Bahrain offers a liberal, pro‑investment environment and is positioned as an agile and historic gateway to the Gulf. The Government has progressively liberalised ownership rules, introduced investor facilitation measures such as golden licences and one‑stop investor services, and developed incentives and specialised hubs (notably for financial services / fintech, manufacturing, ICT / data centres, tourism, and logistics). Other than with respect to certain oil and gas related activities there is no corporate tax, and there are no personal in come taxes and personal tax rates. Profit repatriation is generally unrestricted.

Reforms adopted in 2024–2025 (including a Domestic Minimum Top‑Up Tax and further easing of foreign‑ownership thresholds) have modernised the tax and investment framework and increased predictability for large multinationals. Key strengths include Bahrain’s regulatory agility, an internationally respected financial regulator, competitive operating costs, and strategic connectivity (including physical linkage to Saudi Arabia).

FDI volumes and deal activity — three‑year averages (most recent published data, 2022–2024) :

• Average annual FDI inflows (USD): approximately USD 3.9 billion per year (three‑year average of reported inward FDI flows for 2022, 2023 and 2024).
• Average annual number of greenfield projects: approximately 38 greenfield projects per year (three‑year average of reported greenfield project counts for 2022–2024).
• Average annual value of greenfield investment (USD): approximately USD 1.36 billion per year (three‑year average of reported greenfield project values for 2022–2024).

Context and interpretation

FDI flows showed strong year to year variation across this period (a record surge in one year followed by lower but still substantial inflows other years), reflecting a combination of large individual projects and an improving investor pipeline across industry policy initiatives.

The stock of FDI in Bahrain is large relative to the size of the economy (FDI stock has been reported at a high share of GDP), underlining Bahrain’s role as a capital‑receiving regional hub despite its small population.

Recent policy steps (golden licences, continued liberalisation of foreign‑ownership rules, investor facilitation, and sector strategies) are explicitly designed to stabilise and raise medium‑term FDI attraction, but investors should factor in the evolving fiscal and tax landscape (notably the introduction of the 15% domestic minimum top‑up tax for very large MNEs from 2025 and an anticipated new corporate tax framework) when modelling returns.

o Greenfield or brownfield projects to build new facilities by foreign companies,

Greenfield investment is fairly prevalent, particularly for manufacturing (including aluminium value‑chain), logistics hubs, warehousing, and ICT/data centre infrastructure. Bahrain’s “golden licence” and Economic Development Board (EDB) facilitation have supported several build‑from‑scratch facilities and regional headquarters. Brownfield projects (upgrades or repurposing of existing sites) are also common, for example modernising industrial plants or expanding port‑adjacent logistics capacity.

o Acquisition of businesses (in asset or stock transactions),

Share purchases are both common and standard for across all major sectors incuding regulated financial services (banks, insurers, fintechs), healthcare, education, and industrial companies.

Equally, and as with all developed jurisdictions, asset deals are used to carve out operating units, real estate portfolios or specific concessions.

Foreign buyers often pursue bolt‑ons to existing GCC platforms or acquire Bahraini licensed entities to access the local market

o Acquisition of minority interests in existing companies,

Minority stakes by PE/VC, sovereign wealth funds, corporates and family offices are frequent in particular in the fintech, ICT, education, healthcare and growth manufacturing sectors.

Structures can include include preferred equity, convertible instruments and shareholder agreements aligned with Bahrain’s companies law and broadly in compliance with best international practice.

o Joint ventures,

JVs are widely used to combine foreign international technical know‑how with local market access and know-how, labour and licensing capabilities. They are common for industrial projects, specialised services, tourism developments, and in situations requiring local distribution networks or government counterparties (for example, port logistics, utilities, and certain energy‑related projects).

JV terms typically address governance, capital calls, shareholder exits and compliance with sector‑specific licensing.

In Bahrain, JVs are structured both as incorporated joint ventures (a newly formed JV company with separate legal personality and limited liability) and as unincorporated consortium‑type arrangements formed purely by contract. The latter do not have a separate legal identity; counterparties typically contract with each participant directly, and the consortium/JV agreement governs scope split, decision‑making, cost/revenue allocation, and liability (which may be joint and several depending on the arrangement).

o Others?

In practice, foreign investors also use:

• Public‑private partnerships (PPPs), concessions and build‑own‑operate models for infrastructure, utilities, waste management, and social projects.
• Real estate development vehicles (including master‑developer arrangements for mixed‑use projects, tourism and hospitality).
• Franchising and master‑franchise/area development agreements, especially in F&B, retail and services.
• Branch registrations and wholly owned subsidiaries for service provision and regional HQ functions.
• Special purpose vehicles and project finance structures to ring‑fence large industrial and infrastructure investments.

Depending on the sector and commercial activity, foreign ownership may be permitted up to 100%, restricted to 49%, or restricted to having a minimum percentage (ie. one share) of local (Bahraini or GCC) ownership . GCC ownership means that the shares are held by a GCC national, or a GCC entity that is in turn held by GCC nationals or entities at each level of the ownership chain, up to the ultimate owners.

Over recent years, Bahrain has significantly liberalised its foreign investment regime. Ministerial Decision No. 40 of 2021 sets out the current foreign ownership rules applicable to all commercial activities in the Kingdom. Notably, the list of activities allowing 100% foreign ownership is now considerably longer than the list of those still subject to restrictions.

Industries, sectors and activities that permit 100% foreign ownership without requiring a local partner include, but are not limited to: manufacturing activities, warehousing and storage activities, sale and trade of medical devices, telecommunication activities, IT activities, majority of activities licensed by the Central Bank of Bahrain, some engineering activities, medical industry activities, and the education sector.

Industries that restrict foreign ownership to 49% include, but are not limited to: construction and installation, shipping agents, sea freight agents, air cargo agents, private security activities.

Industries that require a minimum percentage of GCC ownership (i.e. one share) include, but are not limited to: majority of sale and trade activities, repair activities, travel offices, renting activities, food and beverage services, water and air transportation activities. Note that the majority of these activities also permit 100% American ownership, provided that the shareholder(s) are either American nationals, or American entities that are in turn held by American nationals or entities at each level of the ownership chain, up to the ultimate owners.

