The Kingdom of Bahrain has successfully transformed itself into a conducive business environment, expanding every business's opportunities. Budding entrepreneurs and experienced professionals find the zone a productive one to boost and transform their business dreams into a reality.
Bahrain offers a business-friendly environment right from a Single Person to a Joint Partnership Company.
As a result, shareholding companies have successfully positioned themselves in the Bahraini market. Therefore, if you are looking forward to Bahrain company formation, this guide will be fruitful for you to gain a better insight!
What is a Shareholding Company?
The name 'Shareholding' means holding shares. In short, the structure can be understood as an entity entitled to have shares of one or a group of organizations.
Bahrain company incorporation can take place with two types of shareholding company: Closed and Public
The investors are liable to the company debts to the extent of their investment.
Well, now you must be wondering, why start a holding company?
The core answer to the question above is to reduce risk.
As stated earlier, a holding company can hold shares of one or multiple companies. So, in case if one company doesn't perform, the others are protected.
Also, it becomes easier for the holding companies to borrow money from financial institutions at a much lower rate, making it a feasible business option for multi-business owners.
Bahrain Shareholding Company (BSC)-Closed
A Bahrain Shareholding Company (BSC) is a corporate structure that stands as a separate legal entity from its shareholders.
As per the guidelines, the structure consists of two persons. Accordingly, the shares held by these shareholders are known as negotiable shares and may not be offered to the general public for open subscriptions.
For a BSC-Closed Unit, the minimum share capital must be 250,000 BD, wherein the share value may not be less than 100 Fils and not more than 100 BD.
An auditor also needs to look into the company books from the initial stage.
A Bahraini Shareholding Company is ideal for:
- Research and Development
- Banking and Insurance Processes
- Investment activities
- Regional operation tasks
- The articles of association for a closed shareholding company may restrain the shareholders from disposing of their shares in either one of the registrars.
- If the company's share capital increases, the shareholders have the absolute right to underwrite new shares.
- A Bahraini Shareholding Company doesn't require a local sponsorship. In some instances, it might be valid depending on the type of business activity carried out
Features of Bahrain Shareholding Company
A Bahrain established shareholding company holds the following features:
- The liability of the shareholders is limited to their extent of investment
- The annual submission of the audited financial statement is a must
- GCC nationals and foreign investors are permitted to own the company shares at ease
- Restraint activities include: commercial, banking and insurance activities
- Complete repatriation of capital is allowed
- Corporate and personal tax is exempted
Documents Required to Setup a Bahrain Closed Shareholding Company
Documentation is something that can't be avoided while incorporating a business entity. Setting up a Bahrain Closed Shareholding Company requires the following papers to be submitted:
- A duly filled company application form
- Pre-approvals depending on the business activity
- Memorandum and articles of association
- Capital deposit certificate
- Business Feasibility
- Financial audit report
Documents to be Presented if Partners are Individuals
- A valid passport and visa pages (in case if the partner is Non-Bahraini)
- CPR copies for Bahraini partners
- No objection letter from the current employer
- Bank reference letter
- Educational qualification certificates
Documents to be Presented if Partners are Corporate Organizations
- Copy of commercial registration certificate
- Copy of articles and memorandum of association
- General assembly resolution
- Authorization letter from the Ministry of Foreign Affairs of Bahrain
Here's a Guide to Investors Visa in Bahrain, which will help you understand the visa proceedings to be followed.
Advantages of Bahrain Closed Shareholding Company (BSC)
Bahrain company setup comes with a bundle of benefits. A few of the stated benefits are pointed below:
- Complete business ownership
- The shareholders hold the flexibility to invest in Bahraini Joint Stock Company (BJSC)
- Attracts a high number of US investors to come forward and join hands
- Corporate directorship with no local requirements
- Bahrain has a vast number of double taxation agreements
- Zero per cent corporate tax for a Bahrain Limited Liability Company
- No duty tax on goods imported and exported from the Bahrain free zone
Have a look at our summarized treatise on the Advantages of Setting Up Your Business in Bahrain.
How to Set Up a Shareholding Company in Bahrain?
To set up a business in Bahrain, the investor has to abide by the following steps:
Trade Name Search
One of the first moves that every investment needs to step in is to figure out a proper business name that matches the firm's core activities.
The business name is registered with the Commercial Registration Directorate at Bahrain's Ministry of Commerce and Industry (MOCI).
It is to be kept in mind that the chosen business name shouldn't sound offensive or hurt religious sentiments in any possible way.
Submission of the Application Form
A duly filled business incorporation application form will be submitted at the Ministry's office. The complete details of the shareholders, directors, company name, etc., and the business plan are attached.
Once approved, the authorities will get back to you on the contact details submitted.
Obtain an Official Lease Agreement
Bahrain authorities require foreign investors to lease an office space before the company incorporation can be approved.
Therefore, before registering the business, you have to find an office space so that the authorities can approve your business.
Submit the Overall Documents
Submit the list of documents to the Bahrain Company Registrar and the Ministry of Justice to complete the business setup in Bahrain procedure.
Open a Corporate Bank Account
After incorporating an office, you need to open a corporate bank account to ease the business transactions. So, read our guide on opening a corporate bank account in Bahrain.
It takes massive and rigorous planning for an investor to analyze, plan and execute the business parameters to build a strong foundation.
However, the main challenge is to get the tasks completed within days. Now, this might sound impossible if you are a stranger to Bahrain.
One of the feasible ways you can proceed is by joining hands with professional experts who can show the correct route in the right way!
At Business Setup Worldwide, we take care of the required essentials and help you set up a company at ease.
Your dream business needs proper implementation, and that's where-in we enter into the picture. To know more about the different process, feel free to get in touch with our business advisors.