Business entities in Bahrain

Business entities in Bahrain

Healy Consultants will assist our Clients to engineer the optimum corporate structure for their business projects in Bahrain. There are several ways of starting a new business in Bahrain, the most common being through the formation of a limited liability company (locally known as a WLL). Alternatively, our Clients may establish a free zone company (FZC) or a branch or a representative office of their existing overseas company.

The Bahrain limited liability company (WLL)

foreign investor in Bahrain

  • This entity requires i) a minimum paid-up capital of at least US$2,660 ii) two directors iii) two shareholders of any nationality to be incorporated;
  • A limited liability company can also be formed by a single individual. This type of company is known as a “single person company (SPC). Additionally, a WLL and SCP must appoint at least one resident manager in Bahrain;
  • Trading companies in some sectors are subject to mandatory 51% Bahraini local shareholding joint venture requirements. Companies must also submit i) annual tax returns and audited financial statements and ii) contribute 10% of company profits until the paid-up capital reaches 50% of issued capital;
  • Best uses: A WLL is the most commonly used business entity by foreign entrepreneurs looking to do business in Bahrain. This entity will allow our Clients to maximize their profits while legally minimizing international tax liabilities.

The Bahrain free zone company (FZC)

  • Foreign or local companies seeking to do business within the free trade zone must first obtain an operations permit from the Free Zone Authority before commencement of activity;
  • Import and export companies which only require an office in Bahrain are also permitted to register their business within the Free Trade Zones;
  • Companies granted permits to operate within the free zones will enjoy several incentives including zero customs duties and government rebates;
  • Best uses: This entity is recommended for our Clients intending to use Bahrain as a regional manufacturing or distribution base, with intent to conducting the bulk of their business outside the Kingdom.

The Bahrain branch

  • The Commercial Companies Law permits the registration of a Bahraini branch by a foreign company looking to do business in the country without setting up a subsidiary. This entity can be 100% foreign owned, if their industry of operations is also fully open to the formation of a LLC by foreign shareholders;
  • The parent company is required to issue a bank guarantee of at least US$133,000 in favor of the Ministry of Finance and National Economy;
  • A branch is permitted to secure business premises, invoice Bahrain customers, sign local sales contracts and receive income from Clients. A resident local Bahrain agent or distributor must also be appointed to sponsor visas and certain operations licenses;
  • To register a branch, the foreign company must translate into Arabic and legalize i) audited financial statements ii) Board Resolution authorizing opening of the branch iii) power of attorney issued in favor of the general manager and iv) Memorandum of Association and certificate of incorporation;
  • Best uses: This entity is only recommended to our Client in such fields and engineering and financial services industries looking to establish regional headquarters in Bahrain.

The Bahrain shareholding company (BSC)

  • This entity is also known as a public joint stock company and is suitable for investors seeking to establish large projects or operations, involving a large investment of funds;
  • Main requirements to form a BSC in Bahrain include i) a minimum share capital of US$663,000 ii) minimum of 50 members and iii) board of directors consisting of a minimum of three members;
  • Best uses: A BSC is recommended for our Clients planning to offer shares to the public by listing their company in the Bahrain Bourse (BHB), the country’s stocks and securities exchange agency.

The Bahrain representative office

  • The Commercial Companies Law also permits foreign entities to establish representative offices in Bahrain. This entity if not permitted to conduct any profit-making activities within the Kingdom;
  • Following rep office registration, a local Bahrain agent or distributor must be appointed to represent the overseas company locally;
  • Best uses: A representative office is best used for promotion of the parent company’s business and conducting market research.
Type of Business entityLLCFree zonebranchRep office
Also known as?WLL/SPCFree zoneBranchRep. office
Allowed to issue sales invoices?YesYesYesNo
Allowed to sign contracts?YesYesYesNo
Corporate tax payable0%0%0%0%
Allowed to import goods?YesYesYesNo
Allowed to export goods?YesYesYesNo
Type of business permittedAll except trade, retail, mediaAllAll except trade, retail, mediaOnly research and marketing
Bahrain bank account allowed?YesYesYesYes
How long to open company bank account?2 weeks2 weeks2 weeks2 weeks
Can rent an office in Bahrain?YesYesYesYes
Tenancy agreement required?YesYesYesYes
Can conduct business within Bahrain?YesNoYesNo
Can apply for immigration visas?YesYesYesYes
Bahrain employment visa feesUS$3,950US$3,950US$3,950US$3,950
Can hire staff in Bahrain?YesYesYesYes
Incorporation period6 weeks4 weeks8 weeks8 weeks
Shelf companies allowed?YesYesNoNo
Minimum shareholders1100
Minimum directors allowed1100
Minimum capitalUS$2,660US$2,66000
Bearer shares?YesYesNoNo
Public registrar of companies?YesYesYesYes
Annual accounting?YesYesYesNo
Corporate directors allowed?YesYesYesYes
Bahrain resident company secretary required?NoNoNoNo
Can buy Bahrain property?YesYesYesNo
Need to travel for company set up?NoNoNoNo
Annual tax return?YesYesYesYes
Annual audited financial statements?YesYesYesYes
Access to Bahrain double tax treaties?YesNoYesYes
Annual license renewal?YesYesYesYes
Bahrain national director or shareholder required for trading activities?NoYesNoNo
Allowed own shares in other Bahrain companies?YesYesNoNo
Government feesUS$1,031US$1,031US$1,031US$1,031
Healy Consultants feesUS$23,131US$25,131US$26,131US$26,131
Draft invoiceBahrain LLC invoiceBahrain FZ invoiceBahrain branch invoiceBahrain RO invoice

Shareholder agreement with a Bahrain or US national

  1. Bahrain company law allows foreign companies draft flexible profit sharing arrangements, which can be different from the shareholding percentages. Healy Consultants will draft a legal shareholders agreement outlining terms and conditions, shareholder restrictions, expectations and remuneration;
  2. Through a legal shareholders agreement, the nominee will be designated a silent partner who will not interfere in daily activities of the Bahrain limited liability company (or another kind of Bahrain corporate entity type chosen by our Client). The foreign investor legally enjoys full power to solely operate the business and bank account;
  3. The shareholder agreement will be signed by both the investor and the nominee and witnessed by two different parties from each side. The shareholders agreement is legally valid in the Bahrain courts to arbitrate any dispute between the investor and the local partner;
  4. The parties to an international contract are free to choose the law and jurisdiction which will govern that contract. If they do not choose an applicable law, the contract will be governed by the Bahraini Civil Code. The parties may also agree in writing to refer disputes to arbitration;
  5. As the 2006 Bahrain-US Free Trade Agreement affords US citizens the same rights as Bahrain nationals, US citizens and USA companies are allowed to own 100% of shares of Bahrain business entities in all industries. Healy Consultants will be happy to provide our Clients with US nominee services.

The role of the Bahraini or USA shareholder

  1. While foreign companies prefer to establish a Bahrain company with a silent partner, there are advantages to having an active local Bahrain shareholder. Advantages include i) introduction to potential customers and suppliers ii) preference in the allotment of government contracts iii) navigation through Bahrain Government bureaucracy and iv) assistance with immigration and visa matters;
  2. Bahraini shares may only be transferred after they have first been offered to the other shareholders by way of pre-emption, unless the other shareholders have agreed to waive their right.

Frequently asked questions

Contact us

For additional information on our LLC setup services in Bahrain, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi