Options To Set Up

Limited Liability Company

The most common type of corporate entity in Kuwait is the limited liability company (“WLL”). The 51% of the capital in a WLL must be owned by a Kuwaiti national (corporate entity or individual). A WLL requires at least two shareholders and can operate in all sectors except for the banking and insurance sectors. A WLL is prohibited from investing funds on behalf of third parties. The minimum share capital for a WLL is Kuwaiti Dinars 1,000. This may vary, depending on the stated activities of the company.

Kuwait Shareholding Company Closed

A further widely used type of corporate entity is the Kuwait Shareholding Company Closed (“KSCC”), which requires a minimum of five shareholders and a minimum share capital of Kuwaiti Dinar 25,000. A two-year lock up period applies in respect of shares held in a newly incorporated KSCC.

Foreign Investment Incentives

Pursuant to the Direct Investment Promotion Law No. 106 of 2013 (“Investment Promotion Law”) the Kuwait Direct Investment Promotion Authority (“KDIPA”) can grant investment licenses to companies incorporated in Kuwait, which allow up to 100% foreign ownership. In addition, KDIPA can grant further exemptions and incentives to such licensed companies.

Branch Office

The Investment Promotion Law further allows for the establishment of a branch of a foreign company on the basis of a license granted by KDIPA. Such a license can allow the operation of a branch of a foreign company in Kuwait without the involvement of a local representative or agent.

Representative Office

Under the Investment Promotion Law a foreign company may also be licensed to open a representative office without a local partner. A representative office may not conduct any commercial activities in Kuwait.

Commercial Agency

As an alternative to establishing an own entity in Kuwait or in cases where no eligibility exists to receive a relevant license from KDIPA, foreign entities can appoint an agent to market goods and services in the country. A commercial agent generally acts as the exclusive provider of services of the foreign principal or exclusive distributor in Kuwait for the foreign produced goods. Kuwaiti law allows for far reaching protection in favour of the local agent, including difficulties to terminate the agency agreement and compensation claims in favour of the agent in the event of termination.