Strategies for Self-financing in Joint-Stock Companies: Conceptual Analysis According to Bahraini Company Law

Joint-stock companies are the backbone of any country’s economy. The number of joint-stock companies established in a country is a measure of its economic strength. Therefore, the collapse of any joint-stock company has a negative impact on the country’s economy. To avoid such situations, countries need to intervene in the legislative, financial, and regulatory aspects to save these companies as they are involved in major projects in the country. This paper focuses on the legislative involvement in joint-stock companies to ensure that companies provide a cash reserve, deducted annually from the company’s net profits, before making any profits distribution to those entitled to it by law. The aim of this obligation is to cover the erosion of capital in lean years that the company is going through, whether due to losses it suffered or to circumstances sometimes related to the company or the state, such as wars and pandemics.