Recruitment Obligations in Bahrain

Recruitment Obligations in Bahrain

 Introduction:

Embarking on the recruitment process in Bahrain involves meticulous attention to legal obligations spanning various stages, from drafting employment contracts to ensuring compliance with social security regulations. This guide outlines the detailed steps and obligations incumbent upon employers, providing clarity on essential aspects such as contract formatting, employee registration procedures, social security enrollment, and work permit requirements for expatriates. By understanding and adhering to these obligations, employers can navigate the recruitment landscape with confidence, fostering a compliant and transparent employment environment conducive to sustainable business growth.

 Recruitment Steps and Detailed Obligations:

  1. Employment Contract: An agreement between an employer and a worker whereby the worker undertakes to perform the duties of a particular job for the employer under his management or supervision in consideration of a wage. A contract shall be deemed to be for a definite term if it is entered into for a fixed period or for performing a specified job.
    • Format: The contract must be in writing and provided in Arabic. If using another language, an official Arabic translation must accompany it.
    • Content: The contract should clearly outline the following details:
      • Parties: Identify both the employer and employee with their full names and contact information.
      • Job Details: Clearly define the job title, duties, responsibilities, and reporting structure.
      • Work Location: Specify the primary work location and any potential travel requirements.
      • Compensation and Benefits: Outline the base salary, allowances, bonuses, overtime pay (if applicable), paid leave entitlements, and any other benefits offered.
      • Working Hours: Specify the regular working hours, including breaks and any potential overtime arrangements.
      • Termination: Outline the terms for termination, including notice periods, severance pay (if applicable), and consequences of breach of contract.
    •  
  1. Employee Registration:
    • Labour Market Regulatory Authority (LMRA): Register all employees with the LMRA. This is a mandatory step for all workers, both Bahraini and expatriate. The LMRA website offers online registration facilities.
    • Business Registration Certificate: Ensure you have a valid business registration certificate before registering employees.

  2. Social Security:
    • Enrolment: Enrol all employees with the Pension Authority and Social Insurance Organization (SIO). This ensures they receive social security benefits.
    • Contributions: As an employer, you are required to make regular contributions to the SIO on behalf of your employees. The specific contribution rates are outlined in the SIO regulations.

  3. Work Permits (Expatriates):
    • Requirement: If you plan to hire foreign workers, you must obtain a work permit for each one from the LMRA.
    • Process: The work permit application process involves submitting specific documents to the LMRA, including the employment contract, educational qualifications, and proof of health insurance. The LMRA website provides detailed information on the required documents and procedures.

Additional Considerations:

  • Job Advertising: While there are no specific legal requirements regarding advertising job vacancies, it is good practice to advertise positions fairly and avoid any discriminatory language.
  • Pre-Employment Screening: Background checks and reference checks are generally permissible, but ensure you obtain the candidate’s consent beforehand. Be mindful of privacy regulations when conducting such checks.
  • Onboarding: Develop a comprehensive onboarding process to familiarize new hires with the company culture, policies, and procedures.

Civil Service Law and Recruitment Obligations: In the realm of public sector employment, the Civil Service Law, governed by Legislative Decree No. 48 of 2010, delineates recruitment procedures and employee rights within government entities. Article 3 defines the civil service and outlines its scope, encompassing ministries, government agencies, and public institutions. Recruitment in the civil service sector is guided by principles of transparency, impartiality, and efficiency, as enshrined in Article 4.

Article 12 of the Civil Service Law outlines the recruitment process for civil service positions, emphasizing the importance of public advertisement of vacancies and selection based on merit, qualifications, and competency assessments. This merit-based approach seeks to attract talented individuals, enhance organizational performance, and foster public trust in governmental institutions. By upholding transparent recruitment practices, government entities can promote accountability and integrity in their workforce management.

Conclusion:

In conclusion, navigating the intricate terrain of recruitment obligations in Bahrain demands diligence, thoroughness, and a commitment to legal compliance. By adhering to the outlined steps and obligations, employers can not only ensure the legality of their hiring practices but also foster a workplace environment characterized by transparency, fairness, and respect for employee rights. Embracing these principles not only mitigates legal risks but also enhances employer reputation, attracts top talent, and ultimately contributes to the long-term success and sustainability of businesses operating in Bahrain. As employers strive to meet their recruitment obligations, they play a pivotal role in shaping a thriving and inclusive employment landscape in the Kingdom.

 

Bahrain International Commercial Court: Transnational System of Commercial Justice

Bahrain International Commercial Court: Transnational System of Commercial Justice

On 20 March 2024, a judicial milestone was taken by the Kingdom of Bahrain where a bilateral treaty was signed with the Republic of Singapore (the “Treaty”). Preceding the signing of the Treaty, two memoranda were signed by the judiciaries of Bahrain and Singapore in May 2023, namely the Memorandum of Understanding on Cooperation and Memorandum of Guidance regarding the Enforcement of Money Judgements.

The Treaty is the first of its kind in the Middle East and was signed during a virtual meeting between the Minister of Justice, Islamic Affairs and Endowments, H.E. Nawaf bin Mohamed Al Maawda and the Minister of Home Affairs and Minister of Law of Singapore, Mr. Kasiviswanathan Shanmugam.

This article will briefly outline the essence of the Treaty, highlighting its significance and its foreseeable impact in the development of the Bahrain judiciary.

What Does the Treaty Establish?

Bahrain International Commercial Court

Through the cooperation of Bahrain and Singapore, the Treaty aims to establish a Bahrain International Commercial Court (“BICC”). The BICC will be based on the Singapore International Commercial Court (“SICC”) model which will be adopted to settle disputes regionally and internationally.

