Company Registration in Bahrain

 

An archipelago composed of 33 islands, Bahrain is an Arab monarchy in the Persian Gulf, located between the Qatar peninsula and the north-eastern coast of Saudi Arabia. Bahrain has been one of the Gulf's most significant commercial centres for more than 4,000 years.

Export and manufacturing establishments are strongly supported by the government of Bahrain, especially in terms of land acquisition for setting up a factory. Corporate law in Bahrain is not unlike that in western countries, in that businesses can be run as limited liability operations, private companies or other types of incorporations.

There are sundry free trade zones in the region, setting up a business which brings along with it a supplementary exemption from commercial taxes, import and export duties, land tax, building and property license fees, and limits on the transfer of capital invested there.

A company formation in Bahrain may be commenced in one of several ways, the most common one is through a limited liability company. One may also set up a free zone company, a branch, or a representative office of one’s overseas company.

Continue reading this write-up to know all about company registration in Bahrain.

Procedure of Company Registration in Bahrain

Following are the procedure one needs to follow while starting the process of company formation in Bahrain:

  • Security Clearance

The first step is getting the security clearance from the relevant authority with following documents:

  • Engagement letter (duly signed)
  • KYC forms (Duly signed)
  • Letter of authorisation
  • Passport copies
  • Choose a Business Name

The next step is to select the company name based on the guidelines issued by the Ministry of Industry and Commerce (MOIC). One can propose up to 4 names at a time.

  • Prepare MoM & AoA

Preparing Memorandum of company and Articles of association is one of the major parts of doing a company registration in Bahrain. Your MoM and AoA should have suitable details that meet your business requirements.

Note: Get the MoM Notarized. 

  • Decide on a Legal Structure

The legal structure can be one of the corporate entities listed above. One must carefully choose the legal structure of your business as it has a direct impact on how the business will be managed, how ownership is held, the personal liability of the owners, etc.

  • Commercial Registration of the Company

On verification of the application form and payment of the necessary fees, one can go for commercial registration of the company. For companies, commercial registration papers are issued at the Bahrain Investment Centre and for individual establishments at the Ministry of Industry and Commerce Commercial Registration Directorate.

  • Licensing and Approval

In case, one does not get the commercial registration papers right away, one will have to apply for a license or get approval from more than one Governmental authority.

  • Open a Bank Account

It is mandatory to open a bank account in Bahrain with a capital deposit. Below are the requirements to open a bank account in Bahrain:

  • Six months bank statement.
  • All the income supporting documents.
  • Physical presence of all the shareholders.
  • Business plan that says all about your business.
  • Final Approval

The last step is to submit all the documents to MOIC to get the approval and with this approval your company registration in Bahrain is officially done.

Below is an account of the available commercial legal structures for company formation in Bahrain.

  • Bahrain Shareholding Company (B.S.C.) – Public

A public shareholding company comprises a number of promoters (not less than 7) who subscribe therein through negotiable shares. Accordingly, a partner shall be liable for the company’s debts and liabilities only to the extent of the value of one’s shares.

  Main Features

  • Limited liability
  • Commercial, banking, insurance and investment activities allowed
  • Local office presence required
  • Minimum share capital required is BD 1,000,000
  • Minimum number of founding shareholders required is 7
  • Minimum number of directors required is 5
  • Annual submission of audited financial statements required
  • GCC nationals and foreign investors are permitted to own company shares
  • In accordance with the Bahrain-US Free Trade Agreement (FTA), US investors are accorded Most Favoured Nation (MFN) treatment similar to GCC citizens, effective as of 1 January 2005

Ideal For - People planning to offer shares to the public by listing their company in the Bahrain Bourse (BHB).

  • Bahrain Shareholding Company (B.S.C.) – Closed

A closed shareholding company comprises a number of persons (not less than 2) who subscribe therein through negotiable shares. Such shares may not be offered to the public for subscription.

Main Features

  • Limited liability
  • Banking and insurance activities allowed
  • Local operation allowed
  • Local office presence required
  • Minimum share capital required is BD 250,000 (a minimum of 50% of the capital to be paid initially at the time of incorporation, the balance to be paid within 3 years)
  • The nominal value of each share shall not be below BD 0.1 and shall not exceed BD 100
  • Minimum number of partners and promoters required is 2
  • Minimum number of directors required is 3
  • Local sponsor not required
  • Annual submission of audited financial statements required
  • Nationals of the Gulf Cooperation Council (GCC) are permitted 100% ownership
  • Foreign (non-GCC) investors may acquire up to 100% of the company
  • Under the terms of the Bahrain-U.S. Bilateral Investment Treaty (BIT), U.S. investors were accorded MFN treatment, effective as of 1 January 2005
  • With Limited Liability Company (W.L.L.)

A with limited liability company (WLL) is one of which partners are responsible for the debts and liabilities of the company only to the extent of their shareholding in the capital. If the number of partners falls below 2, the company must introduce new shareholders within a period of 30 days, or by force of the law, be converted to a single person company, or proceed to dissolution. A limited liability company cannot issue public shares, negotiable warrants, or debentures.

