Investing In... 2026 Comparisons

Bahrain’s legal system is rooted in civil law traditions, influenced by Egyptian and French codified models. The 2002 Constitution serves as the supreme law, guaranteeing judicial independence and integrity.

The judiciary comprises three principal branches. The Civil Courts exercise general jurisdiction over civil, commercial, and administrative disputes, including personal status matters for non-Muslims. The Shari'a Courts apply Islamic law to family and personal status issues for Muslim citizens, covering marriage, divorce, and inheritance. The Criminal Courts adjudicate offences in accordance with the Penal Code and Criminal Procedure Code, with cases brought by the public prosecution.

Each branch follows a tiered structure consisting of courts of first instance, appellate courts, and the Court of Cassation, which sits at the apex as the final court of appeal across all jurisdictions.

Bahrain also maintains several specialised bodies. The Constitutional Court, established in 2002, has exclusive authority to review the constitutionality of legislation. The Bahrain Chamber for Dispute Resolution (BCDR), created in 2009, handles complex commercial claims exceeding BHD500,000 through a dedicated court and arbitration centre. Most recently, the Bahrain International Commercial Court (BICC), launched in November 2025 pursuant to Royal Decree No. (9) of 2024, adjudicates international commercial disputes by party consent, with proceedings in English or Arabic. Appeals from the BICC are heard by the International Committee of the Singapore International Commercial Court, unless parties agree otherwise.

As in most civil law systems, there is no doctrine of binding precedent, though appellate rulings carry persuasive authority. Proceedings are predominantly conducted in Arabic.

The key regulatory bodies that primarily oversee businesses in Bahrain are:

• the Ministry of Industry and Commerce (MOIC);
• Central Bank of Bahrain (CBB); and
• Bahrain Bourse.

Bahrain maintains a generally liberal and business-friendly approach to foreign direct investment. The primary legislation governing the establishment of companies in Bahrain is the Commercial Companies Law No. 21 of 2001 (CCL) and its Implementing Regulations. A series of ministerial decisions issued under the CCL (particularly Decision 40 of 2021 and its amendments) specify which commercial activities may be licensed for 100% foreign ownership and which require a minimum percentage of Bahraini or GCC ownership. Bahrain does not operate a standalone national-security FDI screening regime comparable to those found in certain other jurisdictions; instead, all are subject to mandatory security screening by the MOIC via its online platform, Sijilat, and in some cases the Ministry of Interior. 

Bahrain has increasingly liberalised the restrictions relating to which commercial activities may be undertaken by 100% foreign-owned entities. As a result, Bahrain law currently permits 100% foreign ownership with respect to the vast majority of commercial activities carried out in Bahrain.

Despite the above, however, some sectors and activities are only allowed to be carried out by Bahrainis or entities fully owned by Bahrainis, and some business activities may require a minimum Bahraini or GCC investment. Where reference is made to GCC ownership, this means that either 51% or at least 1 share (as applicable based on the commercial activity) must be owned by a GCC national, or a GCC entity that is, in turn, owned 100% by GCC nationals/entities at every level of the ownership chain.

Activities requiring a company to be 100% Bahraini-owned (or, in certain cases, GCC owned) include, but are not limited to: fishing, customs clearance offices, postal and private mail carrying, roaming food vending, publishing and distribution of newspapers and books, real estate activities performed on a fee or contract basis, labour supply agencies, employment offices, government support services and clearing government transactions.

Activities requiring a Bahraini or GCC partner with a majority ownership of at least 51% include, but are not limited to: authorised distribution activities, certain construction projects and trading activities, transportation services, accounting, private security, local bread making, certain HVAC installation activities.

Activities requiring at least one share to be held by Bahraini or GCC entities include, but are not limited to: majority of sale and trade activities, activities supporting oil and natural gas extraction, architecture, air and maritime transport, general legal practice, legal representation, and legal advisory services and professional accounting services.

Sectors allowing 100% foreign ownership are strategically significant and high-value sectors such as: technology, finance, logistics, tourism, healthcare, education, manufacturing and professional services.

