Unclear rules sink proposal

TDT | Manama

Email: mail@newsofbahrain.com

A proposal requiring foreign partners in Bahraini companies to provide a BD30,000 bank guarantee has been rejected, with officials warning it could harm the Kingdom’s investment appeal.

Shura Council member Ali Al Aradi said the amendment lacked clarity on key aspects, including the duration, purpose, and handling of the guarantee. He noted that the fixed amount lacked backing from clear economic studies and failed to consider the diversity of business activities, especially impacting small and medium enterprises.

Al Aradi also raised concerns over legal and procedural gaps, such as how the guarantee would be managed during ownership changes or when multiple foreign partners are involved.

Shura Council member Dalal Al Zayed cautioned that tightening requirements for foreign partners could undermine Bahrain’s investment climate and economic competitiveness.

She said amendments to the Commercial Companies Law are carefully developed in line with international agreements and aim to support business growth while ensuring proper oversight and accountability.

Al Zayed noted that existing regulations already provide strict monitoring through the Ministry of Industry and Commerce, alongside legal safeguards that hold shareholders accountable for misconduct, including fraud or false reporting.

Shura Council member Jamal Fakhro said the draft law would reverse earlier reforms that removed the BD20,000 minimum capital requirement to encourage investment. He argued that requiring companies to provide a fixed government guarantee, regardless of their capital, is “unreasonable” and could deter foreign businesses.

He noted that Bahrain is home to around 35,000 companies with foreign ownership, adding that such guarantees could lock up nearly BD1 billion, limiting funds that would otherwise be invested in the local economy.

Meanwhile, the Shura Council has, in principle, rejected the proposed amendment to Article 264 of the Commercial Companies Law. It is also reviewing a separate draft law aimed at boosting employment by requiring large firms to train university graduates, supporting efforts to reduce unemployment and strengthen workforce participation.