1 — 1 — Board of Directors
Article (172)
The company shall be managed by a board of directors the formation and term of which shall be specified in the company's articles of association. The number of board members shall be at least five appointed for a period of three years renewable.
At a request by the board of directors, the Minister of Commerce and Industry may extend the membership term for no more than six months.
Article (173)
The member of the board shall fulfill the following conditions:
i— He must be fully qualified to act,ii— He must not have been convicted of a crime involving negligent or fraudulent bankruptcy or a crime affecting his honor or involving a breach of trust or of a crime on account of his breach of the provisions of this law, unless he was reinstated.iii— He must personally own a number of shares the nominal value of which shall be at least ten thousand Bahraini dinars or the person he represents must own a number of shares representing not less than 1% of the company's capital whichever is higher, unless the company's articles of association provide for a higher amount.If the member forfeits any of the above conditions, he shall no longer be a member from the date of forfeiture of that condition subject to the provisions of the next article.
Article (174)
The aforesaid quorum shares referred to in the foregoing article shall be set aside to guarantee the good conduct of the member, and shall be deposited within thirty days from the date of his election or appointment with one of the banks. The member shall not dispose of these shares in any manner whatsoever throughout his term until the balance sheet of the last financial year in which he was holding office is approved.
If the quorum shares are not deposited within the period specified in the foregoing paragraph, his membership shall be null. Membership shall also be null if such shares are reduced for any reason whatsoever during his term and are not completed within thirty days from the date of the reduction occurring.
Article (175)
Anyone who owns 10% or more of the capital shall appoint a person to represent him on the board of directors for the same percentage of the number of the board members. If he exercises this right, he shall lose his right to voting for the percentage for which he appointed a proxy. If the remaining percentage is not enough to appoint another member, he may use this percentage in vote.
In all cases the number of board members shall be subject to the company's articles of association and the rules and procedures decreed by the Minister of Commerce and Industry.
Article (176)
The general assembly shall elect the board members by secret ballot and they shall be selected by relative majority of the valid votes. As for the members of the first board, the company's articles of association may stipulate the election of not more than half the members from among the company's founders.
Article (177)
The general assembly may appoint a number of experts on the board of directors other than the founders or the shareholders. The Minister of Commerce and Industry shall decree the necessary conditions thereof.
Article (178)
i— The company's articles of association shall specify the cases in which board membership is terminated.ii— The general assembly may dismiss all or some of the board members even if the company's articles of association provide otherwise. A request shall be submitted by a number of shareholders representing ten percent (10%) at least of the company's capital. The board of directors shall refer the request to the general assembly within one month at most from the date it is submitted, otherwise the Ministry of Commerce and Industry shall make the invitation. The general assembly shall not consider the request if it is not listed on its agenda, unless there appear in the meeting serious matters that require such dismissal. The dismissed member may claim compensation from the company if the dismissal has not been justified or has been made at an inconvenient time.iii— The board member may resign his office provided that he resigns at a convenient time otherwise he shall be liable to pay compensation.Article (179)
i— If the office of one of the board members becomes vacant, he shall be replaced by the member next to him in the number of votes in the latest elections of the board. The new member shall complete the unexpired term of his predecessor. In cases other than this, the board shall elect by secret ballot, a member to replace him from among the candidates nominated by two of the board members, at least until the next meeting of the general assembly.ii— If the vacant offices are equal to one-fourth of the original offices, the board of directors shall invite the ordinary general assembly to convene within two months from the date of the last office becoming vacant to fill them.iii— If the vacant offices exceed more than half the number of the board members, the board shall be deemed dissolved, and new elections shall be called for to elect a new board of directors for the company.Article (180)
The board of directors shall convene at an invitation by the chairman or by two members at least. The meeting shall be valid only if attended by half the members, provided that three members thereof at least are present, unless the company's articles of association provide for a higher number or percentage.
The board member may not delegate any other person to attend on his behalf unless otherwise stipulated by the company's articles of association. In such case, he shall be one of the board members or the representative of the public entity whom the original member represents. However, proxy may not also be given to more than two members, provided that the present number of members in person shall not be less than half the board members including the chairman. Proxy shall be personal and in writing and shall be sent to the board of directors three days at least before the meeting. The resolutions of the board of directors shall be passed by the majority of the present members. In case of equal vote, the chairman shall have the casting vote, and any objecting member shall put his objection on the minutes of the meeting.
The board of directors shall meet at least four times in the financial year unless the company's articles of association provide for more times.
