Company Formation in Bahrain - The Complete Business-Friendly Location

by Zaara 22, Mar 2021

With a long and positive historical record as a trading nation globally, the Kingdom of Bahrain has always given global visitors and industrial sectors a pleasant and open welcome. Bahrain's rising and collaborative ecosystem, proactive proximity, quick access to the gulf market, a business-friendly environment, and liberal policies and standards make it a top competitor for a start-up to evaluate, launch, and scale their businesses.

Bahrain's government has taken several initiatives to optimize the Kingdom's enterprise ecosystem to attract entrepreneurs and start-ups worldwide. Entities such as Tamkeen, Startup Bahrain, Bahrain Fintech Bay, Bahrain's Board of Economic Development (EDB), and Flat6Labs Bahrain. Bahrain is a development-oriented location that provides a safe, culturally diverse, and unsurpassed, business-friendly environment.

With world-class infrastructure, a stable economy, and favourable policies legalizing the businesses through commercial registration in Bahrain,  it is vital to start your business.

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Why Start a Business in Bahrain?

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

1. Rising and Helpful Network

Bahrain has built a supportive infrastructure and public, which can directly benefit native and worldwide startups. It is apparent in the growing network of shareholders and venture capital, incubators, supporting entities, accelerators and workspaces, and corporations.

2. Business-Friendly

The Bahrain government works closely with regulatory authorities and businesses to analyze the opportunity to improve the Kingdom's trade environment and nurture optimum trade conditions. This vital collaborative effort has brought numerous initiatives to bear in mind, encouraging innovation and allowing business people to thrive.

3. Easy Entry to the Gulf Market

Bahrain ranks 7th internationally in terms of market connectivity. Its planned geographic location and excellent logistics channels provide the quickest,  most well-organized path, air, and sea connexions to the Gulf Cooperation Council ( GCC).

4. Liberal Environmental Regulations

Startups will benefit enormously from the genuinely progressive and business-related schemes and regulations in Bahrain. The Bahrain government has streamlined business formation and reduced minimum capital requirements for corporations, thereby lowering expenses, easing integration and operating procedures, and offering foreign entrepreneurs 100 per cent foreign land and company ownership in most industries and reducing visa fees.

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All you Need to Know About Company Registration in Bahrain

  • You must have considerable regional knowledge.
  • The law requires you to have a strategic partner who holds the portion of the company's share capital and therefore regulates the company.
  • Post your company registration in Bahrain, and the Ministry of Commerce should check that you have at least the minimum capital required to invest.

It's legitimate that you are consulting a local business consultant right from the start. An experienced consulting firm can guide you through company formation formalities and help you achieve your corporate goals, whether you plan to establish a startup or a substantially larger company.

When forming a company in Bahrain, you can choose from among the following four government bodies:

1. Limited Liability Company

A Limited Liability Company (LLC) must have between 2 to 50 investors, and its shares are not willing to trade on a stock exchange. In an LLC, its shareholders bear limited liability, i.e., they are only responsible for its obligations and disadvantages to their respective equity. An LLC in Bahrain cannot deal with banking, insurance, or brokering activities.

2. Branch Office

A foreign company may start its branch office in Bahrain, provided it is authorized by the Minister of Commerce and Agriculture and is assigned a local (Bahraini) sponsor. Such an office may focus on business activities that include invoicing, signing contracts, or trade.

3. Partnership

A Bahrain partnership company can fall into one of the three categories below:

  • Partnership Limited by Shares

At least one general partner and ten shareholders represent a Partnership Limited by Shares in Bahrain. The general partners carry unlimited liability for the company's debt obligations/bonds. The general partner has limited liability and is not allowed to take part in the companies operation.

  • Limited Partnership

A Bahrain-based limited partnership may be developed by at least a single limited partner and one general partner. The limited partner holds limited company liability but may not take part in the activities of the organization. For being a nationwide resident, the general partner is required. Bahraini investors must own a total of 51 per cent of capital in a limited partnership.

  • General Partnership

A General Partnership in Bahrain is where all the shareholders are legally responsible for their debts/obligations. Although foreign investors may participate in a general partnership, individual Bahraini citizens or corporate entities must own at least 51 per cent of the business.

4. Sole Proprietorship

A sole proprietorship can be developed with a single sole trader, who would hold the business's unlimited liability. The minimum capital necessary to start a sole proprietorship is BD 50,000. It is worth noting that single-person companies in Bahrain are prohibited from buying and selling in the banking, financial services & insurance (BFSI) industry.

5. Bahrain Shareholding Company

If the investors actively participate in banking or insurance business, a Bahrain Shareholding Company (closed or public) is necessary.

6. Public Shareholding Company (PSC)

It is a solely distinct legal entity from its owners. Also known as Joint Stock Company. A Public Joint Stock company in Bahrain consists of several promoters (more than 7) subscribing to it through shares. The GCC of Bahrain and citizens outside the GCC may subscribe to such shares.

7. Closed Shareholding Company

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

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Business Opportunities in Bahrain

The Bahrain Board of Economic Development focused mainly on several economic sectors that help businesses leverage Bahrain's competitive advantage. It means only evaluating opportunities for buyers and startups to open up the Bahrain market, and we stimulate you to contact Commitbiz for a personally tailored discussion.

Some of the flourishing sector in the empires of Bahrain's s are-

  • Tourism and leisure activities.
  • Financial service.
  • Production.
  • Software.
  • ICT.

If you want to learn about the most rewarding business oppurtunities in Bahrain, then you should read this article.

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Procedure for Business Setup in Bahrain

The procedure for starting a business in Bahrain is simple and easy to understand. If you're in contact with a company setup adviser, you don't have to go through the trouble of setting up rounds to the Bahrain EDB. The steps required are:

  • Pay fees.
  • Get your license.
  • Decide on a distinct trade name.
  • Fill out a registration form for first approval.
  • Collect all the documents required, fill out the registration form and submit the same to the department.
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Who Are We?

Our Commitbiz team can provide beneficial support and guidance from analyzing the business's scope to get your business started in Bahrain, registration, and post-setting support services at every stage of your business. Our professionals provide consultancy services to companies in the private, governmental, non-governmental, and academic sectors.

Over the years, we have developed extensive capabilities in various functional and speciality segments and emerged as the partner chosen in several innovative and path-breaking measures undertaken by different businessmen worldwide.

Our Commitbiz company can support you at any stage of your process. It includes –

  • Specific market opportunities advice.
  • Finding a home for your industry.
  • Legal and Regulatory Support.
  • Enrolment and Licensing.

If you're looking for setting up a company in Bahrain, even if it's just for a piece of friendly advice, please do contact us.

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