Commercial Laws of Kuwait

by Santos Krishnan, July 2015

1500 words

5 pages


Commercial Laws of Kuwait

Every country has its own rules that regulate the establishment of a business. Similarly, Kuwait has its own rules which must be followed if one wishes to establish a business entity. In order to start a business in Kuwait, a license is required, and is usually issued by the ‘ministry of commerce and industry.’ A business can be started by any Kuwait citizen provided is 21 years of age or above, but a foreigner can only start a business in Kuwait in partnership with a citizen of Kuwait. The partner in addition, must have more than 51% of the capital investment in the business. Also, for a foreign firm to have a branch in Kuwait, it must first have a Kuwait agent. These and other laws that regulate the start-up and operation of businesses in Kuwait are termed as commercial laws and they work to ensure stability and order in the business industry.

In 1998, foreigners became free to enjoy the privilege of owning a business in certain zones termed as the ‘Kuwait free trade zone.’ In this zone, the foreigners can have business licenses without having any sponsor especially the industrial licenses, commercial and the service licenses. In addition, the free trade zone also provides a range of infrastructural services. There were new rules that were issued in 1999, which permitted the foreign investors to posses stocks on the ‘Kuwait stock exchange’ (Kuwait Government Online, 2012). In 2001, Kuwait enacted a law with the aim of increasing foreign investments in the country. They tried to lure foreign investments into their country by allowing foreigners to own up to 100% of business units in definite areas.

There are three main companies which an individual can establish in Kuwait. These companies are the limited liability company (WLL), closed joint stock company (KSC) and the joint stock company (PKF Bouresli and Co, 2012). These are the companies which are allowed by the Kuwait government to be established by foreigners in that country.

The limited liability company can be established by any foreigner or cooperate, provided they fulfill the terms and conditions set by the government of Kuwait. The term as stated before is that there should be a Kuwait citizen owning at least 51% of the company’s shares (Kuwait Business, 2012). Forming a limited liability company in Kuwait is very simple and follows a process that lasts approximately three months. The companies under this type usually have a limited liability shield in that they do not pay tax like the other corporate bodies that are foreign. Kuwait citizens are permitted to establish companies in their country and are exempted from paying taxes, but those companies that are established by non-Kuwaiti have to pay some specified amount of tax. However, this is different with the limited liability companies as they enjoy the privilege of not paying taxes.

Shareholding companies operating in Kuwait are categorized into two, closed and public. They are required to have five or more shareholders in order to be …

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