Lately, the MOICT has been instrumental in spreading awareness about corporate governance and compliance with the company laws in Bahrain. As part of this initiative, the Ministry sent email alerts to CR holders explaining the importance of annual general meetings for WLL companies.
The Commercial Companies Law is a popular term in the business world, however, hard to get knowledge of. Time and again, there have been a lot of queries coming up for the same to BostonBrooks – being a top company registration service company with an emphasis on Compliance, it’s our responsibility to clear the confusion.
Today, through this blog we will talk about how you can deal with issues related to Commercial Companies Law. Let’s understand the situation in a QA format.
Question: What is a general assembly meeting and why has the MOICT rolled out a circular/mail to all the companies regarding this meeting?
Answer: In accordance with the Commercial Companies Law, the Annual General Meeting also known as the ordinary general assembly of the shareholders/partners shall convene at the invitation of the chairman of the board of directors at the time and place designated in the company’s articles of association. The meeting shall be held at least once a year during the six (6) months following the end of the company’s financial year.
This law is applicable to Bahraini Shareholding Company (BSC), Closed Joint Stock Companies (BSCc) as well as With Limited Liability Companies (WLL).
Many WLL companies in Bahrain are managed by Partners’ themselves, they act as managers or board of directors. Sometimes an active Partner takes the lead and manages the business himself, while the less active partners opt for supporting role. This kind of loose governance structure may pave the way to investor fraud, malpractice, and be detrimental to the interests of minority stakeholders in the company.
Since the law mandates that all important decisions like approval of auditors report, loans, liabilities, amendments company structure, etc. must be discussed in a General Meeting of the Partners, it is important that such General meetings shall be held as per the law. Smaller companies tend to ignore the requirements to hold such meetings, hence a reminder from the Ministry comes in handy. Non-active partners of the company may get a chance to understand the financial status of the company and liabilities.
The provision of Paragraph (b) of Article 283 (amended) of the Commercial Companies Law clearly stipulates that – “The general assembly shall convene at a call by the managers at least once a year within the Six months following the end of the company’s financial year”
Apart from the Article (283) – the managers/partners need to be aware of compliance requirements under the Article (284) of the Commercial Companies Law and memorandum of association.
Question: WLL Companies need to hold general meetings?
Yes, holding these meetings is mandatory as discussed above, however, the Procedures are slightly different than Joint-stock companies. The meeting quorum, voting rights, the record of the meetings shall be strictly in accordance with this Article 284.
Question: MOIC also need to be invited to the meetings?
No, Only Partners need to be invited
Question: WLL Company needs to file Minutes of the Meeting, notice or agenda with Ministry?
Unlike, BSC(C) or BSC companies, WLL companies are not required to invite the ministry or file or submit any documents such as agenda, notice, minutes of meeting etc. with the Ministry for such meetings. However such minutes shall be recorded in a special register to be kept at the company’s headquarters. The provisions regulating the commercial books shall apply to this register, and the company’s manager shall be liable for the accuracy of the data contained therein.
Hopefully, this blog has answered all your queries related to company registration requirements and Commercial Companies Law in Bahrain. If you still have doubts about Company formation in Bahrain, BostonBrooks is right here. Get your policies documented, have any compliance, want amendment in-licenses, have a problem with annual ESR filing, acquisition or merger of business, debt recovery or winding up – BostonBrooks has all solutions from inception of business till end.