A critical phase in the formation of a commercial entity is the acquisition of a license to operate in a regulated industry. This is especially true of prospective companies that will be conducting commercial activities within the Kingdom of Bahrain’s borders and territorial waters. The pursuit of a business license should occur during the commercial registration of a company, as is by the kingdom’s Ministry of Industry, Commerce and Tourism. When specifying the type of activities to be undertaken by a company during commercial registration, and if a license is required for a certain sector, an application for the license would have to be sought from the relevant ministry’s representative at the Bahrain Investors Center (BIC) in the city of Manama, as an example: a venture into the healthcare industry must be approved by the kingdom’s Ministry of Health.
Depending on the nature of the application, the founder of a prospective commercial entity is advised to provide evidence of qualifications relevant to their field of operations. General contractors of most trades seeking to incorporate within the kingdom are only expected to have completed secondary education, while service providers supplying personal care and aesthetics should be accompanied by a certification of training in the relevant skill, and consultancy firms are mandated to be headed by a holder of a Master’s degree in the relevant field, or adequate work experience (amounting to five years) in lieu of formal qualifications.
The Kingdom of Bahrain’s Ministry of Industry, Commerce and Tourism permits completely foreign-owned companies to operate in most fields, but imposes restrictions on certain industries in the interest of social and economic welfare. Any commercial entities operating within the kingdom are prohibited from engaging in activities that involve gambling, or the manufacture of narcotics, alcohol, cigarettes (in addition to the import of cigarette vending machines), and weapons. As is characteristic of most high-income nations, the manufacture, import, storage, and disposal of radioactive or toxic substances such as asbestos are prohibited; by extension, any import or use of industrial chemicals is restricted by the ministry. Certain market sectors are additionally restricted to entry by foreign or locally owned companies, such as postal services, which are restricted in favour of the local infrastructure, such as that provided by the Bahrain Post.
Some other protections exist for the benefit of lower income groups in the kingdom, commercial fishing for example, continues to sustain the many villages located on its coasts, and can only be undertaken by Bahraini-owned companies. Additionally, bookkeeping and accounting practices can only be licensed to operate when owned by a citizen of the kingdom, auditing firms are excluded from this regulation and can be owned by non-Bahrainis. Protections also exist to preserve the interests of local and regional entities involved in the refining and supply of petroleum in its various forms. Only citizens of the kingdom, and the GCC, can partake in the supply of land transportation (goods, passengers, tourists, driving instruction, or rental) and domestic sea cruises, in addition to the supply of gasoline (filling stations, engine lubricants, and racing fuel) or liquid petroleum gas (cooker gas cylinder filling, distribution, and refurbishment).
Commercial entities that serve as agencies or intermediaries between the various government ministries and other companies are also mandated by Bahrain’s Ministry of Industry, Commerce and Tourism to be owned by citizens of the kingdom or of the GCC. This restriction additionally applies to entities providing travel services for religious pilgrimages and the supply of foreign labour. Local Bahraini entities in various sectors centered around media enjoy the same previously described protections that restrict entry for foreign companies. These sectors include the printing and distribution of newspapers, periodicals, and magazines, in addition to the production, distribution, and projection of films in theatre halls. Property management is regulated to the extent that entities supply rental and property management have to be Bahraini owned, excluding personal or consultancy ownership, sale, and management of property.
Additional restrictions worth noting are those that apply to the healthcare industry, specialist medical clinics and centers are restricted to ownership by medically qualified citizens of Bahrain or the GCC, but the ownership and administration of hospitals is not regulated to the same extent. Pharmaceutical entities are only mandated to be majority owned by qualified pharmacists who are citizens of Bahrain. The majority ownership mandate of the kingdom’s Ministry of Industry, Commerce and Tourism also applies to all entities involved in travel, tourism, trade, and retail operations.
Despite the aforementioned restrictions applied to the licensing of some commercial activities, the Kingdom of Bahrain provides mechanisms for all degrees of investment for foreign entities, from minority partnership all the way to complete foreign acquisition of commercial enterprises operating in restricted industries such as accounting and healthcare. The ministry and the recently amended Commercial Companies Law of 2001 enable foreign companies to enter the local market and operate in the vast majority of other industries that are not as heavily regulated, such as architecture, engineering, communications, and manufacturing.
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