NAVIGATING BAHRAIN’S LIMITED LIABILITY COMPANY LANDSCAPE

INTRODUCTION

A Limited Liability Company (“LLC”) is one of the most popular business structures for foreign investors in Bahrain, as it allows for full foreign ownership in most sectors. This legal entity is composed of two or more shareholders, who are liable for the company’s debts only up to the value of their shares. LLCs in Bahrain are restricted from issuing public shares, negotiable warrants, or debentures. The number of shareholders can range from 2 to 50, as per Bahraini law, when registering the business with the Ministry of Industry, Commerce, and Tourism (“MOICT”). New shareholders can join the company later, provided proper documentation is submitted, although share transfers are subject to restrictions.

LIMITED LIABILITY COMPANIES

In an LLC, the liability of shareholders is limited to their individual shareholding. Shareholders must be 2 – 50 members can hold shares in this type of company. Foreign investors are permitted to fully own LLCs in Bahrain.

TYPES OF LIMITED LIABILITY COMPANIES IN BAHRAIN

Bahrain offers foreign investors three types of limited liability company structures:

• SPC – Single Person Company, is a limited liability entity designed for sole proprietors, requiring only one shareholder who manages the company themselves.
• WLL – With Limited Liability resembles European structures, this type requires a minimum of two shareholders and two directors, along with a local manager, typically the company secretary. WLLs are not permitted to engage in banking, insurance, or investment activities on behalf of third parties.
• BSC – Bahrain Shareholding Company, like a Private Limited Company, the BSC requires a minimum of two shareholders and directors, with a resident manager. Unlike WLLs, BSC shares can be sold publicly and the company may be listed on the Bahrain Bourse (stock exchange).

All three of these LLC structures can be 100% foreign-owned.

ELIGIBILITY CRITERIA FOR LLC REGISTRATION IN BAHRAIN

• Minimum Capital Requirement- For LLC registration, a minimum capital of BD 20,000 is required.
• Minimum Shareholders – At least two shareholders are needed to register an LLC in Bahrain.
• Minimum Directors- An LLC requires at least one director, while for an SPC, the sole proprietor serves as the sole director.
• Evaluation Certificate- An evaluation certificate, provided by an accredited auditor or external evaluator, is required for companies with specific capital requirements.
• Capital Deposit Certificate- A capital deposit certificate must be submitted, confirming that the company has met the minimum capital requirements.
• Commercial Name Registration- The company name must be registered, ensuring it is unique and does not infringe on rules regarding religion or government entities.

DOCUMENTS REQUIRED FOR LLC REGISTRATION

• Copy of the Certificate of Incorporation
• Memorandum and Articles of Association
• Minimum of two shareholders and two directors
• Shareholders’ agreement
• Notarized copies of directors’ passports
• Registered business address
• Shareholders and Directors’ register

CONCLUSION

Establishing an LLC in Bahrain offers a flexible and attractive option for foreign investors, with full foreign ownership in most sectors and limited liability for shareholders. While the registration process involves meeting several legal and financial requirements, Bahrain’s business-friendly environment and regulatory framework make it an appealing destination for international entrepreneurs. By understanding the different types of LLCs and their eligibility criteria, foreign investors can effectively navigate the process of setting up a successful business in Bahrain.