Company Formation in Bahrain
Updated on Wednesday 27th September 2023
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A country with a very diversified and strong economy, exporting a wide range of goods everywhere in the world, Bahrain attracts many foreign investors who decide to set up a company on its territory. In order to be assisted on the whole process of incorporating, our company formation specialists are the appropriate choice.
Important matters to know on company formation in Bahrain
The commercial legislation in Bahrain grants the right to set up a business to local citizens as well as to foreigners, provided that the meet the basic requirements imposed by the law. With regards to the registration of a business, the Ministry of Industry, Commerce and Tourism presents the following:
- in May 2015, the governmental authorities in Bahrain launched an online registration system (SIJILAT) in order to simplify the incorporation process;
- the purpose of the online platform is not only to simplify company formation in Bahrain, but also to further the business competitiveness of the country, in order to meet the standards imposed for the Bahrain Economic Vision 2030;
- the legislation regulating the types of companies that can be set up here is given by the Commercial Companies Law of Bahrain No. 21 of 2001;
- the regulations for company registration in Bahrain are given by the Commercial Registration Act No. 27 of 2015.
Legal structures in Bahrain
The first thing a foreign investor should do, before opening a company in Bahrain, is deciding which type of legal entity is best for him/her, as there are more possibilities to choose from, such as the limited liability company, the joint stock company, the representative or branch office and companies that can be opened in the free zone.
The most common legal structure among foreign investors in Bahrain is the limited liability company. Here are some requirements for this type of company:
- minimum two shareholders;
- at least two directors;
- the shareholders and directors may be of any nationality.
Foreign investors can open a company in Bahrain with 100% foreign ownership, as there aren’t any restrictions in this sense. This is the case for most of the countries where the limited liability company is available and the same applies for countries that allow offshore company formation.
Restrictions concerning the ownership of the company can appear in a few countries, but also in certain economic sectors. For instance, in the case of Bahrain, the LLC can’t be used as a vehicle for investing in economic sectors such as banking or insurance.
As mentioned above, the company needs for its incorporation at least 2 shareholders, but it must be noted that the company can't have more than 50 shareholders. For other corporate structures, such as the joint stock company, there aren’t any stipulations concerning the maximum number of shareholders.
Procedure of registering a company in Bahrain
First, it is necessary to obtain a preliminary clearance from the Bahrain Investment Center, more exactly from the Ministry of Industry and Commerce. Some documents need to be submitted for this process. The next step is obtaining the lease grant from the Municipality; the company's location must be approved by the Municipality as well.
Then, after you have obtained the registration approval, you need to notarize the Memorandum of Association at a notary's office. Another important thing is opening a bank account and acquiring a receipt proving the deposit of the share capital.
The bank account is necessary for all company types and it is also required in offshore jurisdictions, where investors must set up an offshore bank account. For more details on the minimum requirements imposed to investors, our specialists remain at your service.
Next is obtaining a certificate of registration from the Ministry of Commerce - the Bahrain Investment Center Agency. This can also be done with the help of our team. The incorporation notice of the new company needs to be published in the Official Gazette at the Municipality.
Last, the company and the employees need to be registered with the General Organization for Social Insurance. Some documents, such as a copy of the Certificate of Registration, will be requested for this procedure.
What are the steps for online company registration in Bahrain?
Once the investors have prepared the basic documentation for the incorporation of the company, the online submission of documents can be initiated. The registration file can be completed with the assistance of our consultants in company formation in Bahrain.
Of course, our consultants can complete the online formalities as well, as the legislation grants the right to legal representation during this stage, through the power of attorney. Investors also have the possibility to complete the online registration in person, if they choose to do so.
The file is registered on the online platform and then the investors (or their representatives) will obtain a security clearance (required only for foreign investors). It is necessary to attach to the registration file the articles of association of the company.
Along with this, a proof of depositing the minimum share capital is needed (this depends on the company type selected – the deposited amount must meet the minimum requirement imposed by the law, generally expressed as a percentage, not the entire capital – for instance, for the joint stock company, only 50% of the capital must be deposited upon the incorporation).
Different documents may be required depending on the economic activity carried out here, or based on the company type selected by the investors, and for full information concerning the list of documentation that must be prepared, our consultants in company formation in Bahrain remain at your service.
Our client will be assisted in forming the right type of company in Bahrain. If you need further information on how to set up a company in Bahrain, or on other countries, please contact our company incorporation agents who will provide a wide range of possibilities for your business.