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Bahrain PCC – Protected Cell Company

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A Bahrain Protected Cell Company (PCC) option is a new one for Bahrain. Like PCC’s in other jurisdictions, each cell is separated from the core company. Thus, the other cells have separate assets and liabilities from the other cells, so do not become commingled. If one cell has unpaid debts the creditors cannot seek redress from the other cells.

The Protected Cell Companies Law of 2016 (hereinafter the “PCC Law”) governs how PCC’s form, separate, act, and dissolve or terminate. The PCC Law provides for one legal entity (PCC) consisting of the core with one or more parts called “cells”. A PCC can have unlimited number of cells. While each cell is not considered a separate legal entity, they do have a ring-fence around each one protecting each one’s assets from the liabilities of the other cells. The PCC Law allows the Central Bank of Bahrain (CBB) to regulate the PCC’s.

Foreigners may purchase all of the shares in the PCC’s core company and individual cells.

Tucked between Saudi Arabia and Qatar near the Persian Gulf lies the small “Kingdom of Bahrain” (“Bahrain” for short). An oil rich country since 1932 when oil was discovered.

The British proclaimed Bahrain a “protectorate” in 1913 after separating from the Ottoman Empire. The protection involved military assistance and defense in case of an invasion from neighboring countries. After obtaining independence in 1971 from the United Kingdom, English remained as an official second language.


A Bahrain Protected Cell Company (PCC) provides the following benefits:

Foreign Shareholders: All of the PCC’s shares may be owned by foreigners.

Protected Cells: Investors in a cell will be protected from the liabilities of other cells and the PCC core company.

Limited Liability: A shareholder’s liability is limited to his or her contribution to the share capital.

No Taxation: Neither the PCC, its cells, or the shareholders pay any taxes. However, U.S. residents and everyone subject to global income taxation must report all income to their governments.

Two Shareholders/Two Directors: The PCC is required to have two shareholders and appoint two directors who can be the same two people.

English: The second official language is English allowing all documents to be written in English.

Bahrain map

Protected Cell Company (PCC) Name

The PCC and its cells must choose company names not similar to other existing legal entities in Bahrain.

The words “Protected Cell Company” or its abbreviation of “PCC” must be located at the end of the core company’s name.

Purpose for a PCC
PCC’s provide a corporate structure for creating cells within the company but having their own assets and liabilities segregated from the core company and the other cells assets and liabilities. This is known as “ring-fencing” which all PCC’s have regarding the separation of assets and liabilities into separate cells.

Permitted Activities

The PCC Law does not allow PCC’s to engage in normal trading activities. However, the following activities are acceptable known as the “Permitted Activities”:

• Collective Investments Undertakings (“CIU”) defined by the CBB as raising capital from the public through private placements, including:

(a) Venture capital seeding using financial instruments and other assets; and

(b) Holdings from the assets of undertakings which are redeemed or re-purchased.

• Private Investment Undertakings (“PIU”) defined by the CBB as investment undertaking funds registered with the CBB. PIU’s may be offered to wealthy individuals or institutional investors. A minimum initial participation/investment interest of $3 million USD (or other currency equivalent).

• Securitization of assets (whether a group of assets or illiquid assets) through financial innovation transforms them into a security. This may include mortgage backed securities.

• Captive Insurance where an insurance company controlled and owned by its insureds. The main purpose is to insure the owners’ risks where the insureds benefit from the captive insurance underwriting profits.

• Additional activities to be identified by the CBB.

PCC’s offer the advantage of reducing the costs of forming separate companies. Other advantages include better efficiency in managing certain risks, separation of risks between different assets, and creating structures for faster and better portfolio management.

Once a PCC is established, similar transactions using previously negotiated documents can be used repeatedly to save time. A mutual fund or financial security may have several investors where each one’s contribution and portfolio are separated from the others. A risky business venture can be separated from the other less risky business ventures.

Bahrain Protected Cell Company Building

Third Parties
Each cell can contract with third parties with the understanding that any unpaid debts must first be sought from the specific cell’s assets. If unsatisfied due to insufficient assets in the cell, the creditor is then able to seek redress from the main core company’s assets. However, the creditor has no recourse against the assets of the other cells.

Some other jurisdictions where each cell’s liabilities to its creditors only leaves that specific cell’s assets as the sole source of attachments or seizure by its creditors. Bahrain, on the other hand, provides creditors with the opportunity to seek redress from the core company if the specific cell is unable to pay the debts and lacks sufficient assets to be attached or seized.

The PCC Law requires that every contract with third parties clearly identify the core company and the segregated cell as the contracting parties.

Limited Liability
Bahrain offers several corporate structures with limited liability benefits to choose from when forming a PCC.

Shareholders’ liabilities are limited to their contributions towards the share capital in the PCC.

PCC’s can be new companies or an existing company can convert into a PCC with the CBB’s approval.

New companies register with the Bahrain Commercial Registration Directorate. Upon approval, details regarding the new company are published in the Official Gazette.

A minimum of two shareholders are required. Shareholders may be residing anywhere outside of Bahrain and be citizens of any country.

The minimum requirement is two directors. Three directors are recommended to avoid tie votes. A resident director is not required. Directors can reside anywhere and be citizens from all countries.

The PCC board of directors manages the core company and all of its cells. Individual cells do not have their own directors.

Company Secretary
A company secretary must be appointed familiar with the rules and regulations of the PCC Law and the CBB in order to file all necessary documents. Typically, the secretary acts as the office manager.

Registered Agent and Office
The company secretary serves as a registered agent and his or her office may be the registered office address.

Minimum Capital
While the PCC Law does not designate what the required minimum capital for the core company and each cell, the CBB will determine the minimum capital required of each.

Bahrain does not levy any taxes on their companies. That’s because the revenues from Bahrain’s main industry of oil production provides sufficient income for the government.

Note: U.S. taxpayers and all others subject to taxes on their worldwide income must declare all global income to their tax agencies.

Public Records
The public records includes the identity of the shareholders and directors.

Formation Time
Estimate up to two weeks for registration and government approval.


A Bahrain Protected Cell Company (PCC) offers these benefits: total ownership by foreigners, protection for individual cells, limited liability, two shareholders who can be the two directors, English is one of the secondary official languages, and no taxes.



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