A liaison office in Bahrain, also known as a representative office, is used for conducting marketing operations as well as a number of other non-commercial operations. This form is usually the initial one before companies open branches or subsidiaries in Bahrain and it is used solely for establishing a presence on the market and maintaining an open communication channel with the local clients, business partners and other parties.
Companies usually open the liaison office before they open a branch. Although not all companies follow this route to establish their activities in the country, for those that do decide this is the optimal course of action, our agents who specialize in company formation in Bahrain can offer specialized services.
The characteristics of the liaison office in Bahrain
The liaison office can be suitable for those foreign companies that need to test the market before settling in by opening a permanent establishment. However, this establishment is one that has certain limitations and company incorporation in Bahrain will become a necessity for those companies that wish to engage in certain activities.
The characteristics of a Bahrain liaison office are, in general, the following:
- – Legal status: the liaison office has no legal status like a corporation and does not act in its own name.
- – Liability: the parent company is liable for its Bahrain liaison office, like in the case of the branch.
- – Activities: the representative office cannot engage in commercial activities; it cannot generate income and it is limited to market research and communications with third parties.
- – Taxation: not applicable as the liaison office does not generate any type of Bahrain-sourced income.
- – Others: the representative office will need to have a local representative from the company, most often an individual who is relocated to Bahrain.
The liaison office is generally subject to a simpler registration procedure due to the fact that it cannot engage in commercial activities. This will make it unnecessary for it to have a sponsorship agreement with a Bahrain partner company or other Bahrain trader or distributor, as it may be necessary for a branch.
Conditions for the liaison office in Bahrain
The representative office will need to comply with a set of requirements in order to properly function in Bahrain:
- Governing law: the representative office is subject to all of the laws applicable in Bahrain.
- Documentation: the documents submitted for its registration must be in English or Arabic.
- Name: the liaison office will have the exact same name as the parent company, followed by “representative office”.
- License: the liaison office needs to be licensed to practice its activities as a representative office for the parent company abroad.
Companies may choose to set up the representative office in those situations in which they need to supervise their interests in the Kingdom of Bahrain or to follow up on market research and maintain a contact base for their local business partners or clients. When foreign companies do need to engage in direct transactions in their own name in Bahrain, they may opt for a branch. The alternative would be to open a company limited by shares which is subject to certain conditions, such as having at least four founders and minimum share capital of 20,000 BD. One of our Bahrain company formation specialists can give you more details about this business form as well as the other available company types, suited to businesses of certain sizes.
The choice between opening a branch, representative office or another type of business can be conditioned by the future activities and the future plans for expansion on the market.
Bahrain offers a number of advantages to investors and it has evolved in the overall ease of doing business conditions. The statistics below provide a brief image of the investment and business field for those who set up a company in Bahrain:
- – number of industrial licenses issued in the first half of 2018: 42;
- – number of preliminary approvals for industrial projects in the same period: 64;
- – number of registered industrial factories in June 2018: 261;
- – the export value in 2017 reached approximately 192 million BD.
- – the Kingdom of Saudi Arabia was the top importer in 2017, with 55 million BD;
- – the USA was the second largest importer with 41 million BD.
The statistics presented herein refer to only part of the business sectors of interest in the Kingdom. Our specialists in company registration in Bahrain can give investors more details about how to open a liaison office or how to incorporate a company as well as the conditions for foreign investors.
Contact us for complete assistance for company formation in Bahrain.