Weekly Spotlight: Bahraini Bankruptcy Law Adopted

This week the spotlight is on legal and regulatory developments in Bahrain, where the Shoura Council has approved the bankruptcy law. A member of the Council’s Financial Committee, Darwish Almanaie said the aim of the legislation is to remedy some of the shortcomings of the existing bankruptcy law. Another Committee member, Sadeq Rahma said the law has been approved because it includes new provisions which are in line with updated laws and regulations and the requirements of commercial businesses. The law is expected to update bankruptcy procedures and establish a law for financial restructuring for enterprises and companies who will be subject to it. The law also regulates cross-border restructuring and bankruptcy procedures.

Elsewhere, the Public Utilities and Environment Committee of Bahrain’s Shoura Council has approved a draft law which would establish a public food safety body. The Food Authority would have its own legal personality and have administrative and financial independence. The Food Control Section of the Health Ministry is currently responsible for the safety of food produced or imported in to the country. The Health, Industry, Trade and Tourism, Works, Municipal Affairs and Urban Planning Ministries as well as the Bahrain Chamber of Commerce and Industry all approved the draft law.

Weekly Spotlight: Objections to Bahraini Government’s Urgent Submission of a Draft Bankruptcy Law

This week the spotlight is on legal developments in Bahrain, where a Bahraini MP has objected to the Bahraini Government’s urgent submission of the draft Bankruptcy Law to the Kingdom’s Parliament. The Government has referred the draft bankruptcy law to the House of Representatives to review in 15 days. The draft law would apply to natural or legal persons and provide legal protection during the bankruptcy process. It also covers bankruptcy procedures, fraud, preventive settlement, liquidation and the right to default until a decision by the Court. MP Ahmed Qaratah has objected because of the Law’s length and importance. It has been classed as urgent under Article 87 of the Constitution.

Elsewhere, Bahrain’s Shoura Council’s Foreign Affairs, Defence and National Security Committee has approved an amendment to the 1975 Passports Law. If approved, the new Article 18 to Bahrain Law No. 11/1975 will criminalise the tearing up or adulterating Bahraini passports with any signs, stickers, slogans, stamps or words. The fine for defacing a passport will be 400 Dinars but will not be imposed where damage is unintentional. Bahrain’s Cabinet Affairs Minister, Ghanim Al-Buainain said the aim is to stop Haj and tourism agencies defacing passports and preserve national identity. An Interior Ministry representative encouraged those with defaced passports to submit them to the Nationality, Passports and Residence Affairs department to issue a replacement. In a related development, Bahrain Law No. 7/2018 was ratified on 6 April. It adds a new clause to Article 9 of Bahrain Law No. 11/1975, granting retired military personnel the right to obtain a special passport.

Weekly Spotlight: Bahrain has announced the introduction of VAT by December 2018

This week the spotlight is on tax and finance developments in the GCC where Bahrain’s Finance Minister, Sheikh Ahmed bin Mohammed al-Khalifa has announced the Kingdom will introduce VAT by December 2018. This comes despite intense opposition which has seen the current plans shelved. Al-Khalifa was speaking on the sidelines of an investment conference in the country’s capital, Manama.

Elsewhere, Oman’s National Tobacco Control Committee has announced the excise tax which has already come into effect in Bahrain, Saudi Arabia and the UAE, will be introduced in the Sultanate in June. Tobacco products, alcoholic beverages and energy drinks will be taxed at 100%, while fizzy drinks will be taxed at 50%. The authorities are also considering increasing taxes on fast food.

Weekly Spotlight: the Bahrain FinTech Bay has been launched

This week the spotlight is on regulatory developments in Bahrain where the Kingdom’s Central Bank has announced it has launched the Bahrain FinTech Bay. The Bank and the Bank’s FinTech & Innovation Unit will work with Bahrain FinTech Bay to support and develop the Kingdom’s FinTech framework and encourage more companies to invest in FinTech. It will be the first dedicated FinTech hub and corporate incubator in the Middle East & Africa region. It will be based at the Arcapita building overlooking Bahrain Bay and have 10,000 square feet of facilities. It will be operated by FinTech Consortium who are a global FinTech ecosystem builder and operator.

The Bank has also issued directives for offshore and locally domiciled Exchange-Traded Funds (ETFs). Exchange-Traded Funds are effectively funds which are traded like stocks on a stock exchange and mainly track index, a commodity, bonds or a basket of securities and therefore divide ownership of those assets into shares. These shares can be bought or sold throughout the day on an exchange at a market-determined price. They generally provide price transparency, higher liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. By owning this type of fund, investors get the diversification of an index fund as well as the ability to easily trade the shares on the licensed exchange. They will expand the categories of locally domiciled mutual funds to include Exchange-Traded Funds as another type of Collective Investment Undertaking which may establish in the Kingdom and be listed by banks and other financial institutions on licensed exchanges. The registration of listed offshore Exchange-Traded Funds will also be allowed. Conventional and Sharia-compliant Exchange-Traded Funds are also recognised.