As soon as the government of Bahrain accepts an update to the current Commercial Companies Law, it will be possible for international investors in Bahrain to get 100% firm ownership in various sectors. More than 80 percent of Bahrain’s gross domestic product produced by non-oil industries in 2018, which expects to continue to rise. It makes Bahrain’s economy the most diversified in the Gulf.
Foreign Ownership in Bahrain
Bahrain has one of the most diversified investment environments and can attract many international investors. Bahrain is a key economic centre in the Gulf Cooperation Council (GCC) area. Also, the unrestricted transferability of money, which ties to the US dollar. The fact that few sectors need local equity involvement are two factors that underpin Bahrain’s position as the leader among GCC nations in foreign direct investment.
Bahrain does not levy any taxes on corporate or personal income, tax capital gains, or impose variable stamp duties. Also, the value-added tax policy in Bahrain, which applies a rate of 10%. It is lower than the VAT rates applied throughout the region and in most of Europe.
Companies that engage in these commercial activities are not subject to the foreign ownership restriction. Also, their foreign shareholders can own up to 100% of the company. Thus, the majority of the commercial activities carried out in Bahrain by companies and branches of foreign companies do not trigger this restriction.
The necessities for a certain level of local shareholding is there anymore. But a person may prevent from holding shares due to state security rationale. Also, specific individuals may prevent from operating these otherwise 100% FDI companies due to licensing requirements. But, the requirements for a certain level of local share capital is not there.
Establishing the Operations in Bahrain
The most frequent legal structure for doing business in the Kingdom is that of a commercial company established in compliance with the Commercial Companies Law. As we mentioned before, it is workable for non-Bahraini investors to hold a 100% legal stake in some Bahrain business entities. Still, there are sector-related limits that may apply in some instances.
Must to examine this matter a little bit more and think about the influence that it may have on possible investors from other countries. For example, some industries and activities may only carry out by citizens of Bahrain or by businesses that Bahrainis wholly own. In contrast, the others are only accessible to the citizens of Bahrain and other GCC countries. Also, a least amount of Bahraini capital may must to operate certain types of businesses.
Opportunities for foreign ownership
Key Link Consulting works in several different economic areas to encourage firms to take advantage of Bahrain’s competitive advantages. These are a few of the many options open to international investors, firms, and entrepreneurs interested in entering the market in Bahrain.
Increasing one’s presence in the economies and marketplaces of other nations might open up more doors in the future for one’s company expansion, commerce, and profits across a variety of industries. Also, to providing better access to international companies located in the immediate region. Both are available in Bahrain due to the country’s laws and regulations. Also, to its geographical closeness to other Middle Eastern nations, and its membership in the Gulf Cooperation Council.
Bahrain already has more than USD 32 billion in infrastructural. Also, they have real estate projects in the development process’s advanced phases. Along with this, they will generate possibilities for future investment that will have far-reaching implications for investors in various fields. It will make them more than a sign of sustained economic progress in the Kingdom.
Free Trade Agreements in Bahrain
The FTAs deviate from the criteria for local ownership that would generally apply to the permitted commercial activities. Still, they do allow for a variety of different unique rights to authorized commercial activities.
FTAs impose certain restrictions on foreign individuals or businesses’ eligibility for benefits. One of the areas of expertise for the ASAR – Al Ruwayeh & Partners, Bahrain’s legal practice is their specialization in FDI. It is to maximize the benefit to the clients operating in Bahrain.
FTAs provide a significant possibility for foreign direct investments from treaty parties to take part in Bahrain in commercial industries that would otherwise be in limit. It is because the FTAs each came into effect before the FDI Resolution.
Also, a significant number of multinational corporations have structured their operations. It is to take advantage of the special rights made available through the FTAs. Due to this that they can enter the GCC market at a time when similar arrangements weren’t available anywhere else in the GCC.
Public Joint Stock Company in Bahrain
This business entity must have at least seven shareholders, and the shareholders are only accountable for the debts and liabilities of the company up to the value of their shares. The least number of necessary directors is five, and the least shareholding required is BHD 1 million.
It is possible to sell the shares to members of the general public. But, any sale of shares to members of the general public must be subject to authorization from the Central Bank of Bahrain. As well as compliance with the CBB’s introduced Offering of Securities Module and approval from the Ministry of Industry and Commerce.
According to the Commercial Companies Law (CCL), a Public Joint Stock Company’s stockholders must be Bahrain’s citizens or a member state of the GCC. But, according to what we’ve told, foreign participation in a Public Joint Stock Company is only allowed after receiving special authorization from the Minister of Industry and Commerce. Who is also responsible for determining the proportion of investment made by foreign investors.
Final Words
It is that Bahrain will have a high possibility of enhancing its ranking on the scale of Ease of Starting Business. It is an asset that will inspire major international companies to establish ownership in Bahrain. The Kingdom has delegated authority to its Economic Development Board to hurry applications for commercial registration. Also, to engage with relevant ministries to assist international businesses in speeding up their operations in Bahrain.