The judicial model adopted by the SICC is renowned as a trusted and neutral forum that ensures efficiency and effectiveness in settling international commercial disputes. Since its launch in 2015, the SICC formed a diverse panel of international and local judges in both civil and common law traditions. In brief, the SICC combines international arbitration’s best practices with the principles of international commercial law, creating a so-called “arbitration in litigation”. This model aims to keep up with the fast-paced developments of international commerce and offer practical and compatible procedures with the demands of cross-border commercial markets.

The BICC is forecasted to hear international arbitration related disputes in the near future with relatively minor adjustments as Bahrain is a bilingual jurisdiction where cases are heard before appointed international judges in English at the highest level of court (the Court of Cassation). In addition, English language litigation is implemented by the Bahrain Chamber for Dispute Resolution for specified cases pursuant to Resolution No. 28 of 2023, where disputes are settled without the need for English translations or the appointment of translators.

Designated Body for Appeals

Furthermore, the Treaty stipulates that cases heard before the BICC may be appealed, where such cases will be heard before a designated body in Singapore. The hearing of appeals by the SICC from the BICC aims to aid in providing the disputed parties a transnational dispute resolution route leading to the growth of international trade and overall development of judicial systems.

What is the Significance of the Treaty?

The establishment of the BICC and a designated body for appeals is forecasted to create a positive wave of change in the judicial system, catalyzing opportunities for growth and expansion. Hatim Q. Zu’bi, Managing Director of Zu’bi & Partners Attorneys & Legal Associates, commented on the Treaty and its vital role in Bahrain (for the commentary, kindly refer to the Al-Watan Newspaper publication linked here).

The Treaty embodies a balance between party autonomy and simultaneously ensures the adherence to public policy, and we are of the view that its implementation will lead to transformative opportunities on a regional and international level, such as:

  1.  the promotion of international rule of law, fostering the principles of, among other things, supremacy of the law, equality before the law and accountability to the law;
  2. The boosting of international trade and development of dispute resolution in international commerce;
  3. The protection of the rights and interests of the international business community, thus encouraging the commercial market to thrive;
  4. The reduction and resolution of current difficulties faced in international dispute resolution; and the development and supplementation of commercial jurisprudence.

Overall, the cooperation between the BICC and the SICC will pave the way to enhancing the standards of international commercial dispute resolution, building on current mechanisms and encouraging the prosperity of transnational commercial justice.

Navigating Share Transfers: A Legal Perspective on WLLs and BSC(c)

Navigating Share Transfers: A Legal Perspective on WLLs and BSC(c)

Understanding the intricacies of share transfers is essential for companies considering adjustments to their share structure. Whether introducing a new shareholder or altering the distribution of shares among existing shareholders, the share transfer process involves relocating existing shares rather than issuing new ones. This is a common method used to bring in new strategic business partners. The regulations governing share capital transfer are primarily outlined in Legislative Decree No. 21 of 2001, known as the Commercial Companies Law, as amended from time to time (“CCL”).

This article will discuss the process of share transfers for Limited Liability Companies (“WLL”) and Bahrain Shareholding Companies (Closed) (“BSC(c)”) from a Bahraini legal perspective. For a detailed explanation of the differences between these two types of companies, please refer to this article explaining the various types of businesses.

In principle, shares can be freely transferred over time unless the company’s constitutional documents explicitly state otherwise. Shareholders of WLLs and BSC(c) companies often seek to manage the admission of new shareholders, particularly if this could significantly influence company management or control. It is customary for such companies to impose certain restrictions on shareholders’ rights to transfer their shares. These transfer restrictions, which can include the right of refusal by directors and pre-emption rights, are stated in the company’s constitutional documents and/or shareholders’ agreement. If there are any restrictions in the constitutional documents, this might impede the intended transfer. Assuming there are restrictions, these restrictions can be waived or disapplied through unanimous agreement or a validly passed resolution.

In summary, understanding the process of share transfers in Bahrain is important for companies seeking to adjust their share structure effectively. Businesses can strategically manage new shareholder admissions while retaining operational control by understanding the legal regulations and navigating specific requirements for WLLs and BSC(c) entities. While this article offers a concise overview of share transfer procedures, consulting a lawyer is advisable for best practice.

 

Please do not hesitate to reach out if you need assistance navigating the share transfer process. Our dedicated team members are ready to provide support tailored to your needs.

المرأة في قانون العمل البحريني

 

المرأة في قانون العمل البحريني

انطلاقاً من حرص مملكة البحرين على اعلاء حقوق الانسان وحظر التمييز القائم على كافة المستويات ومنها التمييز على أساس الجنس فإن وضع المرأة في أي مجتمع يعد معياراً أساسياً يعكس درجة تقدمه ومدى تفاعله مع معطيات العصر الحديث بكل ما يحمله من قيم الديمقراطية واحترام المواطنة ودعم قضايا حقوق الإنسان.   جاء ميثاق العمل الوطني ودستور المملكة المعدل لعام 2002 ليؤكد مشروعية حقوق المرأة البحرينية، حيث أنّ التعديلات التي أدخلت على الدستور الصادر في عام 1973، على أهمية تحقيق مبدأ المساواة بين جميع المواطنين دون أي تمييز بينهم في الحقوق والواجبات بسبب الجنس، أو الأصل أو اللغة أو الدين أو العقيدة، الأمر الذي أسهم في دعم دور المرأة وتعزيز مكانتها في المجتمع البحريني.