Whilst generally a GCC person or entity is treated the same as a ‘local’ or ‘Bahraini’, certain activities remain restricted to pure Bahraini ownership, including, but not limited to: oil and gas, media and press, and certain public utilities activities.

Even in sectors traditionally restricted to local or GCC ownership, Decision No. 53 of 2024 introduced new flexibility for foreign investors. Under this decision, foreign-controlled companies may now hold 100% ownership in certain restricted activities if they meet specific criteria, such as: parent company present in at least 10 countries, annual revenue above 750 million euros, minimum capital requirements, and meeting any other conditions set by the Minister of Industry and Commerce.

The Bahrain Commercial Companies Law No. 21 of 2001 does not distinguish between Bahraini and non-Bahraini shareholders in terms of the class of shares they may hold, provided that any foreign ownership restrictions on the specific commercial activity chosen to appear on the commercial registration are satisfied. Foreign investors can subscribe to or acquire the same class of shares (e.g., ordinary, preferred, or non-voting shares) as local shareholders. The rights attached to a share (such as voting, dividends, and liquidation proceeds) are the same for all shareholders within the same class, regardless of nationality. A foreign investor can hold ordinary or preference shares on exactly the same terms as a Bahraini shareholder, unless a company’s own Articles of Association or a regulatory license says otherwise.

Foreign investors may invest in public joint stock companies (i.e., listed companies on the Bahrain Bourse), provided they comply with any sectoral or ownership limits. There are no general restrictions on foreign participation in public companies, except in strategic or restricted sectors (such as oil, defense, or press/publishing). Bahrain Bourse Listing Rules and the CBB Corporate Governance Code require that shareholders of the same class be treated equally (e.g., one-share-one-vote principle). Therefore, foreign and domestic shareholders in public companies hold the same class of stock with identical rights.

In Bahrain, domestic businesses are primarily organised and managed through domestic company structures, rather than being managed via offshore companies. By way of background, any person or entity which operates and / or provides commercial services in Bahrain is required to have a suitable legal presence in Bahrain, involving duly registering with the Bahrain Ministry of Industry and Commerce pursuant to the Commercial Registry Law Number 27 of 2015.

The table below summarises the main forms of entities in Bahrain:

Corporate Forms	Structure of Partners/Shareholders
Sijili / Individual Establishment	Comprising of 1 Bahraini natural person. Not companies under the Commercial Companies Law No. 21 of 2001 but rather forms of individual commercial registration governed by the Commercial Registration Law and the Ministry of Industry and Commerce.
General Partnership	2 or more partners who assume joint responsibility in the partnership to the extent of their entire personal assets for the partnership’s debts and liabilities.
Limited Partnership	Has (i) general partner(s) with unlimited liability, and (ii) limited partner(s) whose liability is limited to their contribution.
Public Joint Stock Company (BSC)	A public listed company comprising of 2 or more shareholders where their respective liabilities for the company’s debts and obligations are limited to the extent of the value of their respective shareholding.
Closed Joint Stock Company (BSC(c))	Comprising of 2 or more shareholders where their respective liabilities for the company’s debts and obligations are limited to the extent of the value of their respective shareholding.
With Limited Liability Company (WLL)	Comprising of at least 1 shareholder where their respective liabilities for the company’s debts and obligations are limited to the extent of the value of their respective shareholding.
Branch of a Foreign Company	The parent company must guarantee the liability of its branch in Bahrain. The branch is an extension of the parent company.

 

o Which form is preferred by domestic shareholders?
o Which form is preferred by foreign investors/shareholders?
-What are the reasons for foreign shareholders preferring one form over the other?

Domestic (Bahraini) shareholders often prefer structures that: (i) give them control, (ii) limit regulatory burden, (iii) provide flexibility and maybe dilute/share with others on favourable terms. For family-businesses or medium-sized ventures, the WLL form is often preferred as the governance is simpler, liability is limited, there are fewer reporting burdens, and the transfer of shares is ultimately simpler than in other legal entity forms. If the company is larger, expects growth and possibly external investment, then a closed joint stock company might be preferred as it gives shareholding flexibility, potential for raising capital and a more formal structure, but without going full public.

Public joint stock companies are often only used when the business is large, capital-intensive, wants to list or widely issue shares. Sijili is popular with domestic freelancers (designers, IT professionals, consultants), home-based businesses and micro-enterprises, and small retailers or service providers who want to formalise their activity. Overall, a WLL is usually the preferred legal entity form for domestic shareholders.

Similar to domestic shareholders, foreign shareholders typically prefer forms that: (i) allow them to have limited liability, (ii) permit (or maximise) foreign ownership, (iii) involve simpler administration, and (iv) avoid excessive regulatory burden unless necessary. In light of this, again a WLL is often the preferred form for foreign investors, as the governance is simpler, liability is simpler, the set up is quicker and cheaper, and there is less regulatory complexity compared to joint stock companies. Joint stock companies are only chosen by foreign shareholders if they expect to scale, raise capital privately, or engage in regulated sectors that require shareholding company structure (for instance, certain Central Bank of Bahrain licensed activities such as financial services and insurance are only permitted for closed joint stock companies).

o Which governmental entities have to give approvals?

Approvals from the Ministry of Industry and Commerce and Municipality Affairs are both required for all commercial activities in Bahrain. Any additional relevant approvals are dependent on the specific activities that would appear on the Commercial Registration of the Bahrain entity (e.g., the Central Bank of Bahrain would be an additional licensing body for financial services activities, or the Ministry of Health and Directorate of Civil Defence for food & beverage services activities).

o What is the process for forming/incorporating a domestic company?

The set-up of corporate entities in Bahrain is primarily conducted via the online Business Licensing System called Sijilat, an advanced electronic system. The Ministry of Industry and Commerce is the primary licensing authority responsible for the issuance of licenses required for economic development projects and all entities in Bahrain must be registered with the Ministry of Industry and Commerce (i.e. the company registrar). In broad terms, the registration of an entity in Bahrain with the Ministry of Industry and Commerce is a two-stage process summarised as follows:

Stage One

This stage involves the submission of an online application to the Ministry of Industry and Commerce containing specific details of the new entity, including its proposed legal form, commercial name (for approval), share capital, and details of the shareholder(s). All relevant supporting documentation will be uploaded alongside the application for verification by the Ministry of Industry and Commerce.

