The Ministry of Industry, Commerce and Tourism (MOICT) introduced a resolution effective from 14 January 2022 applicable to joint stock companies in Bahrain that requires the annual report of the board of directors to disclose the aggregate amount received by the executive management of the company, as well as the disclosure template for such reporting.
This resolution, which was published in the Official Gazette on 13 January 2022, amends Article 125 of the Executive Regulations of the Commercial Companies Law in Bahrain (the Executive Regulations). As there is nothing to indicate otherwise, this requirement will be effective for directors compiling their annual report for the financial year ended 31 December 2021.
The board of directors of a joint stock company in Bahrain are required to produce an annual report within the three months following the end of the company's fiscal year. In addition to this report, the directors should prepare information on the company's financial position, its budget and the profit and loss statement for the company.
The change to the Executive Regulations requires the report produced by the board of directors to include the total amount received by the six most highly remunerated members of the executive management during the fiscal year, including the Chief Executive Officer and the most senior financial officer, although there is no requirement to specify the individuals or their positions included within this disclosure. The disclosure requires the information to be broken down into the following: (i) total paid salaries and allowances; (ii) total paid remuneration (bonus); (iii) any other cash / in kind remuneration; and (iv) aggregate amount for the six most highly remunerated members of the executive management. We note that the amounts disclosed are provided on a collective basis rather than per executive.
The report of the directors shall be signed by the Chairman and a second member of the board and the board of directors as a whole shall be responsible for implementing this. The report of the board shall be shared with the company's shareholders and the MOICT.
We note that a previous amendment was made to the Commercial Companies Law in 2020 which required companies to include a statement in the annual report of all remuneration received during the course of the financial year by the executive management separately, including any salaries, benefits, shares and profit shares. This was finessed by a subsequent change to the Commercial Companies Law in 2021 that removed the need for all executive management to be included in the statement in the annual report and replaced the requirement for the statement to be in line with the executive regulations. The latest changes to the Executive Regulations, as of 14 January 2022, set out the guidance for this statement in the annual report.
