Bahrain is a major Middle Eastern port center, providing appropriate exposure to all Middle Eastern marketplaces, which is one of the reasons why the country is favored for business incorporation. Bahrain is a part of the GCC economy, and as a result, firms incorporated in the country can take advantage of the various free trade agreements.
However, one of the most crucial factors to take into account while beginning a business in Bahrain is the organization’s structure. A foreign businessperson who wants to expand their operation and enter the economy of Bahrain may think about setting up a branch office.
The branch office is a division of the parent corporation and is not an independent legal organization. The parent business is responsible for the branch’s actions and any debts it may have as a result of carrying out its duties. The Commercial Companies Law permits international corporations to register a company branch in Bahrain.
This article will guide you on how to incorporate a branch of a foreign company in Bahrain. After that, the advantages, costs, and conditions that must be followed for incorporating a company branch in Bahrain will be discussed.
Features of a Branch Office in Bahrain
The numerous features of a branch office in Bahrain are:
- The parent business takes on full responsibility for a company branch in Bahrain.
- Only promotional and advertising-related activities of the parent firm may be carried out by a branch of a foreign company in Bahrain.
- Permitted to engage in financial services, insurance, and third-party investments.
- There must be a branch manager.
- There isn’t any minimum capital necessary.
- A branch can lease an office, charge consumers in Bahrain, negotiate deals for local distribution, and receive payments from consumers.
Procedure to Open a Company Branch in Bahrain
Foreign corporations wishing to enter the markets of Bahrain to expand their company can set up a branch office. A registration form must be filled out and given to the appropriate authorities in order to start a company branch in Bahrain.
Here is the detailed procedure for setting up a company branch in Bahrain:
- Complete the business registration form to establish the branch of a foreign company in Bahrain and provide all relevant information.
- Create a Memorandum of Association and get formal authorization from the Ministry of Commerce.
- Before renting an office space, you must get the municipality’s approval for leasing.
- Notarize the Memorandum of Association and other essential documents, and send it to the Ministry of Industry, Commerce and Tourism (MOICT).
- Create a bank account in Bahrain and acquire evidence of capital contribution.
- Provide a guarantee with the banking institution either in the name of the branch, it’s representative or in accordance with a MOICT directive.
- Acquire the Certificate of Registration.
- Publicize the notification of registration in the official gazette.
- Register the business and its workers for social insurance.
Documentation for Branch Office Registration in Bahrain
In order to incorporate a branch of a foreign company in Bahrain, the following documents may be needed:
- Completed form for business registration
- Pre-approved documentation from external parties (based on the nature of the commercial operations)
- Foreign firm’s copy of Commercial Registration Certificate
- Memorandum of Association
- Details of the resolution of the board approving the company branch in Bahrain
- Sponsorship contracts for active branches negotiated with Bahraini merchants, suppliers, or partner businesses.
- The foreign firm’s guarantee statement admitting complete accountability for the branch office in Bahrain
- Details of the local representatives
- The foreign corporations’ recent audited financial statements
- Power of Attorney, wherever applicable
Criteria to Incorporate Branch of a Foreign Company in Bahrain
In order to incorporate a branch office in Bahrain, the following criteria must be followed:
- Company Name: The chosen name for a company branch in Bahrain has to be distinct from those of its rivals.
- Local Sponsor: A local sponsor is needed for a company branch in Bahrain.
- Local Office: The branch of a foreign company in Bahrain must have a local office.
- Guarantee: The parent firm is obliged to provide a guarantee to the Ministry of Finance when launching a company branch in Bahrain.
- Business Licenses: The international firm has to acquire licenses in order to establish and operate a branch office in Bahrain.
- Branch Manager: It is essential to recruit a branch manager.
- Bank Account: A bank account must be created for the branch of a foreign company in Bahrain.
Cost to Open a Company Branch in Bahrain
One of the most crucial considerations a business must make when registering a company is the capital needed to launch a business. Although there are many business models you can take into account when registering a company, branch offices are one of the types that international business owners favor. Even though registering a branch office does not necessitate having a minimum capital, there are numerous other factors whose costs have to be taken into account.
Here are some of the factors to take into account while considering the cost to open a company branch in Bahrain:
- Business incorporation expenditure: Business incorporation charges can start from about BHD800.
- Expenditure incurred for notarizing documents: The price of notarizing the firm’s MOA is roughly BHD30.
- Getting approval from MOICT: The MOICT approval process costs around BHD50.
- Expenses for annual audit: The cost of an annual audit is between BHD 200 and BHD 250.
Benefits of Establishing a Company Branch in Bahrain
Incorporating the branch of a foreign company in Bahrain will provide you with numerous benefits, some of which are listed below:
- 100% foreign-owned: The branch office in Bahrain may be held entirely by a foreign party.
- Allowed to engage in activities: A branch in Bahrain is allowed to acquire a physical location for office space, send an invoice to customers in Bahrain, establish agreements for regional sales, and collect payments from customers.
- Enhances brand visibility: One of the advantages of incorporating a company branch in Bahrain is that it enhances the brand’s visibility. Establishing a branch of a foreign company in Bahrain can increase awareness and brand exposure, which can help a business make more money. A branch office in Bahrain might additionally lower the risk of conducting operations by providing the chance to experience commodities in the marketplace of the nation.
- No minimum capital requirement: Establishing a branch office in Bahrain does not necessitate having any amount of required capital.
- Low taxes: Establishing a branch office might be advantageous for entrepreneurs as business, income, and withholding taxes are not applicable to corporations.
Conclusion
A branch office in Bahrain is a form of corporate organization that is favoured by international business owners since they can be held entirely by a foreign owner. A branch office is an expansion of a company that is registered elsewhere and has its main office located outside of Bahrain.
The branch must have a business name that is exactly the same as the overseas firm’s official name, preceded by the words “Foreign Branch.” The overseas firm usually would be liable for the branch office’s commitments and obligations. For managing all of the branch office’s operations and tasks, a manager is necessary.
FAQ’s
- Fill out the corporate registration form and include all necessary information if you’re setting up a branch of a foreign corporation in Bahrain.
- Send the Memorandum of Agreement and other important documents to the Ministry of Industry, Trade and Tourism after having them notarized (MOICT).
- Create a bank account in Bahrain and gather evidence of capital investment.
- Get the Registration Certificate.
- A branch may rent space, bill Bahraini customers, negotiate local distribution agreements, and accept consumer money.
- The parent corporation assumes full accountability for a branch office in Bahrain.
- A foreign corporate branch may only conduct marketing and advertising-related operations in Bahrain on behalf of the parent corporation.
- Allowed to conduct third-party investments, insurance, and financial services.
- A Bahraini office is required for any international firm branches there.
- The hiring of a branch manager is crucial.
- The parent corporation is needed to offer a guarantee.
- A foreign company’s Bahraini branch has to open a bank account.
There are many benefits of opening a company branch. It provides 100% foreign ownership, limited liability, no capital requirement, and the flexibility to engage in operations that the main headquarters engage in Bahrain, among other things.
