New Ministerial Decision No.29 of 2024 for Authorized Distributors in Bahrain
Our Associate Budoor Al Halwachi shares insights on how the newly introduced Ministerial Decision No. 29 can enhance your business operations.
Budoor AlHalwachi ([email protected]) – Associate
The Bahrain Ministry of Industry and Commerce (MOIC) has introduced updated regulations for authorised distribution through Ministerial Decision No. 29 of 2024 concerning the Conditions and Controls for Practicing the Authorised Distributor Activity (Ministerial Decision). This Ministerial Decision governs the commercial activities related to distributing and promoting trademarked products through a distribution agreement. The Ministerial Decision aims to streamline the process and ensure that authorised distributors operate within a clearly defined legal framework. This article explores the Ministerial Decision, which is designed to promote local business participation, foster competitive practices and provide legal clarity and protection for all parties involved.
Authorized Distributors
An authorized distributor works independently, with the primary focus on selling and distributing the trademark owner’s product and services. They are governed by Decree-Law No. 27 of 2015 Regarding the Commercial Registry, its implementing regulations, and the specific agreements between the two parties.
Criteria for Authorized Distributors
To qualify as an Authorised Distributor, businesses must be individual establishments or companies with at least 51% Bahraini ownership and headquartered in Bahrain. This ensures that local businesses play a significant role in the distribution network. An important aspect of this Ministerial Decision is that any exceptions to this rule must now be formally approved by the MOIC, offering flexibility while still ensuring Bahraini interests are protected.
Allowance for Multiple Distributors
A trademark owner can now appoint multiple Authorised Distributors, provided they all meet the required conditions and submit the necessary paperwork. This flexibility, introduced by the Ministerial Decision, aims to enhance competition among distributors, encouraging better service and product distribution across the market.
Mandatory Elements of a Distribution Agreement
This regulation requires that a distribution agreement include specific details such as the names of the distributor and trademark owner, the nature of the goods and services covered, the obligations of both parties, the geographical area of operation, and the contract’s duration. Additionally, it should list any trademarks or commercial names involved. These requirements ensure transparency and clarity, providing legal certainty to both parties.
Compliance Timeline and Requirements
Businesses are required to comply with the provisions of this Ministerial Decision by 18 October 2024. This includes updating their commercial registration to include the activity of authorised distribution (under ISIC No. 4699) and ensuring that all relevant distribution agreements are recorded in the Authorised Distributor Registry on Sijilat. Businesses should also maintain an active registration in general trade, retail and/or wholesale sectors. The MOIC has provided a grace period to ensure the businesses can meet these requirements, emphasising the importance of regulatory compliance.
Benefits of Adherence
Overall, compliance not only avoids legal penalties but also helps businesses build stronger relationships with their clients and expand their market presence. By meeting the Ministerial Decision’s criteria, businesses will enjoy enhanced legal protections, increased market credibility, and the safeguarding of market access. Companies are advised to thoroughly review the regulation or contact the MOIC for guidance.
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