KUWAIT Law and Practice Contributed by: Michel Ghanem, Patrick Obeid and Michel Ata, Meysan
submission of an application to the CPA by persons involved in economic concentrations within 60 calen - dar days from signing the joint-venture agreement. Ministry of Commerce and Industry While the MOCI plays a key role in company forma - tion, commercial licensing, and maintaining the regis - ter which is relevant for WLL and CSC structures, its role is limited for a contractual joint venture as such joint venture does not require registration. The incorporated companies will be required to follow all formal procedures including the relevant business/ trade licences by the MOCI, registration in the Com - mercial Register and announcement (if applicable). Boursa Kuwait and Clearing Companies Boursa Kuwait regulates all aspects of CSC share transfers, including the mechanism, timing, and docu - mentation required. 3.2 Anti-Money Laundering Compliance Kuwait’s framework for anti-money laundering and counter-terrorist financing are primarily established under Law No 106 of 2013. This legislation provides a robust regulatory structure aligned with international standards set by the Financial Action Task Force. It imposes specific obligations on financial institutions and designated non-financial businesses and profes - sions. This legislation imposes preventative obligations, including customer due diligence for high-risk rela - tionships, suspicious transaction reporting (STR), and also requires record retention for a period of five years. Oversight on such matters is distributed among the Central Bank of Kuwait, the Capital Markets Authority (CMA), the MOCI, and the Kuwait Financial Intelligence Unit which operates as the independent national cen - tre for receiving, analysing, and disseminating STR. 3.3 Sanctions, National Security and Foreign Investment Controls Restrictions on Business Partners The restrictions on co-operating with joint-venture partners include the Boycott Law (Law No 21 of 1964) which prohibits any dealings of a commercial nature with the residents or nationals of Israel, and, as a
non-permanent member of the UN Security Council, adherence to its sanctions list may be required. How - ever, apart from these lists, Kuwait does not have a separate or autonomous sanctions list. Foreign Participation Joint ventures through foreign direct investment in Kuwait are not subject to any national security review process, although certain strategic sectors such as oil and gas exploration and defence contracting remain reserved for government entities. Foreign direct invest - ment in a joint venture must be structured through a Kuwaiti-incorporated company formed under the Companies Law and established specifically for the joint-venture. The incorporated Kuwaiti company may attain 100% foreign ownership, as an exception to the 49% (foreign partner) and 51% (Kuwaiti/GCC partner) ratio, if the legal form of the company is a shareholding or WLL as provided under Article 8 of the Ministerial Decision No 502 of 2014 (“Ministerial Decision”) and Article 12 of Kuwait Direct Investment Promotion Authority (KDIPA) Law No 116 of 2013. The foreign investor that participates as a partner in a joint venture and anticipates to hold more than 49% of the company shareholding must secure an investment licence from the KDIPA before it can legally commence operations through the joint venture in Kuwait. The KDIPA licence application must include, in accord - ance with Article 14 of the Ministerial Decision, an initial project feasibility study detailing the proposed activity, legal form, investment size, financial structure and sources, and any anticipated economic or social impacts. Restricted Sectors and Industries Pursuant to the Council of Ministers Decision No 75 of 2015, foreign direct investment is expressly prohibited in sectors classified under the International Standard Industrial Classification, including: • extraction of crude petroleum and natural gas; • manufacturing of coke oven products, fertilisers, and nitrogen compounds; • distribution of gaseous fuels through mains;
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