Where any or all of the shareholders in the entity are individuals (i.e. natural persons) the approval of Bahrain’s Ministry of Interior is required. The Ministry of Interior will conduct a security check on all individual shareholder(s) as per the names and details of the shareholder(s) referred to them by the Ministry of Industry and Commerce. It should be noted that there is no specific timeframe within which the Ministry of Interior decides whether to approve or reject a particular application, and nor does the Ministry of Interior issue reasons in the event that it rejects a particular applicant.

Upon verification of the uploaded information by the Ministry of Industry and Commerce and clearance of individual shareholders, the Ministry of Industry and Commerce will issue a provisional ‘active without license’ Commercial Registration (CR). This is valid for one (1) year from the date of issuance and represents confirmation of the incorporation of the entity. However, the entity must not have any operations at this stage.

Stage Two

At this stage, the application will be transferred to all relevant government authorities in Bahrain for their approvals, consents and/or licenses. To this end, to establish the entity with the required activities, licenses must be obtained, as well as approvals from the Ministry of Industry and Commerce and Municipality Affairs, both of which are required for all activities in Bahrain. The additional relevant authorities are the licensing bodies that are specific to the activities that would appear on the Commercial Registration (e.g., the Central Bank of Bahrain would be an additional licensing body for financial services activities).

The approval of the Municipality Affairs is a mandatory requirement for all entities. In order to obtain approval, the entity must provide the Municipality Affairs with a copy of its lease agreement over suitable premises in Bahrain, and will be required to register with, and activate, an EWA and Municipality account. An ‘under formation’ bank account must also be opened with a commercial bank in Bahrain, in which share capital may be deposited and a bank deposit certificate is issued. Upon verification of the above, the Ministry of Industry and Commerce may issue the final Commercial Registration (CR), rendering the entity legally operational.

Generally, the documents required for incorporation of an entity include (note that this list may vary depending on the legal form chosen):

• Certificate of Incorporation: A copy of the certificate of incorporation (or equivalent) of the shareholder (duly authenticated).
• Articles/Memorandum of Association: A copy of the memorandum of association and articles of association of the shareholder, together with complete copies of any amendments thereto (all duly authenticated).
• Passport Copies: Copies of passports for any individuals who are to be appointed as directors/managers/authorised signatories in the entity.
• Shareholder Resolution: A resolution of each proposed shareholder in the entity to approve the incorporation of the entity and authorising the local counsel to submit applications on their behalf.
• Power of Attorney: A POA issued by the shareholder in favour of the local counsel to undertake all incorporation formalities on behalf of the shareholder, and to sign and notarise the constitutional documents of the new entity on behalf of the shareholder in front of the Bahrain notary.
• Bank deposit certificate confirming that the share capital has been deposited into the entity’s bank account. The bank account must be opened in the name of the Bahrain entity.
• Lease documents for the entity confirming that the entity has a lease over suitable premises in Bahrain. The Bahrain entity must have a lease over suitable premises. The lease must be in the name of the Bahrain entity.
• Constitutional documents for the entity. These will be signed before a Bahrain notary at a later stage of the application to incorporate the entity.
• Ultimate beneficial owner (UBO) documents.

All documents being issued in a jurisdiction outside of Bahrain, and which require authentication as indicated above, must be:

• Notarised in the jurisdiction of incorporation of the foreign parent company;
• Stamped and legalised by the legislation department of the Ministry of Foreign Affairs (or equivalent) in the jurisdiction of incorporation of the foreign parent company; and
• Attested by the Bahrain Embassy in the jurisdiction of incorporation of the foreign parent company.

Please note however that Bahrain is a signatory to the Hague Apostille Convention. Therefore, if the document is issued from another signatory country, there is no need to go through the legalisation) above after notarising the document and obtaining the Apostille stamp. Upon their receipt in Bahrain, certain documents may need to be translated into Arabic by a recognised translation firm in Bahrain.

o What is a required capitalization for forming/incorporating a company?

There are generally no minimum share capital requirements for WLLs in Bahrain. The Commercial Companies Law provides, in a general sense, that that the capital must be sufficient enough for the Bahrain entity to achieve its objectives, but without being prescriptive as to actual specific amounts.

From a practical perspective, banks in Bahrain may be reluctant to open a bank account for a company where the share capital is less than (for example) five thousand Bahraini Dinars (BHD 5,000). Furthermore, the authorities may require the entity to have a higher share capital depending on the nature of the commercial activities which the entity proposes to engage in (e.g., certain Central Bank of Bahrain licensed activities require a minimum capital of BHD 250,000).

Closed joint stock companies require a minimum capital of BHD 50,000. Public joint stock companies require a minimum capital of BHD 1,000,000.

o How long does it take to form a domestic company?

Provided that the relevant licensing bodies have no objections and/or comments, a ‘stage one’ application for the provisional commercial registration takes approximately 1 week. Once the lease and bank documents are finalised, the ‘stage two’ application for the final commercial registration takes 4-6 weeks assuming that there are no licensing bodies other than the Ministry of Industry and Commerce and the Municipality Affairs.

Additional timeframes are dependent on the specific activities that appear on the commercial registration of the entity (e.g., engineering activities require approvals from the Council for Regulating the Practice of Engineering Professions, which may some months to finalise).

o How many shareholders is the company required to have?

The number of shareholders is dependent on the legal form chosen. With limited liability companies (WLLs) can be incorporated with 1 shareholder (provided foreign ownership restrictions are satisfied). Joint stock companies (whether closed or public) require at least 2 shareholders. An amendment to the Bahrain Commercial Companies Law No. 21 of 2001 was made in 2025 permitting a closed joint stock company to be held by 1 shareholder, provided that certain conditions set by the Minister of Industry and Commerce are met. As of the date of this publication, the relevant conditions are yet to be published by the competent authorities.

o Is the list of shareholders publicly available?

Yes, the Ministry of Industry and Commerce has an online platform named Sijilat that can be accessed publicly and includes a search engine whereby the commercial name or commercial registration number may be entered to search for any Bahraini registered entity. The platform provides details such as shareholding structure, capital, address, authorised signatories and activities.

