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Bahrain Lawyer Registration Exam study materials
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Bahrain Lawyer Registration Exam practice questions

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Question 1Bahraini Civil Law and Obligations

Under the Bahraini Civil Code, when does a contract generally become binding on the parties?

  1. Only after the contract is registered with a notary public
  2. Only after the first payment is made by the debtor
  3. Only after a court certifies the contract as valid
  4. Upon the exchange of mutual consent, subject to any formalities the law requires Correct answer.

Explanation

The governing principle is that a contract is concluded by the meeting of offer and acceptance, and it binds the parties from that moment unless the law prescribes a particular form. Registration or payment is not a general condition of formation.

Question 2Bahraini Civil Law and Obligations

A person who lacks legal capacity concludes a contract without the required guardian consent. In principle, what is the status of that contract?

  1. It is automatically void in every case
  2. It is voidable, and may be annulled at the request of the protected party or representative Correct answer.
  3. It is valid and fully enforceable against the incapable person
  4. It is converted into a unilateral promise

Explanation

Contracts concluded by persons lacking capacity are generally subject to annulment rather than absolute nullity, protecting the incapable party. Annulment is sought by that party or the legal representative.

Question 3Bahraini Civil Law and Obligations

Which defect vitiates consent when one party exploits the other's obvious need to obtain a grossly disproportionate advantage?

  1. Error in law
  2. Fraud
  3. Lesion (exploitation of necessity) Correct answer.
  4. Duress

Explanation

Lesion arises where a party exploits the manifest need or inexperience of another to secure a clearly disproportionate benefit. It is distinct from fraud, which involves deliberate deception, and duress, which involves coercion.

Question 4Bahraini Civil Law and Obligations

An error will generally justify annulment of a contract only when it relates to which element?

  1. A purely subjective motive that was never disclosed
  2. A matter that is a determining reason for consent and known to the other party Correct answer.
  3. Any mistaken belief about the other party's financial position
  4. A mistake about the future profitability of the transaction

Explanation

Relief for error requires that the mistake concern a substantial element of the contract and that it be a determining cause of consent, shared or known to the counterparty. Undisclosed motives and speculative expectations fall outside this protection.

Question 5Bahraini Civil Law and Obligations

What is the primary legal effect of a contract being declared absolutely void?

  1. It is treated as never having existed and restores the parties to their prior positions Correct answer.
  2. It becomes enforceable after ratification by the parties
  3. It remains valid between the parties but not against third parties
  4. It produces effects until a court cancels it

Explanation

Absolute nullity operates retrospectively: the contract is deemed never to have existed, and restitution restores the parties as far as possible to their pre-contractual positions. Ratification cannot cure absolute nullity.

Question 6Bahraini Civil Law and Obligations

A contract contains a term exempting a party from liability for its own intentional wrongdoing. How is that term treated?

  1. It is valid because freedom of contract prevails
  2. It is valid only if written in bold type
  3. It is void as contrary to public order Correct answer.
  4. It is valid but limited to the amount of the contract price

Explanation

Exemption clauses cannot shield a party from liability for fraud or intentional fault, because such clauses contradict public order. The clause is void to that extent.

Question 7Bahraini Civil Law and Obligations

In the interpretation of contracts, what is the primary guide where the wording is clear?

  1. The interpretation most favourable to the debtor
  2. The subjective intention of the drafting lawyer
  3. The interpretation most favourable to the party who prepared the document
  4. The literal meaning of the words, read in the context of the whole agreement Correct answer.

Explanation

Clear wording is given its literal meaning, understood within the contract as a whole and in light of surrounding circumstances. Recourse to extrinsic intention or contra proferentem rules arises only where ambiguity exists.

Question 8Bahraini Civil Law and Obligations

Where a contract is silent on the place of performance of a monetary obligation, what is the default rule?