The principal authorities responsible for reviewing and approving foreign investment are as follows.

• The MOIC: Responsible for conducting foreign investment reviews and processing all company registrations through its online electronic platform, Sijilat, and enforces ultimate beneficial owner (UBO) disclosure requirements.
• Ministry of Interior: Conducts the mandatory security screening of all foreign investors who are natural persons, which must be cleared before the MOIC processes a commercial licence application.
• Municipality Affairs: Inspects and registers the premises for all offices registered on the commercial registration of Bahrain entities.
• Central Bank of Bahrain (CBB): Regulates the financial sector, supervises capital markets, and oversees anti-money laundering and combating the financing of terrorism (AML/CFT) compliance. 
• Sector-specific regulators: Depending on the commercial activity, additional approvals may be required from bodies such as the Telecommunications Regulatory Authority (TRA), the Ministry of Health, the Customs Affairs, the Civil Defence Directorate, the Criminal Defence Directorate, the Real Estate Regulatory Authority, the Council for Regulating the Practice of Engineering Professions, and the Municipality Affairs Authority, among others.

Looking ahead, several factors are likely to shape the FDI environment in Bahrain:

Continued FDI Liberalisation

Bahrain has pursued successive rounds of continued liberalisation of foreign ownership rules. On 17 October 2024, Decision No. 53 of 2024 allowed foreign companies to sell certain goods without a local partner and fully own their business if they operate in at least ten countries or earn annual revenues exceeding EUR750 million. The minimum capital requirement for wholly foreign-owned companies was simultaneously reduced from BHD2 million to BHD100,000.

On 27 November 2025, Decision No. 71 of 2025 further expanded the activities eligible for 100% foreign ownership.  Five activities, including electric power generation, electric power transmission and distribution, management and operation of ports and private jetties, and real estate brokerage, were opened for 100% foreign ownership on an unconditional basis. A further seven activities were opened subject to a minimum capital of BHD100,000 and parent company revenues of at least EUR750 million.

Bahrain has also enabled up to 100% foreign ownership for companies engaging in crude oil and natural gas extraction and support activities for oil extraction, subject to an agreement with the government of Bahrain under certain specified conditions. Income generated by companies in the oil and gas sector is subject to a 46% tax rate on profits.

The MOIC, EDB, and CBB are expected to continue monitoring the market and proposing further amendments to expand the list of activities eligible for full foreign ownership.

Recent Enforcement Trends

Bahrain continues to introduce various rules and regulations with a view to adopting and applying international best practice in Bahrain, as part of Bahrain’s drive to increase transparency and to promote and aid fair competition, and thereby to increase investor confidence in the Kingdom.

Recent enforcement practice has focused on compliance with anti-money laundering, ultimate beneficial ownership (UBO) disclosure, and economic substance requirements (ESR), rather than on rejecting FDI as such. Amendments to the CCL have also expanded the grounds for personal liability of directors, shadow directors, managers, and shareholders, broadening fiduciary duties and increasing accountability.

Such enforcement trends suggest a continued shift toward greater regulatory rigour in ESR, UBO transparency, and corporate governance, even as entry barriers are lowered.

Golden Visas

Bahrain has also introduced a "golden licence" programme offering streamlined approvals and incentives for investors backing projects valued at a minimum of USD50 million or creating more than 500 local jobs.

Corporate Income Tax Implementation

The introduction of a broad-based corporate income tax at an expected rate of 8–10% would represent a structural change to Bahrain's historically tax-free regime. While this may reduce one of Bahrain's traditional competitive advantages, it is expected to be offset by alignment with global tax norms, stronger fiscal positioning, and the retention of locally taxed MNE income.

Major Infrastructure Projects

The Sitra refinery expansion, the planned Bahrain Metro project, and other GCC-funded development initiatives are expected to sustain construction and industrial activity and create new opportunities for foreign investors.

