The commercial companies law of Bahrain initiated at 2001 replace the old commercial company’s law 1975. The new commercial company’s law makes significant changes with the old laws and these laws apply to all business legal structures in Bahrain, except for the sole proprietorship (the sole proprietorship is registered according to the provision of Bahrain law of commerce, which is mentioned in decree no. 7 of 1987). These laws are applicable to all types of companies in Bahrain. However, it is important to note that the exempt companies and foreign companies are not subject to these laws. Although there is a full provision exist for the fully owned foreign companies. According to the resolution number 3 of 2005, which was issued by the Prime Minister, the exempt companies are eligible to maintain their quo, where BCCL does not allow the exempt companies to maintain registration. In this article, we are going to discuss the business structures and the available types of companies in Bahrain.
Joint stock companies
There are two types of joint stock companies in Bahrain and they are the Public Joint Stock Company and Closed Joint Stock Company. Public Joint Stock Company is one of the popular vehicles among the types of companies in Bahrain and these types of the company consist of a number of partners who subscribe to the company. Shareholders of the company are not liable for the debts and obligation of the company except the amount that extends to the value of their shares. The minimum paid up capital for these types of companies are BHD 1,000,000 and the company must issue the capital. Another requirement for the shares of the company is that the shares cannot be invisible. However, two or more people may jointly own the share or any number of shares. The partners of the share are jointly liable for the debt and obligation for that share. Additionally, the shares are nominal and negotiable. These types of the company should have at least one auditor.
On another hand, the minimum paid-up capital for the closed joint stock company is 250,000 and the value of each share cannot be more than BHD 100. These types of companies should also have at least one auditor and foreign residents may own the 100% shares of these companies. Additional requirements for these types of companies include that the company should have at least two partners and promoters and also have at least three directors. For operating these types of companies in Bahrain, the organization should have an office in Bahrain.
The Limited Liability Company
The limited liability company in Bahrain should have less than 50 partners and these partners are responsible for the debt and obligation for the company. In any case, if the number of partners for these types of companies goes below two personnel than the company should convert into single person company. If the company fails to finish the conversion process within 30 days then it must be dissolved. The restriction applies to these types of companies that they cannot engage in the business of banking and insurance service. According to law, the company should have at least one auditor and a local office in Bahrain. Additionally, the company of this type must have two directors and two promoters or partners. The board of directors may manage the company or company can also be managed by the managing directors.
Single Person Company
This is another popular business vehicle among the types of companies in Bahrain. A single person or corporation owns the complete business and they have unlimited liability for all debts and obligation. The minimum paid-up capital for the company is BHD 50,000 and the capital must be paid up in full value. There must be an auditor with the company and the company forbids acquiring any corporate personality until the 30 days after the date of publication occurs. Additionally, these types of companies must submit the audited financial statements to the directors of company affairs on an annual basis. In case of insolvency, bankruptcy or in the case of owner’s death; the company must be closed. In Bahrain, the company should have a local office and by law, the company should have at least one director and one partner.
Partnership Company is one of the major business vehicles among the types of companies in Bahrain. The partnership may occur between two people or between two corporate bodies. Partners of the company are personally liable for their debts and obligation and there should be two partners and at least two directors. The company must have a local office and there is no minimum share up capital. There are few subcategories among the limited partnership companies and these are,
- Simple limited Partnership Company
- Limited Partnership by Share