  1. Payment is made at the creditor's domicile at the time of payment Correct answer.
  2. Payment is made wherever the goods are located
  3. Payment is made at the nearest court registry
  4. Payment is made at the debtor's domicile at the time the contract was formed

Explanation

In the absence of agreement, a money debt is payable at the creditor's domicile at the time of performance. This default reflects the principle that the debtor must seek out the creditor to discharge the debt.

Question 9Bahraini Civil Law and Obligations

A debtor tenders full performance but the creditor refuses to accept it without justification. What is the debtor's appropriate remedy?

  1. The debtor may make a formal tender and obtain release through the court Correct answer.
  2. The debtor must continue to owe the obligation indefinitely
  3. The debtor may unilaterally reduce the debt by half
  4. The debtor may seize the creditor's assets

Explanation

A valid tender of performance that the creditor unjustifiably refuses places the creditor in default. The debtor may then deposit the subject matter with the court and be discharged.

Question 10Bahraini Civil Law and Obligations

Which of the following best describes an obligation to exercise reasonable care (obligation of means)?

  1. The debtor promises only to take the care of a reasonable person in the circumstances Correct answer.
  2. The debtor guarantees a specific result regardless of effort
  3. The debtor is excused whenever the outcome is unfavourable
  4. The debtor's liability depends entirely on the creditor's satisfaction

Explanation

In an obligation of means, the debtor undertakes diligent conduct measured against a reasonable standard, not a guaranteed outcome. Breach is established by showing a failure of that required care.

Question 11Bahraini Civil Law and Obligations

What is the general effect of a valid assignment of a right against the debtor?

  1. The debtor is discharged from paying anyone
  2. The assignment extinguishes the underlying obligation
  3. The assignee is liable for the assignor's unrelated debts
  4. The assignee acquires the right together with its accessories, and the debtor may raise defences existing at the time of assignment Correct answer.

Explanation

Assignment transfers the right with its accessories such as security, and the debtor may oppose defences that existed before being notified. The underlying obligation survives; only the creditor changes.

Question 12Bahraini Civil Law and Obligations

Which circumstance typically constitutes force majeure excusing non-performance?

  1. The debtor's ordinary financial difficulty
  2. A foreseeable rise in market prices
  3. An unforeseeable and irresistible event beyond the debtor's control that makes performance impossible Correct answer.
  4. A deliberate decision by the debtor to prioritise other contracts

Explanation

Force majeure requires an event that is unforeseeable, unavoidable and outside the debtor's control, rendering performance impossible. It suspends or extinguishes the obligation without liability.

Question 13Bahraini Civil Law and Obligations

A seller fails to deliver goods and the buyer seeks specific performance. When is specific performance generally available?

  1. Only after the buyer has paid the full price
  2. Only when the contract is in writing
  3. Whenever the buyer prefers it, regardless of feasibility
  4. When performance is possible and the creditor has a legitimate interest in obtaining it Correct answer.

Explanation

Specific performance may be ordered where it is materially possible and the creditor has a legitimate interest, and it does not cause disproportionate hardship to the debtor. Mere preference is insufficient.

Question 14Bahraini Civil Law and Obligations

What is the function of a penalty clause agreed in advance for breach?

  1. It bars the creditor from any remedy
  2. It fixes the compensation payable on breach, subject to judicial adjustment where excessive Correct answer.
  3. It transfers ownership of the debtor's property to the creditor
  4. It replaces the contract entirely

Explanation

A penalty clause pre-establishes the compensation for breach, sparing proof of loss. Courts may reduce an excessive penalty to the level of actual damage.

Question 15Bahraini Civil Law and Obligations

Where several debtors are jointly liable for an indivisible obligation, what is the creditor's position?

  1. The creditor may claim only a proportionate share from each
  2. The creditor must sue all debtors together in one action
  3. The creditor loses the right to claim if one debtor is insolvent
  4. The creditor may claim the whole performance from any one of them Correct answer.

Explanation

In a joint (solidary) obligation for an indivisible performance, each debtor is liable for the whole, and the creditor may demand full performance from any of them. Internal contribution is settled among the debtors.

