KUWAIT Law and Practice Contributed by: Sam Habbas, Luis Cunha, Hisham Al-Quraan and Mustafa Sayed, ASAR – Al Ruwayeh & Partners
• KDIPA approval and investment licence: If the application is approved, the necessary formal steps to give effect to the investment/project are put in place, and an investment licence is issued by KDIPA following the completion of the incorporation process and the issue of the trading licence by the MOCI. If the application is rejected, a written explanation will be given. The applicant may challenge this decision within 30 days. 2.3 Commitments Required From Foreign Investors Certain commitments may be required by KDIPA in order for it to issue an investment licence, as set out under 2.2 Procedure and Sanctions in the Event of Non-compliance . Such commit - ments are typically agreed on the basis of the relevant business plan. If the agreed commit - ments are not adhered to, this may have an impact on the investor’s licence and the benefits being enjoyed under the FDIL. 2.4 Right to Appeal See 2.2 Procedure and Sanctions in the Event of Non-compliance . 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity Law No 1 of 2016 (the “Companies Law”) pro - vides 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 Lim - ited 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 share - holder while a WLL is required to have between
two and 50 shareholders. If an SPC has more than one shareholder, it is automatically con - verted 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 consistent with its objects as listed in its memorandum of association (MOA). The minimum required share capital 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 mini - mum 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 contri - bution in the company. However, in relation to an SPC, the owner may also be liable for the debt of the SPC if the shareholder: • liquidates the SPC in a mala fide manner before its expiry or the realisation of its objec - tives; or • does not separate the financial rights and obligations 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: Public Joint Stock Companies (KSCPs) and Closed Joint Stock Companies (KSCCs). KSCCs are more common than KSCPs but, given that KSCs are subject to certain additional taxes (such as Zakat and contributions to the Kuwait Foundation for Advancement of Science) and
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