Sharing my mistakes regarding company formation and agent selection

Possam · 2024-01-23T08:09:21+01:00

Discover valuable lessons on company formation and agent pitfalls in Bahrain, shared from real experiences to help future entrepreneurs avoid mistakes.

Possam Member

Member since 10 March 2023

PossamMember23 January 2024 06:09:21

The purpose of this post is only to share information about the trap I fell into so that other people can avoid it in the future. Please refrain from further criticizing my past actions here as I now understand how naive I was and what I should have done to solve the problem.

I paid an agent to set up my company and secure an address for my CR. They offered a package including incorporation, bank account and rental office address.
Oddly enough, the office contract they shared with me was with a different office provider, and was accompanied by a termination letter terminating the rental after one month. When I asked why they would terminate after one month, they said this was only to save on EWA costs and would not affect the address. I foolishly stopped pursuing the matter further and signed the contract.
They had been not responsive and not able to answer my questions clearly, but I just thought it was due to "cultural reasons" partly because they could complete other tasks like company formation, visa application, etc.
LMRA ran a massive inspection campaign last Nov/Dec and my company was alerted. This was probably because my company did not have a valid address and of course my CR card was not presented at the rental office.
Here I understood that my company had lost its address due to that contract that the agent asked me to sign, and that their answer that the address was not affected was a lie.
I contacted the office provider directly for a detailed information to understand the big picture. He told me that this agent had signed up 100+ offices for clients in the last year, all of which were terminated within a month. And most of the clients are outside of Bahrain.
Cunningly, what this agent has done is probably not culpable because I signed the contract myself. I signed the contract based on their answers to my questions, but these answers were only informal conversations on WA.
This agent is willing to put their clients鈥� companies at risk and make them have serious issues with LMRA for mere hundreds BD.

What this experience made me keenly aware of is the need for us to have sufficient knowledge in order to choose the right agent and to avoid being deceived by agents. However, people with sufficient knowledge do not need agents. What people without sufficient knowledge can do is to ask trusted friends or their acquaintances for referrals of agents who seem to be good.

More importantly, every advice from XTang in this thread is a gem. I should have read it again and again and taken it more seriously. I hope you guys won't get trapped as I did and enjoy your business here without issues like these. Good luck.

XTang Bahrain/UAE/KSA Expert

Member since 22 April 2014

XTangBahrain/UAE/KSA Expert23 January 2024 06:13:51

11938

Thanks for the detailed update.聽 Sorry to hear about it and hope you get to sort it out.

Possam Member

Member since 10 March 2023

PossamMember23 January 2024 06:20:08

@XTang

Thanks for your kind words. I somehow wanted to give something this expat community back because I learnt a lot here.

XTang Bahrain/UAE/KSA Expert

Member since 22 April 2014

XTangBahrain/UAE/KSA Expert23 January 2024 06:27:21

11938

@Possam, thanks for that.聽 In this part of the world, there is always learning as things keep changing a lot .

logicalindian Bahrain Expert

Member since 01 May 2013

logicalindianBahrain Expert23 January 2024 16:03:54

3474

@Possam truly appreciate you sharing this information with others. Sorry to hear that it happened.

Possam Member

Member since 10 March 2023

PossamMember23 January 2024 17:12:25

@logicalindian thanks for your appreciation!

My current situation is totally fine, so I could share this bitter experience

I hope everyone coming here can avoid these scammy agents.

udit107_expat Member

Member since 24 October 2020

udit107_expatMember30 January 2024 10:52:45

@Possam sorry to hear this. Please share the details of this scammer as the warning to others.

Possam Member

Member since 10 March 2023

PossamMember30 January 2024 21:41:10

@udit107_expat I refrain from writing the name here for some reasons, but those who want to know the agent I used can DM me.

isabellabeccaceci Active member

Member since 15 October 2023

isabellabeccaceciActive member31 January 2024 05:29:19

Sorry for your disappointing experience.聽 Hard lesson to learn from.聽 Hope you will not give up on your plans.聽 Good luck!

Possam Member

Member since 10 March 2023

PossamMember31 January 2024 13:29:06

#10

@isabellabeccaceci Thanks for your kind words.

Financially it's not that big pain, but it's indeed disgusting experience. Sadly they're getting more and more expat customers even now.

isabellabeccaceci Active member

Member since 15 October 2023

isabellabeccaceciActive member31 January 2024 13:47:37

#11

Why not report them to the authorities so as to save other victims?聽聽Unless you do not want to be dragged into a never ending saga

Babzy New member

Member since 13 July 2023

BabzyNew member05 February 2024 12:42:04

#12

@passam Sorry to hear your problems. I hope it gets resolved. If you have not got a new CR office address, one option would be to register at an incubator/startup hub. They are linked directly with LMRA.

Following Xtangs advice and bit of Googling thats the route we took. You will be limited to two company employees, but they take care of everything including registered CR address and EWA. Cost is around 90BD a month and worth the peace of mind.聽

Possam Member

Member since 10 March 2023

PossamMember05 February 2024 17:06:18

#13

@isabellabeccaceci

I'll make a summary which helps the authorities crack down on their business later. But according to the explanation from lawyers I talked with about this issue, it might be difficult to penalize them legally since they did what is written on the contract. Their clients sign the contract based on their explanation which is misleading or just a lie. I think, in this case, what they do is not illegal. This is their trick.

Possam Member

Member since 10 March 2023

PossamMember05 February 2024 17:07:41

#14

@Babzy

Thanks for the information. I'm currently making a progress in a bit different way. Anyway, your information is helpful

TDriver 48 New member

Member since 26 February 2024

TDriver 48New member26 February 2024 21:46:40

#15

I actually think I know who you are talking about. In any case, 'setupinbahrain' did this exact manoeuvre on me. I have not yet signed the memorandum they sent and the address is not linked with the company yet. Instead I am intending to fly into Bahrain and talk with some people, and get a legitimate office etc setup.

You can see my recent post if you are interested in my case, and have any information regarding visa for the business setup period of time.

Thank you for sharing.