How to open a company in Bahrain as a foreigner

Bahrain has positioned itself as a business and investment hub in the Middle East due to its favorable location, strong economic environment and business-friendly policies. Setting up a company in Bahrain will provide you with a variety of opportunities and access to regional markets.

Bahrain makes doing business easy with low costs, open policies, and smooth capital flows. Situated in the heart of the Gulf Cooperation Council (GCC), the country maintains open and transparent policies with minimal restrictions on capital repatriation. Moreover, the cost of doing business here is significantly lower than in neighboring countries such as Dubai and Abu Dhabi, making Bahrain an attractive choice for expansion.

However, registering a company in Bahrain comes with strict legal and regulatory requirements. Businesses must comply with foreign investment regulations, labor laws, and tax policies.

Business Benefits of Registering a Company in Bahrain

Bahrain’s favorable business climate, robust infrastructure, and strong government support for foreign investment make the country an attractive destination for international companies.

Here’s why expanding to Bahrain may be the right move for your business:

• 100% Foreign Ownership in Most Sectors: Unlike some neighboring countries, Bahrain allows full foreign ownership in many industries, reducing the need for local sponsors.
• No Corporate or Income Tax: Bahrain does not levy corporate income tax (except for oil companies) or personal income tax, making it a tax-friendly place to do business. (Effective 1 January 2025, Bahrain introduced a 15% corporate tax on multinational enterprises (MNEs) with consolidated annual revenues exceeding €750 million.)
• Gulf Market Access: Bahrain offers seamless access to the wider Gulf Cooperation Council (GCC) region, including Saudi Arabia, the UAE and Qatar.
• Developed Financial Sector: As a well-established financial hub, Bahrain offers a sophisticated banking and fintech ecosystem for businesses.
• Ease of Doing Business: The Bahraini government has simplified incorporation processes, making the country one of the most business-friendly countries in the region.
• Competitive Labor Costs: Bahrain offers better access to skilled labor than its neighbors Gulf.
• Government Incentives: Foreign investors in key sectors such as fintech, logistics, and manufacturing are offered various incentives such as subsidies and tax breaks.

If you are a foreigner looking to set up a business in Bahrain, you need to know which sectors are open to foreign investment:

• Financial Services
• Information Technology
• Logistics and Supply Chain
• Manufacturing and Industrial
• Real Estate and Construction
• Tourism and Hospitality
• Professional Services (Legal, Consulting, etc.)
• Education and Training
• Healthcare and Medical Services

Many of these sectors 100% foreign ownership is allowed, especially if you register in Bahrain's Free Zones.

Types of Companies in Bahrain

Bahrain offers a variety of business structure formats that suit the needs of foreign investors. The most common types of companies you can register with 100% foreign ownership are:

Limited Liability Company (WLL)

With Limited Liability (WLL) is similar to Limited Liability Company (LLC) in other countries. A limited liability company is made up of several individuals, and each partner is liable only to the extent of his share in the capital, it can belong to either an individual or a corporate company.

Basic requirements:

• The capital of a limited liability company is divided into equal shares, each share is indivisible, there is no minimum capital or par value for each share.
• Limited liability of partners
• The phrase (limited) must follow the name of the company.
• The company cannot be registered until all cash and shares in kind have been distributed among the partners and have been fully paid up and the shares in kind have been transferred to the company.
• The company must maintain a reserve share capital in accordance with the established rules for joint stock companies.
• The company must appoint one or more auditors who are elected by the general meeting of partners.
• Partners may submit an audit letter of solvency as an alternative to the financial statement, unless the loss reaches 50% of the share capital.

Important notes:

• A limited liability company may not engage in activities related to insurance, banking or investing other people's funds in general.
• Citizens of GCC countries and foreigners are allowed to own 100% of the company's shares.
• Can be owned by an individual or a corporation.
• The company cannot be established, its share capital increased or borrowed funds raised through an initial public offering (IPO). The company may not issue any type of circulating shares or bonds.
• The transfer of partners' shares in the company is subject to their right of return and special conditions included in the company's memorandum of association, as well as the provisions of the law.
• The company is managed by a manager or managers from among the partners or other persons who are first appointed by the founders and subsequently appointed by a resolution of its general meeting.
• The company may be managed by a board of directors and a composition of at least three members. The founding document shall specify the method of operation of this board and the majority by which its decisions are taken.

Responsibilities:

• Holding a General Meeting of Shareholders.
• Appointing an auditor.
• Preparing a financial report.
• Preparing a management report.
• Appointing an ultimate beneficial owner (UBO).
• Submitting economic substance reporting requirements.
• Complying with anti-money laundering requirements.
• Maintaining a reserve capital.
• Keeping business books for 10 years.

Branch of a foreign company / representative office

Current foreign Branch: Every foreign branch established and registered outside the Kingdom of Bahrain that is licensed to carry out certain activities in Bahrain.

Representative Office: Every foreign branch established and registered outside the Kingdom of Bahrain that is licensed to carry out its activities as a representative office of the parent company for the purpose of monitoring and controlling its interests in Bahrain.

