KUWAIT Law and Practice Contributed by: Sam Habbas, Luis Cunha, Hisham Al-Quraan and Mustafa Sayed, ASAR – Al Ruwayeh & Partners
without the need for a Kuwaiti sponsor or an agent (assuming they operate through a branch). In this regard, the authorities are currently in the process of formulating new regulations setting out the relevant practices and rules for its imple - mentation and the establishment of such an Arti - cle 24 Branch. At present, these reforms are not being implemented in practice. An exception to these conduct of business rules is the establishment of a company or branch under Law No 116 of 2013 (the “Foreign Direct Investment Law” – FDIL). The primary purpose of the FDIL is to improve the overall investment cli - mate in Kuwait with respect to foreign investors, and to encourage foreign investment in Kuwait by offering certain benefits to foreign investors (owning up to 100% of a Kuwaiti entity, tax cred - its, etc). The Kuwait Direct Investment Promotion Authority (KDIPA) was also established under the FDIL, and has regulatory oversight over matters relating to the FDIL. To obtain an investment licence from KDIPA, the prospective foreign investor must satisfy the criteria set out under Article 29 of the FDIL (see 2.2 Procedure and Sanctions in the Event of Non-compliance ). Certain activities are excluded from benefiting under the FDIL but these are narrowly defined activities relating to certain sectors, such as the extraction of petroleum and natural gas, security and investigative services and the manufacture of fertilisers. GCC individuals and GCC companies wholly owned by GCC nationals may establish branch - es of their businesses in Kuwait and/or own more than 51% of the shares of a Kuwaiti company (see Ministerial Resolutions No 141 of 2002 and No 237 of 2011 – the “GCC Exemption”). Except in limited instances, GCC nationals are afforded
the same rights to establish and to do business in Kuwait as Kuwaiti nationals. 2.2 Procedure and Sanctions in the Event of Non-Compliance Any approvals that may be required will depend on the nature of the investment and how it will be made. As a general premise, the following may be of significance. Requirements to Open a Wholly GCC-owned Company Under the GCC Exemption GCC nationals and GCC companies wholly owned by GCC nationals may take advantage of the GCC Exemption to open a Kuwaiti company or a Kuwaiti branch of their operations. The pro - cess and timing will vary, depending on various factors such as the desired corporate form and the relevant activities to be undertaken. During the establishment process, the authori - ties will also seek to confirm that the relevant investor is a GCC national or a GCC company wholly owned by GCC nationals. This is typi - cally evidenced by the relevant identification documents in the case of GCC nationals (ie, the passport of the GCC national, etc) and/or the constitutional documents of the GCC company (including the shareholder details). See also 3.2 Incorporation Process for details of the process generally followed to establish certain Kuwaiti companies. Requirements to Open a Branch Under the GCC Exemption Foreign investors must satisfy the following con - ditions in order to open a branch under the GCC Exemption. • The relevant GCC entity must be wholly owned by GCC nationals, whether directly or indirectly. If at any time a non-GCC share -
434 CHAMBERS.COM
Powered by FlippingBook