When delving into the landscape of corporate compliance in Bahrain, it’s crucial to understand the various forms of entities available for conducting business within the country. This guide aims to provide a concise yet comprehensive overview of the essential aspects of corporate compliance, including entity setup, minimum capital requirements, legal liability, taxation, incorporation process, business recognition, shareholder and director requirements, and more.
Form of Entity
With Limited Liability (WLL)
- A private company with one or more shareholders.
- Shareholder liability limited to their respective shareholding.
- Cannot engage in banking and insurance activities.
Closed Shareholding Company (BSC(c))
- Consists of at least 2 shareholders.
- Shares not offered to the public.
- Allowed to carry out banking and insurance activities.
Foreign Branch (Branch)
- Established by a foreign company with a guarantee from the parent company.
- Activities limited to those of the parent company.
Entity Setup
With Limited Liability (WLL)
- No minimum or maximum number of shareholders.
- Capital must be divided into shares of equal value.
Closed Shareholding Company (BSC(c))
- Incorporated with no fewer than 2 shareholders.
- Minimum capital requirement of BHD 250,000.
Foreign Branch (Branch)
- No minimum capital required.
Legal Liability
- Shareholder liability limited to the extent of their capital in the company for both WLL and BSC(c).
- Parent company bears all liabilities of the branch office in Bahrain.
Tax Presence
- No personal income tax or corporate taxes payable.
- Corporate tax of 46 percent imposed on oil, gas, and related companies.
- Value Added Tax (VAT) increased to 10 percent as of January 1, 2022.
Incorporation Process
With Limited Liability (WLL)
- Submit shareholder resolution and draft deed of association to MOIC and CBB (if applicable).
Closed Shareholding Company (BSC(c))
- Submit shareholder resolution and draft memorandum/articles of association to MOIC and CBB (if applicable).
Foreign Branch (Branch)
- Obtain resolution from parent company and submit to MOIC and CBB (if applicable).
Business Recognition
- All entity forms well-regarded and widely used.
Shareholder and Director Requirements
- Meeting and appointment requirements vary based on entity type.
Annual Compliance Requirements
- Tax returns, business registration filings, and maintenance requirements vary.
Conclusion
Navigating corporate compliance in Bahrain demands a nuanced understanding of legal structures, setup processes, financial obligations, and regulatory requirements. By adhering to the guidelines outlined in this comprehensive overview, businesses can establish a solid foundation for sustainable operations
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