Company Liquidation Bahrain

Liquidating a company in Bahrain

Starting a business can be a great adventure but things don’t always go as planned. As situations change – whether due to market fluctuations, financial difficulties or changes in business strategy – owners may find themselves needing to close their companies. Understanding how to do this in compliance with local regulations is essential to protecting all stakeholders.

Closing a company in Bahrain requires a liquidation process that involves settling debts, disposing of assets and distributing any remaining funds. This section will guide you through the process of winding up a company in Bahrain, so you can close with clarity and confidence and avoid legal and financial headaches.

Types of Liquidation in Bahrain

There are two types of company liquidation in Bahrain under the Bahrain Commercial Companies Law:

Voluntary Liquidation: this happens when the company’s shareholders or its board of directors decide to wind up the business. This is usually done for strategic reasons such as after a project completion, a group restructuring or a reallocation of assets. It allows for a more controlled closure because the company’s management is in charge of the winding up process.
Compulsory Liquidation: this is ordered by the court, usually in cases of insolvency or non-compliance with legal requirements. The company’s creditors can petition the court for compulsory liquidation when a company is unable to settle its debts. In this case the court appoints a liquidator to manage the process and ensure that any remaining assets are distributed fairly among creditors.

Company Liquidation Procedure in Bahrain

01

Resolution to Liquidate: the process begins with a resolution from the company's shareholders or board of directors to wind up the company. This must be documented and submitted to the relevant authorities, including the Ministry of Industry, Commerce and Tourism (MOICT) and the National Bureau for Revenue (NBR).

02

Liquidator Appointed: a qualified liquidator is appointed to manage the winding up process. This person or firm will handle the company’s assets and the company's debts, and ensure compliance with all regulations.

03

Public Notice: a notice of liquidation must be published in the Official Gazette and local newspapers to inform creditors and other stakeholders of the closure. This is important to protect everyone’s interests.

04

Asset and Liability Statement: the liquidator will prepare a comprehensive financial statement of the company that includes a full list of the company's assets and the company's liabilities. After settling all outstanding debts, the remaining funds will be distributed among the partners according to their profit shares. If the company’s assets are insufficient to cover the partners’ shares, the losses will be shared among them according to the same ratio as profit distribution.

05

Settlement of Debts: all debts must be settled before any distribution of assets to shareholders. The liquidator will use the company’s assets to pay creditor claims, which may include payments to employees, suppliers and tax authorities.

06

Tax Clearance: before the liquidation is completed, the liquidator must obtain tax clearance from the NBR to confirm all corporate taxes have been paid.

07

Cancellation of Registration: once all debts are settled and tax obligations are met, the liquidator will submit a request to cancel the company’s commercial registration with the MOICT.

08

Final Report and Approval: the liquidator will prepare a final audit report and submit it for approval. Once approved the company is dissolved.

09

Public Notice: the closure of the company is published in the Official Gazette to formalise the liquidation.

How Can Sovereign PPG Help?

Closing a company in Bahrain can be a complicated process but Sovereign PPG makes it easy. Our team has extensive experience, in-depth knowledge of the local regulations and strong connections with key government authorities to ensure a smooth and compliant liquidation process. From appointing a liquidator to managing all the legal and financial aspects of the liquidation procedure, we will guide you through the whole process.

If you need assistance with liquidating your company in Bahrain or any related corporate services, restructuring or business closure matters in Bahrain, the UAE or the wider GCC region, please contact us by phone on +973 1777 2011 or by email to bahrain@sovereigngroup.com. Alternatively, complete the contact form below, and we will be delighted to assist you.