How to set up your own company in Bahrain

There are no guidelines.  However, practically speaking, you would need to show a small amount of profit in the accounts you file with the ministry otherwise they can question as to why you are keeping the company running in a loss position.  Also, if LMRA do an inspection, they would want to see proof that you are doing a legitimate business through bank statements (appropriate number of transactions) and contracts (valid, active contracts against which you have been paid and ideally with companies in Bahrain).   If you don't have that, they will file a violation on you which can cause problems with visas depending on the nature of the violation.

Gonna have mainly one international customer, definitely generating a profit.
But there is no potential customer in Bahrain for the type of consultancy I offer...

Well its your luck then.  One of my friends, during an inspection, in the middle of the year, when they were really active, showed them an international customer and was told that they needed contracts from companies in Bahrain.  They marked a violation on him called "No activity practiced". 

Based on what they were doing in their crackdown this year, you may have noticed that I have clearly been giving advice to not set up a company just for visas.  But then again, they may calm down next year so who knows.

Thanks for your input XTang, let's see how they react...
All a bit strange, thought it's "Business friendly Bahrain"...

It used to be.  But since Dec 2018 to June / July 2019, LMRA was on a warpath.  What we heard was that it was due to many illicit activities being carried out (free visas and so on) and they targeted shadow companies like yours specifically as well as every incubator / business centre.  It was massive and unprecedented and to an extent, hurt normal businesses as well. 

Their modus operandi was:

Do a physical visit.  If no one is physically present at the office (as was the case with most shadow companies and offices in business centres), slap on a violation of establishment closed and verification need for work permits.  This meant that you couldn't issue new visas or transfers at all.
Then the owner goes to LMRA and files a bunch of documents to remove violation.  Waste of 3-4 hours with the queues.
Then they inspect again within 15-20 days and call you 20 mins before.  If you are not there then another set of violations.
If you reach, they ask you to explain your business and show contracts etc.  If they are not satisfied, they hit you with another violation like no activity practiced etc.

There were people who went through 4-5 inspections without getting violations removed.  It was that tough and to an extent, unreasonable at times.  This continued non-stop till Eid.  The biggest issue that people had is what you are referring to i.e. what is the level of activity I need to have.  Theoretically speaking, even if you have one contract and some income, it is not LMRA's domain to question that as MOIC gets your annual accounts and can challenge you if the company is not financially solvent.   But LMRA made it their domain.  This did stop fake companies but also penalized people like you who have a legal set up and a tiny amount of business i.e. following legal formalities. 

Now there is a lull at the moment but I am not sure if it will not restart in the winter season like last year.  So after an event like this, my advice to everyone is NOT to set up a company in Bahrain unless you plan to do genuine business within the country.

Actually a friend of mine got a violation as well for not being present in the office. But his business activities clearly require him to be out of the office... no brainer!
Tbh, I wasn't aware of the extend of their "mission" earlier this year.
For sure they have to stop illegal visa shadow companies, but careful not to ruin the whole aspect of attracting businesses to come to Bahrain.

But see, this is common with bureaucracies around the world i.e. usually nothing happens but when it does, they go overboard :)

Hello everyone,
Thanks for giving really good answers to a lot of questions in here. I have learned a lot.
[at]XTang - I know mostly I he conversations were about setting up the business. How about if the business was already set and it’s for sale and I wanted to acquire it. As an expat who is currently with an employer (ready to resign) what requirements are there?
Thanks in advance.

Pretty much the same. You would need an NOC from your employer and a sale / share transfer agreement as well as an amended MOA.  Application would be through sijilat. Once initially approved, you and the seller would need to appear before the notary.

Thanks a lot for the quick response.

Welcome and good luck!.

Big update done.  Restructured thread to make it easy to navigate.  Added updates and new information.

Excelent write,thanks for posting this

Any experience with changing banks?

My company is active since a couple of weeks. I'd like to change to a bank with proper online banking system.
Are there any restrictions or problems one can encounter with LMRA/MOIC or is it relatively straight forward, like just set up the new account transfer funds and that's it?

Appreciate your input folks!

Once company is active, the process is straightforward.   You will need a board resolution.

Brilliant, thanks XTang.

Can anyone recommend banks with good online banking system and preferably the option to have US or Euro currency accounts?

Pretty much most of them. Hsbc and Citibank both have that option.

Merci for your input.

And another question came up, I have conflicting information about the first annual report:

I understood that it’s not required for the first year.
But now a consultant told me, as my CR was issued in April and therefore having more than 6 month in the first year, I‘m required to submit an annual financial report.

No you are not supposed to.

Thanks XTang

Hello guys...
My company still under formation and I already have lease agreement for my office.
Now I'm want to apply for EWA but they need IBAN account. (compulsary requirements now). Since my company still under formation and don't have company bank account yet, can I use my own personal bank account IBAN?
Is there anyone here had the same situation? TIA.

I would assume that you can use a personal bank account and then get it changed once your company is active.

Hello, I have an UK passport and an offer to contract for a large MNC in Bahrain. However, I have the following two issues I am trying to navigate.

1. As a contractor I cannot get a work permit. What is the alternative? With a visitor visa for 3 months, I cannot open a bank account.