وتماشياً مع هذه التعديلات، فقد انعكس هذا المفهوم على حقوق المرأة في قانون العمل البحريني، في القطاع الأهلي الصادر بالمرسوم بقانون رقم (36) لسنة 2012 على تمتع المرأة بكافة الحقوق في مجال العمل أسوةً بالرجل، إذْ أورد تعريف العامل بأنه: (كل شخص طبيعي يعمل لقاء اجر لدى صاحب عمل وتحت إدارته أواشرافه).

وبالرغم من حرص الدستور وقانون العمل على مساواة المرأة بالرجل في مجال العمل سواء في الحقوق او الواجبات إلا أنّه خص المرأة ببعض الاحكام الخاصة التي تتوافق مع طبيعتها ودورها الرئيسي الذي تؤديه في المجتمع والاسرة بهدف توفير المزيد من الحماية لها.  فقد أورد المشرع في قانون العمل جملة من التعديلات التي وسعت من نطاق الحقوق والضمانات الممنوحة للمرأة ونذكر منها:

         منح المرأة العاملة إجازة وضع مدفوعة الاجر بمقدار 60 يوم بالإضافة الى 15 يوم بدون اجر (المادة 32/أ).

         منح المرأة العاملة فترتي رعاية للطفل لا تقل كل منهما عن ساعة واحدة (أي بمجموع ساعتين) حتى يبلغ الطفل من العمر ستة أشهر، وفترتي رعاية لا تقل كل منهما عن نصف ساعة حتى يبلغ الطفل عامه الأول مع جواز ضم الفترتين (المادة 35).

         حظر فصل العاملة او انهاء عقد عملها بسبب الزواج او اثناء إجازة الوضع (المادة 33).

          تشديد العقوبة المقررة على مخالفة الاحكام والقرارات الخاصة بتشغيل النساء لتصبح الغرامة لا تقل عن مائتي دينار ولا تتجاوز خمسمائة دينار (المادة 187) .

إضافة الى ذلك فقد استحدث القانون ضمانات وحقوق أخرى للمرأة نذكر منها :

         حظر تشغيل العاملة خلال الأيام الأربعين التالية للوضع (المادة 32/ب).

         حق العاملة في الحصول على إجازة بدون اجر بحد اقصى ستة أشهر في المرة الواحدة وثلاث مرات طوال مدة خدمتها لرعاية طفلها الذي لم يتجاوز من العمر الست سنوات (المادة 34).

         حق المرأة العاملة في الحصول على إجازة عدة الوفاة مدتها شهر مدفوعة الاجر ويحق لها استكمالها لمدة ثلاثة أشهر وعشرة أيام من رصيد اجازاتها السنوية فإن لم يكن لها رصيد فلها الحصول على اجازة بدون أجر (المادة 63/ج).

         اعتبار فصل العاملة او انهاء عقد عملها بسبب الزواج او اثناء إجازة الوضع فصلاً تعسفياً (المادة 104).

ايضاً كذلك فقد جاء المرسوم بقانون رقم (16) لسنة 2021 بتعديل بعض احكام قانون العمل في القطاع الأهلي بإضافة فقرة ثانية الى المادة (39) لغايات حظر التمييز في الاجور بين العمال والعاملات في العمل ذي القيمة المتساوية.

كما ألغى المرسوم بقانون السابق المادتان (30) و (31) من قانون العمل والتي كانتا تتضمنان إصدار قرار بتحديد الأحوال والاعمال والمناسبات التي لا يجوز فيها تشغيل النساء ليلاً وتحديد الاعمال التي يحظر تشغيل النساء فيها. أي انه بإلغاء هاتين المادتين أصبح للنساء والرجال فرص متكافئة للعمل في كافة الاعمال على حد سواء. 

 

تجدر الإشارة إلى أن المرأة البحرينية بدأت العمل في القطاع الخاص في الخمسينات، ثم بدأت بعد ذلك بامتلاك السجلات التجارية ودخول مجال ريادة الأعمال في الستينات، وتؤكد النتائج الإحصائية الرؤيا الواضحة للوضع الراهن للمرأة بمملكة البحرين في القطاع الخاص، حيث ارتفعت نسبة مشاركة المرأة البحرينية من اجمالي العاملين البحرينيين في القطاع الخاص ومجال الأعمال الحرة، من 24% عام 2001 لتصل إلى 35% وفق بيانات الربع الثاني للعام 2023 الصادرة عن المجلس الأعلى للمرأة.   كما تبوأت المرأة البحرينية مناصب قيادية عديدة في مؤسسات القطاع الخاص كرئيسة تنفيذية، ورئيسة لمجالس الإدارة وعضوة في مجالس الادارة، واستطاعت أربع نساء الفوز في انتخابات مجلس ادارة غرفة تجارة وصناعة البحرين في عام 2014 وبنسبة 22%.  كما أخذت المرأة تنخرط في مجالات عمل جديدة لم تكن تشارك فيها سابقاً مثل قيادة سيارات الأجرة وتدريب السياقة وصياغة المجوهرات. كما أوضحت المؤشرات بأن نسبة مشاركة المرأة في التعليم الحكومي والخاص تبلغ حوالي 50%.

 

 

 

A Comprehensive Overview of General Assembly Meetings in Bahrain Shareholding Companies

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:
 Board of Directors (BoD)
 A written request to the BoD by a number of shareholders representing at least 10% of the company’s shares.
 In the event of such a request, the BoD must convene the EGM within 1 month. Failure to do so will prompt the Ministry of Industry and Commerce (“MOIC”) to call for the meeting within 15 days following the expiration of that period, in accordance with the regulations outlined in Article 199 of the CCL.

