The Kingdom of Bahrain regulates the permissible commercial activities for companies with foreign capital pursuant to the Cabinet's Resolution No. 40/2021 Determining Commercial Activities Which Foreign Capital Companies May Be Licensed to Practise (as amended). This framework may be considered against: (i) companies with 100% foreign capital and (ii) companies which require at least one Bahraini partner and (iii) companies which require at least 51% (majority) Bahraini capital.
100% Foreign Ownership
Cabinet Resolution No. 53/2024 has amended provisions of Resolution No. 40/2021 in relation to companies with 100% foreign capital.
Criteria for Full Foreign Capital Companies
Pursuant to Article 5 (as amended by the recent Resolution), in order for a company to practise the business activities specified under Schedule 4 to the Resolution (reproduced below) it must satisfy the following criteria:
- Minimum share capital of BHD 100,000 or its equivalent in other currencies.
- Minimum of EUR 750 million revenues by the parent company or its equivalent in BHD.
- Established in 10 markets globally (noting that prior to the amendment, the requirement was at least three markets globally)
Authorised Distributors
Pursuant to Article 4 bis (as amended by the recent Resolution), companies with both full and partial foreign capital may be exempt from the requirement of a majority-share Bahraini partner to practise the 'Authorised Distributor' business activity if:
- An existing company in Bahrain with at least 51% Bahraini capital practises the authorised distributor activity in respect of the same goods in the Kingdom (i.e. – the company seeking exemption will not be an exclusive distributor).
- The company owning the mark of the products under distributorship satisfies the Article 5 criteria (considered above).
- The company seeking exemption has acquired the right to distribute the goods of a mark of economic value subject to obtaining Cabinet approval.
The amendments introduced by the recent Resolution strike a balance by ensuring that although the Authorized Distributor activity is open to companies with foreign capital, this may not be at the expense of diluting participation of companies with Bahraini partners in the relevant industry that is the subject of a distributorship. This is most evident by the fact that the company seeking an exemption will not be an exclusive distributor, and that the Article 5 criteria have been heightened in raising the revenue threshold and requiring the presence in more global markets.
Overview of Classifications
We reproduce below those Schedules of the Resolution that are relevant to the Resolution's amendment (Schedules 2 and 4).
Schedule 2 to Resolution No. 40/2021 specifies the business activities where a majority of Bahraini capital is required (at least 51%) as follows:
|
No. |
Activity Code |
Activity Name |
|---|---|---|
|
1 |
10711 |
Local Bread Production (Domestic) |
|
2 |
41 |
Building Construction |
|
3 |
421 |
Road and Railway Construction |
|
4 |
422 |
Construction of Utility Projects |
|
5 |
429 |
Construction works for other civil engineering projects |
|
6 |
431 |
Demolition Works and Site Preparation |
|
7 |
43129 |
Marine burial |
|
8 |
4321 |
Electrical Installations |
|
9 |
43221 |
Installation and maintenance of heating, air conditioning and cooling systems |
|
10 |
43223 |
Installation of sanitary appliances |
|
11 |
4329 |
Other structural installations |
|
12 |
433 |
Completion and finishing of buildings, decoration works |
|
13 |
439 |
Other specialized construction activities |
|
14 |
47736-2 |
Handicraft activities |
|
15 |
5110-1 |
Passenger Air Transportation – Regular Passenger Air Transportation Services |
|
16 |
5229021 |
Activities of Transportation and Shipping Agencies |
|
17 |
5229022 |
Agents of ships companies |
|
18 |
522903 |
Activities of Transportation and Shipping Agencies |
|
19 |
692-2 |
Accounting and Bookkeeping Activities / Accounting Firms |
|
20 |
801 |
Private Security Activity |
Schedule 3 specifies 178 business activities which companies are permitted to practice provided there is at least one Bahraini partner, whose share may be determined by the company.
Schedule 4 specifies 62 business activities which companies with 100% foreign capital are permitted to practice subject to satisfying the Article 5 criteria, which we considered above.
