Tightens company liability rules

Parliament has approved major amendments to the Commercial Companies Law, introducing stricter accountability for company managers and expanding digital business practices, as the kingdom moves to strengthen its regulatory framework ahead of an international review.

The changes were passed on Tuesday through Decree-Law No. 38 of 2025, following approval from the Financial and Economic Affairs Committee.

The government said the reforms aim to modernise company legislation, enhance transparency, and close legal loopholes in preparation for Bahrain’s evaluation by the Financial Action Task Force (FATF) in March 2026.

Industry and Commerce Minister Abdulla bin Adel Fakhro said the amendments respond to rapid economic and technological developments and are designed to make Bahrain’s business environment more competitive and investor-friendly.

A key provision expands liability under Article 18 to include individuals who effectively manage companies, even without holding official positions. Those involved in gross negligence, misconduct, or legal violations may now face personal or joint liability.

The law also allows companies to hold general meetings and voting sessions electronically, provided identity verification and proper documentation are ensured.

Additional reforms permit the establishment of single-shareholder closed joint-stock companies and extend the period to 90 working days for partners to decide the future of a business following major structural changes such as death, insolvency, or withdrawal.