Invitation

BSC:
Shareholder invitation: Published in at least two local newspapers, one in Arabic and one in English, at least 21 days prior to the meeting, with a detailed agenda.

BSC (c):
Shareholder invitation: Sent by registered mail at least 21 days before the meeting, or conveyed with shareholders’ signatures acknowledging time, venue, and agenda.

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:
Chairman
BoD upon request by shareholders representing at least 10% of capital.
BoD upon a justified request by the auditor.
The auditor in case of finding remarks, whether financial or administrative or in case he cannot complete his mission.
-Competent body overseeing company activity.

 

The MOIC can call for a meeting if:
1. A month passes without the meeting being held.
2. The board’s membership falls below the required minimum.
3.Shareholders holding at least 10% of the company’s capital request it for valid reasons.
4. They deem the meeting necessary.

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:
 Published in at least two local newspapers, one in Arabic and one in English, at least 21 days prior to the meeting, with a detailed agenda.

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:
Invitations must be sent to shareholders at least 21 days before the meeting.

 

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:
· Attendance of shareholders representing more than 50% of the company’s capital.
·  If the required quorum isn’t met, a second meeting with the same agenda must be scheduled within 7 to 15 days. The second meeting requires attendance by shareholders representing more than 30% of the capital to be valid.
· The third meeting is valid regardless of the number of attendees.
· If the dates for the second and third meetings were already specified in the invitation for the first meeting, new invitations may not be needed. However, if none of these meetings have taken place, publication in at least two newspapers, one Arabic and one English, is required.

BSC (c):
· The ordinary general assembly meeting requires attendance by shareholders representing more than 50% of the shares for validity.
· If the quorum isn’t met, the meeting is valid with those present after 30 minutes from the specified time of the meeting (unless the AoA specifies otherwise).
·Each shareholder has the right to attend the general assembly, and their voting power corresponds to their share ownership (any provision or resolution contrary to this is deemed null and void).
· A shareholder can delegate a person to attend the assembly, except for the chairman, board members, or company employees, unless they are first-degree relatives.
· Delegation requires a special written power of attorney designated by the company.
· Individuals lacking capacity must be represented by their legal guardians.
·The company shall prepare special cards indicating a shareholder’s shares and those they represent.
·Proxy appointments and delegations must be made at least 24 hours before the meeting.
·Members cannot vote for themselves or on behalf of those they represent in matters involving personal interests or disputes with the company.

BSC:
· Extraordinary general assembly requires attendance by shareholders representing at least 2/3 of the company’s capital for validity.
· If the quorum isn’t met, a second meeting is scheduled within 15 days, requiring attendance by shareholders representing more than 1/3 of the capital.
· If the quorum isn’t met for the second meeting, a third meeting is scheduled within 15 days, with validity requiring attendance by 25% of shareholders.
·New invitations for the last 2 meetings may not be necessary if their dates were specified in the invitation for the first meeting, with publication required in 2 local daily newspapers.

BSC (c):
·Extraordinary general assembly requires attendance by shareholders representing 2/3 of the company’s shares for validity.
·If the quorum isn’t met, a second meeting is scheduled within 10 days, with validity requiring attendance by representatives of more than 1/3 of the capital.
· If the quorum isn’t met for the second meeting, a third meeting is scheduled within ten days, with validity requiring attendance by representatives of 25% of the capital.
· New invitations for the last two meetings may not be necessary if their dates were determined in the invitation for the first meeting, with shareholders notified if the first meeting was not held.

 

 

Voting

The majority of shares represented at the meeting (unless a higher threshold is required by AoA).

  • Resolutions of the extraordinary general assembly require a 2/3 majority vote of the represented shareholders.
  • Resolutions concerning capital changes, company term extension, winding-up, conversion, or merger require a 75% majority of shares present for validity.
  • Extraordinary general assembly resolutions require approval by the MOIC to become effective.
  • The extraordinary general assembly can pass resolutions within the ordinary general assembly’s powers if the necessary quorum and majority are present and the agenda includes the relevant matters.

Authority

Set out in Article 206 of CCL
1.Electing Board members and dismissing them
2.Setting remuneration of Board members
3.Discussing and ratifying the Director’s report on company’s activities and financial position during the financial year ended
4.Absolving Board members from liability or otherwise
5.Attend to and discuss the auditor report on the company’s financial accounts for the financial year ended
6. Ratifying the profit and loss account
7. Approval of the balance sheet and the statement of the net profits and dividends
8.Discussing and deciding on the recommendations related to bond and guarantee issuance, borrowing, and mortgaging.

 

Set out in Article 210 and throughout the CCL.
1. Amending constitutional documents
2.Extending term of the company
3.Increasing or decreasing company’s capital, including the issuance of new shares
4.Disposing of more than half in the value of the company’s assets subject to Article 194bis of CCL.
5. The entire project company was established to undertake or dispose of it in any other way
6.Winding up the company or merging it with another company.
7.Any other matters stipulated in 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.

Insurance Coverage for Rain Damage and Business Interruption

Insurance Coverage for Rain Damage and Business Interruption

 Last week in Dubai, a storm hit the Gulf Estates, resulting in unprecedented damage to vehicles and property. As a result, all eyes are now on insurance companies as policyholders seek compensation for their losses. It is anticipated that many insurance claims currently being filed are for damaged vehicles, property, and business interruption.

