Foreign companies may establish branches in Bahrain without the need for a local partner if the activities that will be undertaken are open to foreign ownership. A foreign company that intends to carry out business in Bahrain may do so by establishing a branch, either by way of an operational office or a representative office.

Branches of foreign companies with an operational office may be required to obtain further approvals in Bahrain, depending on their activities. For example, companies seeking to engage in banking and insurance activities must obtain a license from the CBB.

Please note that where a branch is set up to engage in Bahrain activities that necessitate 51% Bahraini or GCC ownership, the following requirements are imposed concerning the foreign parent company:

• The foreign parent company must have been in existence for at least three full years.
• The foreign parent company must be 100% owned by GCC nationals.
• The foreign parent company itself must be established in a GCC jurisdiction.

Meanwhile, representative offices may not carry out any business operations in Bahrain and are restricted to undertaking only marketing and promotional activities.

The liabilities of the branch are guaranteed by the parent company, and it is a requirement under the Commercial Companies Law that the parent company provide a guarantee in relation to its branch and appoint a branch manager.

Under recent amendments to the Commercial Companies Law, companies can be fully or partly owned by non-Bahraini shareholders to practice activities reserved for Bahraini nationals or companies in which Bahrainis must be majority shareholders. The Council of Ministers determines those activities that can be undertaken by foreign ownership companies.. Also, on approval of the Council of Ministers, the Minister of Trade Affairs can allow companies with foreign capital to engage in activities that may have a strategic economic significance or a profitable return for Bahrain’s economy.

Conventional bank licensees that conduct business through a branch or subsidiary in other jurisdictions must go through the Group Compliance Function:

• Comply with local laws and regulations
• Have in place Group Compliance policy and procedures
• Conduct annual compliance testing on overseas operations whose total revenue represents 20% or more of the Group's total revenue, and on every two years' basis for other overseas operations

Conventional bank licensees must have procedures in place to identify and assess the possible increased reputational risk to the bank if it offers products or carries out activities in certain jurisdictions.

Conventional bank licensees with overseas operations must establish a Group Compliance Function that must oversee the compliance activities on a groupwide basis. The Group Compliance Officer must ensure that compliance reviews and checks are carried out at branches and subsidiaries. As legal and regulatory requirements may differ from jurisdiction to jurisdiction, compliance issues specific to each jurisdiction must be coordinated within the structure of the bank's groupwide compliance policy.

It is important to note that licensing requirements may differ based on the type of business. For example, banks, insurance companies and investment firms have specific licensing criteria tailored to their respective sectors.