As stated, Bahrain’s foreign investment regime is liberal and permits 100% foreign ownership in most business sectors. Therefore, a foreign investor can acquire shares in a Bahraini private company by way of providing list of documents to be submitted to the Ministry of Industry and Commerce (MOIC) through the online portal. Unlike some neighboring regimes, no formal foreign investment licence or equivalent is needed.

The nature of the documents will be Power of Attorney (POA) and/or a resolution to be issued from the jurisdiction of the foreign investor and to have the full legalization and attestation for use in Bahrain. (Listed-company acquisitions proceed under capital markets and Central Bank rules rather than ministerial share transfer approvals. From a procedural point of view an amendment to the Memorandum of Association (MoA) of the company must be amended including the new shareholder to the company and a declaration of assignment of shares must be signed before a notary in Bahrain by the disposal shareholder only.

For the acquisition of assets, and depending on the nature of the assets in question, in addition to the above a sale of asset agreement should be signed and submitted to the relevant authority to reflect the change of ownership if it is necessary and the assets are registered with any of the authorities under a specific/unique registration number. Where the asset sale includes goodwill, and the business is effectively sold as a going-concern, then there are certain other procedural formalities which need to be adhered to.

Foreign investors generally do not require specific approval for routine share acquisitions in public companies on the domestic stock market in Bahrain. However, transactions are subject to regulatory oversight by the Central Bank of Bahrain (CBB) and disclosure requirements of the Bahrain Bourse (BHB). Prior approval may be necessary for acquisitions in regulated sectors, such as banking or insurance, or when a controlling stake is being acquired.

Procedural aspects

• Open market trades: For typical share purchases on the BHB, the foreign investor opens an account through a local broker. The broker facilitates the transactions, which are cleared through the Central Securities Depository (CSD).
• Substantial shareholding disclosure: A foreign investor acquiring 5% or more of a listed company’s shares must have that company immediately disclosing the transaction to BHB.
• Controlling stake transactions: If a foreign investor acquires a controlling interest (generally 30% or more), it triggers a mandatory offer requirement, necessitating prior approval from the CBB.
• Due diligence: Foreign investors should conduct due diligence to identify any sector-specific regulations that could require prior CBB approval, as well as foreign investors might be asked to provide the ministry of interiors security clearance.

A foreign investor acquiring shares of a public company in a direct (private) or “off-market” transaction from another shareholder in Bahrain will face different procedures and potential approval requirements compared to an on-market acquisition, primarily depending on the percentage of shares acquired and the company’s industry.

• BHB Rules: Direct share transfers are generally possible but must comply with the Bahrain Bourse (BHB) rules for off-market transactions. The transfer must be recorded in the company’s share register and processed by the Central Securities Depository (CSD).

• Approval for Regulated Sectors: If the public company operates in a regulated sector (e.g., banking, insurance, telecommunications), the transaction may require prior approval from the relevant regulatory body, such as the Central Bank of Bahrain (CBB). The CBB has oversight over financial markets and licensing in these areas

• Security Screening and UBO Disclosure: All foreign investors are subject to security screening by the Ministry of Interior (MOI). Additionally, the company must disclose information on the Ultimate Beneficial Owner (UBO) for any shareholder acquiring a stake of more than 10% to the Ministry of Industry and Commerce (MOIC).

• Foreign Ownership Limits: While 100% foreign ownership is allowed in most sectors, some specific activities (e.g., real estate brokerage, public transportation) have restrictions or require a minimum percentage of local ownership, as determined by Ministerial Resolution No. 40/2021. An acquisition that breaches these limits would require special approval from the Minister of Industry and Commerce or the Council of Ministers.

For publicly listed companies, a mandatory offer will be required to be made where (a) any person acquires, whether by series of transactions over period of time or not, 30% or more of the voting rights of a company; (b) two or more persons are acting in concert, and they collectively hold not less than 30%, but no more than 50%, of the voting rights of a company, and any one or more of them acquires additional voting rights carrying more than 1% of the voting rights in any period of 6 months. Persons who are subject to the mandatory offer requirement may, in certain circumstances, apply to the regulator to waive their obligation to make such mandatory offer, subject to the receipt of conditions which include:

• a shareholders’ meeting resolution of the offeror adopted by independent shareholders.
• an independent professional adviser shall be appointed by the company to provide the independent shareholders with advice on the resolution.
• the company must provide a circular to shareholders giving the required information.
• the offeror obtains the central bank’s approval in advance.

The approval process for building a new facility in Bahrain involves several stages, including submitting a planning approval request with documents like the title deed and survey certificate, followed by a building permit application with architectural and structural plans. This typically involves pre-approval steps, especially special cases, and coordination with various government bodies for required clearances before final approval and the issuance of the building permit.

Pre-Approval Requirements:

• Submission: Submit a planning approval request to the Urban Planning and Development Authority (UPDA).
• Gather documents: You will need a letter from the owner, title deed, owner’s ID, and the latest land survey certificate.
• Submit engineering drawings: Provide horizontal projections, cross-section drawings, and detailed engineering drawings. An engineering office must be appointed to proceed with submitting the required drawings and processing the application.
• Obtain pre-approvals: Secure clearances from other relevant entities such as the Supreme Council for Environment (for factories), the Bahrain Tourism & Exhibitions Authority (for hotels), or the Ministry of Education (for schools), and then the application should be submitted as a building permit application through the relevant online portal, Benayat.bh

Final Stages of the Application:

• Pay fees: Pay the initial and final fees associated with the permit.
• Receive final approval: The application is processed, reviewed, and ultimately approved by the municipality.
• Receive the building permit: The new construction building permit is issued electronically.

 

In Bahrain, investors are permitted to conduct transactions in any currency, not solely the domestic Bahraini Dinar (BHD). The Kingdom of Bahrain has a liberal approach to foreign investment with no foreign exchange controls or restrictions on capital movements.

o Is there an approval requirement (e.g. through Central Bank or another governmental agency) to use foreign currency in the country to pay: in an acquisition, or to pay to contractors, or to pay salaries of employees?

In Bahrain, there is generally no governmental approval required to use foreign currency for acquisitions or paying contractors, as the country has no foreign exchange controls. The Bahraini dinar is pegged to the US dollar, which contributes to this stability. However, transactions may require internal company approvals or bank procedures, and specific regulations apply.

