Foreign investors may set up a subsidiary in Bahrain for the purpose of expanding their international business to this area. The subsidiary and the branch are both two forms of establishing a foreign business in this location, however, there are important differences between them, mostly in teams of the foreign company’s liability towards its counterpart in Bahrain.
The subsidiary is a locally registered legal entity while the branch is a mere extension of the parent company. This can be important for foreign companies that do not want to be liable for the branch’s activities. Having a Bahraini joint stock company as a subsidiary can be advantageous for those foreign companies that want to expand their operations here and consolidate their position through a local company, not a branch.
Company formation in Bahrain
is not a complicated process, however, certain steps are mandatory. Our team of agents can assist foreign investors interested in setting up a subsidiary with all of the needed information about the general and the special requirements.
What types of companies can be set up as subsidiaries in Bahrain?
Foreign investors are allowed to own 100% of the company for a public joint stock company, for a closed joint stock company or the limited liability company
, some of the common business forms used to set up a subsidiary
The list below describes the main characteristics of these business forms.
Liability: the founders have limited liability when opening a public/closed joint stock or a LLC.
Activities: the public and closed joint stock can engage in banking and insurance activities; the LLC cannot.
Minimum capital: it is larger for the public joint stock than for the closed one; not applicable to the LLC.
Founders: at least two founders are needed to open these business forms.
The minimum capital for the public joint stock is 1,000,000 BD with 25% of the capital provided upon incorporation and the remainder within five years. For the closed joint stock it is 250,000 BD of which 50% of the capital is deposited upon incorporation and the rest within three years. The public joint stock must have least two founders and five members on the Board of Directors while the closed one must have at least two founders and three members on the Board of Directors.
The right type of company may be chosen according to the available capital for incorporation and the business sector in which the company will activate. For example, investors should remember the restrictions that apply to the LLC in certain business fields. Because the public joint stock has the largest minimum capital out of the presented business forms, investors can choose to open a closed joint stock company. The shares are non-negotiable and cannot be subscribed publicly for this business form, however, its characteristics and lower minimum capital make it accessible to investors.
What is the general process for company formation in Bahrain?
Below, our team lists the main steps for company formation in Bahrain:
Choose the type of company: investors can start by choosing the business structure that fits their needs.
Choose the company name: the commercial name of the company must be an available one and it must not violate public order.
Apply for registration: the prepared company documents, along with the required filled in forms are filed for registration.
Complete the registration: the company receives the commercial registration certificate once everything is approved.
Post-registration steps: open a bank account, lease the needed office space and hire employees in Bahrain.
Companies may also be required to receive other licenses and approvals, some of them from the municipal authorities and some from other relevant Bahraini authorities. For example, an industrial license will be required by companies that will engage in industrial projects. Entrepreneurs will also need to register for VAT
purposes, if applicable.
How can investors receive assistance to set up a company in Bahrain?
Our team is ready to assist foreign investors interested in opening a subsidiary in Bahrain. We can commence by preparing the company’s Articles of Association and Bylaws and provide counseling on choosing the right business form.
The electronic registration of commercial companies is overseen by the Ministry of Industry, Commerce and Tourism and the applications for the subsequent licenses and permits are also checked by this Ministry. One of our agents can assist investors in making all of the submissions, as required for the particular business field in which the company will activate. Contact us
for more information.