 While it is widely known that most insurance policies provide coverage for rain-related damages, the ability to successfully file a claim hinges on the precise wording and clauses within each policy, including its coverage and exclusions.

For example, a comprehensive vehicle policy explicitly offering protection against rain and natural disasters ensures coverage for rain-related damages. Similarly, property All Risk insurance policies, covering all risks including those arising from natural calamities, typically extend coverage for rain-related damages.

 It is important to note that while damages from heavy rain are generally covered, specific weather-related events such as storms, cloud seeding, hailstorms, and flooding may be excluded unless expressly stated otherwise in the policy. Therefore, insurance professionals and policyholders alike must meticulously scrutinize the terms, conditions, and exclusions of their insurance policies to ensure comprehensive protection against such events.

Regarding business interruption coverage, it is well known that if a business is operational within twenty-four to forty-eight hours after an incident, there may be no eligibility for a business interruption claim under the policy. However, as previously mentioned, the availability of any insurance coverage depends on the precise wording of the insurance policy and its coverage and exclusions. Therefore, it is very important to review the wording of the policy in place carefully before seeking insurance coverage.

As for standard homeowners’ insurance policies, such policies provide coverage for damage resulting from rain-induced flooding. The extent of coverage depends on the specifics of the claim, as these policies typically address perils associated with the property itself, such as accidental leakage within the property. However, some policies may offer the option to include flooding as a covered risk, potentially providing compensation for such damages.

An important factor to consider is that it is essential for policyholders to thoroughly examine and revisit the unique terms and conditions of their insurance policies. Regular review, preferably on an annual basis and in light of any new unprecedented events, is crucial. This practice helps identify any gaps in the required coverage and ensures that the insurance policy adequately protects against any risk.

Contact Us

Should you wish to obtain further clarity on the above matters, please do not hesitate to contact our firm and speak to one of our corporate law experts.

 

Navigating Franchising Laws in Bahrain: Legal Considerations for Establishing and Operating Franchise Businesses

Navigating Franchising Laws in Bahrain: Legal Considerations for Establishing
and Operating Franchise Businesses

Franchising has emerged as a dynamic avenue for business expansion in Bahrain, offering entrepreneurs an opportunity to leverage established brands and proven business models. However, navigating the legal landscape governing franchise operations in Bahrain requires a nuanced understanding of local regulations and compliance requirements. From franchise agreements to intellectual property protection, various legal considerations shape the establishment and operation of franchise businesses in the Kingdom.

In this article, an essential background brief of information for prospective franchisors and franchisees seeking to enter the Bahraini market is provided. By examining key laws and regulations governing franchising, the aim is to offer clarity and guidance for stakeholders looking to capitalize on the burgeoning franchising sector in Bahrain.

Legislative Decree No. 21 of 2001 promulgating the Commercial Companies Law, as amended, governs the establishment and operation of commercial entities in Bahrain, including franchising businesses. It outlines various corporate structures, registration requirements, and corporate governance principles that may apply to franchisors and franchisees.

Bahrain has specific laws and regulations governing the registration, use, and protection of trademarks. These laws aim to safeguard the intellectual property rights of franchisors, including their brand names, logos, and other proprietary assets. Protecting intellectual property rights is crucial for franchisors to safeguard their brand identity and proprietary business methods. Franchisees must adhere to strict guidelines regarding the use of trademarks, logos, and other intellectual property assets. Bahrain provides legal frameworks for the registration and enforcement of intellectual property rights, offering franchisors avenues for recourse in case of infringement.

In addition, there are consumer protection laws in place to safeguard the rights of consumers and regulate commercial transactions. These laws include provisions related to advertising standards, product quality, pricing transparency, and dispute resolution mechanisms.

The Ministry of Industry and Commerce is the primary regulatory authority responsible for overseeing commercial activities in Bahrain. It may issue regulations, guidelines, or licensing requirements that impact franchising businesses operating within the country. The Bahrain Chamber of Commerce and Industry is a prominent business association in Bahrain that provides support and advocacy for businesses, including those involved in franchising. It may offer resources, networking opportunities, and guidance on legal and regulatory matters affecting franchisors and franchisees.

One of the fundamental legal documents in franchising is the franchise agreement. This contract outlines the rights and obligations of both the franchisor and the franchisee, including the use of trademarks, operating standards, fees, and territorial rights. In Bahrain, franchise agreements must comply with local laws and regulations, ensuring fairness and protection for all parties involved.

Despite careful planning and adherence to legal requirements, disputes may arise between franchisors and franchisees. Having robust dispute resolution mechanisms in place, such as mediation or arbitration clauses in franchise agreements, can help mitigate conflicts and protect the interests of both parties. Bahrain offers reliable legal pathways for resolving franchise-related disputes through its judicial system. In the event of disputes between franchisors and franchisees, Bahrain’s judicial system provides channels for resolving legal conflicts. This may include civil courts, which adjudicate commercial disputes according to Bahraini law.

Alternatively, franchise agreements may include provisions for alternative dispute resolution mechanisms such as arbitration or mediation. Bahrain has arbitration and mediation centers that offer neutral and private forums for resolving disputes outside of traditional court proceedings.

 As the franchising sector continues to thrive in Bahrain, entrepreneurs must prioritize a comprehensive understanding of the legal landscape governing franchise operations. By proactively addressing legal considerations such as franchise agreements, intellectual property protection, regulatory compliance, and dispute resolution mechanisms, stakeholders can mitigate risks and maximize opportunities for success in the Bahraini market. With careful navigation of franchising laws and regulations, entrepreneurs can unlock the full potential of franchising as a strategic growth strategy in Bahrain’s dynamic business environment.

