The Bahrain Stock Exchange (BSE[1]) was established in 1987 by Amiri Decree No.(4) and officially commenced operations on 17 June 1989, with 29 listed companies. It operated as an autonomous institution supervised by an independent Board of Directors, chaired by the Governor of the Central Bank of Bahrain. Bahrain Bourse (BHB) was established as a shareholding company by Law No. 60 for 2010 to replace BSE.[1] As of 2015[update] 50 companies were listed on the exchange. The exchange operates from Sunday to Thursday.[2]
Three indices track the BSE: the Bahrain All Share Index, the Dow Jones Bahrain Index and the Estirad Index.
Foreign ownership of securities
As of 2015[update] foreigners can purchase, own or sell bonds, units of mutual funds, and warrants of domestic joint-stock companies. Foreigners who reside in Bahrain for one year or more are entitled to purchase, own, and/or trade up to 49% of a domestic joint-stock company’s equities. However, an individual foreigner may not own more than 1% of a company’s issued capital. There are ten companies that are completely open to foreign investors; Arab Banking Corporation (ABC), Arab Insurance Group (ARIG), Ahli United Bank (AUB), Al Baraka Banking Group (BARKA), Bahrain Middle East Bank (BMB), Ithmaar Bank (ITHMR), Investcorp Bank (INVCORP), Bahrain Shamil Bank (SHAMIL), Al Salam Bank (SALAM), and TAIB Bank (TAIB). Foreign security holders are legally entitled to enjoy all the benefits of the ownership of securities of domestic joint-stock companies. They have voting rights on all matters submitted for approval, and receive dividends and other distributions without being subject to taxation .
Taxation
Bahrain has no capital gains or dividend taxes on both foreigners and nationals.
Practice governing trading and settlement of securities
Securities listed on the Exchange, with certain exceptions, must be traded on the floor through registered brokers. The specific standards of due care and diligence, which are needed in the execution of transactions and in the safeguarding of customers' funds and securities, are imposed under the terms of the BSE's laws and by-laws which are adhered to by the brokers and dealers.
Settlement of sales and purchases of securities
Settlement and transfer of ownership of domestic joint stock securities is undertaken through the Exchange in accordance with simple and straightforward procedures. The sale and purchase of a security creates a binding contract on the part of the seller to deliver the security and on the part of the purchaser to make payment on the settlement date, i.e. within two days after the trading date, (T + 2). The BSE management is continuously monitoring and reviewing the Exchange’s existing laws and procedures in an effort to further develop and enhance its contribution to the economy of Bahrain.
