The corporate Governance Code:
On 19th March 2018, the
Ministry of Industry, Commerce and Tourism issued the Decree No. (19) for 2018
concerning the issuance of the Corporate Governance code, which was published
in the official gazette No. 3360 on Thursday 5th of April 2018, which
is applicable to all joint stock companies incorporated in Bahrain expect for
joint stock companies licensed by the Central Bank of Bahrain.
The purpose of the Corporate Governance
The Code aims to provide guidance to
companies on the best ways to manage, lead, organize and monitor their
businesses through a series of transparent, clearly defined policies, processes
Purpose of Governance:
Governance aims to establish a system
that governs and controls the companies’ businesses and practices in order to
create efficient institutions which contribute to building a strong,
transparent and competitive national economy for the purpose of reducing any
adverse effects on the national economy, acting parties and local community due
to not committing to the best practices in managing joint stock companies.
Key Pillars of Governance:
The key pillars of corporate governance
a- Ensuring that the information required by
regulators, shareholders and investors, as well as related parties is provided
in a timely and appropriate manner to enable these parties to take decisions
and run their businesses properly, while the matters of interest to
shareholders and various related parties are transparently disclosed by the
company and its BoD, which would help attract more businesses to the company,
including various investors within the Kingdom of Bahrain.
b- Accountability, which means that the board of directors
are aware that they are responsible for their decisions and actions in relation
to the management and leadership of the company before the shareholders and are
held accountable to them, and they shall subject themselves to evaluation in
accordance with best practices.
c- Justice, which means that all shareholders,
employees and related parties shall enjoy fair and equitable treatment by the
directors and Executive Management, without bias or any concealed interests.
d- Responsibility, which means that the directors
shall perform their duties with honor, integrity, impartiality and sincerity
towards the economy and society in general, and the company in particular,
exercise caution, care and due diligence in the performance of their duties, put
the company’s best interest ahead of their own self-interests and take into
account the corporate social responsibility.
the companies which apply the code:
The Code is applicable to all joint stock
companies incorporated in the Kingdom of Bahrain and registered pursuant to the
Commercial Companies Law.
In the application of this Code to the
joint stock companies of a family nature, the provisions thereof that suit to
their financial, administrative conditions and capacities shall be observed, in
order to achieve the results which this code is aiming for.
Structure of the Code:
The code contains eleven fundamental
principles of corporate governance, each of which contains several guidelines
and directives to be applied and considered by every company when declaring its
compliance with the provisions of the Code pursuant to the Comply or Explain
Principle. And The principles of corporate governance are as follows:
1. The company shall be headed by an effective,
qualified and expert Board.
2. The board and the executive management shall
have the full loyalty to the company.
3. The board shall have rigorous control for
financial audit and reporting, internal control and compliance with the law.
4. The Company shall have effective procedures for
the appointment, training and evaluation of Board members.
5. The company shall remunerate directors and
officers fairly and responsibly.
6. The board shall establish a clear and effective
management structure for the Company, and define job titles, powers, roles and
7. The company should communicate with
shareholders, encourage them to participate and respect their rights.
8. The company shall disclose its corporate
9. Companies which offer Islamic services shall
adhere to the principles of Islamic shari’a.
10. The board shall ensure the integrity of the
financial statements submitted to shareholders, through the use of external
11. The company must seek social responsibility to
exercise its role as a good citizen.
The requirement of the Ministry of Industry,
Commerce & Tourism for the corporate governance:
Appointment of a
A written guide and
procedures for corporate governance shall be existed within the company.
corporate governance report shall be included in the company’s annual report.
Separate item for
governance shall be included in the company’s general assembly agenda.
Companies and business owners can view
and obtain a copy of the Corporate Governance code, the Corporate Governance
Officer Form and Guidelines for evaluating the performance of the Board of
Directors by click on the following links: Corporate Governance Code