Environment Law: Obligations and Prohibitions

Environment Law: Obligations and Prohibitions

Law No. 7 of 2022 promulgating the Environment Law (the “Environment Law”) was issued with the aim of protecting the environment from all activities and practices that pollute or degrade the environment. Preventing pollution and combating environmental deterioration in all its forms (land, air, marine and sound) are principles embodied in the provisions of the Environment Law, through which Bahrain seeks to protect biodiversity and fulfil the United Nations Sustainable Development Goals.

Since environmental protection is a collective effort, the Environment Law is applicable to all public and private entities in addition to individuals in Bahrain, with the exception of the Bahrain Defense Force, the Ministry of Interior and the National Guard.

This article will briefly outline the obligations and prohibitions stipulated under the Environment Law that may significantly impact entities and individuals.

Environmental Impact Assessment

Generally, any activity that pollutes the environment, contributes to its deterioration or causes damage to natural resources or living organisms is prohibited in Bahrain. This is monitored by the Supreme Council for Environment (“SCE”), the competent authority empowered to protect the environment and achieve sustainable development in the Kingdom.

The SCE sets the standards, specifications, foundations and controls necessary to evaluate the environmental impact of projects to ensure that all projects do not negatively impact the environment in any form. An environmental impact assessment is conducted by the SCE prior to the implementation, modification, or expansion of any project by an entity.

The said entity must submit an Environmental Impact Assessment Data Form to the SCE prior to obtaining any licenses or initiating the project, thereafter the SCE will determine whether a detailed report is required to grant the license.

Monitoring Waste

Subsequent to the environmental impact assessment conducted by the SCE, all project owners must comply with certain obligations that enable the SCE to accurately monitor the performance of project owners and their waste management. In accordance with the controls and procedures set out by the SCE, project owners must:

  • conduct periodic analysis of the project’s waste;
  • monitor the discharge and pollutants resulting from the project; and
  • record data and submit reports to the SCE.

Reporting Incidents

The Environment Law obliges all concerned entities and individuals to immediately report any kind of pollution incident. This reporting obligation extends to entities and individuals not responsible for the incident.

In the event that an incident of pollution to the marine environment occurs, such as an oil leak, the SCE must be immediately notified with an indication of the circumstance of the accident, the type of leaked material and the measures taken to stop or limit the leak.

General Prohibitions

The prohibitions stipulated under the Environment Law concern all possible forms of pollution, some of which are listed below:

  1. All marine means are prohibited from dumping garbage or discharging sewage water, oil, hazardous waste or polluting materials into the marine environment of Bahrain. International treaties ratified by Bahrain and national implementing regulations that regulate the conservation of marine life must be taken into account by the concerned entities and individuals.
  2. All entities such as commercial or industrial projects are prohibited from conducting any activity that may cause pollution or deterioration of the costal or marine environment.
  3. All entities are prohibited from emitting or leaking air pollutants beyond the permissible limits stipulated under the laws and regulations. Entities must be equipped with the necessary networks and units to monitor and control the air pollutants expelled, and such networks must be electronically linked and monitored by the SCE.
  4. All entities and individuals alike must take the necessary precautions when carrying out excavation, construction or demolition works. The import of vehicles, machinery or engines that emit pollutants exceeding the permissible limits is also prohibited.
  5. Any activity that directly or indirectly harms soil, affects its natural properties or harms the quality or quantity of vegetation leading to desertification, distortion of the natural environment or change to agricultural areas is prohibited.
  6. The import, burial, storage or disposal of hazardous materials and waste are prohibited without obtaining the necessary licenses from the SCE.
  7. Exceeding the permissible sound intensity is prohibited, especially with regard to projects that require the operation of machinery, equipment and vehicles that emit loud noises.

The SCE will take the necessary measures to force any violator to rectify the acts committed in violation of the Environment Law, whereby all the repair costs will be borne by the violator.

Furthermore, the violator may face imprisonment or a fine that may range from five hundred Bahraini Dinars (BHD 500) to one million Bahraini Dinars (BHD 1,000,000), and in the case of recurrence of a crime, the penalties may be doubled to their maximum limit.

Appointment, Retirement, Resignation, and Removal of a Director in Bahraini Companies

Appointment, Retirement, Resignation, and Removal of a Director in Bahraini Companies

This article delves into the processes surrounding appointing, retiring, resigning, and removing directors within companies operating under Bahraini law. As financial institutions are governed by the Central Bank of Bahrain (“CBB”) and the provisions of the rulebook, this article will not cover them.

The pertinent legislation governing directorship in Bahrain includes Legislative Decree No. 21 of 2001, which enacts the Commercial Companies Law (“CCL”), as amended, and Ministerial Decree No. 19 of 2022 concerning the amended Corporate Governance Code (the “Code“). The Code applies to all joint-stock companies registered under the CCL, while limited liability companies are exempt from its provisions.

Definition of a Director

A director is an individual elected to oversee a company’s daily operations along with other directors. They have authority over the management, administration, and supervision of the company’s affairs.

