Bahrain is a small island country located in the Middle East. It shares borders with Qatar, Saudi Arabia, Iran and the Persian Gulf. The Kingdom of Bahrain has the fastest growing economy in the Arab world. The economy of the country is majorly driven by the banking, tourism and oil and gas sector.
In order to further boost its economy, the government of Bahrain is taking measures like allowing foreign investors to have 100% ownership in a wide array of business sectors, liberalization of economic laws, tightening anti-money laundering laws, easing out visa and immigration policies and much more. All of these measures work towards bringing foreign investment into the country and to enhance business development within the nation.
Apart from this, Bahrain provides a rewarding investment environment for investors from all over the world. In fact, as per the 2019 report of the World Bank on ‘doing business in Bahrain’, the country is one of the best places for investment in the region. Moreover, it offers a safe and cosmopolitan business-friendly atmosphere to investors aiming for foreign investments in Bahrain.
Reasons to Invest in Bahrain
Bahrain is an emerging country in the Middle East and investing or doing business in Bahrain has the following advantages:
- Bahrain lies in the heart of the GCC which provides the advantage of easy access via air, land and sea from the Middle East and North Africa.
- The country boasts of its robust infrastructure and well-equipped amenities
- Bahrain holds a 40-year track record as the Gulf’s leading financial centre
- The scope of business growth is vast
- The legal system in the country is simple and lucid
- The corporate policies in Bahrain are business-friendly and liberal
- The country favours exports due to its lower customs duty
- Bahrain offers advanced banking facilities
- The country features a modern global economy
- The cost of living in Bahrain is quite low as compared to other neighbouring countries
- The local workforce in the county is educated, skilled and efficient
- The tourism and entertainment industry in the county are booming year on year
- It has one of the highest qualities of life in the Middle East.
Major Considerations to Make Before Starting a Business in Bahrain
If you have decided on doing business in Bahrain, here are a few things that you should consider.
- You must have a good knowledge of the region. It is vital to understand the business sectors that you intend to operate in, study the market conditions, competition, etc.
- There is a requirement of a local partner who holds the majority interest (share capital) and can, therefore, control the business. It can be a company or an individual.
- Post your foreign company registration in Bahrain, you need to convey to the Ministry of Commerce that you have at least the minimum required capital to invest.
Types of Legal Entities That Can Be Incorporated in Bahrain
When thinking of business set up in Bahrain, you may choose from among the following five legal entities:
1.Limited Liability Company
A Limited Liability Company can have a maximum of 50 shareholders (having at least 1 local resident shareholder) and they are liable only to the extent of the share capital they have invested in the company.
2.Branch Office
In order to incorporate a Branch Office, a foreign company has to get approval from the Ministry of Commerce and Agriculture. It has to appoint a local sponsor.
3.Partnership
It has 3 types:
- Partnership Limited by Shares
Partnership Limited by Shares comprises of two types of partners namely general partners and limited partners. It is formed by at least 1 general partner and 10 limited partners. The general partners are fully liable for the debts and actions of the company while the liability of limited partners is restricted to the amount of their capital investment.
- Limited Partnership
Limited Partnership is formed by at least 1 general partner who is liable for the partnership obligations and 1 limited partner who bears the limited liability and does not participate in the business management.
- General Partnership
In the case of General Partnership, all the shareholders are jointly and severally liable for the company’s debts and obligations.
4.Sole Proprietorship
A Sole Proprietorship is owned by a single person who bears unlimited liability for the business.
5.Bahrain Shareholding Company
A Bahrain Shareholding Company is required if the shareholders intend to engage in banking or insurance business. It has 2 types:
- Public Shareholding Company
A Public Shareholding Company (also called as a Joint Stock Company) is formed by at least two shareholders who are only liable to the extent of their capital investment. The shares of this company can be subscribed by Bahrain GCC and non-GCC citizens.
- Closed Shareholding Company
A Closed Shareholding Company is formed by at least two shareholders. The shares of this company are not offered to the general public for subscription.
Procedure to Follow for Starting a Small Business in Bahrain
1.Select a Legal Structure
The very first step is to carefully choose the legal structure of your business as it has a direct impact on how your business will be managed, how ownership is held, personal liability of the owners, etc.
2.Choose a Company Name
The next step is to select the company name based on the guidelines issued by the Ministry of Industry and Commerce (MOIC). You can propose up to 4 names at a time.
3.Commercial Registration of the Company
On verification of the application form and payment of the necessary fees, you can go for commercial registration of the company. For companies, commercial registration papers are issued at the Bahrain Investment Centre and for individual establishments at the Ministry of Industry and Commerce Commercial Registration Directorate.
4.Licensing and Approval
In case, if you do not get the commercial registration papers right away, you will have to apply for a license or get approval from more than one Governmental authority.
5.Other Requirements
Once your company is registered, you will have to comply with other requirements such as opening a local bank account, leasing an office space, hiring local employees, etc.
In order to ease the process of Bahrain company formation, you may seek help from a professional business advisor who can guide you through the company registration complexities and help you achieve your business goals. IMC Group can help you in this regard and make the entire process of doing business in Bahrain a hassle-free and convenient task.