Question 16Bahraini Civil Law and Obligations

Which of the following is an essential element for the formation of a valid contract?

  1. A written document signed by two witnesses
  2. Payment of a registration fee
  3. Approval by a government ministry
  4. Consent, a lawful object and a lawful cause Correct answer.

Explanation

The essential pillars of a contract are consent, a determinate object and a lawful cause, together with capacity. Formalities and official approvals are required only for particular categories of contract.

Question 17Bahraini Civil Law and Obligations

A contract is concluded for an unlawful purpose known to both parties. What is the consequence?

  1. The contract is valid but unenforceable by the seller only
  2. The contract is voidable at the option of either party
  3. The contract remains valid because both parties consented
  4. The contract is void, and restitution may be refused where the parties are equally at fault Correct answer.

Explanation

An unlawful object renders the contract absolutely void. Where both parties knowingly participate in the illegality, the court may refuse restitution to avoid rewarding wrongdoing.

Question 18Bahraini Civil Law and Obligations

What distinguishes a condition precedent from a condition subsequent in a contract?

  1. Both operate identically and differ only in name
  2. A condition precedent suspends the obligation until the event occurs, while a condition subsequent terminates it when the event occurs Correct answer.
  3. A condition precedent is always written, while a condition subsequent is oral
  4. A condition precedent applies only to sale, while a condition subsequent applies only to lease

Explanation

A condition precedent defers the creation or enforceability of the obligation until the event occurs. A condition subsequent brings an existing obligation to an end upon the event.

Question 19Bahraini Civil Law and Obligations

Under the general rule on set-off, when may a debtor extinguish a debt by offsetting a counterclaim against the creditor?

  1. Whenever the debtor chooses, regardless of the debts' maturity
  2. Only when the creditor agrees in writing
  3. Only when a court has issued a final judgment
  4. When both debts are due, certain in amount and of the same kind Correct answer.

Explanation

Set-off requires reciprocal debts that are due, liquidated and fungible in nature. When these conditions are met, the debts extinguish each other to the extent of the overlap.

Question 20Bahraini Civil Law and Obligations

What does the principle of good faith require in the performance of contracts?

  1. Parties may disregard the other's interests entirely
  2. Parties must perform only the minimum expressly stated
  3. Parties must always accept any modification proposed by the other side
  4. Parties must act honestly and cooperatively, refraining from conduct that frustrates the contract's purpose Correct answer.

Explanation

Good faith obliges the parties to perform honestly and cooperatively, including duties of information and loyalty, and not to defeat the legitimate expectations of the other party. It does not require accepting unilateral changes.

Question 21Bahraini Civil Law and Obligations

A seller sells the same movable property to two different buyers, delivering it to the second. Who acquires ownership?

  1. Both buyers share ownership equally
  2. The first buyer, because the contract was concluded first
  3. Neither buyer, because the property must be registered
  4. The second buyer, because ownership of movables generally passes by delivery Correct answer.

Explanation

As between successive purchasers of a movable, ownership generally passes to the party who first takes delivery in good faith, reflecting the importance of possession. Priority of contract alone does not confer ownership against a subsequent good-faith possessor.

Question 22Bahraini Civil Law and Obligations

Which statement accurately describes the effect of a contract in favour of a third party (stipulation for another)?

  1. The stipulation is void because third parties cannot benefit
  2. The third party bears the obligations of the contract
  3. The third party acquires a direct right to claim performance against the promisor Correct answer.
  4. The third party must ratify before any right arises in all cases

Explanation

A stipulation for another confers on the third party a direct right to demand performance from the promisor. The third party does not thereby assume the contract's obligations.

Question 23Bahraini Civil Law and Obligations

What is the effect of novation on an existing obligation?

