How to do business in Kuwait
Foreign entities have the following options to carry out business in Kuwait:
- Through the sponsorship of a registered Kuwaiti merchant (Kuwaiti agent)
- Through a joint venture
- Through W.L.L or K.S.C. Companies
- Through Foreign Direct Investment Law No. 8 of 2001
Sponsorship or agency agreement
A Foreign Company can operate in Kuwait through an agency agreement. Under this arrangement, a Kuwaiti merchant or a Kuwaiti entity must be appointed as an agent of the foreign entity. The agency agreement has to be drafted, setting out the authority and responsibility of the Principal (Foreign entity) and the Kuwaiti agent. Under the sponsorship arrangement the business is carried out in the name of the Kuwaiti agent. It is normal for the Kuwaiti agent to provide local support including fulfilling the local regulatory requirements and arranging for work permits. The agency agreement should be registered with the Commercial Agencies Department at the Ministry of Commerce and Industry.
A Joint Venture may be formed by two or more persons, who are jointly and severally liable. Its objectives, terms and conditions are usually set out in its joint venture agreement. Joint Venture agreement shall be binding on the joint venture partners and is not binding on third parties.
W.L.L. or K.S.C. Companies
Limited liability (W.L.L.) Companies require a minimum of 51% of Kuwaiti shareholding and a minimum of two partners. The partners can either be individuals or legal entities. Husband and wife are considered as one partner.
Kuwaiti Shareholding (K.S.C.) Companies also require a minimum of 51% Kuwaiti Shareholding and minimum of five shareholders. Capital requirement is based on the nature of the Company’s activities. K.S.C. Companies are permitted to be listed in the Kuwait Stock Exchange subject to fulfilling the rules and regulations of the Kuwait Stock Exchange.
Foreign Direct Investment Law
The Foreign Direct Investment Law No. 8 of 2001 came into force from 17 April 2001 and allows 100% foreign ownership for certain economic activities and projects. In order to form an entity under Law No. 8 of 2001, application in the prescribed form has to be made to Foreign Investment Capital office (FICO). The FICO is required to review the application, study the project and present the outcome of the study to the Foreign Capital Investment Committee (FCIC). The FCIC will present the outcome of the study to the Ministry of Commerce and Industry, which will decide whether to grant or not to grant the license to the project.
Download: Doing Business in Kuwait