Bahrain Amends Law to Help Startups Raise Capital

A night view of Bahrain's capital Manama. (AFP file photo)
A night view of Bahrain's capital Manama. (AFP file photo)
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Bahrain Amends Law to Help Startups Raise Capital

A night view of Bahrain's capital Manama. (AFP file photo)
A night view of Bahrain's capital Manama. (AFP file photo)

Startups and scale-ups in Bahrain are set to benefit from a funding boost following the launch of two new schemes that make it easier to raise capital.

A new amendment to the Bahrain Commercial Companies Law (BCCL) will enable firms to introduce employee share schemes and to raise funding via convertible notes – a type of loan which means lenders can be repaid in equity rather than cash.

The change is intended to further improve Bahrain’s business environment and bring the BCCL in line with global best practice.

The amendment allows closed shareholding companies to introduce employee share schemes, enabling them to retain talent and incentivize their employees.

The amendment will also allow these companies to raise capital through convertible notes, making Bahrain the first main land jurisdiction in the Gulf to provide for the use of these debt instruments.

Commenting on the amendment, Head of Startups at the Bahrain Economic Development Board (EDB) Pakiza Abdulrahman said that by granting employees the option to own or buy equity in the company, loyalty is increased and employees are incentivized to act as owners.

“Convertible notes are a debt instrument that provide startups with a simpler, cheaper and faster means of raising capital without having to establish a valuation at an early stage,” she added.

“By granting incentives for early investors such as discount rates, this instrument can attract a wider range of capital. These developments are empowering new growth for locally registered businesses – especially startups and SMEs with global ambitions.”

Director and Fund Manager at Al-Waha Fund of Funds, Areije al-Shakar said the startup and SME sectors have emerged as increasingly prominent pillars in Bahrain’s economic diversification and growth strategies.

“In fact, across the entire Gulf region, they are significant contributors to non-oil GDP and job creation and are widely regarded as being the engine of the Gulf’s post-COVID-19 economic recovery,” she noted.

Other enhancements include allowing for the establishment of non-profit companies, enabling online voting and candidacy submissions for board appointments, further increasing the rights of minority shareholders and further strengthening corporate governance and transparency.

The amendment comes in line with the World Bank’s naming Bahrain the world’s fourth most improved economy for doing business.



Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
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Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices fell on Wednesday, after a gain of 4% in the previous session, as markets weighed up the chance of supply disruptions from the Iran-Israel conflict and as they ponder a direct US involvement.

Brent crude futures fell 93 cents, or 1.2%, to $75.52 a barrel by 0918 GMT. US West Texas Intermediate crude futures fell 88 cents, also 1.2%, to $73.96 per barrel.

US President Trump warned on social media on Tuesday that US patience was wearing thin, and called for an "unconditional surrender" from Iran.

While he said there was no intention to kill Iran's leader Ali Khamenei "for now," his comments suggested a tougher stance toward Iran as he weighs whether to deepen US involvement.

A source familiar with internal discussions said one of the options Trump and his team are considering included joining Israel on strikes against Iranian nuclear sites.

A direct US involvement threatens to widen the confrontation further, putting energy infrastructure in the region at higher risk of attack, analysts say.

"The biggest fear for the oil market is the shutdown of the Strait of Hormuz," ING analysts said in a note.

"Almost a third of global seaborne oil trade moves through this chokepoint. A significant disruption to these flows would be enough to push prices to $120 [a barrel]," the bank added.

Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil.

Meanwhile, Iranian ambassador to the United Nations in Geneva Ali Bahreini said on Wednesday that Tehran has conveyed to Washington that it will respond firmly to the United States if it becomes directly involved in Israel's military campaign.

Markets are also looking ahead to a second day of US Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the range of 4.25% to 4.50%.

However, the conflict in the Middle East and the risk of slowing global growth could potentially push the Fed to cut rates by 25 basis points in July, sooner than the market's current expectation of September, said Tony Sycamore, market analyst with IG.

Lower interest rates generally boost economic growth and demand for oil.

Confounding the decision for the Fed, however, is the Middle East conflict's potential creation of a new source of inflation via surging oil prices.

US crude stocks fell by 10.1 million barrels in the week ended June 13, market sources told Reuters, citing American Petroleum Institute figures on Tuesday. Official Energy Information Administration data is due later on Wednesday.