New Financial Regulations for Commercial Entities
Introduction to Ministerial Order No. 43 of 2024
The Ministry of Industry and Commerce (MOIC) recently issued Ministerial Order No. 43 of 2024 (the “Order”), introducing new regulations to enhance financial transparency and promote electronic payment methods among commercial entities in Bahrain.
Bank Account Requirements for Commercial Entities
The Order mandates every commercial entity operating in Bahrain to establish and maintain a dedicated bank account with a licensed bank within Bahrain. This account will be used exclusively for all financial transactions related to commercial activities, including cash transactions, bank transfers and electronic payments. Even if a commercial entity operates through multiple branches, it is required to maintain a single bank account. The Order stipulates that all commercial entities must offer electronic payment options to facilitate transactions.
Applicability and Scope of the Order
The Order applies to all commercial entities registered under Bahrain’s Commercial Registry Law No. 27 of 2015, as amended (“CR Law”). This includes individual establishments, commercial companies (excluding limited partnership companies) and branches of foreign companies.
Penalties for Non-Compliance
Failure to comply with the Order may result in penalties outlined in Article 20 of the CR Law, including:
- Suspension of commercial registration for up to six months;
- Daily administrative fines ranging from BHD 1,000 for first-time offenses and up to BHD 2,000 for subsequent offenses within three years, with a total fine of up to BHD 50,000;
- A lump-sum administrative fine of up to BHD 100,000; and/or
- Striking off the commercial register.
Implementation Timeline
The Order will come into effect on 13 December 2024, six months after its publication in the Official Gazette.
In conclusion, the Order represents a significant step by the MOIC in modernizing financial practices. The Order aims to enhance transparency and efficiency in financial transactions by mandating dedicated bank accounts and promoting electronic payment options.
