A Comprehensive Overview of General Assembly Meetings in Bahrain Shareholding Companies
In corporate governance, the processes governing Ordinary General Meetings (OGM) and Extraordinary General Meetings (EGM) serve as frameworks for decision-making within organizations. As per Legislative Decree No. 21 of 2001, promulgating the Commercial Companies Law (“CCL”), as amended from time to time, Joint-stock Companies, known as Bahraini Shareholding Company (“BSC”), and Joint-stock Companies (Closed), known as Bahraini Shareholding Company (Closed) (“BSC(c)”), are required to hold their general assembly meetings. This article covers the requirements pertaining to invitations, legal quorums, voting procedures, and authorities applicable to both public and closed joint stock companies in Bahrain.
Before we dive into the intricacies and differences of the two types of meetings, a brief introduction, BSC shareholders are liable for the company’s debts only to the extent of the value of their shares. A BSC allows negotiable shares, enabling multiple legal or natural persons to subscribe. There are two categories of BSCs: public and closed. Public BSCs are listed on the Bahrain Bourse, the capital market of Bahrain, and their shares are openly traded. Closed BSCs may be listed on the Bahrain Bourse but are not open for public subscription.
| OGM | EGM |
Timing and Summoning | The company’s OGM must be convened at least once during the first 3 months following the end of the financial year for companies listed on a stock exchange or licensed by the Central Bank of Bahrain (CBB), and within 6 months following the end of the financial year for other companies. | The following bodies may invite the extraordinary general assembly to convene: |
Invitation | BSC: BSC (c): MOIC Notification: – – Copies of invitation documents should be sent to the MOIC at least 10 days before the general assembly meeting.
Inviting the OGM: The following bodies may invite the ordinary general assembly to convene:
The MOIC can call for a meeting if: | Article 209 of CCL: ‘The provisions relating to the ordinary general assembly shall apply to the extraordinary general assembly, subject to the provisions set out in the following articles.’ Meeting Notice: MOIC Notification: –Copies of the meeting notice sent at least 10 days before the meeting to the MOIC. The following information outlines the process for listed companies in Bahrain to convene the EGM. Shareholder Invitation:
BSC: Published in two local newspapers (Arabic & English) with the agenda.
BSC (c): Sent by registered mail or confirmed delivery with the option for hand-delivered receipts. |
Legal quorum | BSC: BSC (c): | BSC: BSC (c):
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Voting | The majority of shares represented at the meeting (unless a higher threshold is required by AoA). |
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Authority | Set out in Article 206 of CCL
| Set out in Article 210 and throughout the CCL. |
In conclusion, the General Assembly Meetings (OGMs and EGMs) in Bahrain Shareholding Companies play a crucial role in corporate governance, ensuring transparency and effective decision-making within organizations. By understanding and adhering to these frameworks, Bahraini companies can enhance investor confidence and propel sustainable growth in the corporate governance landscape.