#corporateadvisory
Things to remember while signing a lease for office
Khalid Khan
March 4
One of the most important mandatory requirements for setting up a business in Bahrain is having a physical address for the company and since Bahrain is one of the most preferred foreign investor's destinations there are a number of small and big companies offering office spaces for rent in Bahrain to the investors.

We have routinely advised and suggested clients in setting up their businesses and have also seen a lot of problems with the investors related to the office spaces for rent in Bahrain that I finally thought of writing an article covering issues which investors may face while signing a lease for office.

Here are some of those.
1
Full one-year advance rent. A lot of investors don't need a full-fledged office but even a virtual office. A lot of business centres are offering office spaces for rent in Bahrain but asking one year advance as rent which might not be a bad option if you can afford it but you must make sure the business centre you are dealing with has good reputation and are not allocating the same addresses to a lot of people because if in the records a company is already existing at the lease address provided by you then your company cannot be registered at that address.
2
Lessor is not the owner of the property. One of my clients was in the shock of his life when he went to register the address of the company via Municipality. The municipality staff asked him to explain how he has signed the lease agreement with a dead person. This could happen to you also so always sign an agreement with reputed establishments or with someone known to you. Therefore, be sure you are signing the lease with the actual owner.
3
Lessor might not be cooperative. One of my clients signed a one year lease with a business centre and paid them one year rent in advance too but when he asked them to provide a certificate from Municipality they said you can go and do it yourself while the Municipality told him we need the real owner or anyone authorized by him to come here for this purpose. This kind of situation can definitely occur to you when you are paying a year's rent in advance so play smart and don't pay full payment at one time.

I ALWAYS ADVISE MY CLIENTS NOT TO PAY ONE YEAR RENT TILL THE ADDRESS IS ACCEPTED BY THE MUNICIPALITY AND COMPANY FORMATION WORK IS OVER.
4
Address might already be registered with another company. This is another issue which you might encounter. The general rule is the same address cannot be allocated to more than one company unless the shareholder is the same (subject to municipality approvals). However, many people get fooled by signing an agreement for a property which is already registered with another company which not only results in the wastage of money but also wastage of time.
5
You might sign lease without reading it. This is one of the biggest blunders which people do. One of my clients signed a lease which doesn't give him the right to exit. I would never advise my client to sign a one-sided lease which doesn't let him exit even if the lessor is at stake. Also, in many leases, I noticed hidden surprises for the lessee. For example, one lease very smartly hides the fact that the lessee will be paying monthly EWA charges while the lessee was under the impression that EWA charges will be charged to him for one time only.
If you need an address for the company it doesn't mean that you have to agree with everything which the lessor impose on you. Very recently I told one of my clients whom I assisted to set up a business not to sign the lease and agree for payment condition till the address is finally approved for the company formation purpose and the business centre yielded to his condition and said the remaining 11 months payment will only be paid when the address will be accepted. Therefore, it all depends on how you negotiate the deal and don't surrender to whims and fancies just because you need an address.
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