Director Qualifications and Requirements

In accordance with Article 173 of the CCL, a director must fulfill the following conditions:

  •  Full legal capacity to act.
  • Have not been convicted of a crime involving negligent or fraudulent bankruptcy, a crime affecting honor or a breach of trust, or a crime on account of his violation of the provisions of the CCL unless he has been reinstated.
  • Have not been prohibited from assuming the directorship of a joint stock company pursuant to the CCL or any other law in force in Bahrain.
  • With respect to the chairman and the deputy chairman, a director must not simultaneously assume such positions and the position of the most senior executive in the company.
  • Any other conditions specified in a regulation applicable to the executive, non-executive, and independent directors of companies that are not licensees of the CBB as specified in a regulation issued by the competent Minister of Industry and Commerce.
  • Any other conditions specified in the company’s Memorandum of Association (“MoA”).

Types of companies

This article will explore two types of companies in Bahrain: A Limited Liability Company (“WLL”) and a Bahrain Shareholding Company (“BSC”), also known as a joint stock company. A brief introduction: A WLL can be established with one or more legal or natural persons (companies or individuals). It limits liability to the company’s assets, with each partner liable only to the extent of their share in the capital unless specific circumstances apply.

Like WLLs, 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 (“B.S.C (c))” may be listed on Bahrain Bourse; however, they are not open for public subscription.

 W.L.L.B.S.C (c) B.S.C
Managers / Board of ManagersBoard of DirectorsBoard of Directors
Composition
  • The company can be managed by one or more managers, initially appointed by the promoters and subsequently by a general assembly resolution.
  • The MoA may provide for the constitution of a board for the managers, and it shall specify how the said board shall operate and the majority by which its resolutions are to be passed.
  • Managed by a board of directors consisting of a minimum of 3 and a maximum of 15 directors.
  • Maximum term of 3 years, renewable by the general assembly.
  • Must include independent and non-executive directors.
  • Managed by a board of a minimum of 5 directors and a maximum of 15 directors as determined by its MoA and Articles of Association (“AoA”).
  • Maximum term of 3 years, renewable by the general assembly.
  • An audit committee shall be established through a resolution of the board of directors for closed joint stock companies listed on a securities exchange and other closed joint stock companies falling under categories designated by a resolution issued by the competent Minister of Industry and Commerce.
  • As per the Code, public joint-stock companies must now have women’s representation.
Appointment
  • Appointed by the general assembly unless the MoA states otherwise.
  • These directors should possess relevant experience to contribute their expertise to the board.
  • Appointment by a shareholder owning 10% or more or elected by the ordinary general assembly (subject to written acceptance of the nominated/appointed member).
  • The chairperson and vice chairperson of the board are elected by secret ballot for a year (unless the AoA provide otherwise, i.e., period).
  • Shareholders who are not eligible to appoint or do not choose to appoint a director may use their percentage to elect directors by cumulative voting.
  • The company’s management shall be undertaken by a board of directors, the formation and terms of which shall be specified by the company’s MoA.
Removal/ Termination/ Resignation
  • Appointment terminated by shareholder approval passed by those holding the majority of the company’s share capital unless the MoA requires a higher percentage.
  • Resignation at a suitable time, or the director will be liable to pay compensation.
  • Membership termination following MoA.
  • Ordinary general assembly may terminate membership members if shareholders representing 10% of the capital submit a request.
  • The board must present the request to the assembly within a month, or the Ministry of Industry and Commerce will intervene. The assembly cannot discuss the removal unless it’s on the agenda, except for significant developments during the meeting.
  • Resignation at a suitable time, or the director will be liable to pay compensation.
  • Membership termination following MoA.
  • Ordinary general assembly may terminate membership members if shareholders representing 10% of the capital submit a request.
  • The board must present the request to the assembly within a month, or the Ministry of Industry and Commerce will intervene. The assembly cannot discuss the removal unless it’s on the agenda, except for significant developments during the meeting.
  • Resignation at a suitable time, or the director will be liable to pay compensation.
Retirement There are no explicitly outlined mandatory retirement ages or rules for directors.

In conclusion, directors play a crucial role in managing the company’s affairs, and it is essential to ensure that they meet the requirements outlined by the law.

رد المحكم عند نظر الدعوى التحكيمية

رد المحكم عند نظر الدعوى التحكيمية

 

في مجال تسوية المنازعات، يعد التحكيم بديلاً للتقاضي التقليدي، حيث يوفر للأطراف وسيلة أكثر كفاءة لإنهاء خلافاتهم. وتتم عملية التحكيم من خلال توافق أطراف النزاع بموجب وثيقة مكتوبة على كافة شروط التحكيم، ويعد المحكم هو محور عملية التحكيم كونه طرفاً محايداً مكلف بالفصل في النزاع المعروض من خلال اصدار حكم من دون تحيز لأي طرف بناءً على الأدلة والحجج المقدمة. ولكن ماذا يحدث عندما يطلب أحد الطرفين أو كليهما رد المحكم؟

 

يعد رد المحكم حدثًا مهمًا في إجراءات تحكيم، مع ما يترتب على ذلك من آثار محتملة على عملية ونتائج حل النزاع. وفي حين أن مثل هذه الحالات نادرة نسبيًا، إلا أنها يمكن أن تحدث لأسباب مختلفة، بدءًا من المخاوف بشأن التحيز أو تضارب المصالح إلى ادعاءات سوء السلوك أو المخالفات الإجرائية.

 

يعَّرف رد المحكم بأنه منع المحكم او سحب صلاحيته من نظر النزاع محل الدعوى التحكيمية بعد تعيينه بسبب قيام أسباب تؤثر على حياديته واستقلاله في نظر النزاع.

