Bahraini Commercial Law and Companies
Core Concepts
Commercial law in Bahrain is governed by the Commercial Companies Law (Law No. 21 of 2001) and the Commercial Code (Legislative Decree No. 7 of 1987). Candidates must know the types of commercial companies: joint stock (شركة مساهمة), limited liability (ذات مسؤولية محدودة), general partnership, limited partnership, and sole proprietorship. Key concepts include incorporation requirements, capital minimums, governance, and liability of shareholders.
Traps and Distinctions
A common trap is confusing the liability of shareholders in a joint stock company (limited to their shares) with that in a general partnership (unlimited, joint and several). Another trap: the role of the Commercial Register (السجل التجاري) – registration is constitutive for companies, not merely declaratory. Also, distinguish between a branch of a foreign company and a subsidiary; a branch is not a separate legal entity.
Worked Example
A foreign company wants to operate in Bahrain. It can establish a branch (registered with the Ministry of Industry and Commerce) or a subsidiary (e.g., a WLL). The branch's liabilities extend to the parent company, while the subsidiary is a separate legal person with limited liability. Questions often ask which form requires a local sponsor; since 2016, 100% foreign ownership is allowed in many sectors, but some (e.g., oil, aviation) remain restricted.
Rule of Thumb
For company formation, check: (1) minimum capital, (2) number of founders, (3) liability regime, (4) registration and publication requirements. For commercial transactions, remember that commercial obligations are presumed to be onerous (not gratuitous) and that commercial custom (العرف التجاري) supplements the law.