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German Legal Expertise in the Middle East since 1981

New Law allows 100% foreign ownership in Bahrain

Guiding Principle

The government of Bahrain approved a new law giving foreign investors the opportunity to have full ownership of various business assets in the market. The landmark ruling was approved at a cabinet session led by Prime Minister Prince Al Khalifa

Foreign investors in Bahrain will now be able to enjoy 100% ownership of businesses in various sectors after the government approved an amendment to the existing Commercial Companies Law.

The new law will allow 100% ownership in residency, food, administrative services, arts, entertainment and leisure, health and social work, information and communications, manufacturing, mining and quarrying, water supplying and professional, scientific, technical and real estate activities.

Over the years, Bahrain has been making a conscious effort to attract investment onto its shores. According to the Wall Street Journal’s 2013 Index of Economic Freedom, Bahrain has been ranked as the 12th most open economy worldwide. This paper provides a high-level overview of what makes Bahrain an attractive destination for business investors.

Foreign companies can establish branches in Bahrain in order to carry out business and branches can be established either by way of an operational office or by way of a representative office. Branches of foreign companies with an operational office are able to engage in banking and insurance activities subject to approvals from the Central Bank of Bahrain. In addition, there is a requirement for a local partner. In relation to representative or regional offices, they are unable to carry out any business operations in Bahrain and are restricted to undertaking marketing and promotional activities in Bahrain.

Where a foreign investor wants to enter the Bahrain market by simply introducing its products into it without setting up an entity, it can appoint an agent, who must be a Bahraini individual or a Bahraini corporate entity. The parties’ relationship is governed by the Bahrain Commercial Agencies Law (promulgated by Legislative Decree No. 10 of 1992 as amended by Legislative Decree No. 8 of 1998 and Legislative Decree No. 49 of 2002), which allows the agent to register a sole agency for the product.

There are of course some considerations for investors to take into account when setting up in Bahrain, such as labour law requirements. Indeed, a new labour law came into force in 2012 (Bahrain Labour Law for the Private Sector No.36 of 2012) which attempts to bring the rights of employees and employers in line with international standards.

July, 2016 Tarek Jairwdeh
Meyer-Reumann & Partners, Dubai Office
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