Foreign companies looking to establish their regional headquarters can open a branch in Bahrain. This is a business form that is best suited for companies in fields such as financial services but it can also be used to establish the presence of a company in a different business field.
The Bahrain branch will be under the control of the foreign company and the legal entity abroad will be the one liable for the activities and debts of its Bahrain regional office.
One of our agents who specialize in company formation in Bahrain can assist foreign companies that wish to secure their presence on the market.
| Quick Facts | |
|---|---|
| Applicable legislation |
Foreign country |
|
Best Used For |
All types of operations, except telecom, retail and trading |
|
Minimum share capital (YES/NO) |
No, but a bank guarantee is required (USD 133,000) |
| Time frame for the incorporation (approx.) |
Approx. 8 weeks |
| Documents to be filed by parent company |
– application form, – parent company’s statutory documents, – branch office Memorandum and Articles of Association, – approval for office premises |
| Management (Local/Foreign) |
A local manager is required |
| Legal representative required (YES/NO) |
Yes, at least one local |
| Local bank account (YES/NO) |
Yes |
| Independence from the parent company |
Fully dependent on the foreign company |
| Liability of the parent company |
Liable for the branch office’s debts and obligations |
| Corporate tax rate |
0% |
| Annual accounts filing requirements |
– annual tax return, – audited financial statements |
| Possibility of hiring local staff (YES/NO) |
Yes |
| Travel requirements for incorporating branch/subsidiary (YES/NO) |
No, a local agent can be appointed |
| Double tax treaty access (YES/NO) | Yes, approx. 45 double tax treaties |
Steps to create a branch office in Bahrain
Once all the necessary paperwork is drafted, the registration process for a Bahraini branch is usually completed in 2 to 4 weeks. The application for business registration and the selection of the trading name are the first steps in the registration procedure.
Then, the procedure for establishing a branch in Bahrain will continue with:
- completing an application for registration with all relevant information of the parent company and the new branch;
- obtaining preliminary permission from the Ministry of Commerce for registration and registering the Memorandum of Understanding (MOA) and Articles of Association (AOA);
- finding a suitable office space and obtain an authorization to use from the local municipality;
- notarizing the MOA and other documents, as necessary;
- obtaining a capital deposit certificate and opening a local bank account;
- depositing a guarantee with the bank under the branch’s name, the agent’s or representative’s name;
- obtaining the Certificate of Registration;
- advertising the incorporation in the Official Gazette;
- registering for social insurance for employing staff.
Even if the procedure seems lengthy, most of the steps are completed quite fast, which results in the registration of the branch in the above-mentioned timeframe. Also, if you need support, you can rely on our local agents for assistance in setting up a company in Bahrain.
List of documents required to open a Bahraini branch office
There are various documents that need to be drafted and filed by the parent company when setting up a branch in Bahrain. Among these, we mention the following:
- the application form provided by the Companies Register;
- pre-approved documents by external parties (depending on the business activity);
- certificate for a capital deposit.
With the exception of representative offices, regional offices, and GCC corporations, branches must have a sponsorship agreement in place with a Bahraini trader, distributor, or partner company.
Apart from the documents presented above, the parent company must also supply the following:
- a copy of its commercial registration certificate;
- copies of the articles of association, bylaws, and the latest certified financial report (the last document is not required if the company is less than one year old)
- a Resolution of the General Assembly or the Board of Directors designating the Parent Company as the sole shareholder of the branch office;
- a guarantee letter from the parent company accepting full responsibility for its branch.
If you need support in launching a branch office in Bahrain, you can rely on our local consultants.
The requirements for opening a branch in Bahrain in 2024
If setting up a branch in Bahrain in 2024, it is important to keep in mind that these business entities will need to function as per the local regulations and this includes having the right permits and licenses for some types of activities.
Below, our team of agents who specialize in company registration in Bahrain list the most important requirements for those willing to set up a foreign branch:
- Liability: the parent company is the one liable for the activities of the branch and the liabilities it may incur while performing the operations.
- Guarantee: when opening a branch, the parent company is required to issue a guarantee to the Ministry of Finance.
- Local office: it is mandatory for the foreign branch to maintain a local presence in Bahrain (have a local office).
- Sponsor: the branch will need a sponsor who can be a natural or a legal person.
- Manager: the local branch in Bahrain will also need a manager who will be Bahraini; exemptions apply in some cases.
- Licenses: for branches in some business fields, applying for a proper permit or license is required before they can commence business.
When opening a branch, a registration form will need to be filled in and accompanied by the parent company’s registration documents. The capital deposit certificate, as well as the sponsorship agreement signed by the Bahraini individual or company, will also be required.
The name of the branch needs to be a unique one in Bahrain. In most cases, it will be the same name as that of the foreign company abroad, however, one of our agents can help investors perform a name check. The documents for registering the branch are submitted to the Ministry of Commerce, at the Bahrain Investment Centre and are subject to preliminary approval. A bank account for the branch of the foreign company will also be required. Once the branch has obtained the certificate of registration, it can public the incorporation in the official gazette and then register for social insurance purposes for being able to hire employees.