2. To get paid into a bank account in Bahrain, should I open a SPC or sole proprietorship? I have read Xtang's post, but am still not clear on the following

A. how much capital do I need?
B. How long will the process roughly take till my bank account is ready to receive payment from the MNC made to me
C. Can I have some names of agents and accountants who help with the company set up
D.  Names of banks who will open a company account for me

I am interested in extending the contract to a minimum of 6 months, possibly a year

To answer question 2,

1) As mentioned in the post, there are no strict requirements.  You can open a company with as little as 100 but then you will have problems with opening a bank account later.  Try for a minimum of 500 and ideally 1000
2) Depends on the process.  Can be up to 2-3 months.  If everything goes smoothly, can be done in a month
3) You can google for some - I don't have recommendations
4) Pretty much every bank - the requirements will vary from bank to bank.  Most people prefer to go with NBB

My personal view is that for a 6 month to 1 year contract, it is an unnecessary hassle to set up a company.  Can you check with them if they can give you a visa as a consultant?   would be much easier.

Having gone through the process of setting up a company last year and recently followed the set up of a friend's SPC, I second what XTang says.
The time, effort and money you have to invest to set up your company is nowhere near the benefits you'd get. It's not worth it for less than 12 month in my opinion.

A big MNC should have the means to offer a solution. As external consultant they should be able to get you a visa.
Why do you want to run it through Bahrain anyway? Just get a contract agency abroad to do the invoicing for you and get it paid in your account. Yes, you have to pay for their services, but setting up a SPC is not free after all...

Hi, what visa is a consultant visa? Work permit can only be issued for employees on payroll.

Reason to not invoice from outside is that companies in countries like UK etc are liable for tax in their home country for such invoicing

So to receive payment in Bahrain for a contractor, only option seems to be a company account, as personal accounts I understand cannot be opened on visitor's visa?

If there are any options please let me know

It is a visa with the title of consultant but you will be an employee on the payroll.

Yeah, you can't open personal accounts on visit visa.    Your only options are to work with them on their visa and get money in your personal account or set up a company or try to open a savings account in a place like UAE (where it is possible to open savings accounts on visitor visa).

This is interesting, so I can first visit UAE, set up a savings account, then go to Bahrain on a visitor visa? And request them to make the payment to the UAE account?

The point about the UAE account is fine.  But whether or not they will make a payment into it is dependent on your relationship with them.

UKconultant1 :

Reason to not invoice from outside is that companies in countries like UK etc are liable for tax in their home country for such invoicing

Without going into too much detail, there are agencies in places like the Channel Islands or further abroad, which are more than happy to invoice tax free. There are definitely solutions out there.
The bigger issue might be your residence status wherever you reside and tax liabilities going along with it.

Definitely speak to the MNC and ask for a consultancy visa or if they are willing to pay you into a UAE account.
Other option you might want to look at is to set up a UAE Freelance company. It’s definitely quicker to set up, but it has it‘s downsides as well...

All the best

Yeah if we are discussing tax then as far as I know, most countries allow you to be spared from double taxation based on RESIDENCY elsewhere and NOT on payment.  And that too after a certain period of time abroad.  So this means that if you don't have residency in this part of the world, you will be treated as UK resident and all your income will be liable to tax there.   Even if you set up a company and give yourself a visa, you still must qualify the residency rules to be able to avoid taxation.   These for the UK, are:

You’re automatically resident if either:

you spent 183 or more days in the UK in the tax year
your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year
You’re automatically non-resident if either:

you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

Putting this aside, as WorldCitizen89 suggests, it is very easy to get invoicing done.  You can set up a shell company in the UAE for doing that or even buy one existing one outright.  You won't get visas but you can invoice and receive payments.

Hi XTang, I read somewhere that you have a dual residency in Bahrain and UAE.
Assuming we are setting up a company in Bahrain, but still need to have a residency visa in UAE for our family to remain there (because of schools). Is this possible? What would be the process? Thanks

Yep I have always had dual residencies :).

And yes it's possible and the same process as listed will be followed.

Edit :

I had assumed you were asking if your uae residency would lead to a different process to set up a Bahrain company.

Based on your private message, it seems you are asking a different question.  A Bahrain company cannot give you a residence visa in the UAE - its a different country after all.  You would need to separate company in the UAE if that is your purpose.

Hi. I am currently applying for a CR and have a question about the Investor Visa process with LMRA. I live in Bahrain but work in Saudi and commute daily across the causeway. Once my CR is active and I apply for an investor visa, is this going to present a problem with travelling to Saudi while the visa is being processed? Is this going to cancel the Investor Visa application?

I commented about this on another thread.

Look, once you apply for an investor or work or family visa of Bahrain, you should NOT go out of the country (if inside) or don't try to enter (if outside).  The process resets and you are back to square one. 

So you either enter Bahrain, apply for a visa, get it stamped and then exit.   Or if you have EMS access or someone can apply on your behalf at LMRA VIP counter; do that and then enter to complete enrolment process.

Thanks for clarifying that.

Dear all,

Special thanks to Mr.XTang for his valuable contribution in this fourm regarding set up business in Bahrain  my question I want to set up business to be under my wife as my company will not give no objection letter so there is any issue to issue CR and transfer her sponsorship from my employer to be under her  investor visa and that can be done smoothly  as well regarding requesting additional visas afer setup the business and get the first 2 Visas is this easy or there are several requirements.

The process will be as I have listed before.  Read carefully.

Once CR is active, you will need to cancel her family visa and apply for an investor visa.   The process can be smooth or can be difficult depending on many factors such as her nationality, violations on your CR etc.   The number of visas depend on your address - if you are at an incubator, you will only get 2 work visas until you change your address (Limit does not apply to investor or family visas - only to work visas for employees).

Many thanks Mr. X Tang for usual  help

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