Mergers and Acquisitions in Bahrain: A Legal Guide to Mergers, Competition Approval and Public Takeovers (2026)

Bahrain regulates company mergers in Part XI of the Commercial Companies Law (Legislative Decree No. 21 of 2001, Articles 312 to 319). A merger that creates an "economic concentration" also needs the competition regulator's approval when it falls within the cases set by ministerial decision under Law No. 31 of 2018 on Promotion and Protection of Competition. Public company takeovers add the Central Bank of Bahrain (CBB) Takeovers, Mergers and Acquisitions (TMA) module. This guide sets out what each source says. We assist clients with Bahrain from our office in Kuwait, in cooperation with our partners in Bahrain.

Two ways to merge (Article 312)

Article 312 allows a merger in one of two ways:

• Acquisition (absorption): one or more companies are wound up and their patrimony (assets and liabilities) moves to an existing company.
• Consolidation: two or more companies are wound up and a new company is formed, and the patrimony of the merged companies moves to it.

Each company must pass its merger resolution by the procedure for amending its own memorandum and articles of association. In all cases, a merger must not result in monopolizing an economic activity, a commodity or a certain product.

Merger by acquisition (Article 313)

1. The merged company passes a resolution to dissolve itself.
2. The merged company is valued under the law's rules on valuing in-kind shares.
3. The merging (or emerging) company passes a resolution to change its capital in line with the valuation.
4. The capital increase goes to the partners of the merged company in proportion to their shares.
5. If their stakes are shares, they can be traded when issued, if one year has passed since the merging or emerging company was incorporated.

Merger by consolidation (Article 314)

1. Each merged company passes a resolution dissolving itself.
2. A new company is formed under the Companies Law. If it is a joint stock company, the experts' report on the valuation of in-kind shares is relied on under Article 99.
3. Each merged company receives shares or stakes equal to its holding in the new company's capital, and these go to its partners in proportion to their shares.

Publication and creditors' objection (Article 315)

The merger must be published in the Official Gazette and in one local daily newspaper, and recorded in the Commercial Registry. Holders of rights that arose before publication may object by registered letter with a delivery note. The period is fifteen working days from publication. Older published copies of Article 315, including the CBB Rulebook, still show sixty days, but Article 3 of Law No. 50 of 2014 replaced "sixty days" with "fifteen working days" wherever it appears in the Commercial Companies Law. If a creditor objects, the merger's results do not bind that creditor unless one of these happens:

• the creditor gives up the objection;
• the company brings the matter to court and a final judgment rejects the objection; or
• the company pays the debt if it is due, or gives adequate guarantees if it is not due.

If no one objects in time, the merger takes effect against creditors, and the merging or new company steps into all the rights and obligations of the merged companies.

Check the current period before you plan the timetable. We read the replacement in Article 3 of Law No. 50 of 2014, but we have not read a current consolidated Arabic text of Article 315, so confirm the period with the Commercial Registry.

Trading shares after a merger (Article 316)

After a merger by acquisition, the shares given in exchange for the merged company's capital may be traded when issued if one year has passed since the merging company's incorporation, in companies whose shares may be traded. After a consolidation, the new company's shares can be traded when issued if a year has passed since each merged company was incorporated.

Bondholders (Articles 317 to 319)

A joint stock company that has borrowed by issuing bonds can merge only if the board of bondholders approves the merger resolution by a majority representing two thirds of the loan bonds. Otherwise the company must settle the debt in a way the board accepts by that majority. If the board does not approve the merger or the settlement, or cannot meet, its representative must object to the merger resolution under Article 315 (Article 317). Holders of bonds convertible into shares may ask to convert into shares of the merging or new company within the time limit in the bond issue, using the exchange rate set in the issue terms and the replacement percentage in the merger agreement (Article 318). The merging or new company takes over the issuer's obligations on those bonds (Article 319).

Competition approval

Law No. 31 of 2018 defines an economic concentration as a transaction that transfers, in whole or part (by merger or acquisition), the ownership of assets, shares, stakes, usufruct, rights or obligations of one establishment to another and lets an establishment or group of establishments control another, directly or indirectly (Article 1). Under Article 11, a concentration arises when control changes because of:

• a merger of two or more establishments, in whole or in part, if they were independent of each other before the merger;
• one or more establishments, or one or more natural persons who already control at least one establishment, acquiring direct or indirect control of an establishment or part of one; or
• the creation of a joint venture that performs all the functions of an autonomous establishment.

Article 12 bans completing concentrations that a ministerial decision specifies, issued after consulting the authority, without the authority's approval. It also bans those operations if they would significantly limit competition in the market. The application goes to the authority from the party concerned or its representative under the authority's procedures (Article 13). The authority issues a reasoned decision to accept or reject within ninety days of the application, may attach conditions, and may reject the application if the concentration would significantly limit competition or if the parties do not provide the information requested in time (Article 14). The Minister may approve a concentration for exceptional public interest reasons, after consulting the authority and with Cabinet approval (Article 15).

The thresholds that decide which deals need approval are not in the law. Article 12 leaves them to a ministerial decision. Commentators cite Ministerial Decision No. 72 of 2019 on economic concentrations, but some report that no notification thresholds have been published. We have not read that decision, so confirm with the authority whether a filing is required before signing. Practice guides also report that the competition authority is not yet constituted and that the Consumer Protection Directorate of the Ministry of Industry and Commerce acts for it. Confirm the current position with the Ministry.