Bahrain generally has a stable political and a pro-business environment in line with the Bahrain Economic Vision 2030. As a result, there is strong emphasis on encouraging FDI in as many sectors as possible.

The key consideration in the acquisition of a public company relates to the disclosure requirements that may be mandated by the CBB. This may have an impact on the timelines and the transaction structure. A public deal is more procedural and compliance-driven compared to private deals.

Private deals offer deal-makers the flexibility of structuring the transaction in a way they think best (within the bounds of the legal framework in Bahrain).

For a foreign investor, the key things to focus on include:

• MOIC process regarding share transfers;
• Regulatory approvals (such as from the Competition Authority/TRAI/CBB) and;
• Bahrain has no corporate income tax except for companies undertaking activities in the oil and gas sector.

Every foreign investor must engage local counsel as there are several procedural requirements (information on which is not necessarily publicly available) particularly in respect of incorporating an entity, share transfers, approvals etc.

Please also refer to our analysis in 9.1 Taxation of Business Activities.

Law No. 31 of 2018 with respect to the Promotion and Protection of Competition (Competition Law) regulates all competition issues and related matters in Bahrain, including those relating to merger control/market concentration and applies:

• to all undertakings with respect to their economic activities in Bahrain;
• to any conduct or arrangement which is intended to or results in anti-competition in Bahrain;
• where one or more parties is not established in Bahrain; and
• to economic activities carried out extraterritorially which affect competition in Bahrain.

Please note that the Competition Authority is yet to publish the decision setting out the circumstances which may trigger the need to obtain the approval of the Competition Authority in the context of market concentration/merger control. However, by way of an analogy, pursuant to Article 8 (2) of the Competition Law, any company with a dominant position in the market (either solely or jointly with one or more undertakings) shall be prohibited from committing specified acts which may hinder competition. In this regard, an undertaking will be deemed to hold a ‘Dominant Position’ if it, acting solely or jointly with other entities, can control or influence the ‘Relevant Product Market’ exceeding 40% if a single facility or 60% if acting as group of facilities. Accordingly, although the thresholds specified with reference to dominant position are not directly relevant with respect to economic concentration approval, these can (in the absence of the relevant published thresholds) potentially serve as very loose anecdotal indicative guidance for the relevant parties in making a decision with respect to whether they should seek the approval of the Competition Authority.

In light of the above, it is generally recommended that the Competition Authority should be notified about a potential transaction and the intended activity and confirmation be sought on whether or not approval is required, especially noting that the Competition Law is relatively new and not widely tested. Considering this, it is generally recommended that parties reach out to the Competition Authority early on to discuss the potential transaction, to assess the extent of notification/approval requirements applicable (along with any specific timelines), while keeping in mind the aforementioned thresholds as guiding principles.

Please also note that the Consumer Protection Directorate at the MOIC is currently performing the functions of the Competition Authority in Bahrain pending the establishment of a formal Competition Authority pursuant to the provisions of the Competition Law.

Corporate governance in Bahrain is driven by two key pieces of legislation:

• Legislative Decree no. 21 of 2001 as amended, promulgating the Commercial Companies Law (CCL) and its implementing regulations; and
• Legislative Decree no. 19 of 2018 as amended, promulgating the Corporate Governance Code (CGC).

The CCL governs all commercial companies established in Bahrain regardless of their type, and broadly covers requirements of fair treatment of shareholders, transparency and disclosure obligations, internal controls, audit oversight and board accountability to shareholders and the company. Separately, the CGC operates on a “comply or explain” basis (ie, comply or justify deviations) and is applicable to Bahrain Shareholding Companies (BSC). While its principles may serve as best practice guidance for other legal forms, formal reporting requirements apply solely to BSC entities. The CGC provides comprehensive guidance on the roles and responsibilities of the board, management, and board committees. It addresses conflicts of interest, corporate transparency and disclosure, shareholder rights, risk management and internal controls, ethical conduct, remuneration and incentives, as well as compliance and monitoring.

