Another day, another boost to the thriving startup ecosystem in Bahrain. The Kingdom’s government has approved a series of new amendments to the Bahrain Commercial Companies (BCC) law to help promising startups better access to funding and improve the ease of doing business in the country.
With this new development, Bahraini startups will now have the option to introduce an employee share scheme, while simultaneously raising funds through convertible notes.
It is worth noting that Bahrain has become the first mainland junction in the GCC region to have introduced these debt instruments.
The new regulations are likely to come into effect sometime by the end of 2020.
“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 provides startups with a simpler, cheaper, and faster means of raising capital without having to establish a valuation at an early stage,” said Pakiza Abdulrahman, head of Startups at the Bahrain Economic Development Board.
Abdulrahman 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.”
Some of the other improvements introduced by the new regulations include the better framework to establish non-profit companies, permission to introduce online voting and candidacy submission for board appointments, enhance the rights of minority stakeholders, and further strengthening of corporate governance and transparency.