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Location: Commercial Companies Law 2001 > Commercial Companies Law > Part I — General Provisions
  • Part I — General Provisions

    • Article (1)

      The company is a contract by which two persons or more undertake to participate in a profit-making economic project, with each of them offering a share in the form of money or work to divide the yield of this project, whether profit or loss.

      Notwithstanding the provisions of the foregoing paragraph, a company may consist of a single person in accordance with the provisions of this law.

    • Article (2)

      a— A commercial company incorporated in the State of Bahrain shall take one of the following forms:
      1— General partnership company
      2— Limited Partnership company
      3— Association in participation
      4— Joint Stock Company
      5— Limited Partnership By Shares
      6— Limited Liability Company
      7— Single person Company
      8— Holding Company
      b— Any commercial company that does not take one of the above forms shall be null and void, and the persons who have entered into contracts in its name shall be personally and jointly liable to third parties for the obligations resulting therefrom.

    • Article (3)

      The provisions applicable to commercial companies shall also apply to civil companies having a commercial form regardless of its purpose.

    • Article (4)

      Any commercial company of whatever type incorporated or based in Bahrain shall be subject to the provisions of this law.

      However, notwithstanding some or all of the provisions of this law, companies may be established, by virtue of a decree or law, between governments of other countries or between the government of Bahrain and another country or other countries.

      Any company incorporated in Bahrain shall be domiciled therein, and shall be of Bahraini Nationality without necessarily being entitled to the rights exclusive to Bahrainis.

    • Article (5)

      All commercial companies shall, in general, be subject to the provisions of this Part, without prejudice to the special provisions applicable to each commercial company included in this law.

    • Article (6)

      Except for Associations in participation, the company's memorandum of association and any amendment thereto shall be drawn up in Arabic and legalized by the Notary Public, or else the Memorandum of Association and its amendments shall be null and void.

      Companies may not plead before third parties for the nullity of the memorandum of association or the amendment thereto which has not been formalized in the way mentioned above.

      Nullity shall not take effect among partners before a partner files a lawsuit to nullify the company's memorandum of association, and the persons who have entered into contract in its name shall be personally and jointly liable for all their acts.

      In all cases, the provisions of the memorandum of association shall apply to the liquidation of the company adjudged null and void and to the settlement of partners' rights towards each other.

    • Article (7)

      Except for Associations in Participation, the managers or board members shall publish the company's Memorandum of Association and subsequent amendments thereto according to the provisions of this law; otherwise, the Memorandum of Association shall not take effect towards third parties. If failure to make publication applies only to one particular or more of the Memorandum of Association, only such particulars shall not take effect towards third parties.

      The company's managers or board members shall jointly be liable for any damages sustained by the company, partners or third parties as a result of non-registration.

    • Article (8)

      Except for Associations of Participation and unless otherwise provided for in the law, all commercial companies acquire a corporate entity upon registration in the Commercial Registry.

    • Article (9)

      The partner's share may be an amount of money (cash share) or an in-kind share. It may also be in the form of work in cases not specified in the provisions of this law. However, the partner's share shall not be in the form of his influence or financial standing. Cash and in-kind shares only form the capital of the company.

    • Article (10)

      Unless otherwise agreed upon by way of an agreement or in custom, the partners' shares shall be of equal value and relate to property ownership rather than usufruct.

    • Article (11)

      Each partner shall owe the company the value of his share. If he fails to pay this value on the date agreed upon, he shall be liable to pay compensation to the company for any damages that may result from the delay.

      If the partners define the compensation value in advance, such compensation shall be subject to the court assessment.

    • Article (12)

      If a partner's share is in the form of a title, usufruct or any other real right, the sale provisions shall apply in respect of registration procedures and insuring the share against destruction or falling due, or when there appears a defect or a shortage therein.

      However, if the share is in the form of usufruct of funds, lease provisions shall apply thereto.

    • Article (13)

      If the partner's share is in the form of a claim on a third party, his obligation towards the company shall be discharged only upon the settlement of this claim. Moreover, the partner shall be liable to pay compensation to the company for any damages that may result from the delay in the settlement of this claim.

    • Article (14)

      If the partner's share is in the form of work, he shall undertake the services he pledged and submit an account of the return thereon as from the date at which the company started to exercise the services he pledged as his share. All earnings that result from this work shall belong to the company. However, the partner shall not give up to the company what he might have earned from a patent right unless otherwise agreed upon.

    • Article (15)

      If the company's memorandum of association does not define each partner's dividend in profit and loss, such dividends shall be determined in proportion to the partners' respective shares in the capital.

      If the memorandum of association specifies only each partner's dividend in the profit, the same dividend shall apply to the loss, and vice versa.

      If a partner's share is in the form of work and the company's memorandum of association does not specify his dividend, he may request an evaluation of his work, and his dividend shall be determined on the basis of this evaluation unless otherwise provided in an established custom.

      If a partner provides cash or an in-kind share, in addition to work, he shall receive a dividend for his work and another for the other share.

    • Article (16)

      If it is agreed that a partner shall not have a dividend in the company's profits or shall be exempted from the loss, such an agreement shall be null and void.

      However, it can be agreed that a partner whose share is in the form of work be exempted from sharing the loss provided that he receives no remuneration for this work.

    • Article (17)

      A personal creditor of a partner shall not recover his rights out of the partner's share in the company's capital; yet, he may recover his rights out of the partner's dividend in the profits according to the company's balance sheet. If the balance sheet has not yet been prepared, the creditor may garnish the dividend that may accrue to the partner in the profits.

      If the company is wound up, the personal creditor may recover his rights from the share of his debtor in the company's assets upon dissolution, and he may, before dissolution, seek a garnishment over this share.

    • Article (18)

      In all types of commercial companies, the claims against partners shall be time barred after five years from the date of the company's dissolution, or from the date at which a partner withdraws from the company in respect of the claims against this partner.

      This period shall start on the date of the company's registration in the Commercial Registry in all cases in which registration is required, and from the date of registering the liquidation in the cases relating to the liquidation itself.

    • Article (19)

      If fictitious profits are distributed among partners, the company's creditors may request each partner to refund what he has received even if the partner may have acted in good faith.

      The partner shall not repay the real profits he has actually received even if the company may have made losses in subsequent years.

    • Article (20)

      If any of the shareholders or partners or their representatives withdraws from the meeting of the general assembly after the quorum has been obtained, such withdrawal shall not affect the legality of the meeting or the decisions taken by the general assembly regardless of the number of withdrawing shares or stakes.

    • Article (21)

      The Minister of Commerce and Industry may issue in an order a model for the memorandum of association of some or all types of companies or for their articles of association. The model shall comprise all the particulars and conditions required by law or by its Executive Regulation in this respect, and shall specify the conditions that the founding partners must comply with and those which they may not comply with. The partners may also add any other conditions that do not conflict with the provisions of law and its Executive Regulation.

    • Article (22)

      The particulars that are required by law shall be published as ordered by the Minister of Commerce and Industry in the Official Gazette and in one of the local daily newspapers.

    • Article (23)

      If the provisions of this law require a certain quorum to incorporate a company, and if one partner or more withdraws after its incorporation, the company may continue to exist among the remaining partners without prejudice to the obligations it has undertaken before the withdrawal of any partner.

    • Article (24)

      The provisions of article (333) of the Civil and Commercial Procedures Code shall be observed in the calculation of the periods provided for in this law.

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