The most commonly used legal forms for private companies are:

• the With Limited Liability Company (WLL); and
• the Closed Bahrain Shareholding Company (BSC (c)), also referred to as a Closed Joint Stock Company.

The legal form used for public/listed companies is the Public Bahrain Shareholding Company (BSC) also referred to as a Public Closed Joint Stock Company.

Entity selection has significant legal and commercial implications. All the legal forms mentioned above provide limited liability, which is typically preferred by foreign investors. The governance requirements of a WLL are generally lower and more flexible, whereas a BSC (c) faces more extensive regulatory oversight and compliance obligations. The most regulated form is the BSC (public) due to its listing on capital markets. Early-stage investors generally favour WLLs, while BSCs can access capital markets and are generally more suitable for sophisticated financing needs.

The legal relationship between a company and its shareholders is governed by the CCL, the company’s constitutional documents (ie, memorandum and articles of association), and, where applicable, capital markets regulation issued by the Central Bank of Bahrain (CBB) and listing rules of the Bahrain Bourse and applicable corporate governance principles.

Under the CCL, shares confer equal rights and obligations upon shareholders. Shareholders are entitled to receive, among others, dividends, participate in the distribution of liquidation proceeds, attend and vote at general assemblies, stand for election to the board of directors, challenge unlawful resolutions, and transfer their shares.

The CCL further establishes a tiered system of shareholding thresholds that determines the degree of influence a shareholder may exercise over a company. Minority shareholders in private companies, including WLLs and BSC(c)s, are afforded a range of statutory protections, including:

• pre-emption rights on share transfers, requiring existing shareholders to be offered shares prior to any sale to third parties;
• supermajority requirements for fundamental corporate decisions (at least three‑quarters of the share capital, unless a higher threshold is established in the company’s constitutional documents), such as amendments to constitutional documents, capital alterations, and major asset disposals;
• rights to requisition and influence general assemblies, including the ability of shareholders holding 10% or more of shares to requisition meetings and those holding 5% or more to add items to the agenda;
• supervisory and inspection rights, allowing non-managing shareholders to oversee management and request ministerial inspections; and
• cumulative voting for board elections, designed to enhance minority representation on the board.

The CCL also sets out specific rights afforded to shareholders of public companies in Bahrain. These rights include:

• right to receive profits by way of dividends;
• right to receive a share in the company’s property upon liquidation;
• right to participate in the management of the company (such as the meeting of the general assembly, in accordance with the company’s Articles of Incorporation);
• right to receive a printed pamphlet containing the balance sheet of the financial year ended, the profit and loss accounts, the board of directors’ report, and the auditor’s report;
• right to institute legal proceedings to invalidate resolutions passed by the general assembly or the board of directors in contravention of the law, public order, Memorandum of Association or Articles of Incorporation;
• right to dispose of shares owned by that shareholder, and the right to have a priority in subscribing for new shares issued by the company;
• right to access the company’s registers and obtain copies of the same; and
• all such rights as mentioned in the company’s Memorandum of Association and Articles of Incorporation.

By way of background, any entity conducting business in Bahrain, including those with foreign investment, is required to register with the MOIC via the online Sijilat portal and obtain a Commercial Registration (CR) prior to commencing operations. This obligation extends to companies established by foreign investors, as well as to corporate changes such as share transfers or ownership restructurings. Individual foreign investors (ie, natural persons) must also undergo a security clearance process conducted by the Ministry of Interior (MOI) as part of the incorporation procedure.

One of the key ongoing disclosure obligations that directly affects foreign investors and companies receiving foreign investment in Bahrain is Ultimate Beneficial Ownership (UBO) reporting. A UBO is defined principally according to owning or controlling 10% or more of the capital or voting rights (directly or indirectly) of the entity. Other control criteria (eg, influence or effective control) can also trigger UBO status. Such UBO disclosures must be made at incorporation or as soon as any change occurs and must be annually renewed.

