Commercial Code Law, New Business In Kuwait Kuwait

Commercial Code of Kuwait
The Law Firm of Labeed Abdal
The Commercial Law of Kuwait, 1981 is a comprehensive Code covering all commercial activities like commercial contracts, commercial agency, trademarks, trade names, unfair competition, banking operations, bill of exchange, bankruptcy etc.
Articles 23 and 24 lays down the basic requirement for a foreign individual and a foreign company respectively for doing business in Kuwait. Article 23 states that a Non-Kuwaiti cannot practice any commercial activity in Kuwait unless he/she has one or more Kuwaiti partners and also that the Kuwaiti partner/s will own atleast 51 per cent of the total capital invested for the commercial establishment.

Article 24 stipulates that a non-Kuwaiti company can engage in commercial activities in Kuwait only through a Kuwaiti agent.
A foreigner or a foreign company can do business in the Kuwaiti market mainly by way of:-
  1. Establishing a company which could be a Limited Liability Company, Closed Joint Stock Company or a Public Joint Stock Company.
  2. Entering into joint Venture Agreement which doesn't require any formal procedures.
  3. Appointing a Local Commercial Agency.
  4. Appointing a Commercial Agent who is a Kuwaiti individual.
The New Investments Law in Kuwait (Law No.8/2001) has been passed for regulating Direct Investment of Foreign Capital in the State of Kuwait. Since the law was passed with a view to encourage foreign investment in Kuwait, there are many clauses which actually encourages a foreign investor to invest their capital in the state of Kuwait like the 100% foreign ownership of corporate shares of a company(Article 4). A Foreign Capital Investment Committee is set up which is entrusted for recommending to the Minister of Commerce & Industry with regard to the granting of licenses to the foreign investors for practicing the economic activities and enterprises. Furthermore, Article 8 prohibits absolute confiscation or nationalization of any licensed foreign enterprise under the provisions of this law. This provision mandates prompt payment of compensation. The provision of this Law extends to cover the investments currently existing so that the investors could benefit from the new provisions without prejudice to the privileges already obtained by him (Article 9).

Also the foreign investor enjoys the priority right to transfer his investment to another foreigner or Kuwaiti national investor, or to assign the enterprise to his foreign partner (Article 11).

There are benefits and exemptions granted to the foreign investor like tax exemption, avoidance of double taxation, exemption from customs duties, allotment of land and real estate, recruitment of foreign labour etc upon the approval by the Investment Committee (Article 13).