Starting A Business In Bahrain

Bahrain is one of the most economically liberal countries with an ethnically diverse demographic. Due to its strategic location in the Arabian Gulf, Bahrain is a junction for major trade routes with the Kingdom of Saudi to its east and Qatar to its north. The country’s dynamic business environment and flourishing economy make it a prime destination for domestic and foreign investors.

The top business opportunities investors can explore to start a business in Bahrain include:

• Finance and banking
• Construction
• Restaurants
• Hospitality and tourism
• Digital marketing
• Real estate
• Retailing
• Hospital and health services
• Events planning
• Financial consultancy

The procedure for incorporating a company in Bahrain is pretty elaborate. Before companies can take advantage of the country’s business-friendly environment, they must be well-versed with the rules concerning company incorporation in Bahrain.

The key advantages of doing business in Bahrain:

• Strategic location at the crossroads of major trade routes
• Access to the Middle East and African markets
• Diverse and talented workforce
• Free trade zones with less restrictive regulations and lower costs
• 100% foreign ownership
• Tax exemptions 
• No exchange control
• No restriction on capital and profit repatriation
• Well-developed infrastructure
• Excellent communication and transport facilities

Duty-free access to GCC member states for Bahrain-manufactured products

Thanks to its liberal business climate, Bahrain draws investors, business owners, and employees worldwide. However, investors and business owners looking to start a business in Bahrain must ensure they fulfill the following eligibility requirements:

Work pass

British citizens by birth and nationals of the Gulf Cooperation Council (GCC) member states do not require a visa to stay and work in Bahrain. However, citizens of other nations must apply for one of several visas to come to Bahrain or work in the country. The work visa applies to those who take up any form of employment in Bahrain. The business and seven-day and 72-hour visas apply for short-term business trips. 

Company name

Setting up a company in Bahrain demands that business owners and investors adhere to the strict norms around the company registration process, including the trade or company name registration.

For business name registration in Bahrain, business owners engaging in commercial activities must have a unique trade name that distinguishes their business from its peers. The tradename can be the owner’s name and surname, or both, or any other appropriate name. Additionally, the trade name may include business activity details or a trademark registered under the Trademarks Law.

To register a trade name in Bahrain, employers must satisfy the following conditions:

• The name must be unique, not used or registered by any other company for the same or similar business activity.
• The trade name must not breach public order, religious sentiments, or Bahraini morals.
• One must register the trade name in Arabic. If you opt for a trade name in an acceptable foreign language, it must have an Arabic translation. 
• The company must display its trade name on its letterhead.

Company address

The company registration process in Bahrain requires that the company has a registered address. A registered address is the official correspondence address of a company or its primary place of business, and it refers to a physical location, either commercial or residential. The registered office address is used for all official communications of the company.

However, as a company’s business activities evolve, many businesses in Bahrain exist on virtual platforms such as social media – they do not require physical office space. For such companies, Bahrain’s virtual commercial registration facility SIJILAT permits business owners to conduct business activities without registering a physical office address.

The SIJILAT portal simplifies the company registration process in Bahrain while supporting and encouraging entrepreneurs and investors by giving legal status to their business activities. However, only Bahraini nationals can use the SIJILAT portal. Even for online businesses, applicants must provide a permanent address for correspondence during registration.

Taxation

The biggest advantage of doing business in Bahrain is that it has free trade zones to promote trade and investment. Companies in Bahrain are tax-exempt with no restrictions on foreign ownership for most businesses and minimum customs duties. Moreover, when you incorporate a company in Bahrain, it is exempt from different taxes, including corporate tax, tax on dividends, and withholding tax.

Bahrain has three main free trade zones –

• Bahrain International Investment Park (BIIP)
• Bahrain Logistics Zones (BLZ)
• Bahrain International Airport (BIA)

These free trade zones require no annual rental and customs duty and have 50% lower utility costs. Khalifa Bin Salman Port, the primary commercial port of Bahrain, provides a free transit zone facilitating the duty-free import of machinery and equipment into the country. Foreign-owned companies enjoy the same investment opportunities and perks as Bahraini companies for doing business in Bahrain. 

Business capital

Company registration in Bahrain entails that the applicant satisfies the minimum capital requirement. While the minimum capital required to register a limited liability company is BD 20,000 (USD 53,036.32), the capital requirement is BD 2,50,000 (USD 662,954) for joint-stock companies. Companies limited by shares also have a minimum capital requirement of BD 20,000.

Directors and company secretary

Company registration in Bahrain involves appointing a minimum number of directors depending on the type of company. A  limited liability company in Bahrain must have at least one director. On the other hand, joint-stock companies require a minimum of three directors. 

The person running a company is the sole director of a single-person company. Foreign companies with a branch in Bahrain must appoint at least one director, which is usually the parent company’s responsibility. 

The types of legal structures available for company registration in Bahrain are – 

Limited liability companies

Shareholders have limited liability in Bahraini limited liability companies. Up to 50 members can have a shareholding in this type of entity, and foreigners are also allowed to have ownership in a limited liability company in Bahrain.

Joint-stock companies

Bahraini joint-stock companies can offer shares to the public and have two types of entities – closed joint-stock companies and public joint-stock companies. However, members have limited liability, and foreigners can have shares in this entity type. Joint-stock companies can engage in industries like insurance, finance, and public procurement policies.