Sector-specific regulatory requirements in Bahrain impose additional reporting and approval obligations on foreign investors in regulated companies. In the financial sector, the CBB generally requires prior approval for any change in 'controller' status — typically a 10% shareholding — and ongoing reporting on control changes, AML/CFT compliance, and beneficial ownership. In other externally licensed sectors, such as engineering and telecommunications, the relevant ministries also generally require notification and approval for changes in control or significant share transfers of licensed operators. Separately, the Competition Authority and MOIC may require notifications under Bahrain’s Competition Law for mergers or acquisitions that materially increase market concentration, creating an additional layer of compliance for large foreign investments.

In Bahrain, various kinds of financing arrangements are available from financial institutions, subject to the rules and regulations of the CBB. The various types of financing arrangements include loans, revolving credit facility, mezzanine debt, and structured debt (for sophisticated borrowers), among others. The lending financial institution may also require the debtor to offer assets of value as security.

Additionally, Bahrain has listed companies which allow funds to be raised through the issuance of shares to the public. Any such capital raised must be in compliance with the rules and regulations of the Bahrain Bourse.

Specific requirements need to be satisfied in this respect, such as listing requirements (if it is the first time a company is issuing shares to the public), drafting a prospectus setting out the details of the issue, and compliance with the company’s Articles of Association in particular provisions relating to pre-emption rights.

The CBB is the sole regulator of the financial services sector in Bahrain including the capital markets. The Legislative Decree No. (64) of 2006 promulgating the CBB and Financial Institutions Law (CBB Law) is the key piece of legislation that governs the financial services sector in Bahrain. The CBB issues regulatory instruments that CBB licensees and other specified persons are legally obliged to comply with. These regulatory instruments are contained in the CBB Rulebook. Volume 6 (Capital Markets) of the CBB Rulebook covers the regulation and supervision of Bahrain’s capital markets. It includes requirements dealing with:

• the offering and listing of securities;
• the authorisation and supervision of exchanges (notably the Bahrain Bourse which is the Bahrain Stock Exchange (BHB)); and
• capital market behaviour (such as insider dealing and market abuse, and the conduct of mergers and acquisitions of listed companies).

Collectively, these requirements aim to ensure transparent and orderly markets, which help protect the rights of investors and shareholders, whilst enabling an attractive environment for those seeking to raise capital.

BHB is a licensed institution subject to the supervision of the CBB, operating within a legal framework consisting of various laws, rules and procedures, including, without limitation, BHB listing rules and market rules.

A foreign investor in a business in Bahrain will be subject to various requirements under the CBB Law, CBB Rulebook, and the CCL depending on the type of regulated banking activity it intends to undertake in Bahrain.

FDI in Bahrain by foreign-structured investment funds is subject to regulatory review. There is no fund-specific FDI screening, however, relevant regulatory authorities such as the MOIC and CBB regulate licensing, ultimate beneficial owner identification, and sector-specific restrictions. While Bahrain is very open to FDI, permitting 100% foreign ownership in most sectors, regulatory oversight is mandatory for operating within Bahrain.

Please review our response in 3.2 Regulation of Domestic M&A Transactions.

Please refer to our response in 6.1 Applicable Regulator and Process Overview.

Please refer to our response in 6.1 Applicable Regulator and Process Overview.

Please refer to our response in 6.1 Applicable Regulator and Process Overview.

Where a shareholder in a Bahrain company is an individual (as opposed to a corporate entity), it is established practice that the Ministry of Interior (MOI) conducts a background security check on such individual as part of the incorporation and licensing process. This requirement operates alongside the approval of the MOIC, which will not finalise or issue a commercial registration (CR) unless the requisite MOI security clearance has been obtained, irrespective of the size of the shareholding.

There is no prescribed statutory timeframe within which the MOI must complete its review, nor is it obliged to provide reasons in the event of a rejection. While market practice suggests that straightforward applications may be processed within a matter of days, the absence of formal timelines or published criteria means that the process remains discretionary and can vary depending on the profile of the shareholder and the nature of the proposed business activity.

Please refer to our response in 7.1 Applicable Regulator and Process Overview.

