Located in the Arabian Gulf, the Kingdom of Bahrain is the smallest sovereign country in the Gulf Cooperation Council (GCC). Despite its size, businesses in this tiny nation are booming, particularly those engaged in hospitality and tourism.
In fact, official records revealed that there were as many as 11.7 million tourists who joined the archipelago’s 1.5 million residents during short weekend trips via the famed King Fahad Causeway in 2017. Since tourism and hospitality comprise 6.3 percent of the Kingdom’s gross domestic product (GDP), investing in the industry is definitely a viable option for businessmen.
If you’re looking to delve into this sector in Bahrain, it is important that you know the facts of starting a business in the country and what steps you need to take to become a part of this fruitful business environment.
3 Steps in Starting a Business in Bahrain
Before you can start operating a hotel, restaurant, or any type of hospitality or tourism-related business in Bahrain, you must first incorporate and register your company. This will give you and your business financial and legal protection as well as potential tax benefits extended to foreign investors.
To get you started, here are three steps you need to take to launch a business in the Kingdom of Bahrain:
Step #1: Choose a Legal Structure
The first step to successfully run a business in Bahrain is to select an appropriate legal structure for it. Doing so will help determine how your business should be managed and the extent of your liability as the company owner.
To choose the right legal entity for your business, it is imperative that you know your options and what each of them entail. Below are the types you can choose from:
- Single Person Company – As the name implies, a single person company has one shareholder and has a separate legal personality from its owner. This type of legal entity requires a minimum capital of 50 BD.
- With Limited Liability Company (WLL) – WLLs in Bahrain are required to have a minimum of two and a maximum of 50 shareholders. WLLs cannot issue shares to the public and shareholders have the benefit of limited liability that covers the extent of their shares in the company only.
- Branch Office – Foreign corporations can open a branch office in Bahrain without the need of a local partner, if the activities that will be undertaken are open to foreign ownership. In order for a foreign corporation to carry out business in Bahrain, it may establish a branch either by way of an operational office or a representative office. Branches of foreign corporations with an operational office may be subect to obtaining further approvals in Bahrain, depending on their activities.
- General Partnership – A general partnership is formed between two or more natural or corporate persons. All partners assume joint responsibility to the extent of their entire personal assets for the partnership’s debts and liabilities. There is no requirement for a minimum share capital.
- Shareholding Company – is also referred to as a Public Joint Stock Company and is typically listed on the Bahrain Bourse. This entity requires a minimum of two shareholders and the minimum share capital is 1M BD.
Step #2: Decide on a Company/Trade Name
After choosing a type of entity for your business, it is time to think about your trade name which will serve as your company’s identity. Thus, it should reflect the nature of the business and follow the guidelines set by the Ministry of Industry and Commerce (MOIC). You can propose up to four trade names at a time.
Step #3: Process Your Commercial Registration
A Commercial Registration (CR) is a document that certifies that a business is registered with the Ministry of Industry and Tourism (MOICT). When applying for this document, you must submit all pertinent documents with properly filled out application forms and the duration required by the MOICT to review the application will depend upon the proposed activity.
For hospitality companies, only one business day is needed for the preliminary approval from the MOICT.
On top of that, the company is also required to open an account at any commercial bank located in the country. After that, you need to acquire a capital deposit certificate and submit it with a lease agreement.
Starting a business in Bahrain – or any foreign country, for that matter – requires ample knowledge of the rules and regulations, and a lot of patience. Make sure you understand what you need to do to start your hospitality business first, and get professional help if necessary.
Sharon Danso-Missah is the Head of Marketing at Al Tamimi & Company, the largest law firm in the Middle East, with 17 offices across nine countries. Established in 1989, they are a full service commercial firm combining knowledge, experience and expertise to ensure all clients have access to the best legal solutions that are commercially sound and cost effective.