capital then the partner of the company gets the benefit for the share amount and for the work.


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