Please refer to our response in 7.1 Applicable Regulator and Process Overview.

Please refer to our response in 7.1 Applicable Regulator and Process Overview.

No information has been provided in this jurisdiction.

Corporate Income Tax

Bahrain does not currently levy corporate income tax, with the exception of businesses operating in the oil and gas sector. Entities deriving income from the exploration, production or refinement of hydrocarbons in Bahrain are taxed at 46% on net profits per accounting period, irrespective of their residency status.

However, on 29 December 2025, the Bahraini Cabinet approved the introduction of a Corporate Income Tax (CIT) regime, with implementation expected from 2027, subject to enactment of the relevant legislation. The proposed CIT would apply at a rate of 10% to businesses with annual revenues exceeding BHD1 million or net annual profits exceeding BHD200,000.

At the date of this guide, the draft CIT legislation has not yet been officially published; it has been referred to the Council of Representatives for review by the Legislative and Legal Affairs Committee as part of the legislative process, with detailed implementation rules and administrative procedures to follow in accompanying regulations.

Separately, in line with its commitment to the OECD's Base Erosion and Profit Shifting Pillar Two framework, Bahrain has enacted Decree-Law Number 11 of 2024, introducing a Domestic Minimum Top-Up Tax on large Multinational Enterprises. Under the DMTT Law, Bahraini entities belonging to groups with consolidated global revenues of at least EUR 750 million in at least two of the four financial years preceding the tested entity's relevant period may be subject to a top-up tax bringing their effective rate to 15%.

Value Added Tax

Under the Value Added Tax Law (Decree-Law Number 48 of 2018, as amended), VAT is imposed on the supply and importation of goods and services by taxable persons in Bahrain, unless the relevant supply is exempt, or falls outside the scope of VAT. The standard VAT rate is 10% with 0% applying to specified supplies.

Excise Tax

Bahrain also imposes excise tax on certain goods, including tobacco products and energy drinks at 100% and carbonated drinks at 50%, pursuant to Decree-Law Number 40 of 2017.

As Bahrain does not currently have a general corporate tax regime, there is no withholding tax on dividends, interest, or other payments made to foreign companies.

Bahrain has concluded a number of double tax treaties with other jurisdictions. However, given the absence of withholding tax, relief for any withholding tax imposed in Bahrain is not currently relevant.

In the absence of a general corporate income tax regime, conventional tax planning strategies employed in other jurisdictions are not currently relevant in Bahrain.

Companies that fall within the scope of the Bahraini Domestic Minimum Top-up Tax regime will need to have regard to the BEPS Pillar Two rules which may limit the effectiveness of certain profit-shifting or tax planning arrangements.

As there is no general corporate tax regime in Bahrain, capital gains derived by foreign investors are not currently taxable in Bahrain outside the oil and gas sector.

As such, structuring considerations commonly seen in other jurisdictions (eg, availing of specific exemptions, the use of “blocker” corporations or tax-preferred vehicles to shelter gains) are not relevant from a Bahrain tax perspective.

Entities that fall within the scope of the Bahraini Domestic Minimum Top-up Tax regime may need to consider the potential treatment of capital gains under the BEPS Pillar Two rules, including their impact on the computation of GloBE income and the jurisdictional effective tax rate.

Bahrain does not currently have a general anti-avoidance rule or transfer pricing requirements applicable to all businesses.

Under the DMTT Law, a general anti-avoidance rule, substance-based exclusions, and top-up tax mechanisms aligned with the OECD's Pillar Two framework apply to Large MNEs. The Executive Regulations also establish Bahrain's first formal transfer pricing framework for in-scope groups, requiring arm's length pricing for cross-border transactions between constituent entities of the same group.

At present, there are no specific domestic anti-hybrid rules governing cross-border investments.

Bahrain’s employment and labour matters fall under the Labour Law No. 36 of 2012 (Labour Law), which governs private-sector employment, including foreign nationals.