Article (181)
The board of directors shall elect by secret ballot a chairman and a deputy for one year unless the company's articles of association provide for another period.
The board of directors may elect by secret ballot a managing director or more who shall have the right to sign on behalf of the company either severally or jointly as decided by the board of directors.
The Ministry of Commerce and Industry shall be given a copy of the decisions of electing the chairman, his deputy and the managing directors.
Article (182)
The board of directors shall undertake the powers and the acts necessary for the company's management in accordance with its objectives except for those banned by the law, the company's articles of association or the general assembly resolutions.
The company's articles of association shall specify the extent to which the board of directors can borrow for more than three years or sell company's property or business or mortgage such property or provide guarantees for third parties or discharge the company's debtors of their liabilities or reach a compromise with them or donate the company's property. If such matters are not provided for in the company's articles of association, the board shall refrain from carrying out such acts without the approval of the general assembly, unless such acts are falling within the ambit of the company's objectives.
Article (183)
The chairman of the board is the company's chairman, and represents it before third parties, and his signature is considered as a signature of the board of directors before third parties, unless the company's articles of association provide for including another member or another person authorized by the board of directors to co-sign with the chairman. He shall implement the board decisions and abide by its recommendations. The vice-chairman shall act for the chairman in his absence.
Article (184)
The board of directors may allocate its duties among its members in accordance with the nature of the company business, and the board shall exclusively have to do the following:
i— Delegate any of its members or a committee from among its members to carry out a specific assignment or more or to supervise one of the company's activities or to exercise some of the powers or authorities granted to the board.ii— Delegate a member or more to perform actual management, and the board shall specify the powers of the member so delegated.Article (185)
The chairman and the members of the board shall be jointly liable before the company, the shareholders and third parties for all acts of fraud and misuse of powers and any violation of the law or the company's articles of association and for mismanagement. Any condition to the contrary shall be null and void.
A decision by the general assembly absolving the board of directors of liability shall not preclude instituting action of liability against it.
Article (186)
The liability referred to in the foregoing paragraph shall be either personal relating to a specific member or joint for all board members. In the last case the members shall be jointly liable for paying compensation unless some of them have objected to the decision causing the liability and put their objection on the minutes of the meeting. The absence of a member from the meeting in which the resolution was passed, shall not be a reason for exemption from liability unless he proves that he was unaware of the resolution or that he was aware of it but was unable to object to it. If more than one member committed the wrongdoing, they shall be jointly liable towards the company. The liability actions shall be time-barred after the elapse of five years from the date of the general assembly meeting at which the board of directors reported on its management.
Article (187)
i— The company shall have the right to file an action of liability against the board members whose wrongdoing has caused damages to the shareholders. The general assembly shall pass a resolution to file the action which shall be carried out by the chairman of the board. If the chairman of the board is among those litigated by the company, the general assembly shall appoint another board member to file the action. However, if the action was against all board members, the general assembly shall appoint a non-member to file the action.ii— In case of the company's bankruptcy, the bankruptcy trustee shall file the action, and if the company is in the process of liquidation, the liquidator shall file the action following a resolution by the general assembly.Article (188)
The company's articles of association shall specify the manner of determining the remuneration of the chairman and members of the board, the total of which shall not exceed 10% of the net profits after deducting the legal reserves and distributing a profit of not less than 5% of the company's paid-up capital. The general assembly may decide to pay an annual remuneration to the chairman and members of the board in the years in which the company has not achieved profits or the years in which no dividends are paid to the shareholders, provided that the Minister of Commerce and Industry approves such payment. The board of directors' report to the general assembly shall include a comprehensive account of all payments to the board members during the financial year, including salaries, profit shares, representation allowances, attendance allowances and expenses and the like. The report shall also include an account of the amounts paid to the members of the board in their capacities as employees and administrators, and what they have received for technical, administrative or consulting services or any other business.
Article (189)
i— Any one of the company's board members or managers shall have no direct or indirect personal interest in the business and contracts concluded on behalf of the company unless allowed by the general assembly. Any contract or business concluded in contravention of this provision shall be null and void.ii— Any member of the board shall notify the board of his direct or indirect personal interest in the matters presented to the board. Such member shall not participate in deliberations or voting on these issues and his declaration shall be recorded in the minutes of the meeting.iii— The chairman of the board shall notify the general assembly of the results of the permitted works and contracts at the first meeting following the termination of the work or the implementation of the contracts. The notification shall be accompanied by a special report from the auditor. The company shall disclose such dealings and contracts in its financial statements.iv— Any member who violates this ban shall be liable to pay compensation to the company for any damages it has sustained. However, this provision shall apply neither to the ordinary dealings which the company concludes with its customers nor to those awarded in public tenders if the offer presented by the board member is the best.Article (190)
The public entity shall receive all the amounts due for its representative in the company's board of directors in any manner, and the chairman of the board shall pay these amounts to the public entity within one week from the date they become due. The public entity may determine the remunerations and salaries of those representatives.