Dominant position and abuse (Law No. 31 of 2018)

A merger can leave the buyer in a dominant position, so the test in the Competition Law matters even for deals that do not need approval. The Law treats an establishment as dominant if its economic strength lets it prevent effective competition in the market and act, to a real extent, independently of its competitors, customers and consumers. Unless the contrary is proved, a single establishment is presumed dominant if its share of the relevant product market is above 40%, and a group of two or more establishments is presumed dominant if its share is above 60%. A smaller share does not rule out dominance. The authority may issue decisions that add criteria or that find particular establishments dominant.

A dominant establishment may not abuse its position, alone or with others (Article 9). The Law lists these examples of abuse:

• imposing selling or purchase prices or other trading terms, directly or indirectly;
• limiting production, markets or technical development in a way that harms consumers;
• discriminating between suppliers or customers in similar contractual positions, in price, product quality or other terms;
• making a contract for one product conditional on accepting obligations or products that are unrelated to it by nature or commercial usage; and
• refusing without legitimate justification to sell or buy, selling below actual cost, or stopping dealing completely in a way that pushes competitors out of the market or makes it hard for them to continue.

The ban does not apply if the conduct is reasonable under the objective standard for such establishments and is proportionate to its justification.

What the authority's Board can order if a deal breaches the Law

If a violation of Article 3, 9 or 12 is proved, the Board first orders the violator to stop and to remove the causes or effects at once or within a period it sets, without prejudice to criminal or civil liability (Article 49(1)). The Article 12 rule is the one on economic concentrations. If the violator does not remove the effects of a prohibited concentration, the Board may by reasoned decision order him to:

• take the steps needed to abandon the economic concentration;
• operate under conditions and limits that restore competitive balance; or
• dispose of certain assets, shares or ownership rights, or modify the concentration so that the causes or effects of the violation disappear (Article 49(3)).

The Board may also impose a coercive daily fine of up to 5% of the violator's daily sales of the products, capped at BHD 1,000 a day for a first violation and BHD 2,000 a day for the same violation within three years of an earlier decision (Article 49(4)). It may impose an administrative fine of not less than 1% and not more than 10% of the total sales of the products during the violation period, up to three years (Article 49(5)). Both are collected as debts owed to the State (Article 49(6)). If the investigation shows a criminal offense, the Board refers the papers to the Public Prosecution. The authority publishes a statement of the violation, but only after the time to challenge the decision has passed or a final judgment has been issued. Civil liability follows the Civil Code. For claims arising from a breach of Article 3(1), 9(1) or 12(1), there must first have been an authority decision establishing the defendant's violation, or the claimant must have filed a complaint or grievance with the authority and received no notice of its outcome for one year. In addition, the Appeals Committee must have issued a decision if the matter was before it, or the time for an appeal must have expired (Article 52(2)).

How an investigation runs

The authority's investigation committee has to submit a reasoned report to the Chief Executive within six months of starting the investigation, and the Chief Executive can extend that period before it ends, by a decision made at the committee's request. Under Article 46, all extensions together may not exceed six more months, and they apply only where the delay is for reasons outside the committee's control. The Chief Executive then notifies the parties within three working days of receiving the report. The parties have up to thirty days from receipt to file written observations with supporting documents. The Chief Executive submits the report with his opinion to the Board, which issues a reasoned decision to close the investigation, find no violation, or take measures under Article 49.

Dates and the interim authority

Law No. 31 of 2018 was issued in Shawwal 1439 AH and applies from the first day of the month after six months from its publication, except Part Two, which applies from the first day of the month after publication. A decree was to name an administrative body to carry out the authority's functions until the authority was funded and its board formed. We have not confirmed which body acts today, so check this before you file.

Public companies and takeovers

For a bid for a listed company, the CBB Rulebook TMA module applies. Under TMA 3.1.1, a mandatory offer is required when a person acquires, alone or over time, 30% or more of the voting rights of a company. The rule also covers persons acting in concert, and a person who holds at least 30% but not more than 50% and acquires additional voting rights of more than 1% in any period of 6 months. Check the module's scope and exemptions for your target before you plan the bid. Where a party is a CBB-licensed institution, expect extra regulatory requirements, and plan early contact with the regulator.

Practical sequence

1. Choose the structure: absorption, consolidation, or a share or asset purchase.
2. Run due diligence and value the merged company (Article 313 and Article 99 rules for in-kind shares).
3. Test whether the deal is an economic concentration and falls within the ministerial decision, and file for competition approval if it does.
4. Check sector regulators and, for listed targets, the TMA module.
5. Pass the merger resolutions in each company by the amendment procedure.
6. Publish the merger and record it in the Commercial Registry, then run the creditor objection period.
7. Complete the capital change or incorporation and issue the shares.

Read also: Entering Bahrain: Company Forms and Foreign Ownership Guide | Entering the UAE: Company Forms, Ownership and Free Zones

Frequently asked questions

What are the two kinds of merger in Bahrain?

Acquisition and consolidation, under Article 312.

Can a merger create a monopoly?

No. Article 312 says a merger must not result in monopolizing an economic activity, a commodity or a certain product.

How do creditors object?

By registered letter with a delivery note within fifteen working days of publication (Article 315, as changed by Article 3 of Law No. 50 of 2014; older copies still show sixty days).

Do I need competition approval?

If the deal is an economic concentration within the cases the ministerial decision specifies, yes. Approval is a gate before completion under Article 12 of Law No. 31 of 2018.

When must a bidder make an offer for a listed company?

TMA 3.1.1 requires a mandatory offer at 30% or more of the voting rights, among other cases.

How do you help with Bahrain deals?

From our office in Kuwait, in cooperation with our partners in Bahrain, we structure the deal, map the approvals and review the documents.