Sweeping amendments to the Commercial Companies Law aimed at modernising corporate governance, strengthening transparency and aligning the kingdom’s financial framework with international standards are set to be debated and voted on in Parliament on Tuesday.
The financial and economic affairs committee has endorsed Decree-Law No (14) of 2025, which introduces wide-ranging reforms to the Commercial Companies Law issued in 2001, including digital transformation of company operations, tighter accountability rules, and the restructuring of company models to enhance investment flexibility.
Committee chairman MP Ahmed Al Salloom said the proposed reforms would mark a ‘decisive shift’ in Bahrain’s corporate regulatory environment.
“This decree-law is a structural reform that strengthens Bahrain’s position as a competitive and trusted investment destination,” he said. “It directly responds to the demands of modern business practices while reinforcing governance, transparency and accountability.”
* The amendments allow companies to hold general assemblies and board meetings electronically without requiring prior stipulation in their constitutions – a move aimed at reducing costs and improving efficiency.
* Voting through electronic systems will also be formally recognised under ministerial controls.
* Another key feature of the reform is the introduction of the ‘one-person company’ model, allowing a single shareholder to establish a joint-stock company. Officials say this will expand entrepreneurial opportunities and support small and medium-sized enterprises by offering more flexible corporate structures.
* The bill also strengthens liability provisions by extending legal responsibility to include not only formal managers and board members, but also de facto managers – individuals who exercise real control over a company without holding official titles. Under the amendments, such individuals may be held personally liable for damages caused by gross negligence or misconduct.
Mr Al Salloom stressed that this measure closes a longstanding legal loophole.
“We are ensuring that accountability follows actual decision-making power, not just job titles,” he said. “This protects shareholders, partners and third parties from concealed management practices that previously complicated legal responsibility.”
The reforms also abolish the joint venture company structure, long criticised for enabling opaque ownership arrangements. Existing companies will be given a transition period to regularise their status under the new framework. The committee noted that this step aligns with global anti-money laundering and transparency standards.
Another significant amendment permits companies to continue operations despite changes in partnership structure, provided decisions are taken within a defined timeframe, supporting business continuity and stability.
The committee highlighted that the reforms are particularly urgent given Bahrain’s upcoming Financial Action Task Force (FATF) 2026 assessment.
“These amendments are a necessary step,” Mr Al Salloom said. “Delaying them would have affected Bahrain’s international reputation and its standing as a financial hub. We are acting in advance to ensure full compliance and competitiveness.”
Business groups, including the Bahrain Chamber, have welcomed the proposed reforms while calling for technical guidance mechanisms to support implementation and reduce interpretational ambiguity in areas such as ‘gross misconduct’ and ‘de facto management’.
The committee concluded that the decree-law would enhance governance, support investment, and safeguard the kingdom’s financial reputation, while ensuring Bahrain remains aligned with global best practices in corporate regulation.
mohammed@gdnmedia.bh
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