Companies limited by shares

This entity involves two categories of partners, the joint partner, and the silent partner. A minimum of four founders are required to form this type of business entity.

Partnership companies

A partnership company thrives on an agreement between two or more people who share the company’s profits. A minimum of two partners must form this business entity with unlimited liability.

Single-person companies

As evident from the name, a single-person company is owned by a single individual. While there is no minimum capital requirement to form a single-person company, it requires external audits. Foreigners can operate a single-person company.

Holding companies

A holding company is typically formed as a separate entity for a Bahraini public limited company or a foreign joint-stock company. These entities essentially offer assurance concerning company guarantees to third parties.

Foreign company branches

A branch office is an extension of a foreign parent company, and the liability lies with the latter. A manager is typically responsible for all activities of a branch office.

The company registration process in Bahrain involves multiple steps that can be categorized into pre-registration, registration, and post-registration, and every company must fulfill the requirements for successful registration. 

Pre-registration

• Before incorporating a company in Bahrain, you must select the business type and its activities.

• Next, you decide the share capital and determine the services you want to outsource for registering your company in Bahrain.

• Obtain an electronic key or e-key (including username and password) from the Ministry of Industry and Commerce by registering through the e-Government authority portal of Bahrain. If an e-key is not available, you must obtain the Power of Attorney to establish a company in Bahrain.

• Once you have the e-key or Power of Attorney, reserve the company name as the next step in the company registration process in Bahrain.

• Determine the shareholding pattern of your company and assign shareholders their respective designations.

Registration

• Submit the application to the Bahrain Ministry of Industry, Commerce, and Tourism (MoICT) with the company name and applicant’s details, the type of business, total share capital, shareholding patterns, copy of passport, and other relevant documents. 

• Obtain the Commercial Registration (CR) once the MoICT reviews and approves your application. Hence, obtain the relevant business licenses. 

• You must register for the company’s head office approval. For this, you need the lease agreement of the office/shop/workshop, electricity and water connection from the Bahrain Ministry of Electricity and Water (EWA), photos of the office/shop/workshop, and an address card from the landlord showing the type of property and the address of the commercial location.

• Next, prepare the memorandum of association and Articles of Association. The step includes notarizing the memorandum, articles, and other legal documents from a public or private notary.

• It is mandatory to open a bank account to register a company and start a business in Bahrain. The bank account must be in the company’s name. You can create a business bank account in your desired Bahraini bank and deposit the capital amount.

• Finally, submit the bank certificate and notarized memorandum to the MoICT. The company formation is official upon approval of the MoICT.

Post-registration

• Shareholders meetings

While LLCs must hold shareholders’ meetings six months after completing a financial year, joint-stock companies must hold a shareholders’ meeting three months after completing a financial year. 

• Board meetings

Usually, joint-stock firms set up board meetings after every quarter. However, LLCs can hold meetings if their company memorandum or articles of association mandates them to do so. 

• Tax requirements

All companies in Bahrain must pay VAT to the National Taxation Authority (NTA).

• Company registration

All firms must register with the MoICT and the Central Bank of Bahrain. After successful incorporation, they must review the MoICT-issued Commercial Registration (CR) annually.

The cost of incorporating a company in Bahrain is relatively lower than in other countries and depends on multiple factors, including:

• The nature and type of company
• The number of partners
• Preparation of legal documents
• Company registration
• Payment of taxes and fees at the time of registration
• The legal address of the company

The Kingdom of Bahrain offers several visa types to foreigners seeking to live or work in the country. Non-Bahraini nationals looking to live and work legally in Bahrain need to apply for a work visa and residency permit at the Labor Market Regulatory Authority and the National, Passport and Residence Affairs. 

Business visa

Individuals wanting to stay in Bahrain for more than a week for business activities need a business visa. While the visa is valid for up to four weeks, the duration can vary depending on the type of trip.

Seven-day and 72-hour visa

These are short-stay business visas available at the point of entry and require a valid passport and an onward ticket.

Work visa

Individuals taking up any form of employment in Bahrain require a work visa. The permit entails the visa holder to residency and is valid for one to two years.

The pro-business environment of Bahrain encourages foreign investment through liberal government policies. For instance, foreigners are allowed to have 100% ownership of the company’s shares. The government has also created free trade zones with additional tax benefits for companies operating in these areas.

US citizens and GCC  citizens can engage in professional, commercial, service, and industrial activities in Bahrain through a sole proprietorship or a company after meeting the relevant requirements. Moreover, citizens of other countries can practice all economic activities through commercial companies in Bahrain, provided they do not engage in banned business activities concerning alcohol, tobacco, firearms, and waste products. 

Setting up a company in Bahrain is a lengthy and complex process. Employers must comply with the local laws and industry regulations while fulfilling numerous documentation requirements. This can be challenging if you are unsure how to navigate the process. 

You can ease the setup process by partnering with Multiplier. 

Our integrated SaaS-based platform offers the infrastructure to employers – they can start operating in Bahrain and employ talent without establishing a subsidiary. Additionally, our experts can help streamline payroll management, employment contract generation, ESOPs for startups, contingent workforce management, etc.

Thus, Multiplier helps business owners and employers test new markets, attract talent, and set up teams in new countries seamlessly and at affordable costs.