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Company Liquidation in Bahrain

Company Liquidation in Bahrain

Company liquidation in Bahrain is primarily regulated by the Company Law. Partially, it is also covered by the Bankruptcy Code which was recently amended. Closing a business in a Middle Eastern country follows specific steps that are detailed below.

Our Bahraini company formation agents explain how you can wind up a company and can also offer assistance during the procedure.

Reasons to close a company in Bahrain

Winding up a company in Bahrain can occur provided one of the following conditions is met:

  • the company was created for a limited time only and has reached the end of its activities;
  • the shareholders reach a mutual agreement and decide to close the business;
  • the company no longer complies with the requirements of the Company Law or articles in its statutory documents;
  • in the case of disagreements between the shareholders;
  • when failing to pay its creditors, which can lead to bankruptcy.

The last situation is divided into 2 scenarios:

  1. the shareholders can reach an understanding to terminate the business, liquidate its assets and pay the creditors;
  2. the creditors address a Bahraini court to have their debts recovered.

In case of litigation, you can rely on our lawyers in Bahrain for guidance and legal support.

Company liquidation procedures in Bahrain

There are two ways to close a company in Bahrain:

  • the voluntary procedure;
  • the compulsory procedure.

The differences between them reside in the decision-making process (who makes the decision to terminate the business) and the appointment of the liquidator.

Feel free to address our company incorporation agents in Bahrain for details on the two procedures.

Voluntary company liquidation in Bahrain

The voluntary company winding up procedure starts with convening a meeting of the shareholders. During it, the participants will adopt a resolution to terminate the business and adopt the liquidator. Following that, the representative must file a notice with the Companies Register in Bahrain regarding the liquidation.

The decision to close a business must also be published in the Official Gazette and in local newspapers in order to notify the creditor. During this period, the liquidator will make the inventory of the assets and will gather all financial information in order for the final accounts to be prepared and filed. Also, all taxes must be paid before closing the Bahraini company.

Our local specialists can assist during the company liquidation procedure. However, you can also count on us if you want to set up a company in Bahrain, which is one of our main services.

Compulsory liquidation in Bahrain

A company can also be wound up after a Bahraini judge rules so. This usually occurs after one or more creditors fail to recover money in an amicable manner. After deciding the start of the company liquidation in Bahrain, the court will also appoint the liquidator.

Then, the same steps as in the voluntary procedure will be completed.

Bahraini company winding up in numbers

Here is what to expect when closing a company in Bahrain in terms of duration:

  • the decision to terminate the business must remain published for 15 days;
  • unless insolvency proceedings have been commenced, the liquidation of a company can take between 2 and 3 months;
  • if insolvency proceedings are in place, they can take up to 2 years in order to allow the company to get back on track.

In the case of financial companies, the Central Bank must also revoke the license of such entities, which may lead to a delay of the liquidation procedure.

Our lawyers are also at your disposal with other services, among which immigration to Bahrain. So, if you want to apply for a residence permit for Bahrain, you can rely on us.

Do not hesitate to contact our specialists for support in winding up a company in Bahrain.