Bahrain: corporate governance code published

The Kingdom of Bahrain's Ministry of Industry and Commerce has published a corporate governance code: see here (pdf). The code contains nine principles with supporting directives and recommendations. For example, principle 5 provides that the company "shall remunerate directors and officers fairly and responsibly". This principle is supported by the directive that the board should establish a remuneration committee. A recommendation provides that all plans for performance-based incentives should be approved by the shareholders.

The code will initially apply to public companies but it is intended that it should, in due course, apply to all operating joint stock companies incorporated under the Bahrain Commercial Companies Law. The subject of enforcement is explained in the code's introduction. Whilst the code is based on the comply or explain approach, the introduction notes that market based monitoring alone is not sufficient and identifies other bodies and mechanisms which should perform this function including the Central Bank of Bahrain and shareholder litigation.