Doing business in Kuwait as a non-national

We are lucky in Kuwait to have such a diverse and talented community, and we are blessed to be able to learn from different cultures and societies. Like I have mentioned in my previous articles, Kuwait is changing to the positive when it comes to establishing a business in Kuwait, thanks to new commercial and corporate laws and regulations, the Kuwait Business Center, Kuwait Direct Investment Public Authority (KDIPA) and the National Fund for Small and Medium Enterprises (SMEs).

Many non-nationals are hearing about this inside and outside Kuwait and would like to contribute to Kuwait’s economy, and therefore want to know more about the ease of starting a business in Kuwait, and what exactly is the process. Today I want to answer the most common questions from SMEs outside Kuwait considering opening a branch in Kuwait or non-nationals in Kuwait wanting to establish a cooperation agreement in Kuwait.

Kuwaiti partner

Question: Can a non-national start a business in Kuwait without a Kuwaiti partner?

Fajer: Yes, he or she can, by receiving an exemption from KDIPA, as the law clearly states that a Kuwaiti needs to own the majority of the shares, ie 51 percent. Theoretically, and according to the companies law, you will need a Kuwaiti partner, but recently, a new law was passed for establishing the Kuwait Direct Investment Promotion Authority (KDIPA), which is a government authority that aims to encourage foreign investment in Kuwait. You can visit their website at www.kdipa.gov.kw and apply online for a commercial license as an expat in Kuwait. They offer exemptions and have four different types of applications. The requirements by KDIPA may be difficult to meet for smaller companies.

It is important to mention that some non-nationals are afraid of having a partner with more power, ie a bigger percentage of the share, and therefore split the share into three parts. Having one non-national own 49 percent, their Kuwaiti partner own 49 percent and a non-biased third Kuwaiti party own one percent.

Leaving a partnership

Question: My partners and I have been in the food and beverage industry for the past seven years and although the business is succeeding, I would like to leave the partnership as I would like to go back to my country and I am not happy with the terms and conditions that we are working on. How can I leave? My partners are saying I cannot because there is not anyone to be the managing partner. The other partners have full-time jobs and therefore cannot be managing partners. What can I do?

Fajer: I honestly do not answer questions like this without reviewing all the necessary documents and gathering more information about the company, the company’s articles of association and the company’s policies, which are just some of the documents that I would need to review. The general procedure would be for you to offer your share to the other partners first - they have priority over your share. Should they refuse or refuse to respond to your offer, you can publish your offer to them in a newspaper and wait for seven days. If you do not receive a response within this timeframe from any of the partners, you can sell your share to a third party or you can waive your shares to the other partners.

A company does not need a managing partner but can only have a registered manager. You can leave the company, and all the partners need to do is hire a manager if they cannot or do not want to be managers. The manager will be officially registered and is responsible for the company’s presence.