In practice:-

– Acquisition payments. There is no standalone approval requirement to pay the purchase price in foreign currency. Parties commonly denominate acquisition consideration in USD (or another major currency) and settle through local or offshore banking channels. If the target is a regulated entity (e.g., a CBB‑licensed bank, insurer or investment firm), regulatory change‑of‑control approvals are required for the acquisition, but those approvals relate to ownership and fitness/merit—not to the currency used for payment. Standard banking AML/sanctions checks will apply to fund transfers.

– Payments to contractors. Private contracts may be priced and paid in foreign currency without regulatory pre‑approval. Payments routed through Bahraini banks are subject to routine AML/sanctions screening and any correspondent‑bank requirements. Public‑sector procurement or concession agreements may stipulate currency terms case‑by‑case. Where payments involve outward remittances, normal bank documentation (invoice/contract) is generally sufficient; no FX approval is needed.

– Employee salaries. Employers typically pay wages in Bahraini Dinar for payroll processing and statutory recordkeeping, including compliance with the statutory Wage Protection System. If an employer and employee agree to a foreign‑currency denomination (for example, USD), employers should ensure the payroll ledger and statutory filings reflect amounts in BHD and that the employee is paid an amount at least equal to the contractual BHD equivalent on the pay date. There is no separate FX approval for salary payments, but labour‑law and payroll compliance considerations favor using BHD for settlement in Bahrain, particularly for statutory benefits and end‑of‑service calculations.

o Is there a limit on the amount of foreign currency in any transaction or series of related transactions?

There is no prescribed statutory cap on the amount of foreign currency that may be used in any transaction or series of related transactions. However, Bahraini banks will apply risk‑based AML/CTF monitoring and may request supporting documentation for large or unusual payments; attempts to “structure” payments to avoid monitoring thresholds can be treated as suspicious and may be delayed or refused if compliance or sanctions concerns arise

Is there an approval requirement and a limit on how much foreign currency a foreign investor can transfer into the country?

Foreign investors can transfer any amount of foreign currency into Bahrain without prior approval from the Central Bank or a governmental agency. The country has a free-market economy and does not impose restrictions on foreign exchange or capital movements. However, with any large transaction, financial institutions in Bahrain must report large cash transfers as part of the country’s anti-money laundering and counter-terrorist financing framework. This is for monitoring purposes, not a limit on the amount as such.

Is there an approval requirement and a limit on how much domestic currency a foreign investor can buy in the country?

Purchases of domestic currency (BHD) by foreign investors through licensed banks or exchange houses likewise do not require prior approval , and there is no express statutory limit on the amount of BHD that may be bought. Transactions are executed at market/posted rates subject to bank AML/CTF, sanctions screening and source‑of‑funds checks; large cash conversions may attract enhanced due diligence, and physical cash is subject to airport/customs declaration thresholds and requirements.

Can an investor buy domestic currency outside of the country and transfer it into the country to pay for an acquisition or to third parties for goods or services or to pay salaries of employees?

Buying BHD outside Bahrain and remitting it into the country is permitted when executed through licensed banks and SWIFT/correspondent channels. In practice, offshore BHD liquidity is limited; many investors therefore remit USD (or other major currencies) and convert to BHD onshore at bank rates.

No prior FX approval applies to inbound BHD transfers; routine AML/CTF, sanctions and source‑of‑funds checks will apply, and again, physical cash imports remain subject to customs declaration thresholds and requirements.

Outward remittances by foreign investors (dividends, capital returns, intercompany payments, shareholder loans and service/invoice payments) do not require prior FX approval, and there is no statutory limit on amounts remitted. Licensed banks apply AML/CTF, sanctions screening, source‑of‑funds/earnings verification, and may request supporting documentation. Where relevant, tax compliance (for example, withholding tax if applicable, or confirmation that corporate income tax obligations are settled) is checked before executing dividend or capital distributions.

No governmental approval is required solely to remit foreign or domestic currency out of Bahrain. Remittances are processed by CBB‑licensed banks subject to compliance checks and evidence of the underlying transaction (e.g., board dividend resolutions, audited financials, tax payment receipts, invoices/contracts).

Timing is operational rather than regulatory. Straightforward remittances typically settle same day to T+2 once documentation is in place and correspondent banks clear sanctions/AML screening. There is no prescribed statutory timeline.

There are no statutory caps on outward bank transfers. Physical cash taken out of Bahrain is subject to customs declaration thresholds; bank transfers are not limited by amount.

No “approval” is issued per transfer or on a blanket basis because none is required. Banks can set up standing instructions or recurring payments once KYC is complete, but each transfer remains subject to routine compliance screening.

There is no tax or duty on the currency amount exchanged in Bahrain. Bahrain maintains a liberal foreign‑exchange regime with no exchange controls, and converting foreign currency to Bahraini Dinar (BHD) or vice versa does not itself trigger any tax.

Under Bahrain’s VAT regime, financial services are generally exempt. In practice, this means:

• Currency conversion itself (the margin/spread) is treated as an exempt financial service and no VAT applies to the exchanged amount.
• Explicit service fees or commissions charged by banks or exchange houses for FX services may be subject to VAT at the standard rate (currently 10%) because fee‑based financial services are typically taxable, whereas margin‑based services are exempt.

There is no stamp duty or specific FX levy on conversions or remittances, and no withholding tax on outward payments. Normal banking charges and AML/sanctions compliance apply, but they are operational rather than tax constraints

Constituent entities belonging to Pillar II entities (i.e. large multi-national entities with a consolidated group revenue of Euro 750 million or more within two of the last four financial years) that are subject to the Bahraini Domestic Minimum Top-up Tax (DMTT) Law (effective from 1 January 2025) should note that foreign exchange gains and losses may affect local accounting profits used to calculate their effective tax rate under Pillar II.

There is no tax or customs duty on bringing money into Bahrain, whether in foreign currency or Bahraini Dinar (BHD). Carrying or transferring funds into the country does not itself trigger a tax.

However, Bahrain applies AML/CTF and border‑declaration rules:

Physical cash and bearer negotiable instruments brought in at or above applicable thresholds must be declared to customs on entry. This is a compliance requirement, not a tax, and is intended to prevent money laundering and terrorist financing.

