Converting From Individual Establishment to Wll in Bahrain: a Quick Guide

Starting a business in Bahrain often begins with an Individual Establishment, but as your business grows, converting to a With Limited Liability (WLL) company might be a smart move. Here’s a simplified guide to help you understand both structures and the conversion process.

What is an Individual Establishment?

An Individual Establishment is a business owned and managed by a single individual, where:

• The owner is fully responsible for all liabilities and financial obligations.

• Eligibility: The owner must be at least 18 years old and a Bahraini or GCC national, or a resident with certain agreements.

• Complete Control: The owner makes all decisions and handles business operations.

• Simple Setup: Ideal for new entrepreneurs due to its simplicity and lower startup requirements.

What is WLL (With Limited Liability)?

A With Limited Liability (WLL) company offers liability protection, where:

Limited Liability: Each partner’s liability is limited to their share of the company’s capital.

• Ownership Flexibility: It can be owned by individuals or corporate entities.

• No Minimum Capital: No set capital requirement, though shares must be paid up before incorporation.

• Governance: WLLs must hold shareholder meetings and comply with transparency regulations.

• Restrictions: WLLs cannot engage in sectors like banking, insurance, or general investments.

Merits & Aspects of Converting from Individual to WLL

• WLL can have one or more shareholders, offering more flexibility in ownership

• All shareholders in a WLL will get an investor visa & there is no age restriction for obtaining an investor visa.

• Limited Liability: Protects personal assets from business debts and liabilities.

• Increased Credibility: A WLL is often seen as more professional, which can attract clients and investors.

• Potential for Growth: Easier to raise capital through investors or loans.

• Complexity and Cost: More paperwork, legal requirements, and associated costs compared to an Individual Establishment.

• Ongoing Compliance: WLLs require annual audits, filing financial statements, and meeting regulatory obligations.

• Restrictions: Limitations on ownership and structure may complicate certain operations.

• New Commercial Registration (CR): Depending on the case, a new CR may be issued, requiring a name change on business materials, such as letterheads and stamps, with additional costs.

• Capital Requirements: Capital must be deposited in cash or kind for the new structure.

• Credit Line Adjustments: Changes to the company’s credit line may be necessary.

Implications for Visas and SIO After Conversion

When converting from an Individual Establishment to a WLL, there are several key steps regarding visas and registrations:

• Visa Transfer: All employee or investor visas tied to the Individual Establishment must be transferred to the new WLL company. Visas with less than 15 days of validity must be renewed before conversion.

• LMRA Registration: The company must update its registration with the Labour Market Regulatory Authority (LMRA) to process new visas and permits.

• Employee Visa Changes: Any employee visas previously under the Individual Establishment will need to be transferred to the WLL manually 

• SIO Registration: The company will need to update its Social Insurance Organization (SIO) registration for social insurance and employee benefits.

• Investor Visa: If the business owner is applying for an investor visa, specific documentation will be required under the WLL structure.