How to Set Up a Branch of Foreign Company in Bahrain?

How to Set Up a Branch of Foreign Company in Bahrain?

by Zaara 05, May 2021

A foreign entity or business established outside the country may select an operating branch in the Kingdom of Bahrain to carry out business. International companies involved in expanding into the Kingdom of Bahrain can be formed as an operational office, a representative office, or a branch office in compliance with the organization's commercial activities and specifications.

Before starting their operations in Bahrain, the foreign business branches must acquire approvals, apply for permits, licenses, and authorization specific to the type of company operation from the Ministry of Industry, Commerce and Tourism (MOICT).  Furthermore, the foreign entity needs to adhere to the rules & regulations, regional laws, and customs while operating.

According to Bahraini law, the company’s Bahrain branch’s liability must be following its parent company. It is a standard requirement of the Ministry of Industry and Commerce and the Central Bank of Bahrain (if applicable) that the parent corporation provides a guarantee concerning the branch and appoints a branch manager.

The branches of global companies with an operating office can participate in banking, insurance, and investment operations subject to the Central Bank of Bahrain (CBB). If a foreign corporation has representative or provincial offices, it cannot carry out any commercial operations in Bahrain. It is limited to marketing and promotional activities in Bahrain.

Requirements for Establishing up a Foreign Company Branch in Bahrain

  • The parent corporation must bear all the obligations of its Bahrain branch office and activities.
  • The parent company is authorized to issue a bank guarantee of at least $133,000 in favor of the Ministry of Finance and the National Economy as evidence of funds to establish Bahrain business.
  • The presence of municipal offices is mandatory.
  • The group’s Bahrain division must have a Bahraini supporter who could be a businessman, individual, or a partner company.
  • A Bahraini branch manager or regional manager, or Bahraini distributor must be named a supporter to obtain a visa and acquire such operating licenses.
  • However, the provision of a local sponsor is excluded if the organization conducts its main activities using a registered business entity as a regional branch or if the organization branch is authorized by the Central Bank of Bahrain and the Committee for Organising Engineering Technical Practice (COEPP)
  • Obtain pre-approval, permits, and file with the Ministry of Business, Trade, and Tourism (MOICT) and the Commercial Registry.

Characteristics of a Foreign Company Branch in Bahrain

  • The holding company shall assume all the liabilities of its affiliate in Bahrain.
  • The involvement of the local office is compulsory.
  • The branch would have a local supporter for an accounting office.
  • No minimum capital obligation
  • A branch manager is required
  • Banking, insurance, and savings operations are approved.
  • The parent corporation is obligated to issue a bank guarantee on behalf of the Ministry of Finance and National Economy.
  • A branch can acquire an office, Bahraini invoice clients, sign local distribution contracts, and obtain revenue from customers.

Benefits of Establishing a Foreign Company Branch in Bahrain

  • A foreign investor may wholly own a corporate company.
  • No minimum capital obligation
  • A branch in Bahrain is allowed to protect its business premises, invoice Bahraini clients, sign local distribution contracts, and earn its clients’ profits.
  • Banking, insurance, and savings operations for the operating division are approved.
  • Strategic position in the Middle East that provides liberal and company-friendly laws

Foreign Branch in Bahrain is Suitable for

  • Commercial business activities which are capital intensive such as
  • Manufacturing
  • Automotive
  • Engineering
  • Banking & Financial Services
  • Insurance business
  • Investment activities

Business Climate in the Kingdom of Bahrain

  • The robust legal structure for liberal business-friendly strategies
  • The prevalent use of English makes corporate processes effortless.
  • A robust finance market and banking market with productive business-friendly regulations
  • Transparent registration, oversight, and control in compliance with the International Accounting Principles
  • No payroll taxes, capital gains, and inheritance taxes
  • Excellent access to Saudi Arabia and other CCG countries
  • Lower operational costs relative to other GCC nations

(Note: The Gulf Cooperation Council (GCC) nations only apply to and include the Kingdom of Bahrain, the Sultanate of Saudi Arabia, the United Arab Emirates, the State of Kuwait, the Sultanate of Oman, and the State of Qatar.)

Documents Required for Establishing a Foreign Company Branch in Bahrain

In registering a branch office in Bahrain, the parent corporation’s records must be converted into Arabic and authorized with the Bahraini regulatory agencies.

General Documents

  • Application form for incorporation of the company
  • Pre-approval papers for foreign agencies (depending on the form of commercial activity)
  • Certificate of Capital Deposit (after provisional approval)
  • Sponsorship deal negotiated with a Bahraini trader or dealer or an operating branch partner (except the representative office, the central office, and the GCC)

Documents Required for Company

  • Copy of the Business Registration Certificate of the parent corporation
  • Copy of the MOA of the corporate organization, Articles of Association, and modifications for foreign-registered companies
  • The current audited financial statements of the parent organization (not needed if the company is less than one year old)
  • Statement of the General Assembly or the Board of Directors as sole holders of the SPC
  • Letter of guarantee from the parent company assuming full responsibility for the Bahrain division

Documents Required for Manager or Directors

  • Copy CPR (Bahraini ID) whether the owner is Bahraini or Bahraini emigrant.
  • Passport and visa document copy if the manager is a non-Bahraini resident.
  • CPR (Bahraini ID) a copy of the Director of Bahraini Residents or a copy of the Passport if the Director is not Bahraini.
  • Authenticated powers of attorney

The Procedure for Establishing a Foreign Company Branch in Bahrain

The procedure for registration of foreign companies in Bahrain starts with approval for registration of the company. Selecting the company’s name must be original and not identical to any other recognized legal firm in the Kingdom of Bahrain.

The step-by-step guide for the registration of an overseas business branch is as follows:

  1. Fill out the commercial registry document to establish the foreign corporation’s branch office with all the necessary information.
  2. Draft basic MOA and receive prior permission from the Ministry of Commerce at the Bahrain Investment Centre.
  3. Acquire the Municipality's lease permission to secure an office space
  4. Notary and submit a copy to the Ministry online.
  5. Open a Bahraini bank account and receive evidence of the capital deposit.
  6. Deposit an assurance to the bank in the name of the branch, director, official representative, and the Minister of Commerce and Industry order.
  7. Get a Certificate of Registration from the Ministry of Commerce
  8. Publish the notice of inclusion in the official gazette
  9. Register the corporation and its staff with the General Social Security Agency.

Documents Required to Establish a Foreign Branch Company in Bahrain

  • The completed application process for registration of the business
  • Pre-approval of external bodies
  • Sponsorship arrangement with a Bahraini merchant for operational divisions
  • Copy of Certificate of Commercial Registration
  • Copy of and modifications to the Memorandum and Articles of Association
  • Resolution of the Board of Directors on the creation of a branch in Bahrain
  • Letter of guarantee from the parent company assuming full responsibility for the Bahrain division
  • Authenticated powers of attorney

Why Establish a Foreign Branch Company in Bahrain?

Bahrain is a nation that is open to developing a unique economy rising by leaps and bounds. It has been welcoming investors to invest in the region for a long time. It has set itself as the primary banking and financial hub in the Gulf region. Bahrain offers several benefits to foreign investors, including no personal or corporate tax system, no capital, benefit repatriation limits, built infrastructure with ideal transport and communication facilities, and duty-free travel to Gulf Cooperation Council ( GCC) the Member States for goods produced in Bahrain. Thus, registering a business in Bahrain, a branch office, can be lucrative for an investor.

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