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Bahrain Allows 99% foreign ownership for Trade Sector
In 2016, the amendment was made in commercial company’s law, and it allows 100% foreign ownership to most of the businesses in Bahrain. This reform made the country more attractive for international investors. Along with focusing on encouraging foreign direct investment (FDI) in most businesses, the Ministry of Industry and Commerce has also changed the foreign ownership rules for trade-related business activities allowing them to own 99% of the business.
This page focuses exclusively on the trade sector – what changed, why it matters, and how you can benefit from it.
What Has Changed in the Trade Sector in Bahrain?
The Old Rule (Before September 25, 2021)
Previously, to set up a trade business in Bahrain, 51% Bahraini ownership was required, and foreign ownership was allowed only up to 49%. This meant foreign investors had to find a Bahraini shareholder to be eligible for the trade business.
The New Rule (Effective September 25, 2021)
On 25-09-2021, the Ministry of Industry & Commerce silently changed the foreign ownership rules for trade-related businesses, allowing them to own up to a 99% share in a business. This eased up a rather stringent requirement, allowing foreign investors to be able to include Bahraini shareholders risk-free.
The official Sijilat system requirement now states: “Foreign ownership allowed, but must include a Bahraini shareholder: Yes“
This welcoming policy makes Bahrain a good choice for foreign investors and businesses looking to begin operations in the Gulf.
Why Bahrain’s Trade Sector Matters for Foreign Investors?
The trading market in the Bahrain presents extensive opportunity for foreign investors. The trade sector in Bahrain includes activities such as:
- Import and export of goods
- Wholesale and retail trading
- General trading
- Distribution and logistics-related trade
By reforming the trade sector, Bahrain aims to increase foreign direct investment in commercial goods and movement, boost export activities and leverage Bahrain’s strategic Gulf location for regional trade.
The Bahrain government has made it easier to start a business with the help of professional bodies like PI Startup Advisory, that are trained in helping foreigners set up businesses in Bahrain quickly and easily.
Benefits of 99% Ownership in Trade Sector
Full Operational Control
You can make all important and key business decisions including pricing and distribution strategy by yourself.
Easy to Find a Local partner
Finding a local partner to hold 1% of shares is easier and far less impactful on overall business ownership security.
Improved Ease of Doing Business
Trade businesses can now be set up quickly and confidently.
Legal Framework for Trade Businesses
- The legal framework for trade businesses is primarily governed by Commercial company law (updated in 2016).
- The key regulatory authority overseeing this sector is the Ministry of Industry and Commerce (MOIC).
- Business registration is conducted online via Sijilat portal.
- A specific legal requirement for the trade sector is the mandatory inclusion of 1% Bahraini shareholder ownership.
The Ministry of Industry and Commerce actively works to simplify procedures for trade-related licenses.
How to Set Up a Trade Business with 99% Ownership in Bahrain
Setting up a business in Bahrain is not difficult, all you need to do is complete all the requirements and follow these steps:
- The first thing is to Identify a 1% Bahraini partner, it can be an individual or a corporate entity.
- Then choose your trade activities such as imports/exports, general trading, or wholesale etc.
- Register via the Sijilat system. Select “Trade” as the sector and indicate 99% foreign/1% Bahraini ownership.
- Submit required documents such as passports, Memorandum of association and local partner agreement.
- Now, apply for a trade license which will be issued by the Ministry of Industry and Commerce.
- Lastly, open a corporate bank account to support your trade finance easily.
Ready to register your trade business in Bahrain? Speak to an expert now.
