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Bahrain SPC / Single Person Company
A Bahrain Single Person Company (SPC) offers foreigners a company owned and controlled by a single person. More than just a sole proprietorship, a SPC is an actual company.
The Commercial Companies Law of 2001 governs SPC’s formation, registration, types of business activities, and termination. This law allows foreigners to own 100% of the shares in a SPC.
Their judicial system is based upon a dual court system:
1. Islamic Sharia Courts – They deal with personal legal issues regarding Muslims including: marriage, divorce, and inheritance.
2. Civil Courts – originated from the Egyptian system but based on the modern French legal system. These courts handle all civil, commercial, and criminal matters.
The “Kingdom of Bahrain” is situated close to the Persian Gulf near Qatar and Saudi Arabia. Ever since oil was discovered in 1932, the main industry has been oil production making Bahrain a very wealthy country.
Since 1913, Bahrain has been a British protectorate in return for military protection, the British obtained a strong foothold in the Middle East Gulf region. In 1971, Bahrain gained independence from the British but have remained strong allies ever since. Arabic is the official language while English is a secondary official language.
Its political system is described as a unitary parliamentary constitutional monarchy under their King Hamad bin Isa Al Khalifa.
A Bahrain Single Person Company (SPC) enjoys the following benefits:
• 100% Foreign Owned: All of the shares in a SPC can be owned by foreigners.
• No Taxes: SPC’s enjoy complete exemption from any type of tax. However, U.S. taxpayers and all others paying global income taxation must declare all income to their governments.
• One Owner: SPC’s only have one owner who can be a foreigner.
• One Director: The only director can be the owner.
• Limited Liability: The owner’s liability is limited to his or her share capital contribution.
• English: After 58 years as a British protectorate, English is the official second language.
Bahrain Single Person Company (SPC) Name
SPC’s must select a company name not similar to another legal entity’s name in Bahrain.
The company name must either end using the words “Single Person Company” or its abbreviation of “S.P.C.”.
Foreigners who are either a single natural person or a single corporate body can form a SPC in Bahrain. The only prohibitions of the types of business activities are for banking, insurance, and financing services. SPC’s may engage in local business as well as internationally.
To qualify for a SPC, the applicant must be:
• 18 years of age or older (some business activities requires at least 21 years old); •
• To be of sound of mind;
• Committed full time to his or her business; and
• Having no criminal record.
The following documents must be included with an application to form a SPC:
• Copy of a passport if the founder is a non-Bahraini citizen;
• Copy of Director’s (if different from the founder) Bahraini ID (if a citizen) or passport if a non-citizen;
• Copy of Authorized Signatory’s Bahraini ID (if a citizen) if different from the founder or director. If a non-citizen, then a copy of his or her passport;
• Original notarized power of attorney by the representative of the applicant;
• Copy of the applicant’s educational qualifications if the type of business requires specific qualifications;
• Proposed registered local office address (a copy of a signed office lease agreement if one exists);
• Copy of a draft Memorandum of Association for the new SPC;
• Copy of a draft Articles of Association for the new SPC;
• Original Declaration of a Single Person Company;
• Copy of the Resolution by the Board of Directors authorizing the formation of a SPC (this can be done by the founder as the sole board of directors member);
• Copy of a Resolution by the Board of Directors appointing the director and authorized signatory for the SPC (which can be the founder).
Owners of a SPC only have liability to the extent of his or her capital contribution to the company.
A minimum of one shareholder (founder) is required. The shareholder can reside anywhere in the world and be a citizen of any country.
Since this is a single person company, the only type of shares which can be issued are registered shares. The SPC cannot issue public shares. In addition, a SPC is prohibited from issuing debentures or negotiable warrants.
Only one director is required to be appointed to manage the SPC. The sole shareholder may be the only director. Directors can be citizens of other countries and reside anywhere.
Registered Agent and Office
A local registered agent must be appointed whose office may be the registered office address for the SPC.
The required minimum share capital is 50,000 BHD (equivalent to $133,000 USD as of July, 2017).
Bahrain imposes no taxes whatsoever upon a SPC. This includes: income tax, corporation tax, capital gains tax, gift tax, inheritance tax, wealth tax, and withholding taxes.
The reason why no taxes exists for the SPC is because all of the wealth obtained by Bahrain comes from their oil producing industry.
Note: U.S. taxpayers must report all global income to the IRS just like everyone subject to worldwide income taxation must disclose all income to their tax authorities.
An audited financial statement must be filed every year.
The name of the founder as sole shareholder is included in the public records.
It could take up to two weeks for the application process to be completed.
Bahrain offers shelf companies to purchase.
A Bahrain Single Person Company (SPC) offers the following benefits: complete foreign ownership, no taxes, one shareholder who can be the sole director, English is the official second language, and limited liability.