  1. It transfers the obligation to a court-appointed trustee
  2. It extinguishes the original obligation and replaces it with a new one Correct answer.
  3. It suspends the obligation temporarily
  4. It merely clarifies the original terms

Explanation

Novation extinguishes the original obligation and substitutes a new obligation, whether by change of debtor, creditor or object. The old obligation's accessories are extinguished unless the parties agree otherwise.

Question 24Bahraini Civil Law and Obligations

A creditor grants a debtor an extension of time to pay without the guarantor's consent. What is the guarantor's position?

  1. The guarantor is discharged to the extent the extension prejudices its subrogation rights Correct answer.
  2. The guarantor becomes primarily liable in place of the debtor
  3. The guarantor remains fully liable for the whole debt
  4. The guarantor's obligation is automatically doubled

Explanation

A surety is protected against acts of the creditor that prejudice its right of recourse against the debtor. An extension granted without consent discharges the guarantor to the extent of that prejudice.

Question 25Bahraini Civil Law and Obligations

Which of the following best describes a contract of adhesion?

  1. A contract that requires notarisation to be valid
  2. A contract concluded only between merchants
  3. A contract whose terms are entirely negotiated between equal parties
  4. A contract in which one party imposes standard terms and the other has little bargaining power Correct answer.

Explanation

In a contract of adhesion, one party drafts the standard terms and the other merely accepts or rejects them. This imbalance justifies protective interpretation, particularly against the drafter.

Question 26Bahraini Civil Law and Obligations

Under the general rules on the formation of contracts, at what moment is a contract concluded between parties who are not in each other's presence?

  1. When the offeror receives the acceptance. Correct answer.
  2. When the offeree dispatches acceptance to the offeror.
  3. When the offeror dispatches the offer to the offeree.
  4. When the offeree first learns of the offer's terms.

Explanation

In the civil law tradition, a contract between absent parties is formed when the offeror receives the acceptance. Receipt means the acceptance comes into the offeror's sphere of control, not merely that it was sent. Dispatch of the offer or of the acceptance does not by itself conclude the contract.

Question 27Bahraini Civil Law and Obligations

A debtor owes a sum of money and the contract does not specify the place of payment. Under the default rule for monetary obligations, where must the debtor pay?

  1. At the debtor's current domicile.
  2. At the place where the contract was signed.
  3. At the creditor's domicile at the time the obligation was created.
  4. At the creditor's current domicile at the time of payment. Correct answer.

Explanation

Where the contract is silent, a monetary obligation is payable at the creditor's domicile at the time payment is due. This rule reflects the principle that the debtor must seek out the creditor to discharge the debt. A change in the creditor's domicile may therefore shift the place of performance.

Question 28Bahraini Civil Law and Obligations

A creditor assigns a right to an assignee. Before the debtor is notified of the assignment, the debtor pays the original creditor in good faith. What is the effect of that payment?

  1. The payment is invalid and the debtor must pay the assignee again, because assignment transfers the right automatically.
  2. The payment is valid only if the assignee consents to it after the fact.
  3. The payment is invalid because the debtor should have checked the register of assignments before paying.
  4. The payment is valid and discharges the debtor, because the assignment is not enforceable against the debtor until notified. Correct answer.

Explanation

An assignment of a right does not bind the debtor until the debtor has been notified of it. A debtor who pays the original creditor in good faith before notification is discharged. The assignee's remedy is then against the assignor, not against the debtor.

Question 29Bahraini Civil Law and Obligations

A contract contains a clause stating that if the buyer fails to pay by the due date, the buyer must pay the seller a fixed sum of money. Which statement best describes the legal nature of such a clause?

  1. It is always void because it penalizes the buyer.
  2. It is a penalty clause that fixes the compensation in advance and is generally enforceable, subject to judicial adjustment if excessive. Correct answer.
  3. It is an earnest payment that must be returned if the contract is performed.
  4. It is a condition precedent that automatically terminates the contract.

Explanation

A clause that fixes in advance the sum payable on breach is a penalty clause. In many civil law systems it is enforceable as agreed compensation for the breach, but courts may reduce it if it is manifestly excessive. It is not automatically void merely because it operates as a penalty.