Basic Requirements:

• A head office is required for a branch in Bahrain.
• The branch, agent or office must submit to the Ministry of Commerce a copy of the incorporation documents of the head office and any amendments thereto.
• The branch must have a name identical to the original name of the parent company and contain the indication “branch of a foreign company”.
• In the event that the name of the branch cannot be matched with the original the name of the company, a branch may adopt another business name, provided that its name is followed by the phrase (branch of a foreign company).
• A branch must submit an audited annual budget reflecting the financial position of the company.
• A representative office may not under any circumstances carry out any direct transactions with the company's clients in Bahrain, and the activities of a branch must be limited to marketing and promoting the parent company without entering into direct transactions on its behalf.
• Every branch, agency or office of a foreign company must indicate on all its papers, documents and publications the full name of the company, its address and head office, and the name of the agent in Arabic in a legible format.
• A branch is subject to the laws of the Kingdom of Bahrain.

Important Notes:

• If a branch, agency or office carries out its activities before the completion of the registration procedures branch, the persons who carried out this activity bear personal and joint liability for it.
• All documents submitted to the Ministry must be in Arabic or English. If they are written in languages other than these two, they must be accompanied by an Arabic translation certified by the competent authorities.

Obligations:

• Appointment of an auditor.
• Preparation of financial statements.
• Appointment of the ultimate beneficial owner (UBO).
• Submission of economic substance reporting requirements.
• Compliance with anti-money laundering requirements.
• Keeping business books for 10 years.

Partnership Company

A company consisting of two or more persons under a certain name, the partners are jointly and severally liable with all their funds for the obligations of the company.

Basic Requirements:

• Partners bear joint and several liability with all their funds for the company's obligations.
• The minimum number of partners is two.
• There is no minimum capital or par value for each share.
• May be owned by only one person.
• The name of the company must be accompanied by the phrase (Bahrain Partnership Company) wherever it appears.
• The management of the company is exercised by all the partners, unless the partners appoint in the memorandum of association of the company or in a separate agreement one or more managers to manage the company from among the partners or from among other persons.

Important notes:

• Each partner of the company acquires the status of a merchant and is deemed to be trading on behalf of the company.
• Bankruptcy of the company entails bankruptcy of all partners.
• Creditors of the company have a claim on the assets of the company, and also a claim on the private assets of any partner who was a member of the company at the time of the agreement. All partners are jointly liable to the company's creditors, and any agreement to the contrary is of no effect against third parties.
• GCC and foreign nationals are allowed to own 100% of the company's shares.
• No banking, insurance or investing of other people's money is allowed.

Responsibilities:

• Appointment of the ultimate beneficial owner (UBO).
• Submission of economic substance reporting requirements.
• Compliance with anti-money laundering requirements.
• Maintaining business books for 10 years.

Company Registration

Step 1: Select your activity

Your chosen activity will determine whether 100% foreign ownership is permitted. Activities such as consulting, software services, trading, and manufacturing are generally open to full foreign ownership.

Step 2: Choose a Legal Structure

The type of company matters in Bahrain because it’s more than just filling out forms. The type of company you choose shapes everything from your legal status to how your finances are managed, how easy or difficult it is to operate, and even who can invest with you. That’s why your choice matters. Choose the right company type based on the size of your business, your goals, and how you plan to operate.

Step 3: Reserve a Company Name

Suggest up to three names for your business. Make sure they are not already taken and do not violate the naming rules in Bahrain:

• A company name in Bahrain can be a person's name or part of a person's name.
• A company name can be innovative and include a description of the type of business.
• The name must be unique and must not have been previously registered.
• The name must not consist of only common words, such as “Mechanical Workshop”, “Hospital”, “School” etc.
• It should not conflict with the business activities being carried out, local laws and values.
• It cannot be identical to an international brand, religious, political or military term.
• It should not be a translation or imitation of reputable marks, brands or third parties.

The Ministry of Industry, Trade and Tourism (MOICT) oversees this process.

Step 4: Submitting the necessary documents

You will need to provide:

• Copies of the passports of the shareholders and directors.
• The proposed business activity and structure.
• Lease agreement or virtual office agreement.
• Brief personal and business biography.
• Letters of recommendation bank.
• Non-resident security check (if applicable).

Step 5: Register via Sijilat Portal

Bahrain's official business registration platform - www.sijilat.bh - allows you to submit your application, pay fees, and track the progress online.

Step 6: Get MOICT approval

Once your documents have been reviewed and approved, the Ministry of Industry and Trade (MIOCT) will issue you a Commercial Registration (CR). This is your company's official license to operate. Bahrain offers different types of licenses:

• Commercial License.
• Industrial License.
• Professional License.
• Tourism License.

Step 8: Open a Corporate Bank Account

You will need an active corporate bank account to manage your business finances. Bahraini banks are well equipped to handle corporate accounts for foreign entities.

Step 9: Apply for a Visa

Once you have your license, you can sponsor residence visas for yourself and your employees.

Documents Required to Set Up a Foreign Company in Bahrain

Here is a checklist of what you will typically need:

• Passport copy (all shareholders/directors).
• Proof of address (utility bill or lease agreement).
• Company structure chart (if you are setting up a branch or group company).
• Bank reference letter.
• Proposed business plan or profile.
• Lease agreement or virtual office agreement.
• Power of attorney (if using a local agent).

Each document must be notarized and translated into Arabic if it was originally issued in another language.