On having learned that 100% foreign ownership of business along with ownership of land for GCC nationals is permitted, most people wonder how to start a business in Bahrain. If you are one of them, the first step is to identify the business activity and then the legal structure of the company that you wish to register. This will determine the approvals that you will need in order to receive a Corporate Registration from the Ministry of Industry and Commerce.
Legal Structures of Companies in Bahrain
Bahraini Shareholding Company (Public/Closed): A shareholding company that is public constitutes of 7 or more promoters who hold negotiable shared. They are liabilities are in proportion to the value of the shares that they hold. On the other hand, a closed shareholding company consists of two or more partners who hold negotiable shares that are not offered to the public for subscription.
With Limited Liability Company: As the name suggests, the liability of the partners in such a company is limited to the extent of their shareholding in the capital. It must constitute of at least two partners at all times and cannot issue public shares or debentures.
Partnership: This type of company is formed between two persons or more and they assume joint responsibility to the extent of their entire personal assets for the company’s debts and liabilities.
Simple Commandite: Such a company is a limited partnership company, at least one of more of the partners are liable to the extent of their personal wealth while others are only liable to the extent of their share in the capital. These limited partners are not involved in the management of the company.
Commandite by Shares: The ownership of such a company is divided between two categories of partners – one in which the partners are jointly responsible to the extent of their personal wealth and the other in which the partners are only liable to extent of their equity in capital.
Single Person Company: If you are an individual contemplating how to start a business in Bahrain, you may want to opt for such a company. It has one natural or corporate person as the owner of its capital and he is liable only to the extent of the capital that he has allocated for the company.
Foreign Company Branch: If you are the owner of company that is registered elsewhere and are wondering how to start a business in Bahrain, you may want to operate as a branch or a regional office in the kingdom.
Holding Company: This is a company that owns more than 50% shares and stocks in Bahraini or foreign joint stock companies or participate in the establishment of such companies by providing loans or acting as a guarantor to a third party. It also has a distinct legal structure of its own as a closed or open public shareholding company, a limited liability company or a single person company.