Incorporating in Bahrain

One must consider tax and legal issues to ensure a company is properly structured in Bahrain. Some points to consider in Bahrain include:

1.	To incorporate a company in Bahrain, a minimum of two shareholders and two directors are required, although they need not be resident in Bahrain. Corporate directors are not permitted.
2.	When incorporating in Bahrain, a Bahrain With Limited Liability Company (WLL) can be 100% foreign-owned. Investors starting a company in Bahrain can take 100% foreign ownership, however, in certain circumstances, 51% Bahraini shareholding is required, including: (i) Companies that engage in certain business activities, reserved only for Bahraini citizens. (please see point 3 below) (ii) A public shareholding company.
3.	Incorporating in Bahrain is popular for international investors, as it is possible for a Bahrain company to be 100% foreign-owned under the following circumstances:
4.	i) The majority of the company's capital is to be invested in an industrial development; or ii) The company will be the primary centre for capital investment by the foreign shareholders related to the distribution of its goods and/or services. iii) Examples of sectors open to 100% foreign investment include telecommunications, tourism (e g hotels), healthcare (e g private doctors, health insurance, hospitals and clinics), Education (private schools, colleges and universities) and Business Services (e g conference and exhibition organisers).
However, investors incorporating in Bahrain with 100% foreign ownership should note that the entity must conduct regional services. It cannot operate solely in Bahrain.
4.	A Bahrain With Limited Liability (WLL) Company is an appealing option for investors incorporating in Bahrain. A WLL company must have office in Bahrain and business operations are allowed within the country. Many of our Clients choose to incorporate a company in Bahrain via this route.
5.	Bahrain has over 20 double taxation agreements in place, including with the UK. Also, Bahrain holds free trade agreements with the Pan-Arab Free Trade Area , GCC-EFTA , America and Singapore.
6.	There is no restriction on repatriation of capital, profits or dividends when incorporating in Bahrain.
7.	The minimum capital required to incorporate a limited liability company in Bahrain is 20,000 Bahraini Dinars (US$53,000).
8.	Investors starting a company in Bahrain are not liable to pay corporate, personal, value-added or withholding tax.
9.	When incorporating in Bahrain, an LLC is valid for an initial 25 years, though this can be extended by unanimous shareholders' resolution.
10.	Investors starting a company in Bahrain have wide access to low cost skilled and manual labour.
11.	Investors who incorporate a company in Bahrain are required to have a registered office to which all communications and notices may be addressed and which shall constitute the address for service of legal proceedings on the company.
12.	Investors incorporating in Bahrain enjoy excellent access to financing through the Bahrain Stock Exchange and the Bahrain Development Bank.
13.	Investors may have trouble with the country's inefficient bureaucracy when starting a company in Bahrain.
14.	Having incorporated a company in Bahrain, a shareholders register must be kept at the head office, including shareholders’ names, domiciles, professions, nationalities and the number of shares each owns. Each partner and any interested person have the right of access to this register.
15.	Investors who incorporate a company in Bahrain should note that the memorandum of association of an LLC includes the following details:
	(i)The company's headquarters; (ii)The company's name and address; (iii) The company's objectives; (iv) The names, titles and nationalities of shareholders; (v) The company's capital, and the cash and in-kind shares provided by each partner with a detailed description of the in-kind shares and their value; (vi) The conditions of shares assignment; (vii) The term of the company, if any; (viii) The names of those entrusted with the company's management from among the shareholders or from others, and the names of the members of the control board in the cases in which law stipulates the existence of such board; (ix) Distribution methods of profits and losses.
16.	After incorporating in Bahrain, there is 100% customs duty exemption on capital goods and goods for re-export, raw materials for manufacturing, semi-finished commodities imported for further processing, imports required for development projects, and initial import of capital goods by a manufacturing company.
17.	Investors starting a company in Bahrain may find it difficult to obtain employment visas for expatriate employees.
18.	After incorporating in Bahrain, a limited liability company is required to maintain a statutory reserve deducting 10% from its annual profits accumulating up to 50% of its capital.
19.	Those starting a company in Bahrain can utilise the range of Healy Consultants services to support Bahrain incorporation.
20.	Investors who intend to incorporate a company in Bahrain should note a Bahrain LLC cannot undertake banking, insurance or brokerage activities.
21.	Investors starting a company in Bahrain should note that, according to a 2005 Investment Climate statement by the US Department of State, interpretation and application of the law in Bahrain sometimes varies according to the Ministry, and may be dependent on the stature and connections of an investor's local partner.
22.	Many investors choose to start a company in Bahrain to tap the Kingdom's strategic location at the heart of the Gulf. Bahrain offers excellent access to the Gulf Cooperation Council (GCC), especially Saudi Arabia, the largest market in the region.

For more information on incorporating in Bahrain, email email@healyconsultants or telephone us at (+65) 6735 0120.

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