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Questions and Answers
What is the purpose of Corporate Governance?
What is the purpose of Corporate Governance?
To protect stakeholders' rights and achieve justice, competitiveness, and transparency.
Which of the following is a principle of Corporate Governance?
Which of the following is a principle of Corporate Governance?
What is the definition of a company according to the text?
What is the definition of a company according to the text?
A company is a 'corporation' - an artificial person created by law.
Which of the following are types of companies according to the content? (Select all that apply)
Which of the following are types of companies according to the content? (Select all that apply)
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A general partnership company in Bahrain consists of at least three partners.
A general partnership company in Bahrain consists of at least three partners.
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An Association in Participation is also known as a ______.
An Association in Participation is also known as a ______.
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Match the following company forms with their descriptions:
Match the following company forms with their descriptions:
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What is the definition of a company according to Company Law?
What is the definition of a company according to Company Law?
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Which type of company does not have a juristic entity and cannot issue shares?
Which type of company does not have a juristic entity and cannot issue shares?
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In a Limited Partnership by Shares, the sleeping partners are responsible for the company's obligations.
In a Limited Partnership by Shares, the sleeping partners are responsible for the company's obligations.
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A holding company is a company that owns shares in Bahraini or foreign shareholding companies, or participates in the establishment of these companies. The holding company shall own more than half (__%) of the affiliated company.
A holding company is a company that owns shares in Bahraini or foreign shareholding companies, or participates in the establishment of these companies. The holding company shall own more than half (__%) of the affiliated company.
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Match the following company forms with their descriptions:
Match the following company forms with their descriptions:
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What is the main function of corporate governance?
What is the main function of corporate governance?
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The liability of promoters extends to the extent of all their funds.
The liability of promoters extends to the extent of all their funds.
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What should the company's board establish for effective management?
What should the company's board establish for effective management?
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Corporate Governance Principles: Principle 1 states that the company shall be headed by an effective, qualified, and expert __________.
Corporate Governance Principles: Principle 1 states that the company shall be headed by an effective, qualified, and expert __________.
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Match the following Corporate Governance Principles with their descriptions:
Match the following Corporate Governance Principles with their descriptions:
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Study Notes
Introduction to Company Law and Corporate Governance
- Company law is about the formation, regulation, and liquidation of companies.
- A company is a "corporation" or "legal person" with legal rights and obligations, similar to a natural person.
Types of Companies
- Civil companies: government-established or acquired entities.
- Commercial companies: private established or acquired business entities.
Company Forms and Structures
- Definition of a company in law: a contract between two or more persons to participate in a profit-making economic project.
- Companies in Bahrain can take one of the following forms:
- General Partnership Company
- Limited Partnership Company
- Association in Participation (Joint Venture)
- Shareholding Company
- Limited Partnership by Shares
- Limited Liability Company
- Holding Company
Association in Participation (Joint Venture)
- A company that conceals itself from others, without a juristic entity and not subject to publication procedures.
- The company cannot issue shares.
- Rights and obligations of partners are stated in the memorandum of association.
General Partnership Company
- A company formed between two or more persons under a specific name.
- Partners assume joint responsibility for the company's obligations.
- The name of the company must consist of the names of all partners or the name of one of them with "& Co."
- Liability of partners:
- All partners are jointly liable.
- Each partner is treated as undertaking business activities under the company's name.
- Bankruptcy of the company entails the bankruptcy of all partners.
Limited Liability Partnership
- A company with two categories of partners:
- Joint partners who are jointly and severally liable for the company's obligations.
- Sleeping partners who are not liable for the company's obligations except to the extent of their shares.
Limited Partnership by Shares
- A company with two categories of partners:
- Joint partners who are jointly responsible for the company's obligations.
- Sleeping partners who are not responsible for the company's obligations except to the extent of their equity in the capital.
Limited Liability Company
- A company with more than 50 partners.
- Each partner is responsible only to the extent of their shareholding in the capital.
- Limitations:
- Not allowed to undertake insurance, banking, or investment activities.
- Must not fall below two partners, or it will become a single person company.
Holding Company
- A company with the aim of owning shares in Bahraini or foreign shareholding companies.
- A holding company shall own more than half of the affiliated company.
- Can take one of the following forms:
- Shareholding company.
- Limited liability company.
- Single person company.
Shareholding Company
- A company with a number of persons who subscribe to it by way of negotiable shares.
- Shareholders are not liable for the company's debts and liabilities except to the extent of the value of their shares.
- Types:
- Shareholding company (public).
- Closed shareholding company.
Shareholding Company: Pre-incorporation actions of Promoter
- Contracts and acts executed by promoters in the name of the company under incorporation are effective against the company after it is incorporated.
Shareholding Company: Shares
- The capital is divided into equal shares.
- Shares are issued in their nominal value.
- The shares may not be issued for a lesser value.
Shareholding Company: Membership
- Promoters who signed the company's Articles of Incorporation, together with shareholders, are considered members of the company.
- The company shall maintain a register for its shareholders.
Shareholding Company: Management
- Management is undertaken by a Board of Directors (BoD).
- The BoD shall have at least five members, with a term limit of three years.
- Members of the BoD must fulfill certain conditions, including having full legal capacity, not being convicted of certain crimes, and not being prohibited from assuming a directorship.
Shareholding Company: Members' Meetings
- Types of meetings:
- Ordinary General Assembly.
- Extraordinary General Assembly.
Shareholding Company: Members Meeting; Ordinary General Assembly
- The ordinary general assembly of shareholders shall convene at least once a year.
- Each shareholder has the right to attend and has a number of votes equal to the number of shares they hold.
Shareholding Company: Members Meeting; Extraordinary General Assembly
- The following matters are reserved for the extraordinary general assembly:
- Amending the company's Memorandum of Association or Articles of Incorporation.
- Reducing or increasing the company's capital.
- Disposing of more than half of the company's assets.
- Disposing of the entire project undertaken by the company.
- Winding up the company or merging it with another company.
Documents Required for Registration
- Memorandum of Association.
- Articles of Incorporation.
Shareholding Company: Memorandum of Association
- The Memorandum is addressed to the general public.
- A document that regulates a company's external activities.
- Preliminary Memorandum of Association shall include:
- Company name.
- Head office.
- Objectives.
- Names of at least two promoters.
- Information about the company's share capital.
- Details about non-cash contribution.
Shareholding Company: The Articles of Incorporation
- The articles of association are a set of rules for running the company.
- Set out the heart of any company's organizational structure.
- Allocate power between the BoD and the general meeting.
Liability of Promoters et al.
- The promoter, partner, capital owner, company's manager, or member of the BoD shall be liable to the extent of all their funds for any damages sustained by the company, partners, shareholders, or third parties.
Corporate Governance
- A methodology to lead, guide, and control the company.
- Includes mechanisms to regulate the relationships between the various stakeholders.
- Focuses on efficiency, transparency, accountability, fairness, and anti-money laundering.
Corporate Governance Principles
- Principle 1: The company shall be headed by an effective, qualified, and expert Board.
- Principle 2: The directors and executive management shall have full loyalty to the company.
- Principle 3: The Board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law.
- Principle 4: The company shall have effective procedures for appointment, training, and evaluation of the directors.
- Principle 5: The company shall remunerate directors and senior officers fairly and responsibly.
- Principle 6: The Board shall establish a clear and efficient management structure.
- Principle 7: The company shall communicate with shareholders, encourage their participation, and respect their rights.
- Principle 8: The company shall disclose its corporate governance.
- Principle 9: Companies which offer Islamic services shall adhere to the principles of Islamic Shari'a.
- Principle 10: The Board shall ensure the integrity of the financial statements submitted to shareholders.
Introduction to Company Law and Corporate Governance
- Company law is about the formation, regulation, and liquidation of companies.
- A company is a "corporation" or "legal person" with legal rights and obligations, similar to a natural person.
Types of Companies
- Civil companies: government-established or acquired entities.
- Commercial companies: private established or acquired business entities.
Company Forms and Structures
- Definition of a company in law: a contract between two or more persons to participate in a profit-making economic project.
- Companies in Bahrain can take one of the following forms:
- General Partnership Company
- Limited Partnership Company
- Association in Participation (Joint Venture)
- Shareholding Company
- Limited Partnership by Shares
- Limited Liability Company
- Holding Company
Association in Participation (Joint Venture)
- A company that conceals itself from others, without a juristic entity and not subject to publication procedures.
- The company cannot issue shares.
- Rights and obligations of partners are stated in the memorandum of association.
General Partnership Company
- A company formed between two or more persons under a specific name.
- Partners assume joint responsibility for the company's obligations.
- The name of the company must consist of the names of all partners or the name of one of them with "& Co."
- Liability of partners:
- All partners are jointly liable.
- Each partner is treated as undertaking business activities under the company's name.
- Bankruptcy of the company entails the bankruptcy of all partners.
