In the Past
According to the Commercial and Company Laws in Kuwait, any foreign investor seeking to establish their business in the Kuwaiti Market could either establish a company with a limited ownership of a mere 49% of the company’s shareholding (whereby the remaining 51% must be owned by a Kuwaiti partner) or alternatively operate under an agency scheme through a Kuwaiti agent, in accordance with the Commercial Agency Law. Establishing a representative office to study the market or opening a branch of a foreign company was not previously permitted.
In 2013, the Kuwaiti government has decided to begin a new era and has enacted the Foreign Direct Investment Law (“FDI Law”) and its executive regulations which allow the foreign investors 100% ownership of a Kuwaiti FDI company, and to manage it completely without needing a Kuwaiti partner. The Law opens a new channel for foreign investors to own and control the company to pursue a great number of business activities inside the Kuwaiti market, with the exception of certain activities. The Law also permits to have a branch to the foreign company or a representative office to study the market prior to establishing the company and operating in Kuwait.
The foreign investor, during the establishment of his business, in Kuwait will deal with two main authorities: the Kuwait Direct Investment Promotion Authority (KDIPA) and Ministry of Commerce and Industry (MOCI).
Timeline to get your licenses:
KDIPA grants the investment license to the foreign entity which allows for 100% foreign ownership of the Kuwaiti company within 30 days from the date of the application. The MOCI grants the applicant the commercial license to operate within a maximum of 60 days. This timeframe may be extended if the applicant’s activity is subject to the regulations and supervision of another ministry or authority i.e. the Capital Market Authority (CMA) or Ministry of Information etc..
Minimum Capital Required:
Determining the company’s capital is currently based on the company’s type, as opposed to its objectives as was the case in the past. However, the below minimum capital required may be increased in the event that the company’s objectives falls under the scope of the regulations or supervision of another authority other than MOCI (e.g. Capital Market Authority or Ministry of Information):
- Limited Liability Company – minimum capital required is KWD 1000 (One Thousands Kuwaiti Dinars Only)
- Closed Joint Stock Company – minimum capital required is KWD 10,000 (Ten Thousands Kuwaiti Dinars Only)
- Public Joint Stock Company – minimum capital 25,000 K.D. (Twenty Five Thousands Kuwaiti Dinars Only)
The Law grants foreign investors the right to carry out most commercial activities without restrictions, although some specific activities are excluded from direct investments in accordance with the Ministerial Decree no. 75 of year 2015 regarding the List of Excluded activities from provisions of FDI Law no. 116 of 2013 and International Standard Industrial Classification (ISIC) which enable the foreign investor to easily identify the excluded activities from those permitted for direct investment inside the State of Kuwait as follows:
- Extraction of crude petroleum (Class 0610)
- Extraction of natural gas (Class 0620)
- Manufacture of coke oven products (Class 1910)
- Manufacture of fertilizers and nitrogen compounds (Class 2012)
- Manufacture of gas, distribution of gaseous fuels through mains (Class 3520)
- Real estate (Level L) excluding privately operated building developments projects
- Security and investigation activities (Division 80)
- Public administration and defense compulsory social security (Level O)
- Activities of membership organizations (Division 94)
- Activities of hiring labor including domestic labor.
Finally, we hope our efforts will succeed in raising awareness and disseminating knowledge that are truly informative about Government developmental goals.