Foreign companies looking to set up a company in Bahrain can choose to open a branch and maintain their presence in the country through this regional headquarters. Other options include opening a subsidiary which is a locally registered company for which the foreign parent company will not be liable.
Characteristics of branch offices in Bahrain
The branch office is a dependent entity, which makes the parent company responsible for all its obligations. Other characteristics overseas businesses must consider when choosing this legal form are:
- no minimum capital is required for such an entity, however, the bank guarantee of at least 133,000 USD must be considered;
- a branch manager who is a Bahraini resident must be appointed;
- only operations in banking, insurance, and savings are allowed for this type of legal entity.
Compared to the liaison office, the branch can acquire real estate in the name of the parent company, it can issue invoices to clients in Bahrain, and enter contracts for local distribution. The branch is a suitable alternative only for well-regulated activities, such as the ones mentioned above.
Also, if you need support in obtaining a residence permit for Bahrain for the manager, our local specialists can help you. Our Bahraini lawyers are also at your service in other legal matters.
The advantages of the branch in Bahrain
A branch is a form of establishing a business presence that has somewhat lighter requirements compared to the subsidiary, for example. However, investors will still be required to comply with the existing registration and licensing obligations. Our immigration lawyers in Bahrain will assist you in moving here.
The branch can be the most suitable means of entering the market in Bahrain for many foreign companies. While the parent company will need to remain liable for its Bahraini counterpart, it does have certain advantages that can be particularly interesting for companies in the financial services, for example. For example, this is a means of operation for foreign bank branches.
The advantages of the branch are the following:
- Complete foreign ownership: the company abroad retains full foreign ownership of its branch in Bahrain.
- No capital requirements: there is no mandatory requirement for a minimum share capital when opening a branch in Bahrain.
- Permitted activities: provided that it has adequate permits, the branch can engage in a large number of activities.
- Easy setup: the requirements for opening a branch in Bahrain are not complicated and can be easily handled by foreign investors.
- Location advantages: a branch in Bahrain can be used as a springboard to expand business operations in other countries.
Companies in fields such as banking and financial services, insurance companies, investment activities, manufacturing, automotive and others, can use branches successfully in order to establish their presence in Bahrain.
We are at your disposal if you need accounting services in Bahrain. We can also help with immigration to Bahrain.
If you are looking for lawyers in Bahrain, you can choose our local specialists who are at your disposal with various services. To name just a few, real estate acquisition, immigration and employment-related solutions are among the most requested by our current clients. Also, our lawyers are at the service of natural persons and companies residents or non-residents in Bahrain.
You can also get in touch with our lawyers if you are interested in immigration to Bahrain. You may count on us for various services, no matter if you want to move here temporarily or definitively. For each case, there are specific visas you can apply for, so contact us for advice on how to choose the most suitable option.
Deciding on the type of visa is the first step in applying for a residence permit in Bahrain. The permit can be issued for short or long stay, and each has its specific conditions. Qualifying for any of them implies having various qualifications or sufficient money. Our immigration specialists can help you navigate all these conditions.
Even if you are not required to move here, our immigration lawyers in Bahrain can still help you relocate and manage your business.
To open a company in Bahrain, there are several things to arrange, such as selecting a corporate structure and appointing the directors. Also, the Companies Register Office will approve the name of your company at this stage of the procedure. Because the name must be original and suggestive, choosing one might be challenging. However, our specialists can guide you.
Business expansion through a branch office in Bahrain in 2024
Expanding a company’s operations through a Bahrain branch office in 2024 represents one of the most modern ways of creating a satellite company. Apart from having access to the country’s network of double tax treaties, the branch office will be subject to income tax on the profits it makes here.
Foreign business owners considering setting up a branch in Bahrain in 2024 can rely on the services provided by our local agents. We can also provide details on the licensing requirements such an entity must respect.
Here is also a video:
Economic overview of Bahrain
Stronger export growth—net exports are predicted to account for about 10% of GDP in 2023—will contribute to Bahrain’s economic growth in 2024, which is predicted to remain stable compared to the previous year. Consistent with the moderate global economic development pattern, the stable average prices of steel and aluminum will help local economic growth. Bahrain is a major global producer and exporter of aluminum, making up approximately 20% of total exports. Because inflation is starting to decline, private consumption—which makes up around 40% of GDP—will remain the main engine of development. Furthermore, Bahrain will continue to draw significant foreign direct investments (which increased by almost 6% to USD 34.5 billion in 2022 from the previous year), aided by the government’s initiatives to enhance the business climate as part of the Vision 2030 program.
Contact our team who specializes in company registration in Bahrain for more information about opening a branch or for details about the other available options. You can also rely on us for services related to immigration to Bahrain.