Company Formation in Bahrain, the Aspiring "Singapore" of the Gulf
Bahrain’s Company Formation procedures bear much resemblance to the online and digitally managed registration process in the Republic of Singapore. Even the name of the online registration system, “sijilat.bh,” sounds similar to the “singpass.gov” system in place in Singapore (in English of course). Much of the registration process also follows a similar pattern in Bahrain. There is good reason for this. Singapore is a small island state in East Asia, which has grown into a global financial hub. Bahrain, is a similarly small Island state in the Arabian Gulf, with a growing financial and technology industry, and a multicultural population. As the Kingdom of Bahrain grows its trade in ideas, expertise, goods, and services with the wider world, modelling other successful and similarly structured landscapes is a reasonable strategy for growth.
The Company Registration Process in Bahrain
In summation, there are a few key steps which foreign investors need to take when registering a company in Bahrain. First, they need to obtain their temporary CR via the Sijilat system. For foreigners and non-residents, this can only be done via a resident agent or attorney. Thereafter, they will need to obtain a lease premises and finally, sign the memorandum at the notary public once the company is formed (if going through a lawyer, the investor needs to visit Bahrain only at the point of signing the memorandum). Once the memorandum is signed, the investor can then proceed to open a bank account with a local bank, to deposit their capital.
Before starting the process however, investors should also check whether their business activity will require a local partner, or a “side agreement.” A side agreement or “partnership agreement,” as it is known in Bahrain, would allow a foreign investor to form a company with a local partner, while entering into a back to back partnership agreement with the partner as a shareholder. This would allow the investor to maintain full control of the entity. Usually, there is a fee to pay the partner for this, ranging from BHD 50-100 per month.
Benefits of Registering a Company in Bahrain
The first, and most obvious benefit, is that Bahrain is a tax free jurisdiction. Therefore, it is a great place to set up holding companies, and entities which aim to reduce the tax liabilities for the investor in their home jurisdiction. The tax liability of the investor will depend on their tax obligations back home, or in the jurisdictions in which they are tax liable. However, by maintaining a running entity in Bahrain, some of that burden can be reduced year on year, through deferrals or other provisions in the law (if applicable).
Bahrain is also a relatively less costly option for doing business, when compared to its neighbor in the United Arab Emirates, Dubai. Office rent, living expenses, and house rent are far cheaper. It is also strategically located between East and West. To the West, most of Europe is accessible, and within an 8 hour flight range. To the East, India, the sub continent, China and East Asia are also within similar flight durations.
In addition, Bahrain is in the process of finishing a newly developed airport, which may transform the Kingdom into a global trade hub. This development will make the transfer of goods, services, individuals and expertise, easier via the Kingdom of Bahrain, and will improve the air transportation facilities in the country greatly. This could attract future business opportunities and accessibility to other markets for potential investors as well.
Conclusions
For those wishing to incorporate a business in Asia, or the Middle East, Bahrain could be a good place to start. It offers many modern facilities and a comfortable lifestyle for most expats. It also offers a number of economical advantages for potential investors, which makes it a place worth considering for your next business venture.
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