|
No. |
Activity Code |
Activity Name |
|---|---|---|
|
1 |
451 |
Trade / sale of Motor Vehicles |
|
2 |
452 |
Maintenance and repair of motor vehicles |
|
3 |
45205 |
Car Wash & Polishing |
|
4 |
453 |
Trade / sale of Motor Vehicle Parts and Accessories |
|
5 |
45401 |
Trade / sale of motorcycles and small motorcycles |
|
6 |
45402 |
Trade / sale of motorcycle parts |
|
7 |
45403 |
Repair and maintenance of motorcycles and the like |
|
8 |
461 |
Sale for a fee or on the basis of a contract |
|
9 |
46201 |
Trade / sale of agricultural raw materials |
|
10 |
46205-1 |
Trade / sale of live animals |
|
11 |
46205-2 |
Trade / sale of live animals – fish/marine organisms |
|
12 |
46206 |
Trade / sale of leather types |
|
13 |
4649511 |
Trade / sale of veterinary medicines |
|
14 |
4652 |
Trade / sale of telecommunication equipment and spare parts |
|
15 |
4653 |
Trade / sale of agricultural machinery, equipment and supplies |
|
16 |
4659-1 |
Trade / sale of other machinery and equipment |
|
17 |
4659-2 |
Trade / sale of other machinery and equipment – medical devices, equipment and supplies |
|
18 |
4659-2 |
Trade / sale of transportation equipment except auto-mobiles, motorcycles and electric bikes |
|
19 |
46593-2 |
Trade / sale of transport equipment except auto-mobiles, motorcycles and electric bikes – import, export and sale of aircraft spare parts |
|
20 |
4662 |
Trade / sale of minerals and mineral ores |
|
21 |
4699 |
Authorised Distributor |
|
22 |
4663 |
Trade/sale of building materials, metal construction materials, plumbing and heating equipment and supplies |
|
23 |
46691-1 |
Trade/sale of industrial chemicals |
|
24 |
46691-2 |
Trade/sale of industrial chemicals – Substances subject to the Chemical Weapons Convention |
|
25 |
46692 |
Trade/sale of fertilizers, soil conditioners and pesticides |
|
26 |
46693 |
Trade/sale of soap and detergents |
|
27 |
46694 |
Trade/sale of plastic raw materials, rubber and synthetic fibres |
|
28 |
46695 |
Trade/sale of paper products |
|
29 |
46699 |
Trade/sale of waste and scrap |
|
30 |
466999 |
Trade/sale of industrial products and other raw materials |
|
31 |
469-1 |
General trade |
|
32 |
469-2 |
General trade – includes trade sale of food and beverages |
|
33 |
469-3 |
General trade – includes trade/sale of tobacco products |
|
34 |
469-4 |
General trade – includes trade/sale of food, beverages and tobacco products |
|
35 |
4721-1 |
Trade / sale of food and beverages |
|
36 |
4721-2 |
Trade / sale of food and beverages – fish /marine species |
|
37 |
4721-3 |
Trade / sale of food and beverages – Healthy Food |
|
38 |
4723 |
Trade/sale of tobacco products |
|
39 |
474 |
Retail trade / sale of information and communications equipment |
|
40 |
47412 |
Trade / sale of video games, programs and accessories |
|
41 |
4751 |
Trade / sale of textile |
|
42 |
4753 |
Trade / sale of carpets, rugs, floor and wall cladding |
|
43 |
47591 |
Trade / sale of Home Furniture |
|
44 |
47592 |
Trade / sale of household electrical and electronic appliances |
|
45 |
47593 |
Trade / sale of household items and miscellaneous handicrafts (cutting tools, ceramics, glassware and crockery, etc) |
|
46 |
47594 |
Trade / sale of chandeliers, lighting goods and accessories |
|
47 |
47595 |
Trade / sale of musical instruments |
|
48 |
47596 |
Trade / sale of security and safety systems, (locks and lockers) |
|
49 |
47611 |
Trade / sale of books, magazines and newspapers of all kinds |
|
50 |
47612 |
Trade / sale of stationery, arts and crafts tools and appliances, office and professional tools |
|
51 |
4762 |
Trade / sell music and video recordings |
|
52 |
4763 |
Trade / sale of sports equipment |
|
53 |
4764 |
Trade / sale of games and toys |
|
54 |
4771 |
Trade / sale of clothing, shoes and leather items |
|
55 |
4772-5 |
Trade / sale of pharmaceutical and medical goods – sale of alternative medicine products |
|
56 |
47723 |
Trade / sale of perfumes, cosmetics and ornamental soaps |
|
57 |
47731 |
Trade / sale of cameras and other equipment |
|
58 |
47732 |
Trade / sale of Optometry Equipment (Eye wear Stores) |
|
59 |
47733 |
Sale / trade of jewellery and related items |
|
60 |
477341 |
Trade / sale of pet food and supplies |
|
61 |
47735-1 |
Trade / sale of flowers, plants and seeds |
|
62 |
47735-2 |
Trade / sale of flowers, plants and seeds – fertilizer |
|
63 |
4774 |
Sale of used goods |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
