A Guide on How to Start a Business in Bahrain

by Zaara 05, Mar 2021

A Guide on How to Start a Business in Bahrain

With a healthy and productive history as a trading nation worldwide, the Kingdom of Bahrain has always offered global visitors and businesses a warm and open welcome. Bahrain's rising and supporting ecosystem, strategic connectivity, and easy access to the gulf market, a business-friendly climate, and flexible policies and guidelines make it a top competitor for start-ups to research, launch and scale their companies.

Investing in the Kingdom from around the world has enhanced the real estate, manufacturing, health & social care, administrative facilities, culture, entertainment, mining, and investment sector infrastructure, offering the sector a competitive place to expand and prosper.

Bahrain's government has taken several steps to improve the Kingdom's business environment to draw entrepreneurs and startups worldwide. Entities such as Tamkeen, Startup Bahrain, Bahrain Fintech Bay, Bahrain's Board of Economic Development (EDB), and Flat6Labs Bahrain.

With world-class infrastructure, stable government, and favorable policies legalizing businesses through Bahrain's commercial registration is an integral part of starting your company.

Why Start a Business in Bahrain?

The Bahrain Board of Economic Development is the first point of interaction for investors seeking to integrate their companies. Here are a few reasons why you must set up a business in Bahrain.

1. Rising and Supporting Network

Bahrain has developed a supportive ecosystem and public, which can directly help native and foreign startups. It is evident in the increasing network of shareholders and venture capital, incubators, supporting companies, accelerators and workspaces, and businesses.

2. Business-Friendly

The Bahrain government collaborates with regulators and companies to identify possibilities for developing its trading climate and maintaining optimum trade conditions. This critical partnership has brought numerous initiatives to bear in mind, promoting innovation and enabling business people to thrive.

3.Easy Access to the Gulf Market

Bahrain ranks 7th globally in terms of business access. Its designed geographic location and excellent logistics channel provide the quickest and most well-organized route, air, and sea connexions to the Gulf Cooperation Council ( GCC).

4. Liberal Environment Regulations

Startups would benefit tremendously from the progressive economic and business-related policies and regulations in Bahrain. The Bahrain government has streamlined company development and lowered minimum capital requirements for companies. It is done through reducing costs, easing incorporation and operating procedures, offering foreign entrepreneurs 100 percent foreign land and company ownership in most sectors, and reducing visa fees.

Challenges to Overcome while Starting a Business in Bahrain

  • The workers/labor/immigration ministries are segmented, and on some occasions, the legal system can be biassed.
  • For your operations, you must have a permanent business address in Bahrain.
  • Considering that you don't speak Arabic (it can make it difficult to decode the popular culture, interests)
  • Government procurement processes are not always wholly transparent because contracts are mostly not awarded based on merit.

Business Opportunities in Bahrain

The Bahrain Board of Economic Development emphasizes several economic sectors that encourage businesses to capitalize on Bahrain’s competitive advantage. It means just a plethora of choices for investors and start-ups to access the Bahrain market, and we invite you to contact Commitbiz for a personalized discussion.

Some of the booming sectors in the Kingdom of Bahrain are –

  • Financial Services
  • Logistics
  • Manufacturing
  • Tourism and Leisure
  • ICT

All You Need to Know for Starting a Business in Bahrain

  • You should have considerable knowledge of the region.
  • The law requires you to have a local partner who owns the portion of the company's share capital and therefore controls the industry.
  • Post your company registration in Bahrain, and the Ministry of Commerce should verify that you have at least the minimum capital needed to invest.

You should consult a local business consultant right from the very beginning. An experienced consultant will direct you through company incorporation formalities and help you achieve your corporate goals, whether you decide to create a start-up or a relatively larger business.

When forming a company in Bahrain, you may choose from among the following four legal entities:

1. Limited Liability Company

A Limited Liability Company ( LLC) can have between 2 and 50 shareholders (with at least one shareholder resident in Bahrain), and its shares are not subject to trade on a stock exchange. In an LLC, its owners assume limited liability, i.e., they are only responsible for the company's debts or responsibilities to the extent of their respective equity in it. A vital point to note is that an LLC in Bahrain cannot deal with banking, insurance, or brokerage activities.

2. Branch Office

A foreign company can start its branch office in Bahrain unless it is authorized by the Minister of Commerce and Agriculture, and a local (Bahraini) sponsor designates it. Such an office can engage in business practices that include invoicing, signing contracts, or trading.

3. Partnership Company

A partnership company is a corporation with no limited liability, established under a particular name between two or more individuals. Partners assume shared responsibility for the partnership's debts and disadvantages to the extent of all their personal properties.

4. Sole Proprietorship

A single business owner may form a sole proprietorship, which would carry unlimited responsibility for the company. The minimum capital necessary to start a sole proprietorship is BD 50,000. It is worth noting that single-person companies in Bahrain are barred from trading in the banking, financial services & insurance (BFSI) industry.

5. Public Shareholding Company

It is a distinct legal body from its owners. Also known as the Joint Stock Company, a PSC in Bahrain consists of several promoters (more than 7) subscribing to it via shares. GCC Bahrain and people outside the GCC can subscribe to such claims.

6. Closed Shareholding Company

It is composed of 2 shareholders who subscribe to it via negotiable shares that are not available for subscription to the public. Such shares in the Closed Shareholding Company may not be available for sale to the general public-such shares held by Bahraini, GCC, and non-GCC residents.

Steps to Start a Business in Bahrain

The process of starting a business in Bahrain is simple and easy to understand. If you're in touch with a company set up consultant, then you don't have to go through the trouble of making rounds to the Bahrain EDB. Here are the steps required -

1. Choose a Legal Framework

Choosing a legal framework is one of the most important decisions when starting a company. It will directly impact the way the company will be handled, the owner's liability, etc. You can choose from the above listed legal framework.

2. Register a Business Name

The next move is to register your company name, which will remain forever with your corporation. The Ministry of Industry and Commerce (MOIC) has developed a few guidelines while selecting a company’s name. Make sure you adhere to those rules. An entrepreneur can put forward four company names at a time.

3. Commercial Company Registration

The Bahrain Investment Centre provides the Commercial Registration Documents. They will only issue you the documents if they find no fault with the application form filled in the initial stage. The papers may be purchased after the requisite fees have been charged.

4. Licensing and Registration

Licensing and approval are required if a company is not immediately obtaining the Commercial Registration papers. So to get their company registered in Bahrain, they have to follow this extra step.

5.Other Authorisations

After successfully registering your business, the next steps include opening a bank account, leasing an office space, recruiting employees in Bahraini, etc.

How Can We Help?

Formation of business in Bahrain offers tremendous profit opportunities, tax exemptions, state-of-the-art infrastructure, comfortable services, liberalized public policies, and barriers to free trade. Commitbiz helps entrepreneurs, business people, and corporates set up their business in Bahrain while taking advantage of all the benefits that a growing economic hub offers.

 

Our experts take care of all the rules and procedures of banking, visa, legal, and licensing and allow you to go through the process of establishing your business without thinking about bureaucratic bureaucracy and legal formalities. If you're looking to start a business in Bahrain, even if it's just for a piece of friendly advice, please do contact us.