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.
|Applicable legislation (home country/foreign country)||
Best used for
Strictly regulated activities, such as the financial ones
Minimum share capital
|Time frame for the incorporation (approx.)||
Appox. 4 week
Local (resident director must be appointed)
|Legal representative required||
|Local bank account||
|Independence from the parent company||Fully dependent on the parent company’s decisions|
|Liability of the parent company||Fully liable for the branch office’s debts and obligations|
|Corporate tax rate||15%|
|Possibility of hiring local staff||Yes|
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 in 2022?
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 in 2022.
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.
One of our agents who specialize in company registration in Bahrain can give investors more details on the characteristics of these business forms.
An important step to set up a company in Bahrain is choosing the business form. Your choice of structure will have an impact on the terms and conditions, licensing, and registration requirements. These legal forms include foreign branches and companies with limited liability for most foreign investors seeking to enter this market.
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.
Why open a Bahrain subsidiary in 2022?
Bahrain is one of the most prolific economies in the Middle East and it attracts many foreing investors who can set up various types of companies in 2022.
Among these, foreign companies can expand their operations through Bahrain subsidiaries in 2022, especially if they target the trading sector. The simplified company registration procedure is one of the main reasons to choose this business form.
Starting a subisidiary in Bahrain in 2022 implies incorporating a domestic company and obtaining various licenses and permits which are easy to acquire. Our specialists can also offer accounting services in Bahrain.
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.