Question 30Bahraini Civil Law and Obligations

A debtor is bound by an obligation to deliver a specific unique painting to a creditor. Before delivery, the debtor sells and delivers the painting to a third party who acts in good faith. In an action by the creditor against the third party, which principle best determines the outcome?

  1. The third party always loses because the creditor's claim arose first in time.
  2. The creditor automatically acquires ownership at the moment the contract is formed, so the third party never obtains title.
  3. The third party acquires ownership only if the creditor consents to the transfer.
  4. The third party may acquire ownership if the requirements for good-faith acquisition from a non-owner are satisfied, because the creditor had only a personal right against the debtor. Correct answer.

Explanation

A contract creating an obligation to deliver a specific thing does not by itself transfer ownership; it creates a personal right against the debtor. If the debtor transfers the thing to a third party, the third party may acquire ownership under the rules protecting good-faith purchasers. The original creditor is then left with a claim for damages against the debtor.

Question 31Bahraini Commercial Law and Companies

Under Bahraini commercial law, which body is principally responsible for registering commercial companies and maintaining the commercial register?

  1. The Bahrain Chamber of Commerce and Industry
  2. The Ministry of Industry and Commerce Correct answer.
  3. The Ministry of Justice, Islamic Affairs and Waqf
  4. The Central Bank of Bahrain

Explanation

Company incorporation and commercial registration in Bahrain are administered by the Ministry of Industry and Commerce, which keeps the commercial register and issues the commercial registration certificate. The Central Bank licenses financial institutions, the Chamber is a private-sector membership body, and the Ministry of Justice handles courts and notarisation.

Question 32Bahraini Commercial Law and Companies

What is the minimum number of shareholders required to form a Bahraini single-person company (with limited liability)?

  1. One Correct answer.
  2. Five
  3. Two
  4. Three

Explanation

Bahraini law permits a single natural or legal person to incorporate a single-person company with limited liability, so one shareholder suffices. Ordinary closed joint-stock and limited liability companies generally require at least two founders, and there is no general three- or five-shareholder minimum.

Question 33Bahraini Commercial Law and Companies

In a Bahraini limited liability company (WLL), a shareholder's liability is generally limited to what amount?

  1. An amount fixed by the creditors
  2. The total debts of the company
  3. The shareholder's personal net worth
  4. The value of the shares the shareholder holds Correct answer.

Explanation

A limited liability company gives its members limited liability, meaning each shareholder is liable only up to the nominal value of the shares held. The company's own assets answer for company debts, and creditors cannot generally reach shareholders' personal wealth beyond their subscribed capital.

Question 34Bahraini Commercial Law and Companies

Which document typically governs the internal management of a Bahraini company and is filed at incorporation?

  1. The import licence
  2. The articles of association Correct answer.
  3. The tax clearance certificate
  4. The commercial registration certificate

Explanation

The articles of association (and, where applicable, the memorandum) set out the company's governance, share structure and management rules, and are filed with the authorities at incorporation. The commercial registration certificate merely evidences registration, while tax and import documents are unrelated to internal governance.

Question 35Bahraini Commercial Law and Companies

What is the general rule on the commercial nature of a transaction under Bahraini commercial law?

  1. It is commercial if it is carried out by a trader for business purposes Correct answer.
  2. It is commercial only if registered with the Chamber
  3. It is commercial only if it exceeds a fixed value
  4. It is commercial only if both parties are companies

Explanation

Bahraini commercial law classifies acts as commercial when performed by a trader in connection with their business, or when the act itself is commercial by nature. Registration, transaction value and the parties' corporate status are not the tests.

Question 36Bahraini Commercial Law and Companies

Which of the following is a characteristic of a Bahraini joint-stock company (BSC)?

  1. Its partners are personally liable for company debts
  2. It cannot issue shares to the public
  3. It must have a single shareholder only
  4. Its capital is divided into transferable shares Correct answer.

