Over the last few years, Bahrain has made constant efforts to attract foreign investment into the country. It consistently ranks as the top open economy for conducting business. The country is better known for its well-regulated financial sector and has introduced many laws to enable further growth in the investment sector. Foreign investors willingly invest in Bahrain due to the government’s pro-business ideology and enjoy the profits that they make while conducting business in Bahrain. Investors can establish an organization in Bahrain through various business entities. The most common way of conducting business in this region is by becoming a business partner in Bahrain. In other words, you can establish a general partnership company.
A general partnership company is an entity without a limited liability. Two or more parties sign an agreement to share profits and losses under a specific collective trade name for a commercial purpose. There are no provisions in the law concerning the minimum or maximum capital required for the partnership or the maximum number of partners allowed. However, the partnership should have a minimum of two partners. Other types of partnerships include Limited Partnerships and Partnership Limited by Shares.
Features of a Partnership Company in Bahrain
The benefits of Bahrain commercial registration are:
- The liability is unlimited
- Banking, insurance, and investment activities are not allowed
- No minimum share capital
- 100% foreign ownership is allowed
- A minimum of 2 partners is required
- A minimum of 2 directors is mandatory
- The presence of a local office is necessary
- Local operations are allowed
- A local sponsor is not required
How to Set Up a Partnership Company in Bahrain?
To complete a Bahrain commercial registration, in other words, to establish a company, you need to follow specific prerequisites. The first and foremost step is to decide on the company structure, which, in this case, is a partnership company. The next steps are as follows:
Choosing a Company Name
A company name is something that will stick with your business forever, which is why the Ministry of Industry and Commerce (MOIC) has set up certain guidelines to assist business owners in their search for a company name. If the suggested name violates the guidelines of the ministry, it is rejected. Hence, before naming the company, it is advised to go through the rules and regulations.
Commercial Registration Papers
The Bahrain Investors Centre issues commercial registration papers for companies.
However, the ministry will grant the commercial registration papers only if it finds no issues with the application form filled out in the initial stage. Once the authorities approve the application form, you will acquire the Bahrain commercial registration papers after you have paid the requisite fees.
Licensing and Approval
The next step to get your company legalized is to apply for a license. The type of license depends on the company structure. Some businesses do not need to obtain a permit to get the Bahrain commercial registration done. They are approved right away by the Ministry of Industry and Commerce. However, there are other businesses where licenses and approvals are needed to get the CR and ultimately start the business operations.
Documents Required to Set Up a Partnership Company in Bahrain
To be a business partner in Bahrain, you will need to submit the following documents:
- Application form for the company registration
- Draft of Memorandum and Articles of Association (MAA)
- Copy of commercial registration certificate
- An original bank reference letter and CV for non-GCC nationals
- Original educational qualifications and experience letter of each partner and director (depending on the business activity)
- Passport and visa copies (for non-Bahrainis partners)
Why Set Up a Partnership Company in Bahrain?
Starting a business in Bahrain has advantages of its own. The benefits include the following:
- Employees are not required to pay income or corporate tax to the Bahraini authorities.
- There is no wealth tax, no tax on capital gains, or inheritance tax.
- Bahrain has no exchange control restrictions on the repatriation of capital, profits, or dividends, which allows them to be fully transferable.
- Bahrain recently introduced value-added tax (VAT), which is similar to the UAE and Saudi Arabia. They determined the rate to be 5%, which they later increased to 10% in 2022. Low tax rates have been highly encouraging for investors to invest in Bahrain.
If you are looking to become a business partner in Bahrain, Business Setup Worldwide is here to guide you through the process, assist with company formation, and help you take full advantage of the benefits offered by this growing economic trading hub. Our advisors in Bahrain will handle all the formalities, allowing you to focus on your business without worrying about legal procedures. Contact us for any business-related inquiries.
