Company registration in Bahrain

The Kingdom of Bahrain is a country that consists of 33 islands. But, a convenient geographical position is not the last thing that may be interesting to foreign investors. Even if this country is rich in mineral resources, it strongly encourages the development of many other sectors of the economy: tourism, e-commerce, FinTech, financial services, wholesale and retail, etc. If you are interested in exploring local business opportunities, your interest may be realized in one of these forms available for doing business in this jurisdiction.

Major Forms of Legal and Business Presence

If you intend to register a company in Bahrain, the following options are available:

• Public Shareholding Company – a company that should consist of two partners at least who risk loose within the contributed amounts (value of shares owned) only. The chartered capital of this entity should be at least 1 million BD. It is required to appoint an auditor for such a company who should prepare an annual report about the result of this entity’s operation. External borrowings and offerings shares to the public are allowed for this type of corporate entity.
• Closed Shareholding Company – a corporate entity that doesn’t offer its shares to the public but distributes such among its subscribers (at least two persons). Each shareholder is liable within the number of shares owned only. The minimum share capital for this type of entity shall be at least 250,000 BD.
• Limited Liability Company – a body corporate that should have not more than 50 partners who are not liable in excess of the amounts contributed to such an entity. This entity is simple to establish and operate. It doesn’t require a minimum share capital to be formed. At least two partners are necessary to found this entity. There are certain restrictions concerning the allowed types of activities, like banking, insurance, and investment.
• Joint Liability Company – a corporate entity that should consist of two persons at least who bear unlimited liability for the results of the entity’s operation. Their personal funds also may be called for covering potential losses of the enterprise.
• Limited Partnership Company – a corporate entity that should consist of (i) at least one person who bears the unlimited liability for the results of the company’s operation, and (ii) at least one partner who is liable within the contributed amounts only and is not involved in the managerial activities.
• Foreign Branch – an option suitable for a foreign company that is registered and licensed for doing business in the country of its origin. It is allowed to conduct in Bahrain the same types of business activities as abroad.
• Representative Office – is an option suitable for a foreign entity too. It is cost-effective but it doesn’t allow to do business in Bahrain limiting the scope of activities to marketing and promotion only.

Registration Requirements and Steps

Company incorporation in Bahrain is related to these approximate registration steps:

1. Definition of the activities scope (not all industries are open to foreigners).
2. Selection of the name of the future enterprise – it should not repeat already registered trademarks and brands.
3. Collecting details about the entity’s shareholders – there may be certain restrictions on a range of shareholders.
4. Appointment of company directors.
5. Formation of the authorized capital of the company.
6. Development of a memorandum of association and the charter of a limited liability company – with the prior approval of these documents by the Ministry of Commerce.
7. Opening a settlement account and obtaining a certificate of bank deposit.
8. Filing an application for the registration of the company together with an accompanying package of documents.
9. Registration for tax and social security purposes.
10. Obtaining additional licenses and permits (required for certain regulated types of activities).

Each concrete incorporation case may vary depending on the background. Contact Prifinance lawyers for more precise information on the investigated matter.

Legal and Regulatory Framework

The main legislative act regulating corporate legal relations is the Law on Commercial Companies of 2001. Foreign legislation is quite loyal to foreign entrepreneurs. However, a normative requirement has been established, providing that a foreigner must necessarily have a resident co-founder. The latter usually deals with the actual management of the company, while its foreign partner ensures the financing of the case.

Bahrain is a jurisdiction attractive to foreign investors since it has no direct taxation. If a corporation is established in this state, neither its profit nor turnover will be taxed. To carry out business activities, it is most convenient to select the organizational and legal form of the company in the form of a limited liability company.

One person may be the founder of the company, but it will require the involvement of a manager from local residents. The formal appointment of a “silent partner” is also practiced to ensure compliance with the requirements of the Law.

The registration of a company in Bahrain requires a mandatory determination of the authorized capital amount, a clear indication of the terms and procedure for its payment. The timing of registration activities depends on the characteristics of each individual organization. On average, the full procedure takes about 12 weeks.

In general, the whole process corresponds to the generally accepted world practice, therefore, foreign investors usually do not face serious difficulties. However, it is necessary to take into account the presence of certain local features of the corporate legislation.

Tax System of Bahrain

An option of company formation in Bahrain should be assessed along with these basic tax highlights:

• Corporate income tax rate – (i) oil corporations – 46%, (ii) other corporations – 0%
• Personal income tax rate – not applicable (N/A)
• Value-added tax rate – 5%
• Withholding tax rates – (i) dividends – N/A (ii) interests – N/A (iii) royalties – N/A
• Capital gains tax rate – (i) corporate – N/A (ii) personal – N/A

Advantages of the Jurisdiction

Company registration in Bahrain may be a promising deal in view of the following advantages that this jurisdiction offers:

• Plenty of signed free trade agreements and treaties with different states and international organizations (including the World Trade Organization, the International Monetary Fund)
• Lots of tax exemptions
• Highly-developed financial sector
• Many incentives for foreign investments

How Prifinance Specialists May Help You

Prifinance company will help to open a company in Bahrain in a qualified manner and reasonable time. We offer our customers:

• full legal, accounting, and advisory support at all stages of the process;
• individual approach;
• professionalism;
• ensuring confidentiality.

We offer prompt company registration and bank account opening services in Bahrain and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.