The first Law Update of 2024 is here, and our first focus of the year spotlights Healthcare and Lifesciences, a sector that is undergoing significant growth and development across the MENA region.
Our focus provides an insight into some of the most important regulatory updates across the region, such as the UAE’s groundbreaking law on the use of human genome, Kuwait’s resolution on nuclear and radioactive materials, the new regulations for healthcare services in Qatar, Egypt’s healthcare regulatory framework, and the impact of the Saudi Civil Transactions Law on the healthcare and life sciences sector … and there is so much more!
Beyond the healthcare pages our lawyers share with you multi-sector insights where you will discover articles on Dubai’s DIFC regulatory framework for startups, Bahrain’s commercial agencies law, and we also shed light on Kuwaiti civil code and the advantages of setting up a joint stock company in Saudi Arabia.Read the full edition
Macho by Deena Rashed
The Kingdom of Bahrain continues to cement its positioning in the global market as a jurisdiction committed to meet international standards and to update, modernise and where relevant simplify and consolidate its legislative regime to reflect changes in the market and to address investor and stakeholder feedback.
More recently, Bahrain’s Ministry of Industry, Commerce and Tourism (“MOICT”) published Resolution 28 of 2020 amending certain provisions of Legislative Decree No. 21 of 2001 promulgating the Commercial Companies Law. The Commercial Companies Law is the primary legislation in the Kingdom of Bahrain which governs the operations of commercial companies,
This article provides a high-level overview of the notable amendments made to the Commercial Companies Law, including the merging of Single Person Companies with With Limited Liability Companies; new methods of capital increase applicable to Joint Stock Companies and some other notable changes made to the Commercial Companies Law.
This article will also touch upon on the recent decision to ease foreign ownership restrictions with respect to the entities which practice the activity of selling goods via the internet (e-commerce).
A significant change brought about by the Amendment to the Commercial Companies Law is the removal of the Single Person Companies (“SPCs”) corporate form, and their merger with With Limited Liability Companies (“WLLs”).
The provisions in the Commercial Companies Law that specifically covered SPCs have been repealed. In terms of related changes to the provisions of the law governing WLLs, these include the removal of a minimum or maximum number of shareholders. Moreover, there is no longer a minimum capital requirement for WLLs (with the exception of certain activities). Rather, in a more general sense a company should have a capital sufficient enough for it to achieve its objectives.
As a result of the merge, business owners need to take certain actions to ensure compliance with the law – these include the following:-
Another key change to the Commercial Companies Law is the introduction to additional methods by which Joint Stock Companies can raise capital
These rules in principle make it easier and faster for Joint Stock Companies to raise capital. Companies can choose from different options to raise finance or increase capital. For example, companies can issue preference shares or convertible notes to get finance and increase capital. Convertible notes will allow companies to obtain finance from investors in the form of a loan which can be either paid with interest or converted into shares equivalent to amount of loan plus interest. This benefits investors as it provides some protection whereby the note holder has priority over rights of shareholders.
Additionally, the rules related to in-kind assets have been amended. Based on the Amendment to the Commercial Companies Law and its Implementing Regulations, the valuation of in-kind assets can be carried out by experts or audit firms. The valuation would then need to be approved by the MOICT. Previously, the valuation would be carried out by a committee formed by the MOICT.
Formerly the Commercial Companies Law provided for the issuance by a joint stock company of shares with certain privileged rights with respect to such matters as voting and profits, as well as distribution upon liquidation. The Amendment to the Commercial Companies Law take these concepts further in expressly providing for the issuance of preference shares that have rights and privileges with respect to voting or profits, or other rights and privileges. The law is also clear that a Joint Stock Company may issue various classes of preference shares, provided that all shares of a given class have equal rights.
Historically, the MOICT has periodically liberalised the foreign ownership restrictions with respect the previous foreign ownership restrictions which applies to a wide variety of sectors and activities, and permitting such commercial activities to be carried out by entities which are owned 100% by foreign persons or entities
With reference to the MOICT Decision 6 of 2021, the e-commerce activities (specifically, “Retail Sale via the Internet”) has now also been liberalised to permit for 100% foreign ownership, provided that certain minimum capital requirements.
The addition of e-commerce activities to the list of activities which permit for 100% foreign ownership confirms the government of Bahrain’s continued commitment to open up Bahrain for foreign investment, with particular focus on the rapidly burgeoning e-commerce sector in Bahrain and the region.