Limited Liability Partnership
- A company with two categories of partners:
- Joint partners who are jointly and severally liable for the company's obligations.
- Sleeping partners who are not liable for the company's obligations except to the extent of their shares.
Limited Partnership by Shares
- A company with two categories of partners:
- Joint partners who are jointly responsible for the company's obligations.
- Sleeping partners who are not responsible for the company's obligations except to the extent of their equity in the capital.
Limited Liability Company
- A company with more than 50 partners.
- Each partner is responsible only to the extent of their shareholding in the capital.
- Limitations:
- Not allowed to undertake insurance, banking, or investment activities.
- Must not fall below two partners, or it will become a single person company.
Holding Company
- A company with the aim of owning shares in Bahraini or foreign shareholding companies.
- A holding company shall own more than half of the affiliated company.
- Can take one of the following forms:
- Shareholding company.
- Limited liability company.
- Single person company.
Shareholding Company
- A company with a number of persons who subscribe to it by way of negotiable shares.
- Shareholders are not liable for the company's debts and liabilities except to the extent of the value of their shares.
- Types:
- Shareholding company (public).
- Closed shareholding company.
Shareholding Company: Pre-incorporation actions of Promoter
- Contracts and acts executed by promoters in the name of the company under incorporation are effective against the company after it is incorporated.
Shareholding Company: Shares
- The capital is divided into equal shares.
- Shares are issued in their nominal value.
- The shares may not be issued for a lesser value.
Shareholding Company: Membership
- Promoters who signed the company's Articles of Incorporation, together with shareholders, are considered members of the company.
- The company shall maintain a register for its shareholders.
Shareholding Company: Management
- Management is undertaken by a Board of Directors (BoD).
- The BoD shall have at least five members, with a term limit of three years.
- Members of the BoD must fulfill certain conditions, including having full legal capacity, not being convicted of certain crimes, and not being prohibited from assuming a directorship.
Shareholding Company: Members' Meetings
- Types of meetings:
- Ordinary General Assembly.
- Extraordinary General Assembly.
Shareholding Company: Members Meeting; Ordinary General Assembly
- The ordinary general assembly of shareholders shall convene at least once a year.
- Each shareholder has the right to attend and has a number of votes equal to the number of shares they hold.
Shareholding Company: Members Meeting; Extraordinary General Assembly
- The following matters are reserved for the extraordinary general assembly:
- Amending the company's Memorandum of Association or Articles of Incorporation.
- Reducing or increasing the company's capital.
- Disposing of more than half of the company's assets.
- Disposing of the entire project undertaken by the company.
- Winding up the company or merging it with another company.
Documents Required for Registration
- Memorandum of Association.
- Articles of Incorporation.
Shareholding Company: Memorandum of Association
- The Memorandum is addressed to the general public.
- A document that regulates a company's external activities.
- Preliminary Memorandum of Association shall include:
- Company name.
- Head office.
- Objectives.
- Names of at least two promoters.
- Information about the company's share capital.
- Details about non-cash contribution.
Shareholding Company: The Articles of Incorporation
- The articles of association are a set of rules for running the company.
- Set out the heart of any company's organizational structure.
- Allocate power between the BoD and the general meeting.
Liability of Promoters et al.
- The promoter, partner, capital owner, company's manager, or member of the BoD shall be liable to the extent of all their funds for any damages sustained by the company, partners, shareholders, or third parties.
Corporate Governance
- A methodology to lead, guide, and control the company.
- Includes mechanisms to regulate the relationships between the various stakeholders.
- Focuses on efficiency, transparency, accountability, fairness, and anti-money laundering.
Corporate Governance Principles
- Principle 1: The company shall be headed by an effective, qualified, and expert Board.
- Principle 2: The directors and executive management shall have full loyalty to the company.
- Principle 3: The Board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law.
- Principle 4: The company shall have effective procedures for appointment, training, and evaluation of the directors.
- Principle 5: The company shall remunerate directors and senior officers fairly and responsibly.
- Principle 6: The Board shall establish a clear and efficient management structure.
- Principle 7: The company shall communicate with shareholders, encourage their participation, and respect their rights.
- Principle 8: The company shall disclose its corporate governance.
- Principle 9: Companies which offer Islamic services shall adhere to the principles of Islamic Shari'a.
- Principle 10: The Board shall ensure the integrity of the financial statements submitted to shareholders.
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Description
This quiz covers the basics of company law, including the formation of companies, regulation, and liquidation procedures. Learn about the definition of a company and its characteristics.
