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The Commercial Law of Kuwait, 1981 is a comprehensive
Code covering all commercial activities like commercial
contracts, commercial agency, trademarks, trade names,
unfair competition, banking operations, bill of
exchange, bankruptcy etc.
Articles 23 and 24 lays down the basic requirement for a
foreign individual and a foreign company respectively
for doing business in Kuwait. Article 23 states that a
Non-Kuwaiti cannot practice any commercial activity in
Kuwait unless he/she has one or more Kuwaiti partners
and also that the Kuwaiti partner/s will own atleast 51
per cent of the total capital invested for the
commercial establishment. Article 24 stipulates that a
non-Kuwaiti company can engage in commercial activities
in Kuwait only through a Kuwaiti agent.
A foreigner or a foreign company can do business in the
Kuwaiti market mainly by:-
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Establishing a company which could be a Limited
Liability Company, Closed Joint Stock Company or a
Public Joint Stock Company.
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Entering into joint Venture Agreement which doesn't
require any formal procedures.
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Appointing a Local Commercial Agency.
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Appointing a Commercial Agent who is a Kuwaiti
individual.
The New Investments Law in Kuwait (Law No.8/2001) has
been passed for regulating Direct Investment of Foreign
Capital in the State of Kuwait. Since the law was passed
with a view to encourage foreign investment in Kuwait,
there are many clauses which actually encourages a
foreign investor to invest their capital in the state of
Kuwait like the 100% foreign ownership of corporate
shares of a company (Article 4). A Foreign Capital
Investment Committee is set up which is entrusted for
recommending to the Minister of Commerce & Industry with
regard to the granting of licenses to the foreign
investors for practicing the economic activities and
enterprises.
Furthermore, Article 8 prohibits absolute
confiscation or nationalization of any licensed foreign
enterprise under the provisions of this law. This
provision mandates prompt payment of compensation. The
provision of this Law extends to cover the investments
currently existing so that the investors could benefit
from the new provisions without prejudice to the
privileges already obtained by him (Article 9). Also the
foreign investor enjoys the priority right to transfer
his investment to another foreigner or Kuwaiti national
investor, or to assign the enterprise to his foreign
partner (Article 11). There are benefits and exemptions
granted to the foreign investor like tax exemption,
avoidance of double taxation, exemption from customs
duties, allotment of land and real estate, recruitment
of foreign labour etc upon the approval by the
Investment Committee (Article 13).
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