Main Features

  • Limited liability [there being two categories of partners: limited partners or shareholders, and partners with unlimited liability (joint partners)]
  • Banking, insurance and investment activities not allowed
  • Local operations allowed
  • Local office presence required
  • Minimum number of partners and promoters required is 2, and the maximum is 50
  • Minimum number of directors required is 2
  • Local sponsor not required
  • 100% foreign ownership allowed
  • Annual submission of the audited financial statement required

Ideal For - Foreign entrepreneurs looking to do business in Bahrain. A W.L.L. allows one to maximize one’s profits while legally minimizing international tax liabilities.

  • Partnership Company

A partnership company is a company without limited liability, formed between two or more persons under a specific name, in which partners assume joint responsibility, to the extent of all their personal assets, for the debts and liabilities of the partnership.

Main Features

  • Unlimited liability
  • Banking, insurance and investment activities not allowed
  • Local operations allowed
  • Local office presence required
  • Minimum share capital not applicable
  • Minimum number of partners and promoters required is 2
  • Minimum number of directors required is 2
  • Local sponsor not required
  • 100% foreign ownership allowed
  • Simple Commandite

A simple commandite company is a limited partnership company established by one or more partners, who are jointly liable to the extent of their entire personal wealth for the company’s obligations, and other partner or partners who have invested capital in the company but are not involved in management referred to as “the limited partners”. No limited partner is held responsible for the company’s obligations except to the extent of one’s share in the capital.

Main Features

  • Limited liability [there being two categories of partners: limited partners or shareholders and partners with unlimited liability (joint partners)]
  • Banking, insurance and investment activities are not allowed
  • Local operations allowed
  • Local office presence required
  • Minimum share capital not applicable
  • Minimum number of partners required is 2
  • The share of Bahraini partners’ capital shall not be less than 51%
  • Minimum number of directors required is 2
  • Commandite by Shares

A commandite by shares company in Bahrain is established between two categories of partners – one of which is that of joint partners who are jointly responsible, to the extent of their entire personal wealth, for the company’s obligations, and the other is that of limited partners (shareholders) who are not liable for the company’s obligations except to the extent of their equity (shares) in the capital.

Main Features

  • Limited liability [there being two categories of partners: limited partners or shareholders and partners with unlimited liability (joint partners)]
  • Banking, insurance and investment activities are not allowed
  • Local operations allowed
  • Local office presence required
  • Minimum share capital required is BD 20,000
  • Minimum number of partners and promoters required is 4
  • Minimum number of directors required is 2
  • An external auditor is required
  • Local sponsor not required
  • 100% foreign ownership allowed
  • Single Person Company (S.P.C.)

A single-person company is a company the capital of which is fully owned by a single natural or corporate person. The proprietor of the capital of the company shall be liable only to the extent of the capital allocated for the company.

Main Features

  • Limited liability
  • Banking, insurance and investment activities are not allowed
  • Local operations allowed
  • Local office presence required
  • Minimum share capital required is BD 50,000
  • Minimum number of partners required is 1
  • Minimum number of directors required is 1
  • An external auditor is required
  • 100% foreign ownership allowed (depending on activities)
  • Annual submission of the audited financial statement required
  • Foreign Company Branch

A foreign company branch that is incorporated and registered outside the Kingdom of Bahrain may be established as an operational office, a representative office, or a regional office.

  Main Features

  • Limits of liability the same as that of the parent company
  • Local operations allowed only for operational offices
  • Representative and regional offices only permitted to undertake marketing and promotion
  • Banking, insurance and investment activities allowed (operational offices only)
  • Local office presence required
  • Minimum share capital not applicable
  • Branch manager required
  • A local sponsor is required only for an operational office, with the exception of branches licensed by the Central Bank of Bahrain (CBB) or the Committee for Organizing
  • Engineering Professional Practice (COEPP)

Cost of Company Registration in Bahrain

With regards to the cost of company registration in  Bahrain, it depends on the type of business activity and business license that is chosen.

Company Registration in Bahrain with Commitbiz

It can be difficult for an ex-pat to go through the procedure of starting a business in Bahrain. That is where business setup consultants in Dubai, like Commitbiz, can help with the registration. Our consultants have years of experience in this field and can make the process hassle-free.

Contact us today – we’d be happy to assist you.

Frequently Asked Questions (FAQs)

Do I need a local sponsor to register a company in Bahrain?

The requirement for a local sponsor depends on the type of company you want to register and the percentage of foreign ownership. Some companies, like WLLCs, require a Bahraini shareholder with at least 51% ownership. However, other structures like SPCs allow 100% foreign ownership without a sponsor.

How long does it take to register a company in Bahrain?

The process can take around 4-6 weeks, depending on your case's complexity and government agencies' efficiency.

What are the different types of companies I can register in Bahrain?

Popular options include 

  • Limited Liability Company (LLC), the most common, which requires Bahraini shareholders with at least 51% ownership.
  • Single Person Company (SPC): One owner can be 100% foreign-owned.
  • WLL (With Limited Liability): Similar to LLC, but shares not publicly traded.

Representative Office: Branch of a foreign company, limited activities.

Which type of company is best for me?

This depends on your business needs, ownership structure, and desired level of liability protection. Consulting with a business setup specialist in Bahrain is recommended.

How much does it cost to register a company in Bahrain?

Costs vary depending on company type, share capital, and additional services needed. Expect to pay government fees for registration, licensing, and annual renewals.