 

والمقصود بالحياد هو عدم انحياز المحكم الى أحد أطراف النزاع اما الاستقلال يقصد به استقلال المحكم في تكوين قناعاته واحكامه دون التأثر بأحد أطراف النزاع لقيام علاقة تربطه بأحدهم سواء تبعية او مادية او اجتماعية وغيرها من شأنها ان تؤثر في قراراته.

 

أسباب الرد

 

1.    التحيز وتضارب المصالح: أحد الأسباب الرئيسية لطلب رد المحكم هو تصور التحيز أو تضارب المصالح، إذا اعتقد أحد الطرفين أن المحكم متحيز للطرف الآخر أو لديه مصلحة شخصية أو مالية في نتيجة التحكيم، فعندئذ يجوز له أن يطلب رد المحكم.

 

2.     سوء السلوك والمخالفات الإجرائية: يمكن أن تؤدي ادعاءات سوء السلوك أو المخالفات الإجرائية من جانب المحكم أيضًا إلى طلب الرد، وقد يشمل ذلك الحالات التي يفشل فيها المحكم في الالتزام بقواعد التحكيم المتفق عليها، أو يتصرف بطريقة تعرض سلامة العملية التحكيمية، أو يظهر سلوكًا غير أخلاقي.

 

3.    عدم الكفاءة أو الافتقار إلى المؤهلات: يجوز للأطراف أن تسعى إلى رد المحكم إذا اعتقدت أن المحكم يفتقر إلى المؤهلات أو الخبرة اللازمة لإدارة النزاع بشكل فعال. حيث يمكن أن يؤدي عنصر عدم الكفاءة إلى هدم مصداقية عملية التحكيم وإثارة الشكوك لدى المحتكمين حول صحة القرار النهائي لعملية التحكيم.

 

إجراءات رد المحكم:

 

الأصل في إجراءات رد المحكم هو عدم مخالفة النظام العام وعليه فإنه يجوز للأطراف الاتفاق على هذه الإجراءات عند بدء عملية التحكيم وفي حال عدم الاتفاق عليها يتم تطبيق القواعد حسب القوانين المتفق عليها في الدعوى التحكيمية.

 

وسنتعرض هنا للإجراءات المنصوص عليها في القانون رقم (9) لسنة 2015 بإصدار قانون التحكيم:

 

أولا: يقدم طلب رد المحكم الى الهيئة التحكيمية مكتوباً مشفوعاً بالأسباب التي يستند اليها طلب الرد خلال خمسة عشر يوماً من تاريخ العلم بتشكيل هيئة التحكيم وفي حالة عدم تنحي المحكم المعني او عدم موافقة الطرف الآخر على طلب الرد، فعلى هيئة التحكيم أن تبت في طلب الرد.

 

ثانياً: في حال عدم قبول طلب الرد المقدم وفقاً للإجراءات، جاز لمقدم الطلب ان يطلب من المحكمة البت فيه على ان يقدم هذا الطلب للمحكمة خلال ثلاثين يوم من تسلمه الاشعار برفض طلب الرد، ويكون قرار المحكمة في هذا الطلب غير قابل لأي طعن.

 

ويجوز لهيئة التحكيم ومن ضمنها المحكم المطلوب رده السير في إجراءات التحكيم، كما يمكن لها أن تصدر قرار التحكيم ريثما يتم الفصل في طلب الرد مع الاخذ بعين الاعتبار كافة الاثار القانونية المبينة ادناه.

 

الآثار المترتبة على رد المحكم

 

1.    التأخير والتعطيل: يمكن أن يؤدي عزل المحكم إلى تأخير وتعطيل إجراءات التحكيم، حيث يتوجب في هذه الحالة تعيين محكم جديد واطلاعه على أوراق الدعوى التحكيمية، وهذا من شأنه أن يطيل عملية التحكيم ويزيد التكاليف على الأطراف المعنية.

 

2.    فقدان الثقة والمصداقية: يمكن أن يؤدي عزل المحكم إلى تقليل الثقة في عملية التحكيم، خاصة إذا كانت أسباب الفصل مثيرة للجدل أو تثير تساؤلات حول نزاهة الإجراءات وحيادها. وقد تنظر الأطراف إلى المحكم البديل بعين الشك، مما يؤثر على الشرعية المتصورة للقرار النهائي.

 

3.    الاعتراضات المحتملة على قرار التحكيم: في الحالات التي يتم فيها عزل المحكم، هناك احتمال أن يطعن الطرف الخاسر في القرار النهائي على أساس عزل المحكم، بحجة أنه يضر بنزاهة عملية التحكيم، وهذا يمكن أن يؤدي إلى مزيد من الإجراءات القانونية واطالة أمد النزاع وعدم التيقن بشأن قابلية تنفيذ هذا القرار.

 

4.    اما بالنسبة لأثر رد المحكم على الإجراءات المتخذة خلال وجود طلب الرد امام المحكمة فقد اتفقت كافة القوانين الخليجية على انه إذا تم رد المحكم او تنحيته، فإن كافة الإجراءات التي اتخذت في وجوده تعتبر كأن لم تكن.

 

 

 

في الختام، يعد عزل المحكم حدثًا مهمًا في عملية التحكيم، وله آثار بعيدة المدى على الأطراف المعنية. ومن الضروري لجميع الأطراف أن يدرسوا بعناية أسباب طلب عزل المحكم وأن يتبعوا الإجراءات المعمول بها لمعالجة أي مشكلة تطرأ، لذا يعد التواصل الواضح والشفافية والالتزام بالمعايير الأخلاقية أمرًا بالغ الأهمية للحفاظ على نزاهة وفعالية عملية التحكيم.