In this article, our colleague, Att. Abdel Hamid Soliman from Gurcan Partners Kuwait Office will mention Doing Business in Kuwait after changing of the Foreign Direct Investment Law of Kuwait.
DOING BUSINESS IN KUWAIT - A NEW ERA
Over the last 3 years, the Government of the State of Kuwait has taken sequential steps in order to develop the legal environment for foreign investors to do their business in the State of Kuwait smoothly and without any hindering obstacles.
The developments include the introduction of new laws that are directly applicable to businessmen and investors who are seeking to start (or already have started) their business in the Kuwaiti Market.
These developments allow for the commencement of all kinds of business, and possibly the increase in profitability in comparison with the previous practice.
In response to these developments, from our Kuwait Office, Att. Abdel Hamid would like to present this highlight on the major changes which have taken place in the legal framework of Kuwait from commercial and business perspectives.
This and the following articles portray the shift in the Kuwaiti market from a challenging market (particularly to foreign investments) to a financial hub aiming to attract new investors and operators and also benefit existing market players.
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FOREIGN DIRECT INVESTMENT LAW IN KUWAIT – BE THE OWNER OF YOUR COMPANY
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 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.
As a result of these restrictions, foreign entities were unable to expand their business in the Kuwaiti market due to limited options to establish their business in terms of corporate structures and accessing the Kuwaiti market, and limited control over and management of the Kuwaiti company as major decisions would require the consent of the local partner who has higher control over the business.
In 2013, the Kuwaiti government decided to begin a new era and enacted the Foreign Direct Investment Law (“FDI Law”) and it’s executive regulations which allow the foreign investors 100% ownership of a Kuwaiti FDI company, and to manage it completely without needing a Kuwaiti partner.
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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 having a branch of the foreign company or a representative office to study the market prior to establishing the company and operating in Kuwait.
The introduction and implementation of the FDI Law have encouraged the following companies to start their business in the Kuwaiti Market since the Law was enacted in 2013:
- IBM KUWAIT 100 %
- HUAWEI TECHNOLOGIES KUWAIT 100 %
- GE TECHNOLOGIES CENTER KUWAIT 97%
- NTG CLARITY NETWORKS INC 100 %
- MALKA COMMUNICATIONS GROUP 60 %
- TSK ELECTRONICA Y ELECTRICIDAD S.A. 100%
- SINGULF GLOBAL PTE. LTD – Representative office
- BERKELEY RESEARCH GROUP – 99%
The following article on FDI Laws in our upcoming post will include a discussion on the timeframe of obtaining an FDI license, the required capital for permitted activities, as well as the restricted activities for companies to pursue under FDI Law.
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Doing Business in Kuwait
Att. Abdel Hamid Soliman
All rights reserved. All rights of the Doing Business in Kuwait article belong to Gurcan Partners International Law Firm. The author has no responsibility for the information in this article. This article is prepared just to inform.
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