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Company Formation

Before incorporating your business, it is first crucial to consult a good lawyer who will guide you through registration procedures and will protect your interests.

Forming of a company in Bahrain is a 7-stage process, which is as follows:

1. Obtain a lease agreement, which is needed to get preliminary approval from the Ministry of Commerce. This takes one day.
2. Obtain preliminary approval from the Ministry of Commerce by submitting the following documents: Draft Memorandum of Association, board resolution, CPR copies of the company representative, managers' CVs and the lease agreement. This takes one day.
3. Obtain approval for the location of the company from the Municipality. This takes 2 to 3 days.
4. Have the Memorandum of Association notarised. This takes a day and costs approximately 40 BHD.
5. Open a bank account in which to deposit capital, and obtain proof of deposit. This takes one day.
6. Obtain a registration certificate from the Ministry of Commerce. This takes a day and costs approximately 20 BHD.
7. Register with the General Organisation for Social Insurance. This takes one day.

Foreigners wishing to establish a business in Bahrain should do so through one of the following business entities:

• A Limited Liability Company (W.L.L)
• A Joint Stock Company (Closed) (JSCC)
• A Single-Person Company (SPC)
• A Holding Company (HC)
• A General Partnership Company (GPC)
• A Simple Commandite Partnership (SCP)
• Public Joint Stock Companies (PJSC)
• Branch and Representative Offices

The law requires that any foreigner wanting to establish a business in Bahrain should have a local partner that holds a majority interest in the company. Your local partner, be it a company or an individual, is not required to contribute financially to your business at all.

When your business is registered in Bahrain, you need to show the Ministry of Commerce proof that you have a substantial sum of money to invest.

Offshore Companies

By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of itsoperations. Offshore companies are traditionally, but not exclusively,incorporated for lower fees and taxes. Business owners must abide theregulations of the offshore jurisdiction, and must not trade within thejurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are oftenbig factors when considering offshore incorporation. A company may alsochoose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
  
• Assume anonymity - the names of owners and directors are not forpublic record, and references to the company may only be made in itsregistered agent
  
• Ensure legal protection - for instance, some jurisdictions favourcorporate governance, meaning a company is only liable to offshore lawsas opposed to those in its areas of operation
  
• Protect assets - business owners may opt to arrange their assetsand transactions in such a way that protects them from liability
  

Characteristics of an offshore company:

• Memorandum and Articles of Association
  
• Certificate of Incorporation
  
• Registered Office/Agent
  
• Shareholders / Members
  
• Directors / Managers
  
• Company secretary
  
• Statutory Register
  
• Bookkeeping
  

Traditional locations for offshore incorporation are tax havens,such as the British Virgin Islands, Panama and Monaco. Other favouredareas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus,Seychelles, Marshall islands, Delaware, Turks & Caicos Islands,Hong Kong, Jersey, Guernsey and the Isle of Man.

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