The Labour Market Regulatory Authority (LMRA) oversees the regulation of work permits for expatriate employees and related compliance requirements in the workplace.

Collective bargaining is legally recognised in Bahrain, but its use in practice is limited. Labour unions and works councils are not widespread, with only a few sectors seeing active participation. Foreign investors should note that while collective employment disputes, if any, must follow statutory mediation and arbitration procedures, individual disputes are handled directly through Bahrain’s labour courts.

Key regulations for FDI stakeholders include adherence to statutory benefits for employees such as annual leave, end-of-service gratuity, and employer contributions to the Social Insurance Organisation for eligible employees. Bahrain’s legal framework emphasises fair treatment in employment termination, non-discrimination, and adherence to labour laws during mergers, acquisitions, or organisational restructurings.

The Labour Law in Bahrain provides clear frameworks for employee compensation. Employers must comply with specific thresholds when calculating wages and salaries for their workforce. Compensation primarily consists of cash payments, including salary, allowances, and commissions.

The Labour Law also requires mandatory pension contributions to the SIO for Bahraini and GCC national employees.

Additionally, the Labour Law mandates end-of-service benefits (ESB) for expatriate employees and Bahraini employees with a salary exceeding BHD4,000, the calculation of which varies based on the employee’s length of service.

Other statutory benefits include annual leave, medical leave, maternity leave, and child-related benefits, ensuring that employees receive a minimum standard of entitlements.

In the context of acquisitions or asset sales, employment contracts do not typically transfer by operation of law. Employers would typically renegotiate or reassign contracts to transfer employees to the buyer. However, in a merger or share sale, employment contracts continue automatically with the business, unless explicitly agreed otherwise.

Regardless of the transaction type, employees remain entitled to their accrued end-of-service benefits and entitlements. Compliance with these obligations is critical to avoid disputes or potential claims.

Furthermore, while collective bargaining is legally recognised in Bahrain, it is not widely practised, and there are no specific requirements related to collective agreements during acquisitions or restructurings.

Intellectual property is not a primary criterion in the screening or approval of foreign direct investment in Bahrain. There is no dedicated IP-focused review mechanism applied during the FDI approval process, and the authorities do not condition investment approvals on the transfer, licensing, or localisation of intellectual property.

The approval process handled by the MOIC primarily focuses on proposed business activities and is not IP-specific.

Bahrain does not impose technology transfer requirements that oblige firms to share or divulge technology through compulsory licensing to a domestic partner, nor are investors required to undertake research and development activities in Bahrain as a condition of market entry.

Certain sectors — most notably financial services, telecommunications, and activities falling within the purview of the Central Bank of Bahrain — are subject to heightened regulatory scrutiny, though this scrutiny relates primarily to prudential, competition, and national security considerations rather than IP ownership or exploitation.

Companies engaged in activities involving intellectual property are, however, required to demonstrate genuine economic substance in Bahrain under the Economic Substance Requirements regime, which applies to a defined set of activities including distribution, headquarters, and IP-holding activities.

Bahrain maintains a broadly comprehensive intellectual property framework, underpinned by its commitments under the U.S.–Bahrain Free Trade Agreement, the WTO/TRIPS Agreement, the Berne Convention, the Paris Convention, the WIPO Copyright Treaty, and the Patent Cooperation Treaty, among other international instruments.

IP rights are protected under a suite of national laws, including:

• Law No. 6 of 2014 on Approval of the Trademarks Law of the Gulf Cooperation Council States;
• Trademarks Law No. 11 of 2006;
• Patents and Utility Models Law No. 1 of 2004 (as amended by Law No. 14 of 2006);
• Law No. 12 of 2004 on Approval of the Patent Law of the Gulf Cooperation Council States (as amended);
• Industrial Design Law No. 6 of 2006;
• Designs of Integrated Circuits Law No. 5 of 2006;
• Copyright and Neighbouring Rights Law No. 22 of 2006; and
• the Trade Secrets Law No. 7 of 2003 (as amended).

