The special purpose vehicle or SPV is a company set up in a manner that the assets are isolated from the parent company’s main activities with the intention of avoiding the latter’s financial integrity. It is possible to open a SPV in Bahrain in accordance with various laws, among which the Company Act.
There are several legal entities that can be used to create an SPV company in Bahrain, however, the most employed is the private limited liability company. Below, you can find out how our Bahraini company formation agents can assist in this case.
How to open an SPV in Bahrain
The registration requirements for an SPV company are the same as for any other legal entity in Bahrain, as it needs to follow the same procedure. The main difference between the special purpose vehicle and another business is the reason for creation. Namely, the SPV will be used as a financial tool.
Most often, SPVs are used as holding companies, including in Bahrain, as they can be employed to hold various types of assets without engaging in commercial activities. This is a definitory trait of the special purpose vehicle.
If you need assistance in setting up a Bahraini SPV company, you can rely on our local agents.
Who can open SPV companies in Bahrain?
Both local and foreign investors can set up SPV companies in Bahrain and can select from the following types of entities:
- the private and public limited liability company;
- the single person company;
- the partnership.
It is also possible to open a SPV in Bahrain under the form of a trust. However, the most employed legal form is the private limited liability company.
Main uses of an SPV company in Bahrain
If you want to incorporate a company in Bahrain for securitization purposes, you should note that the SPV can be used for the following:
- protection of the investors in the case of risky financial ventures;
- for securitization of loans and/or receivables;
- for the consolidation of assets in large companies;
- to finance the projects of a parent company;
- for holding various types of assets (in most cases, real estate).
If you want to know more about how an SPV company in Bahrain works, you can get in touch with our company registration advisors.
Special considerations when establishing a SPV in Bahrain
The creation of an SPV company is subject to stringent requirements when it comes to its financial character, one of them being related to licensing. As such, these entities are required to register with the Central Bank of Bahrain and obtain a business permit.
SPVs fall under the category of finance businesses, money exchanges, and representative offices and must apply for specialized licenses. Please note that such licenses are subject to annual registration fees.
Our company formation consultants in Bahrain can offer more information on the licensing requirements applicable to special purpose vehicles.
Penalties for failing to register with the Central Bank
Opening a SPV company in Bahrain is not complicated, however, the licensing conditions are more stringent, and failing to comply with them will attract various penalties. Among them:
- BD 10,000 to BD 50,000 for failing to register with the Central Bank;
- BD 500 for not appointing a local representative.
There are no restrictions related to opening an SPV as a foreign investor, however, in this case, Bahraini residency rules must be respected. If you intend to move to this country, we have a team of specialized immigration lawyers in Bahrain who can help.
If you want to establish an SPV company in Bahrain and need assistance, please contact our local company registration representatives for support.