Explanation

A joint-stock company has capital divided into equal, generally transferable shares, and shareholders' liability is limited to the value of those shares. It may be closed or public, and it is not restricted to a single shareholder.

Question 37Bahraini Commercial Law and Companies

What is the role of the auditor in a Bahraini joint-stock company?

  1. To manage the company's daily operations
  2. To examine the financial statements and report to the shareholders Correct answer.
  3. To set the company's dividend policy
  4. To represent the company in court

Explanation

The auditor independently examines the company's accounts and financial statements and reports findings to the general assembly of shareholders. Day-to-day management belongs to the board, legal representation is a separate function, and dividend policy is decided by the general assembly on the board's proposal.

Question 38Bahraini Commercial Law and Companies

A Bahraini WLL wishes to increase its capital. Which procedure is generally required?

  1. A resolution amending the articles and registration of the increase Correct answer.
  2. Notification to creditors without any corporate resolution
  3. A unilateral decision by the manager alone
  4. Approval by the company's external auditor only

Explanation

Increasing capital requires a corporate resolution amending the articles of association, followed by registration of the amendment with the commercial authorities. A manager acting alone or the auditor cannot effect a capital increase, and creditor notification alone is insufficient.

Question 39Bahraini Commercial Law and Companies

In a Bahraini general partnership, what is the partners' liability for partnership debts?

  1. Joint and unlimited personal liability Correct answer.
  2. Limited to their capital contribution
  3. No liability at all
  4. Limited to twice their contribution

Explanation

In a general partnership the partners are jointly and severally liable, without limit, for the partnership's obligations. Limited liability applies to other forms such as the WLL or joint-stock company, and there is no rule capping liability at double the contribution.

Question 40Bahraini Commercial Law and Companies

A Bahraini company's board resolves to enter a transaction that falls outside the objects stated in its articles. What is the general legal position?

  1. The transaction binds the directors personally as parties
  2. The transaction is automatically void in every case
  3. The company may be bound, but the directors may face liability for acting beyond authority Correct answer.
  4. The transaction is valid only if the auditor approves it

Explanation

Under modern company law, acts beyond the stated objects are not automatically void as against third parties acting in good faith; the company may be bound while directors who exceeded their authority may be liable internally. The auditor's approval is not the test, and directors do not automatically become parties to the contract.

Question 41Bahraini Commercial Law and Companies

A shareholder in a Bahraini joint-stock company is unable to attend the general assembly. What is the usual mechanism to exercise voting rights?

  1. Appoint a proxy to vote on the shareholder's behalf Correct answer.
  2. Ask the auditor to vote instead
  3. Request the court to vote by default
  4. Transfer the shares to the board temporarily

Explanation

Shareholders may generally attend the general assembly in person or appoint a proxy to vote on their behalf, subject to the articles and applicable rules. Shares are not transferred to the board, the auditor does not vote, and courts do not cast votes for absent shareholders.

Question 42Bahraini Commercial Law and Companies

Which body normally approves the annual financial statements of a Bahraini joint-stock company?

  1. The board of directors alone
  2. The general assembly of shareholders Correct answer.
  3. The external auditor alone
  4. The Ministry of Industry and Commerce

Explanation

The board prepares the financial statements and the auditor reports on them, but it is the general assembly of shareholders that approves them. The auditor examines rather than approves, and the Ministry does not approve individual companies' accounts.

Question 43Bahraini Commercial Law and Companies

A Bahraini company's manager enters a contract with a supplier. The articles require board approval for contracts above a set value, but the supplier was unaware of this limit. What is the likely position?

  1. The company is generally bound because the internal limit was not disclosed to the supplier Correct answer.
  2. The manager is personally the only party liable
  3. The contract is void because internal limits always bind outsiders
  4. The supplier must return any goods delivered

Explanation

Internal restrictions on a manager's authority generally do not bind third parties who deal in good faith and are unaware of them; the company may be bound and the manager answerable internally. Such limits are not automatically effective against outsiders, and the supplier is not required to return goods.

