Economic Substance Regulations
AM Consulting provides expert guidance and comprehensive ESR compliance services. With our in-depth knowledge of Bahrain’s regulatory environment and extensive experience we are your trusted partner in navigating the complexities of ESR.
In Bahrain, businesses registered with a Commercial Registration (CR) must comply with the Economic Substance Regulation (ESR). The ESR ensures that entities carrying out certain business activities demonstrate substantial economic substance in Bahrain.
Core Income-Generating Activities (CIGA) Under ESR
Distribution and Service Centers
Headquarters
Holding Companies
Leasing & Shipping
Financing Companies
Intellectual Property (IP) Holding
Financing Companies
Banks & Insurance
Certain Investment Firms
Economic Substance Test & Requirements
To meet the Economic Substance Test, entities must:
- Conduct relevant CIGA in Bahrain.
- Have an adequate number of qualified full-time employees, physical offices, and operating expenses.
- Ensure that the management is physically present in Bahrain, with an adequate number of Board of Directors meetings held in Bahrain, and strategic decisions made and recorded in the country.
- The Board of Directors must possess appropriate knowledge of the business and the ability to make strategic decisions.
Failure to meet these requirements can result in penalties, including fines, suspension of commercial registration, or criminal prosecution.
Regulatory Authorities
Consequences of Non-Compliance
Non-compliant entities could face the following actions:
- Warning Notices
- Suspension of Commercial Registration (CR)
- Criminal Prosecution
- Penalties of up to BD 1,000 per day
- Striking off from the CR
Our ESR Compliance Services
ESR Classification and Assessment
We review your business activities, determine ESR applicability, and ensure accurate classification for a clear and compliant approach.
ESR Reporting and Notification
We manage ESR reporting and notifications, ensuring every submission is accurate, timely, and fully aligned with regulatory requirements.
ESR Compliance
We create tailored ESR compliance plans designed around your operations, helping your business meet all mandated regulatory expectations smoothly.
Record-Keeping and Documentation
We maintain organised ESR documentation, ensuring your business stays prepared for regulatory audits, reviews, or compliance-related inquiries anytime.
