INSITE - UAE- September 2025
- sukhwinder21
- Oct 1
- 2 min read
Bahrain 2025 Commercial Companies Law Amendments: Key Changes and Implications
Summary: Bahrain has enacted Decree-Law No. 38 of 2025, introducing wide-ranging reforms to its Commercial Companies Law. The amendments expand liability to directors and shadow managers, enable digital governance, and permit single-shareholder joint stock companies. At the same time, outdated structures such as Musharakah have been abolished, while regulatory oversight has been strengthened to align Bahrain’s corporate framework more closely with international standards.
In Detail: Bahrain has issued Royal Decree-Law No. 38 of 2025, amending certain provisions of the Commercial Companies Law (Decree-Law No. 21 of 2001). The reforms introduce expanded governance obligations, strengthen director accountability, and modernize company operations to align with international standards.
Key Changes:
Expanded Liability for Directors and Managers: Directors, board members, and managers (including shadow managers) are now personally liable for damages caused to the company, shareholders, or third parties due to negligence, gross errors, or legal violations. Liability may be individual or joint and cannot be waived unless formally recorded.
Virtual Meetings and Electronic Voting: Companies may now hold board and shareholder meetings electronically or via telephonic means, subject to identity verification and participation protocols. Electronic voting is permitted under conditions issued by the Ministry of Industry and Commerce.
Single-Shareholder Bahrain Shareholding Companies (Closed): While closed joint stock companies typically require a minimum of two shareholders, a new paragraph added to Article 226 now allows such companies to be established by a single shareholder, who exercises the powers of both the founding assembly and the general assembly, in accordance with the terms and conditions to be set out in a decision by the Minister of Industry and Commerce. The relevant ministerial decision has not yet been published.
Continuation After Partner Exit: Where a company’s constitutional documents are silent on continuation following the withdrawal, death, or legal disqualification of a partner (e.g., interdiction, bankruptcy, or insolvency), the period allowed for the remaining partners to unanimously decide on continuing the company has been extended from 15 working days to 90 working days.
Abolition of ‘Mushārakah’ Joint Venture Companies: A Mushārakah (associations/partnership by participation) was an unincorporated, unregistered partnership existing solely between the partners, with business conducted in the name of one or more partners. This legal form has now been abolished. All statutory references to Mushārakah are repealed, and the entire chapter governing them has been deleted. Existing Mushārakah partnerships must regularize their status within three months from the Law’s effective date.
Implications: Companies operating in Bahrain should review their governance frameworks, meeting procedures, and legal documentation to ensure compliance. Special attention should be paid to director liability, digital meeting capabilities, and the status of any joint venture arrangements.
Key Links: https://www.tamimi.com/news/bahrain-decree-law-no-38-of-2025-amending-the-commercial-companies-law/
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