Foreign Ownership in Bahrain: Key Regulations

Published on September 29, 2025 and written by Cyril Jarnias

Bahrain, a small archipelago in the Persian Gulf, has established itself as an attractive destination for foreign investors in recent years. With a diversified economy and favorable regulatory framework, the kingdom offers numerous opportunities for international companies looking to establish a presence in the region. This article examines in detail the regulations governing foreign ownership in Bahrain to guide your investment project.

A Legal Framework Increasingly Open to Foreign Investors

Bahrain has significantly relaxed its foreign ownership legislation over the past two decades, aiming to attract more foreign direct investment. Today, the country allows 100% foreign ownership in most economic sectors, with a few exceptions.

The main texts governing foreign investment in Bahrain are:

– The Commercial Companies Law of 2001, amended in 2014 and 2018 – The Foreign Investment Law of 2006 – Legislative Decree No. 48 of 2012 on Real Estate Ownership by Non-Bahrainis

These laws have progressively expanded the rights of foreign investors, notably by allowing them to hold 100% of the capital of Bahraini companies in most sectors since 2016.

However, some restrictions remain in areas considered strategic:

• Oil and gas: foreign participation limited to 49%
• Fishing: reserved for Bahraini nationals
• Press agencies and media: foreign participation limited to 49%
• Certain service activities like recruitment agencies: reserved for nationals

Outside these sectors, foreign investors generally enjoy the same rights as Bahraini nationals regarding business ownership.

Simplified Procedures for Establishing in Bahrain

The approval process for foreign investments in Bahrain has been significantly simplified in recent years. In most cases, no prior authorization is required to create a 100% foreign-owned company.

The main steps for establishing in Bahrain are as follows:

1. Choose the appropriate legal form (LLC, joint-stock company, branch, etc.)

2. Reserve a trade name with the commercial registry

3. Prepare the company’s articles of association and other founding documents

4. Obtain a commercial license from the Ministry of Industry and Commerce

5. Register with the tax authority and social security

6. Open a local bank account

The entire process can typically be finalized in 2 to 4 weeks. The Bahrain Economic Development Board (EDB) offers free support to foreign investors to facilitate their procedures.

For certain regulated sectors like finance or telecommunications, specific approvals may be required from the relevant authorities.

Note that foreign investors do not need a local partner to create a company in Bahrain, unlike other Gulf countries. This enhances the kingdom’s attractiveness for international businesses.

Significant Benefits for Foreign Investors

Foreign investors in Bahrain benefit from numerous rights and advantages, including:

– Unlimited repatriation of profits and capital: no restrictions on transferring funds abroad

– Full corporate tax exemption for 10 years for foreign companies in certain priority sectors

– No personal income tax

– Possibility to acquire real estate in certain designated areas

– Access to a skilled local and expatriate workforce

– Investment protection guaranteed by law and bilateral treaties

In return, foreign companies must comply with certain obligations:

– Comply with local laws and regulations in force – Maintain accounting in accordance with Bahraini standards – Employ a certain percentage of Bahraini nationals (quotas vary by sector) – Obtain necessary licenses and permits for their activity – Pay applicable taxes and administrative fees

It is important to note that Bahrain does not impose restrictions on employing expatriates in management positions, unlike other Gulf countries. This offers great flexibility for foreign companies to build their teams.

Keys to Success for Investing in Bahrain

To succeed in establishing in Bahrain, here are some essential tips:

1. Thoroughly research the regulatory framework: despite an overall favorable environment, some sectors remain subject to restrictions. Ensure you fully understand the rules applicable to your activity.

2. Surround yourself with local professionals: engage Bahraini lawyers and accountants to guide you through procedures and ensure compliance with all legal obligations.

3. Build a local network: personal relationships remain important in business in Bahrain. Attend professional events and connect with key players in your sector.

4. Understand the local business culture: familiarize yourself with Bahraini cultural codes and business practices to facilitate your interactions.

5. Consider strategic partnerships: even if not mandatory, partnering with a local entity can facilitate your development in the Bahraini market.

6. Take advantage of government incentives: inquire about support programs for foreign investors offered by the Bahrain EDB and other organizations.

7. Anticipate your human resource needs: prepare a recruitment strategy considering local employment quotas and skill availability in the Bahraini market.

By following these recommendations and leveraging the favorable regulatory framework, you will maximize your chances of success in the Bahraini market.

Conclusion: Bahrain, an Attractive Gateway to the Gulf

With its regulatory framework open to foreign investors, advantageous taxation, and strategic position, Bahrain stands out as a prime destination for international companies looking to establish a presence in the Gulf region.

Recent reforms aimed at further liberalizing the economy and diversifying business sectors offer new opportunities in areas like financial technology, renewable energy, or the digital economy.

Although some restrictions remain in a few strategic sectors, the kingdom overall offers one of the most favorable environments in the region for foreign business ownership.

By relying on the advice provided in this article and surrounding yourself with the right local partners, you will have all the assets to succeed in establishing in Bahrain and make this small kingdom your springboard to Middle Eastern markets.