HOW TO SETUP A NEW COMPANY
IN KUWAIT

Business opportunities in Kuwait

If you are a foreign investor who is planning to start a business in Kuwait, the country can be extremely advantageous for the reasons listed below.

• Water, electricity, land, and labor are all cheap, and some are even heavily subsidized by as much as 86%.
• Kuwaitis are wealthy and have immense knowledge in the business.
• The building, project, and construction industries have experienced significant growth.
• $104 billion National Development Plan for building new airport terminals, hospitals, housing developments, and a campus for Kuwait University.
• A new train and metro system, an oil refinery, oil exploration, and new power projects.
• Private project development and construction.
• Numerous project options, such as a $10 billion electricity generation project that has been suggested.
• With recent government measures, the automobile, oil and gas, computers/ICT, telecommunications equipment, and construction equipment industries appear to be on the upswing.
• Infrastructure for health care is highly valued by the government.
• A country of political strategic importance.
• Local population is full of young, energetic people.
• High domestic consumption and average income.
• A strong banking industry and a well-managed financial market.
• Excellent infrastructure.
• Strategically placed close to Iran, Saudi Arabia, and Iraq, three important markets.

Who can start a company in Kuwait?

According to the Foreign Direct Investment Law of 2013, foreign ownership may only be 100 percent foreign with Kuwait Direct Investment Promotion Authority approval (KDIPA). At least 51% of all firm shares must be owned by GCC or Kuwaiti nationals.

100% foreign ownership is only taken into account if the business structure is seen as having the potential to boost jobs and diversify the country’s economy. Also, the company formation in Kuwait must profitably use Kuwaiti services and natural resources and promote exports. According to KDIPA’s most recent statistics, 37 foreign companies have received approval for 100% foreign ownership to date.

Different business structures in Kuwait

There are many investment opportunities in Kuwait as a foreigner if you are planning to new company registration. Here are some of them:

1. The most popular, simple, and quick form of incorporation for an LLC is WLL (With Limited Liability), which requires a minimum share capital of 1000 KD. Furthermore, a WLL can only hold a maximum of a 49% ownership in the banking or insurance industries.
2. A closed KSC does not allow for public trading of shares, but a joint-stock company, also known as a Kuwaiti Shareholding Company (KSC), allows for a maximum of 49% foreign equity participation.
3. A limited liability partnership is a type of partnership having two types of partners, one of which is a general partner who is responsible for the obligations of the company and the other of which is a limited liability partner who receives earnings proportionately according to the number of shares held.
4. Only GCC nationals are allowed to open branches, which are not required to have sponsors. Only international companies that have received KDIPA approval may open a branch office.
5. If you as a foreign investor are unwilling to establish a local firm in Kuwait, agency entails a deal with a local commercial agent or distributor. The standard payment structure for a commercial agent is a flat fee or a percentage of the revenue generated by your Kuwaiti company, with all terms and circumstances outlined in the agency agreement.
6. A joint venture, or JV, is a partnership between two or more natural or legal persons that is typically used for building projects and carried out in accordance with the Kuwaiti partner’s trade license. A JV lacks a separate legal entity and is not required to register with the Ministry of Commerce and Industry.

How to setup a business in Kuwait?

In Kuwait, starting a business is not difficult, costs KD 323 (about $1000), and takes about a month. Regardless of the sorts of companies, the stages involve are essentially the same and include

• Filing a registration application to the Ministry of Commerce and Industry’s (MOCI) department of companies with details concerning the capital, shareholding, and other facts of your business.
• A background investigation by the Ministry of Commerce through the local municipality and the Ministry of the Interior.
• Reserving a distinctive company name and presenting it for name approval to the Company Registry.
• Retrieving the letter provided to the brank by the department of companies
• Depositing the paid-up capital of your business at the bank and obtaining a receipt.
• Arranging for a local government inspection and acquiring NOC within two weeks.
• Getting clearance after submitting a Memorandum of Agreement (MOA) to the Department of Companies
• Notarizing the MOA in front of a notary public.
• Filing a signed and notarized copy of the MOA with the Department of Companies
• Registering with the commercial registry and getting a Certificate of Registration (CR).
• Getting Commercial License from the Department of Companies.
• Registering with Kuwait Chamber of Commerce and Industry.
• Registering with the Public Authority for Civil Information.
• Registering with the Department of Labor and Social Affairs.

What is the labor law in Kuwait?

Any company that registers in Kuwait is required to employ native Kuwaitis according to the appropriate sector-specific standards, which might range from 3 to 60% of the overall staff.

All employees are required to pay a minimum of 10.50% towards their social security contributions, while the employer is required to contribute a maximum of 2.750 KD towards the Financial Reward Fund, which is equal to 11.5% of the employee’s monthly wage.

Conclusion

The most crucial stage for a foreign investor while setting up a new company in Kuwait is careful to partner selection. Protecting your company from potential liabilities can be accomplished by outsourcing tax, accounting, and legal services.