Question 44Bahraini Commercial Law and Companies

What is the effect of registering a company in the Bahraini commercial register?

  1. It confers legal personality on the company Correct answer.
  2. It exempts the company from all taxes
  3. It replaces the need for articles of association
  4. It transfers ownership of shares to the state

Explanation

Registration in the commercial register is what brings the company into existence as a legal person with capacity to contract and sue. It does not transfer shares to the state, grant tax exemption, or dispense with the articles of association.

Question 45Bahraini Commercial Law and Companies

A Bahraini WLL has two shareholders holding 70% and 30%. The majority wishes to remove a director. What is the general principle?

  1. The general assembly may remove directors by the majority specified in law and the articles Correct answer.
  2. Only the auditor can remove a director
  3. Directors can only be removed by court order
  4. A single shareholder can always remove a director unilaterally

Explanation

Directors are appointed and may be removed by the general assembly, subject to the majority requirements in the law and articles. No single shareholder can act unilaterally unless the articles so provide, the auditor has no such power, and court removal is not the only route.

Question 46Bahraini Commercial Law and Companies

Which of the following best describes a Bahraini holding company?

  1. A company that only holds real estate for its owners
  2. A company that controls other companies through share ownership Correct answer.
  3. A company that cannot own shares in other companies
  4. A company formed solely to hold client funds

Explanation

A holding company's purpose is to acquire and hold participations in other companies, exercising control through share ownership. It is not limited to real estate, is not a client-fund vehicle, and by definition may own shares in subsidiaries.

Question 47Bahraini Commercial Law and Companies

A Bahraini company discovers that a director secretly diverted a corporate opportunity to a business she owns. What claim may the company generally bring?

  1. A claim only if the auditor consents
  2. No claim, because directors may take any opportunity
  3. A claim limited to recovering the director's salary
  4. A claim for breach of fiduciary duty and account of profits Correct answer.

Explanation

Directors owe fiduciary duties of loyalty and must not divert corporate opportunities for personal gain; the company may claim damages or an account of the profits made. The auditor's consent is irrelevant, and the remedy is not confined to salary recovery.

Question 48Bahraini Commercial Law and Companies

What is the usual minimum share capital requirement for a Bahraini closed joint-stock company?

  1. Capital determined solely by the auditor
  2. No capital is ever required
  3. Capital equal to the company's annual revenue
  4. A statutory minimum set by the commercial companies law Correct answer.

Explanation

Bahraini commercial companies law prescribes minimum capital thresholds for joint-stock companies, which must be subscribed and paid in accordance with the rules. Capital is not tied to revenue, is not set by the auditor, and some capital is required.

Question 49Bahraini Commercial Law and Companies

A Bahraini company's general assembly is convened without the notice period required by the articles. What is the consequence for resolutions passed?

  1. They are valid only if unanimous among directors
  2. They are automatically valid because shareholders attended
  3. They become valid once the auditor signs them
  4. They may be challenged and set aside for defective convening Correct answer.

Explanation

Resolutions adopted at a meeting not properly convened may be challenged and annulled for procedural defect, unless the relevant rules on waiver or unanimous attendance cure the defect. Mere attendance, auditor signature, or director unanimity does not automatically validate a defective meeting.

Question 50Bahraini Commercial Law and Companies

In a Bahraini company, a shareholder holding a small minority believes the board is mismanaging assets. Which mechanism is generally available under company law?

  1. Automatic dissolution of the company
  2. Unilateral removal of the board by the minority
  3. Direct seizure of the directors' personal assets
  4. Derivative action on behalf of the company against the directors Correct answer.

Explanation

Minority shareholders may in defined circumstances bring a derivative action in the company's name against directors for breach of duty. Self-help seizure of assets, automatic dissolution, and unilateral board removal by a minority are not available remedies.