Bank transfers into Bahrain are not subject to customs declaration or FX approvals, but licensed banks will perform AML/sanctions screening and may request source‑of‑funds documentation for large or unusual inflows.

Bahrain does not impose a stamp duty on share transfers, and its general tax profile means the tax outcome can differ between share and asset deals. The main differences typically arise from VAT, real estate registration fees, customs/excise, and administrative registry charges, rather than income or capital gains taxes

Share acquisitions: No stamp duty and generally no VAT on the transfer of shares, as transfers of equity are treated as an exempt financial service for VAT purposes. As there is currently no Corporate Income Tax regime in place in Bahrain except on companies engaged in oil and gas activities, generally, there should be no capital gains tax nor withholding tax applicable in Bahrain. Nominal government/registry and professional fees can apply when updating corporate records.

Asset/business acquisitions: VAT can apply to taxable supplies of goods and services at the standard rate (currently 10%), unless the sale of assets may be eligible to be treated as outside of the scope of VAT if the sale of assets meet certain prescribed conditions to be considered a “transfer of a going concern” (TOGC). Transfers of real estate attract land registration fees (see response to query 17 below) and may trigger Real Estate Regulatory Authority (RERA) requirements for development or off‑plan projects. Customs/excise may apply where relevant assets are imported or are excisable. No capital gains tax and no withholding tax in Bahrain.

In light of the recent introduction of the DMTT Law, companies would need to determine the impact of the DMTT rules in relation to share or asset acquisitions in relation to Bahraini entities that involve a constituent entity of a Pillar II entity.

Stamp duty in Bahrain applies to transfers/registrations of real estate only and is collected by the Survey and Land Registration Bureau (SLRB) at the time the notarized sale contract is lodged for registration; the fee is 1.7% of the property value if the registration application is submitted within 60 days from the contract’s notarization date and 2% if submitted after 60 days (SLRB “Registration of purchase or sale a property” service page; SLRB information center). The duty is effectively payable upon filing the registration application (debit card, bank cheque, or electronic payment), and the title deed is issued once registration and payment are completed. There is no stamp duty on share transfers of companies.

Yes, shares in private entities in Bahrain are generally transferable via a share transfer. Depending on the legal form of the entity, the applicable laws and the terms of its constitutional documents will determine any pre-emption rights, notifications, and procedures required to effect the transfer.

o Can the shares be held outside of the home jurisdiction?

Yes, shares may be held outside the home jurisdiction; however, foreign ownership restrictions can apply to certain ISIC4 Code commercial activities. In such cases, a minimum number or percentage of shares (e.g., at least one share or 51%) must be owned by a Gulf Cooperation Council (GCC) national or by a GCC entity that is itself directly and ultimately owned by GCC nationals.

o What approval does a foreign investor need to transfer shares to another foreign or domestic shareholder?

o Unlike some neighboring regimes, no formal foreign investment licence or equivalent is needed. The Ministry of Industry and Commerce (the company registrar) must approve any share transfer, which is obtained through a formal application submitted by the entity. Depending on the ISIC4 Code commercial activities listed on the Commercial Registration (CR), additional approvals from external regulators may also be required (e.g., the Central Bank of Bahrain for financial institutions, or the Council for Regulating the Practice of Engineering Professions for engineering entities etc.). In addition to the regulatory approvals mentioned above, corporate authorisations issued by the entity, the outgoing shareholder, and the incoming shareholder will be required.

o Are changes in shareholding publicly reported or publicly available?

Amendments to the shareholding of a Commercial Registration (CR) are generally publicly available and accessible on the Ministry of Industry and Commerce’s online portal (Sijilat).

Unlike some neighboring regimes, no formal foreign investment licence or equivalent is needed. Bahrain does not maintain a stand-alone foreign direct investment (FDI) law requiring foreign investors to notify or obtain approval for all FDI activity. However, as noted above, certain sector-specific permissions or approvals may be required depending on the ISIC4 Code associated with the commercial activity listed on the Commercial Registration (CR). In such cases, additional regulatory filings or approvals may apply, but these relate to sectoral regulation rather than a general FDI-screening regime.

o If a mandatory filing is not required, can a transaction be reviewed by a governmental authority and be blocked?

Yes, where the investment is not compliant with the general legal requirements under Bahrain’s foreign ownership laws or other mandatory legislation. As noted above, this assessment is heavily dependent on the ISIC4 Code associated with the commercial activity registered on the Commercial Registration (CR).

o If a transaction is outside of the home jurisdiction (e.g. a global transaction where shares of a foreign incorporated parent company are being bought by another foreign company, but the parent company that’s been acquired has a subsidiary in your jurisdiction, could such a transaction trigger a mandatory FDI filing in your jurisdiction?

Strictly speaking, if any foreign ownership restrictions apply to the commercial activities listed on the Commercial Registration (CR) and a global transaction results in the entity becoming non-compliant with Bahrain’s foreign ownership laws, it is recommended that the entity undertake such analysis in advance of the transaction and identify and relevant restructuring options to ensure compliance. In the event of an investigation or inspection by the Ministry of Industry and Commerce—whether routine or triggered by a complaint—any non-compliance may be identified. The Ministry of Industry and Commerce would then typically record a violation against the Commercial Registration (CR) and require the entity to regularize its situation within a specified timeframe. Failure to do so could result in administrative fines, cancellation of the Commercial Registration (CR), or, in severe cases, criminal penalties.

o Can a governmental authority in such a transaction prohibit the indirect transfer of control of the subsidiary?

Generally no – currently there is no formal mandatory requirement to notify government authorities in Bahrain of an indirect transfer of control. As noted above, in the unlikely event of an investigation or inspection by the Ministry of Industry and Commerce—whether routine or triggered by a complaint—if non-compliance with foreign ownership restrictions is identified, the Ministry would likely record a violation against the Commercial Registration (CR) and require the entity to regularize its situation within a specified timeframe.

