The Dynamics of Corporate Governance in Bahrain: structure, responsibilities and operation of corporate boards

Saleh H. Hussain and Chris Mallin

Corporate Governance: An International Review, 2003, vol. 11, issue 3, 249-261

Abstract: There has been an increasing emphasis on corporate governance in recent years in a global context. The board of any company is key to the adoption and implementation of corporate governance best practice. In this paper we examine the dynamics of corporate governance in Bahrain, a Middle‐Eastern country, by analysing the board structures of companies in Bahrain. We employ a survey methodology with a questionnaire being sent to all of the companies listed on the Bahrain Stock Exchange Market. The aim of the questionnaire is to elicit information regarding the structure, responsibilities and operation of corporate boards in companies in Bahrain. We find that non‐executive directors dominate the board composition, key factors influencing appointment of these directors being relevant skills and business experience and reputation. However, none of the companies has a Nominations Committee and so NEDs are generally nominated by the board as a whole or by major shareholders, Chairmen/CEOs. Nonetheless, the non‐executive directors would appear to be relatively independent, as in the majority of cases the NEDs are not former executive board members or major shareholders. Whilst Bahrain does not have a corporate governance code per se, the company law reforms contain some interesting provisions that will contribute to the corporate governance framework in Bahrain. Amongst these provisions is one that excludes directors from being on more than three boards. There are therefore some encouraging features and developments in corporate governance in Bahrain.

Date: 2003
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