Bahrain

PROCESS FOR BUSINESS SETUP IN BAHRAIN

After understanding and selecting the right entity type for your business in Bahrain, you will need to also follow the following process/ steps to complete the incorporation in Bahrain. 

Security clearance

The next step is to get the security clearance approval. This involves drafting of initial KYC documents and submission of identification documents of all company signatories to Nationality Passport and Residency Affairs (NPRA) for approval. You’ll require the following documents:

Passport copies

Signed KYC forms

Signed engagement letter

Authorisation letter

Company name reservation

You’ll need to submit three proposed company names that comply with Bahrain's naming regulations, ensuring they are distinctive, not misleading, and do not infringe upon any existing trademarks or intellectual property rights.

Prepare the Memorandum and Articles of Association

These should be drafted in line with the chosen business structure and attested by a public or private notary. These documents should clearly define the company's structure, objectives, governance, and operating procedures.

Open company bank account

Choose a suitable bank, gather required documents like the Memorandum and Articles of Association, and visit the bank with these documents. Complete the application form, make an initial deposit, designate authorised signatories, and undergo compliance checks. Once approved, you'll receive your account details, which you can use to deposit initial funds and activate the account.

Get final approval

Final approval from the Ministry of Industry and Commerce (MOIC) is the last crucial step in setting up your business in Bahrain. This approval ensures that your business complies with all relevant regulations and that your application has been thoroughly reviewed. You’ll have to submit your notarised memorandum and bank certificate and then once you receive this approval, you're ready to operate your business legally in Bahrain.

WHY INVEST IN BAHRAIN?

Bahrain’s economy is relatively untapped when compared to other already well-developed regional business hubs like Dubai, Abu Dhabi or Doha.

Its strategic location in the Gulf, with a causeway connecting the island to the eastern province of Saudi Arabia, provides the same easy access to other GCC and global markets but at a fraction of the cost, with comparatively lower setup costs and overhead expenses such as office rentals and labour costs.

As with its other GCC neighbours, it boasts an open economy with minimal restrictions on foreign ownership. There are also no taxes on income, capital gains, or estates in the vast majority of situations other than for companies that operate in the oil and gas sector. There is VAT in Bahrain at a rate of 10%.

The presence of three free trade zones is also a significant draw. These hubs offer purpose-built environments designed to simplify the business setup process, with streamlined regulations, tax incentives, and a wealth of support services. The Bahrain Logistics Zone, for instance, focuses on logistics and distribution, making it an ideal location for companies seeking to establish regional distribution centres. The Bahrain International Investment Park (BIIP) is tailored for light and medium industries, while the Bahrain International Airport Free Zone (BIAF) is strategically positioned to facilitate air cargo, logistics and international trade operations.

In these free trade zones, investors can take advantage of efficient customs procedures, duty exemptions, and access to well-established infrastructure. Although, the free zones in Bahrain are slightly differing from those in other regions, as they require specific activities to be allowed in the free zone. For example, BIIP is an industrial area and BIAF is exclusively for cargo activities.

KEY ECONOMIC GROWTH AREAS IN BAHRAIN - INVEST IN BUSINESS SET UP

Bahrain's economic landscape is evolving rapidly, creating a range of promising investment opportunities. As the government actively reduces reliance on hydrocarbons and promotes foreign direct investment (FDI), several sectors have emerged as key growth areas.

• Financial Services: Bahrain boasts the Middle East's most mature and diversified financial sector. Its well-established banking industry, housing over 400 financial institutions, plays a pivotal role in the nation's economy. With total banking assets exceeding $213 billion, Bahrain is recognised as a regional financial powerhouse. The Central Bank of Bahrain (CBB) has implemented forward-thinking regulatory policies, creating an environment conducive to fintech innovation. As the sector contributes around 17% to Bahrain's GDP, foreign investors find a welcoming landscape for a wide array of financial services and opportunities.
• Information and Communication Technology (ICT): Bahrain's ICT sector has been growing at an impressive rate, marked by a 40% increase in the number of tech companies over the past five years. This sector now contributes almost 7% to the nation's GDP. Bahrain's commitment to nurturing ICT is evident in its investment in cutting-edge infrastructure and emerging technologies. The establishment of a cloud-first policy, the implementation of 5G technology, and the development of smart cities provide a glimpse into Bahrain's vision for the ICT sector. Moreover, initiatives like "StartUp Bahrain" (which we are a part of) and "MITEF Pan Arab" are nurturing homegrown tech talent, creating an ecosystem conducive to innovation and entrepreneurship.
• Tourism: Bahrain's tourism industry has been experiencing steady growth, with a 6.4% increase in the number of tourists visiting in recent years. The government is actively investing in tourism infrastructure and services, aiming to position Bahrain as a leading destination in the region. This opens doors for foreign investors interested in hospitality, entertainment, and supporting services.
• Logistics: Bahrain's strategic location at the heart of the Gulf region makes it an emerging logistics hub. The Bahrain Logistics Zone, spanning 1.7 million square meters, serves as a magnet for businesses looking to establish regional distribution centers. Streamlined customs procedures, duty exemptions, and access to well-established infrastructure make this sector highly appealing.
• Healthcare: Bahrain's healthcare sector is on an upward trajectory, with healthcare expenditure amounting to $2.6 billion. The demand for advanced medical services and facilities is surging, presenting investment opportunities for private healthcare providers and foreign investors seeking to participate in the country's evolving healthcare landscape.
• Renewable Energy: Bahrain is committed to embracing renewable energy sources. High-profile projects include a 100MW solar power plant and a 100MW wind energy initiative. These endeavors reflect the nation's dedication to sustainable practices and make Bahrain an attractive hub for investors in the renewable energy sector.
• Manufacturing: The Bahrain International Investment Park (BIIP) is a thriving location for investors, hosting over 100 companies. With manufacturing contributing around 16% to Bahrain's GDP, foreign investors find enticing incentives and opportunities in various manufacturing sub-sectors, including food processing, light industries, and technology production.
• Real Estate: Bahrain's real estate market remains robust, with an 8% increase in property transactions in recent years. Residential and commercial real estate projects continue to attract foreign investors and represent a secure and lucrative option.

COMPANY FORMATION ASSISTANCE IN BAHRAIN

At Sovereign PPG, we have 12 years of experience in the corporate services industry in Bahrain, as well as decades in the UAE and wider GCC and have developed key industry connections to help facilitate the successful incorporation of your business.

We can help you with business setup in Bahrain, providing a comprehensive suite of services that streamline the company setup process. We will offer insights on the best business structure that aligns with your business objectives, secure licences, navigate documentation, and liaise with government authorities on your behalf, eliminating bureaucratic hassles and saving you valuable time. We can further assist with establishing a corporate bank account, managing payroll services, and providing essential guidance on compliance matters.

If you need assistance with this or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Bahrain, Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.