The MOIC oversees the registration and administration of industrial property rights, while the Ministry of Information administers copyright and related rights. Trademark registrations are valid for ten years (renewable), and patents are protected for twenty years from the date of filing.

Bahrain is generally regarded as providing a reasonable level of IP protection by regional standards, though certain practical limitations exist. There are no specialised IP courts; IP disputes are adjudicated through the ordinary civil court system, where rights holders may seek injunctive relief, damages, and criminal penalties (including fines and imprisonment) against infringers. While commercial-scale copyright piracy has been substantially reduced, end-user piracy of audio, video, and software remains a challenge. The patent regime includes provisions for compulsory licensing in defined circumstances — including national emergencies, non-exploitation of a patent within three years of grant (or four years of filing), and anti-competitive conduct — though these provisions have not been widely invoked in practice.

Bahrain's IP laws do not currently address the protection of AI-generated works, and there is no specific legislation or published guidance on the eligibility of such works for copyright or patent protection. In 2024, the MOIC and the U.S. Patent and Trademark Office signed a Memorandum of Understanding to strengthen cooperation on IP matters, reflecting Bahrain's continued efforts to enhance its IP framework.

Bahrain's principal data protection legislation is the Personal Data Protection Law (Law No. 30 of 2018) (the PDPL), which came into force on 1 August 2019 and is supplemented by various ministerial resolutions issued by the Personal Data Protection Authority (the PDPA).

The PDPL regulates the collection, processing, and transfer of personal data by both public and private sector entities. It applies to natural persons habitually resident in Bahrain or maintaining a place of business in the Kingdom, legal persons with a place of business in Bahrain, and — critically for foreign investors — natural or legal persons outside Bahrain who process personal data using means situated in the Kingdom, unless such means are used solely for data transit.

The PDPL therefore has extraterritorial scope and may extend to a foreign investor in its home jurisdiction where that investor processes data through infrastructure or service providers located in Bahrain.

The PDPL requires that personal data be processed only with the data subject's explicit, written consent, unless a statutory exemption applies (such as contractual necessity, legal obligation, or protection of the data subject's vital interests). Processing of sensitive personal data — including information revealing an individual's race, ethnicity, political views, religious beliefs, union affiliation, criminal record, or health and sexual life — is subject to more stringent requirements, including, in certain cases, the prior written authorisation of the PDPA.

Additionally, the PDPL imposes notification obligations on data controllers, requiring prior notice to be given to the PDPA before carrying out any wholly or partially automated processing operation. This obligation does not apply, however, where the processing relates solely to the maintenance of a legally required public register, where it is carried out by associations, unions, or non-profit-seeking bodies, where an employer processes employee data to the extent strictly necessary for employment-related purposes, or where a data protection guardian has been appointed.

Cross-border transfers of personal data are prohibited unless made to a jurisdiction on the PDPA's approved adequacy list (currently comprising 83 countries, including GCC states, the United States, the United Kingdom, and EU member states) or where specific conditions are met, such as the data subject's explicit consent or contractual necessity.

The enforcement framework under the PDPL is notable for combining both administrative and criminal penalties, distinguishing it from many Western data protection regimes that are primarily civil in nature. The PDPA may issue stop orders, impose administrative fines of up to BHD20,000 (approximately USD53,000) per violation, and levy daily fines of BHD1,000 for ongoing breaches. Criminal penalties — including imprisonment for up to one year and fines of up to BHD20,000 — may be imposed for serious violations such as the unlawful processing of sensitive personal data, unauthorised cross-border transfers, or obstruction of the PDPA's investigations. Individuals who suffer damage as a result of unlawful data processing may also pursue civil compensation through the Bahraini courts. While penalty amounts are modest compared to those under the EU's GDPR or Saudi Arabia's PDPL, the inclusion of criminal liability and the potential for cumulative daily fines represent a meaningful enforcement mechanism.

Enforcement activity by the PDPA is expected to intensify as the authority becomes fully operational and as Bahrain's broader regulatory framework continues to mature.