Types of Business Entities Available for Business Setup in Bahrain

Bahrain is a country made up of an archipelago of 30 islands in the Arabian Gulf. The nation has always been a hub for important trade routes due to its strategic position in the Arabian Gulf. On its east lies the Kingdom of Saudi, and to its north lies Qatar. Thus, Bahrain benefits from the resulting synergy of being placed between the coasts of these two nations. 

Over the course of a decade, Bahrain turned its focus on controlling, adjusting and adapting to the changes in its economy and business environment to meet the equilibrium of supply-demand.

However, in this write-up, let's discuss the legal structure available for company formation in Bahrain.

Different Entities Available for Bahrain company incorporation

Setting up a company in Bahrain has become a much easier procedure, and the likelihood of your business staying afloat in Bahrain's economy has also increased. Overall, Bahrain is constantly renovating itself to sustain more new business entities. The types of entities available for setting up a company in Bahrain are as follows:

1. Bahrain Limited Liability Company (WLL)

A Limited Liability Company is a business entity in which the owners are legally responsible and liable for the company's debts only to the extent of the capital amount they invested. They combine the attributes of a corporation and a partnership or sole proprietorship. To establish a Limited liability company in Bahrain, the following perquisites are required to be collected:

• A minimum paid capital of BDH 20,000
• Two directors
• Two shareholders of any nationalities
• A minimum of 2 and a maximum of 50 partners

A limited liability company can be 100% foreign-owned in Bahrain. WLL is the best option opted for by foreign investors and entrepreneurs who wish to do the business setup in Bahrain. A WALL enables entrepreneurs to maximise profits and see an imposition of minimum international taxation.

2. Bahrain Free Zone Company (FZC)

A free zone company is a legal entity established in a free economic zone. An area in which companies are taxed lightly and leniently or thoroughly exempted to encourage economic activity. 

In addition to that, foreign investors who wish to set up a business in the Bahrain free trade zone must acquire a trade permit by appealing to the Trade Zone Authority before commencing any business activity. 

Also, it should be noted that free zone companies enjoy several benefits, such as zero customs duties and fewer taxes.

3. Bahrain Branch Office

A branch office stems from a company or an organisation. Despite being physically disconnected from the central office, it is not a separate legal entity. In Bahrain, the Commercial Companies Law authorises the registration of a Bahraini branch by a foreign company. The subsidiary can be 100% foreign-owned if its industry of operations is fully open to forming an LLC by foreign shareholders.

In order to register a branch, the following procedures must be undertaken:

• The audited financial statements.
• A Board Resolution affirming the opening of the branch.
• Issuance of a power of attorney in favour of the general manager.
• Certificate of Company Incorporation and a Memorandum of Association (MOA).

It should be noted that all the above-mentioned certificates, statements and letters must be legalised and translated into Arabic. A branch office holds best in the fields of engineering and financial services.

4. Bahrain Shareholding Company (BSC)

A shareholding company is also known as a public joint stock company. A BSC is most suitable for those businesses which seek to undertake large-scale projects involving a substantial investment of funds and capital.

The requirements to establish a BSC are:

• Required the minimum share capital of BHD 250,000.
• Requirement of a minimum of 50 members.
• Board of Directors consisting of a minimum of 3 members.
• A BSC is most suitable for businesses offering their shares to the public by enlisting their company on the Bahrain Bourse (BHB), the securities exchange agency of Bahrain.

5. Bahrain Representative Office

Generally, a Representative Office is a legal office established by an organisation or a company to operate in countries where a branch office or subsidiary is not permitted. The Commercial Companies Law grants the establishment of Representative Offices in Bahrain. In order to register a Representative Office in Bahrain, it is necessary to appoint a local agent or distributor to represent the foreign company within Bahrain. Moreover, if you wish to set up a business in Bahrain or anywhere in the world, you ought to select the right legal structure for the kind of business you offer.

Why Choose the Assistance of BSW While Opting for a Business Setup in Bahrain? 

Selecting the correct business entity allows your business to operate smoothly and in the best possible way. Bahrain allows the establishment of various business entities to choose when it comes to setting up a business in the nation. Business Setup Worldwide is a global consultancy company, and we specialise in providing the most exceptional business solutions to your business needs! If you are interested in setting up a company in Bahrain, contact us; we'd be happy to help!