Deadline Reminder: Submission of Audited Financial Statements and Non-Acceptance of Postponement Letters for ESR Entities

Audited Financial Statements

The requirement to submit audited financial statements to the Ministry of Industry and Commerce (“MOIC”) on an annual basis applies to all corporate entities or legal presences incorporated or registered in Bahrain, including Limited Liability Companies, Branches of Foreign Entities, and Bahrain Shareholding Companies (Closed).

Corporate entities registered in Bahrain with a financial year ending on 31 December annually are required to submit their audited financial statements to the MOIC within six (6) months of the end of the financial year. As such, the deadline for such corporate entities is 30 June 2024. Entities with a financial year ending on 31 March are required to submit by 30 September 2024.

Audited financial statements are submitted to the MOIC via their online portal. Failure to submit audited financial statements by the end of June 2024 will result in a violation placed on the Commercial Registration (CR) of the entity on the MOIC online system. This violation prevents the entity from, for example, carrying out any online applications or renewals of Commercial Registrations (CRs).

Entities Subject to the Economic Substance Rules

As per the Economic Substance Rules introduced by Resolution No. (106) of 2018 (and the supporting Guidance Notes published by the MOIC), commercial entities in Bahrain that undertake a relevant activity are required to submit an Economic Substance Rules Annual Return Form (“ESR Annual Return”) to the MOIC on an annual basis.

The MOIC circulated a decision on 28 March 2024, stating that it will not be accepting auditor postponement letters relating to the audited financial statements of entities subject to the Economic Substance Rules. Accordingly, it is especially important for such entities to prepare their audited financial statements within the six (6) month deadline, in order to allow for the same to be submitted and accepted prior to the ESR Annual Return deadline (to be announced).

What should you do next?

To avoid violation(s) being placed on the Commercial Registration (CR), your Bahrain-based entity must:

1. Approach a registered audit firm in Bahrain to prepare audited financial statements for the financial year ended 2023;
2. Submit the audited financial statement on the online portal of the MOIC before 30 June 2024;
3. Ensure that your Commercial Registration (CR) is free of other violations and that it is renewed and active at the time of the submission of the audited financials; and
4. Complete and submit the ESR Annual Return to the MOIC by the deadline (to be announced) via online submissions on the ITIES system.

How can we help?

As the leading law firm in the Middle East & North Africa Region and with strong corporate structuring experience across all industry sectors in the region, Al Tamimi & Company is well-placed to assess the impact of the Rules on your organization and assist you in complying with the Resolution, including working with you to complete and submit the required ESR Annual Return and annual audited financial statements.

If you would like to further discuss the contents of this update, and find out what it means for your business, please contact Al Tamimi & Company in Bahrain.