Article (191)
Subject to the provisions of article (215) of this law, any board member or manager of a joint-stock company shall not exercise any business in competition with the company's activities without special and justified authorization by the general assembly, to be renewed annually, otherwise the company may claim compensation from him, or consider the operations he exercises as conducted for the company.
The chairman and members of the board of directors and the company's managers shall not disclose any of the company's confidential matters they come to know.
Without prejudice to the provisions of the Penal Code and this law, whoever violates the ban provided for in this article shall forfeit his membership of the board of directors and be liable to pay compensation.
Article (192)
The company shall not give cash loans whatsoever to any member of its board or guarantee any loan contracted by any of them with third parties.
Excluded from this ban are banks and other credit companies. In exercising activities falling within the ambit of their objectives under the supervision of the Bahrain Monetary Agency and on the same terms and conditions applied to their clients, they are allowed to lend any board member or to open a credit for him or to guarantee loans he contracts with third parties.
A statement by the auditors shall be placed at the disposal of the shareholders, for their personal information, at the date specified in article (195) of this law declaring that the loans, credits or guarantees mentioned above have been concluded without breach of the provisions of the foregoing paragraph.
Any contract concluded in contravention of the provisions of this article shall be void without prejudice to the shareholders' right to claim compensation from the violator if necessary.
Article (193)
i— No person shall be appointed or elected member of the board of directors unless he declares in writing his acceptance. The declaration shall also disclose any business he conducts that competes directly or indirectly with that of the company and the names of the companies and the entities in which he is engaged in such business.ii— In case the board member has been appointed or elected in breach of the provisions of this law or has misused his membership by conducting works in competition with those of the company thereby causing damages to the company, the general assembly of the company shall convene to consider dropping his membership within forty-five days from the date of discovering the violation.Article (194)
The minutes of the meetings of the board of directors shall be entered in a special register and signed by the members present at the meeting and the secretary of the board.
The member who objects to any of the board's resolutions shall put his objection on the minutes of the meeting, and those who sign the minutes of the meetings shall be liable for the accuracy of the information included in the register.
Article (195)
Each company shall prepare, for each year, a detailed list approved by the chairman of the board and the managing director — if any — of the names of the chairman and members of the board and their designation and the names of the company's managers. The company shall maintain a copy of this list and send the original to the Ministry of Commerce and Industry attached with the annual report prepared by the board of directors and the company's balance sheet and the profits and losses account. The company shall notify the said ministry of any changes that may take place in the list during the year.
The board of directors shall prepare for each financial year, within a period not exceeding three months from the end thereof, a report on the company's activities and financial position during the ended year and the company's balance sheet and the profit and loss account. The chairman and another member of the board shall sign the report, the balance sheet and the profit and loss account. The board members shall be responsible for the implementation thereof.
Article (196)
The board of directors shall publish the balance sheet, the profit and loss account and an adequate summary of the annual report and the full text of the auditors' report in one of the local daily Arabic language newspapers at least fifteen days before the general assembly meeting.
Article (197)
The Minister of Commerce and Industry may dissolve the company's board of directors if the company has encountered severe financial or administrative difficulties, or if it has sustained heavy losses prejudicing the rights of the shareholders or its creditors, or if the provisions of this law have been violated. All such incidents shall be evidenced by whoever the Minister of Commerce and Industry appoints, either from the staff of the ministry or from amongst others, to inspect the works and accounts of the company. The minister may also dissolve the company if the chairman and board members have resigned their offices, or if the board of directors has lost its quorum so that it becomes unable to convene, or if the general assembly has not been able to elect a new board of directors.
In case of board dissolution, the Minister of Commerce and Industry shall appoint an interim committee composed of specialized experts to manage the company for a six month term renewable only once until the general assembly elects a new board at an invitation by the Minister of Commerce and Industry.
Any interested person shall have the right to appeal against the decision of dissolving the company within fifteen days from the date it is issued before the High Civil Court, and the court shall decide on the case on an urgent basis.