Foreign owned companies operating in Bahrain have several exit options available to them, depending on their corporate structure, sector, and commercial objective:

Share sale/transfer to a strategic buyer. The most frequent route, especially in consumer, industrials, logistics, and tech-enabled services. Buyers are often regional strategics (Saudi/UAE-headquartered). Share transfers are generally permitted, though certain restrictions may apply depending on the company’s constitutional documents and any shareholders’ agreements in place. For companies in regulated sectors (such as financial services), regulatory approval may be required for change of control transactions. Documentation follows international norms; share transfers are registered with the Ministry of Industry and Commerce (MOIC) via the Commercial Registration (CR) system.

Asset/business transfer. Foreign companies may choose to sell their business assets rather than shares, particularly where (a) the buyer prefers to acquire specific assets without assuming liabilities; (b) there are complex shareholding structures that make sale of shares impractical; or (c) tax considerations favour an asset sale structure.

Mergers. Foreign companies may exit through a merger with another entity or by being acquired as part of a larger consolidation in their sector. Bahrain’s Commercial Companies Law provides a framework for mergers, though these transactions require compliance with specific procedural requirements and, in some cases, regulatory approvals.

IPO. Whilst less common as a complete exit, foreign companies in certain sectors may consider listing on the Bahrain Bourse as a partial exit strategy or to provide liquidity to shareholders. This option is typically only viable for larger, established businesses meeting the listing requirements.

Restructuring. In some cases, foreign companies may restructure their Bahrain operations by (a) converting a subsidiary into a branch; (b) transferring business operations to another group entity; or (c) redomiciling certain functions to other GCC jurisdictions as part of a regional restructuring.

Solvent liquidation/wind-down. Selected where buyer appetite is limited or the business is contract-heavy and non-transferable. The liquidation process involves settling all liabilities, distributing remaining assets to shareholders, and deregistration with the Ministry of Industry and Commerce.

Entities incorporated in Bahrain generally do not default to IPOs; most continue to rely on bank financing, private placements, and strategic or sponsor capital. As such, IPOs do not take place very frequently in Bahrain, the most recent one being in December 2024. Where an IPO is pursued as a capital-raising and profile-building step, preferences split by scale, sector, and liquidity objectives.

o on a domestic stock market, or

In practice, private companies in Bahrain that pursue an IPO overwhelmingly prefer the domestic market i.e., the Bahrain Bourse as their primary listing venue. Foreign stock market listings are rare for Bahraini companies, though dual listings may be considered in specific circumstances. The strong preference for domestic listing is driven by several complementary factors: companies and their advisers benefit from established relationships with local regulators and familiarity with Bahrain’s listing requirements; the Bahrain Bourse offers significantly lower costs than international exchanges for both initial listing and ongoing compliance; the natural investor base of GCC investors, local institutions, and retail participants primarily access the domestic market; the regulatory process is streamlined through dealing with a single regulator and unified disclosure framework; domestic listings accommodate Arabic language requirements and locally familiar reporting standards; and the Bahrain Bourse has developed particular expertise in key sectors such as Islamic finance, banking, and insurance, making it an especially appropriate venue for companies operating in these areas.

o on a foreign stock market?

If foreign, which one?

When entities incorporated in Bahrain do consider foreign listings, the most relevant markets are: (1) the Saudi Exchange (Tadawul), which is increasingly attractive given Saudi Arabia’s market size and depth, regulatory cooperation facilitating cross-border listings, and suitability for companies with significant Saudi operations; (2) the Dubai Financial Market (DFM) or Abu Dhabi Securities Exchange (ADX), considered by companies with substantial UAE operations seeking access to a broader GCC investor base, particularly in real estate, hospitality, or retail sectors; (3) the London Stock Exchange (LSE), rarely pursued but available to larger companies seeking international investor access and able to bear significant costs, often as a secondary listing; and (4) NASDAQ Dubai, positioned as an international exchange that may appeal to technology or growth companies seeking international profile with lower barriers than traditional international exchanges. Some larger companies may pursue dual listing strategies to broaden their investor base, enhance liquidity, raise their international profile, and access deeper capital pools, though this remains uncommon due to additional costs, regulatory complexity, and ongoing compliance burdens. In practice, IPOs generally remain relatively uncommon in Bahrain, as the market is relatively small and many private companies are family-owned businesses preferring to retain private ownership or exit through trade sales; when IPOs do occur, they typically involve large financial institutions, established companies in regulated sectors, family businesses seeking partial liquidity whilst retaining control.

Most cross‑border M&A, investment, and JV agreements involving in particular foreign parties opt for international arbitration rather than litigation in domestic courts. This reflects a desire for neutrality, enforceability, confidentiality, and specialist decision‑makers. There are a number of options available as regards dispute resolution generally, which include:

• Arbitration. ICC, LCIA, or DIAC arbitration. Seats most often selected include Bahrain, Abu Dhabi (ADGM), Dubai (DIFC), and London, depending on counterparty comfort and enforcement strategy.
• BCDR in Bahrain. The Bahrain Chamber for Dispute Resolution (BCDR) administers arbitrations under modern rules, and Bahrain’s Arbitration Law (based on the UNCITRAL Model Law) supports court assistance and interim measures.
• Domestic courts for local, smaller, or sector‑bound matters. Purely local transactions, lower‑value deals, or disputes tied to statutory/registry issues (e.g., share register changes, some real estate or licensing questions) may designate Bahraini courts.

The average duration for the resolution of contract disputes through the court system in Bahrain depends on a myriad of factors including the level and complexity of the case, as well as whether experts are appointed by the parties or witnesses are heard by the relevant court. However, some general estimates can be provided as follows:

• Cases before the Lower Courts, which has jurisdiction to hear civil and commercial cases where the value of the claim does not exceed BHD 5,000 will take approximately three to six months from commencement up to judgment. If the claim amount is under BHD 1,000 then the judgment shall be final and not subject to appeal.
• Cases before the High Court will normally take approximately four to six months from commencement up to judgment.
• Cases before the High Court of Appeal, which hear appeals from the lower courts, will take approximately two to four months from commencement up to judgment.
• Cases before the Court of Cassation, which is the highest civil judicial authority in Bahrain and hears appeals on points of law, will take approximately nine to 12 months from commencement up to judgment.

These timeframes assume that the issues in dispute are limited to legal and factual issues, the court has not appointed an expert and notification of the proceedings does not become protracted.

