KUWAIT Law and Practice Contributed by: Sam Habbas, Luis Cunha, Hisham Al-Quraan and Mustafa Sayed, ASAR – Al Ruwayeh & Partners
3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity Law No 1 of 2016 (the “Companies Law”) provides for several types of companies that may be established. The more common forms used by foreigners when investing into Kuwait are the Single Person Company (SPC) or the With Limited Liability Company (WLL). SPCs and WLLs are largely subject to similar rules/ regulations, with a significant difference being that an SPC may only have a single shareholder while a WLL is required to have between two and 50 share - holders. If an SPC has more than one shareholder, it is automatically converted into a WLL. WLLs are the most common form of corporate entities established by foreign parties in Kuwait. The objects of an SPC/WLL have to be selected from a pre-approved list issued by the MOCI. An entity is not authorised to undertake activities that are not con - sistent with its objects as listed in its memorandum of association (MOA). The minimum required share capi - tal of an SPC/WLL is currently KWD100 per licensed activity, which will be cumulative: the minimum share capital of each registered object (ie, licensed activity) will be added together to reach the required minimum share capital of the relevant SPC/WLL. The capital amount is usually dependent on the objects selected and approved by the MOCI for inclusion in the MOA of the SPC/WLL. The liability of shareholders of an SPC/WLL is limited to the extent of their share capital contribution in the company. However, in relation to an SPC, the owner may also be liable for the debt of the SPC if the share - holder: • liquidates the SPC in a mala fide manner before its expiry or the realisation of its objectives; or • does not separate the financial rights and obliga - tions of the SPC from its other activities to the prejudice of bona fide third parties. Investors may also establish a Kuwaiti Joint Stock Company (KSC). There are two types of KSCs: Pub - lic Joint Stock Companies (KSCPs) and Closed Joint Stock Companies (KSCCs). KSCCs are more com -
mon than KSCPs but, given that KSCs are subject to certain additional taxes (such as Zakat and contribu - tions to the Kuwait Foundation for Advancement of Science) and increased regulation, and have greater minimum capital requirements compared to an SPC/ WLL (the minimum required capital is KWD10,000 for KSCCs and KWD25,000 for KSCPs), investors prefer to establish SPCs/WLLs unless the particular project requires a KSC. SPCs/WLLs are also easier to set up and administer, are subject to less stringent regula - tions and are relatively cheaper to establish and oper - ate than a KSC. In light of this, what follows in this chapter does not address issues in relation to KSCs, focusing instead on SPCs/WLLs. 3.2 Incorporation Process As a high-level summary, in order to incorporate an SPC/WLL, an application must be submitted to the MOCI using a standard Arabic application form accompanied by the required documentation/infor - mation. This is submitted online through the MOCI’s website. Certain information must be provided as part of the online application, including the names of the shareholders/manager, the capital amount, the man - ager’s authority, the company name, the ultimate ben - eficial owner (UBO) details, etc. As an initial step, the UBO must approve their inclu - sion and be named as such in the application. Cur - rently, only Kuwaiti nationals or expatriates holding a Kuwaiti Civil ID can be listed as a UBO. Under Reso - lution No 4 of 2023 on the Procedures for the Identi - fication of the Actual Beneficiary (the “UBO Resolu - tion”), the actual beneficiary of a corporate entity is the party that directly or indirectly owns or controls 25% or more of the capital or voting rights of the entity or otherwise has the right to appoint and remove the majority of the board of directors. Where it is not pos - sible or practical to identify the UBO on that basis, the UBO is the person who has actual control over the relevant corporate entity. Where this is not possible or practical, the UBO is the person responsible for the management of the relevant corporate party. Once the UBO has approved their inclusion, the MOCI must approve one of the proposed names. The online application is then referred to the Ministry of the Inte - rior (the MOI) for its approval regarding the partners
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