Yes. The Bahraini courts are generally regarded as reliable and efficient in upholding the contractual and statutory rights of foreign investors. The country’s civil law system is codified and grounded in the principle of freedom of contract, as reflected in Article 128 of the Civil Code, which states that a contract “makes the law of the parties” and can only be altered by mutual consent or by operation of law. Bahraini courts generally uphold these principles, provided that contractual terms do not contravene public policy or mandatory legal provisions.

Courts in Bahrain also give effect to valid choice‑of‑law and jurisdiction clauses, including arbitration agreements, in accordance with Law No. 9 of 2015 promulgating the Arbitration Law. Where a valid arbitration agreement exists in relation to a dispute filed before the courts in Bahrain, the courts will dismiss the case on the basis of lack of jurisdiction, provided that the arbitration plea is raised early in the proceedings by the other party. This procedural requirement is strictly enforced. Bahraini case law, including Cassation Appeals No. 255 of 2020 and No. 285 of 2020, confirms that the arbitration plea must be raised during the case‑management phase. This reinforces the enforceability of alternative dispute resolution mechanisms often preferred by foreign investors.

Additionally, Bahrain’s civil court system demonstrates a high degree of procedural reliability in commercial matters. In particular, litigation is electronically initiated and case‑managed on a structured timetable. Of note, Decision No. 28 of 2023 provides for an English‑language court capacity for defined commercial disputes before the Bahrain Chamber for Dispute Resolution (BCDR), improving accessibility and predictability where agreements are in English, particularly for foreign investors. However, the application of the English-language track is subject to specific limitations. It does not extend to disputes arising from agreements drafted solely in Arabic, even where the parties agree to litigate in English. In the case of bilingual agreements, English proceedings are permitted only where the agreement expressly stipulates that English is the prevailing language. Absent such a clause, Arabic will remain the language of proceedings.

Further, foreign investors should also be mindful of structural and procedural features of the Bahraini legal system. Proceedings are generally conducted in Arabic, requiring translations for submissions and evidence unless the matter qualifies for the English-language court track. The legal system does not follow a doctrine of binding precedent, which may limit predictability across similar cases. Legal cost recovery in the courts is typically modest relative to actual expenditure, and representation by licensed local counsel is mandatory, even for foreign parties.

As to enforcement, while recent legal reforms and the establishment of specialized commercial courts have enhanced the system’s investor-friendliness, the effectiveness of judgments remains influenced by practical considerations. The speed and success of enforcement largely depend on the nature and location of the respondent’s assets within the Kingdom. Enforcement measures such as bank account freezes can generally be obtained swiftly. However, in cases where the counterparty lacks liquidity and holds no attachable assets in Bahrain, enforcement may face significant delays.

• We are generally not aware of any instances of abuse of foreign investors in Bahrain. Bahrain has positioned itself as a business‑friendly economy. In Q1 2025, according to the Ministry of Finance, Bahrain’s inward foreign direct investment stock rose by 3.5% year‑on‑year to BHD 17.1 billion, reflecting growing investor confidence and the success of ongoing efforts to enhance the business environment.Should any instances of investor abuse occur, the legal framework in Bahrain provides multiple avenues to address them:

  Civil court remedies: Contractual and tort remedies are available. Courts can award damages, rescission, or specific performance where appropriate, and may impose precautionary measures (for example, asset attachment) to prevent dissipation. Criminal laws address fraud, embezzlement, and other economic crimes.

• Arbitration and mediation: Arbitration and mediation are well-established and widely used in Bahrain. Law No. 9 of 2015 promulgating the Bahrain Arbitration Law governs domestic and international arbitration in line with the UNCITRAL Model Law. In addition, the Bahrain Chamber for Dispute Resolution (BCDR) provides institutional arbitration and mediation services, with jurisdiction over certain commercial and investment-related disputes.
• Investment treaties: At the international level, Bahrain has ratified more than 40 bilateral and multilateral treaties with different countries that promote and protect foreign investment. These instruments typically include provisions on fair and equitable treatment, protection against expropriation and access to investor–state arbitration.Accordingly, Bahrain maintains a transparent, rules-based investment environment that actively safeguards the rights of foreign investors.

Bahrain honours the enforcement of foreign judgments and arbitral awards.

The framework in Bahrain consists of Decree-Law No. 22/2021 on the Promulgation of the Execution Law in Civil and Commercial Matters, which governs the recognition and enforcement of foreign judgments and orders, as well as the principles of Shari’a law and public policy that may affect the enforcement of such judgments and awards. In addition, Bahrain is a signatory to several international treaties that provide for the reciprocal recognition and enforcement of foreign judgments and arbitral awards, such as the Hague Convention for the Pacific Settlement of International Disputes 1907, the Convention on the Settlement of Investment Disputes between States and Nationals of other States 1965, the Riyadh Arab Agreement for Judicial Cooperation 1983, the Gulf Cooperation Council Convention for the Execution of Judgments, Delegations and Judicial Notifications 1995, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, and various bilateral investment treaties and free trade agreements.

In addition, further steps have also been taken to ensure that the process to recognise and enforce Arbitral Awards is cost effective and efficient. In this regard, a party is entitled to apply for the recognition of an Arbitral award on notice to the court. If the value of the award is greater than US$1.3 million, then the application is immediately transferred to the Bahrain Chamber for Dispute Resolution (the “BCDR”) where a party is afforded an election either to proceed with the recognition in English before the English-speaking section of the BCDR, or to proceed before the Arabic section.

Bahrain has an extensive network of foreign investment treaties with approximately 46 countries including, Russia, France, United Kingdom and the United States of America. The bilateral investment treaties with such countries generally provide robust protections for qualifying “investments” and “investors” from each state in the other’s territory. Core standards include fair and equitable treatment, full protection and security, and national treatment/MFN for investments and their management and returns.

Additionally, the Bahrain–U.S. Free Trade Agreement establishes a comprehensive bilateral framework liberalizing trade in goods and services, with preferential tariff treatment conditioned on detailed rules of origin, robust customs cooperation, expedited procedures, and advance rulings. It provides nondiscriminatory disciplines for government procurement, market access and regulatory transparency for cross‑border services (including telecoms and express delivery), and a dedicated financial services chapter balancing liberalization with prudential carve‑outs, new‑services commitments, and self‑regulatory reform.