A- Foreign Investor’s Law: most important advantages of which are:
· Establishing Kuwaiti companies wherein the share of foreign capital can reach up to 100%.
· The foreign project cannot be confiscated or nationalized but against a compensation equal to its market value. Rights and privileges obtained by the foreign investor cannot be cancelled but against a fair compensation.
· The foreign investor can transfer the ownership of his investment to another foreign or national investor.
· The foreign investor has the right to transfer his profits and capital abroad.
· The foreign investor can enjoy the following privileges:
– Exemption from income tax or any other type of tax for a period up to ten years.
– Full or partial exemption from custom charges on imports needed for the project.
– Allocation of the land required by the project.
– To bring forward and employ foreign labor needed for the project.
· Any dispute that arises between the foreign investor and any other party can be referred to local or international arbitration. “Other party” as used herein includes governmental authorities.
For further information, please review the above mentioned law or refer to the following address:
Office of Investment of Foreign Capital
P.O.Box (3690) Safat 13037
Tel: 22240700 – 22240724
Fax: 22240694 – 22240713
E-mail: info@kfib.com
Website: www.kfib.com
* This law was followed by the Council of Ministers resolution No (1/1006) of 2003 regarding economic activities and enterprises which foreign investors are allowed to undertake in the State of Kuwait. Herein below is the text of the resolution:
A license is issued by an order of the Minister of Commerce and Industry upon the Investment Committee recommendation and following the approval of the competent in accordance with procedure, conditions, and rules stipulated in article 3 of the said law No. 8/2001, a foreign investor may carry out economic activities and enterprises in the following fields:
1- Industries except for enterprises related to Oil or Gas exploration or production.
2- Construction, operation and management of infrastructure enterprises in the fields of water, power, drainage and communications.
3- Banks, investment corporations and foreign exchange companies which the Central Bank of Kuwait agrees to consider incorporation thereof.
4- Insurance companies which Ministry of Commerce & Industry agrees to incorporate.
5- Information Technology and Software Development.
6- Hospital and Medicines manufacturing.
7- Land, sea, and air transport.
8- Tourism, hotels and entertainment.
9- Culture, information and marketing except for issuance of newspapers and magazines and opening publishing houses.
10- Integrated housing projects and zones development except for real estates speculation.
11- Real estate investment though foreign investor subscription to Kuwaiti shareholding companies as per the provisions of law No. 20/2002
b- Owning Shares:
Non-Kuwaitis can own shares in Kuwaiti Shareholding Companies in accordance with the law No. 20 of 2000.
For more information, please peruse the above-mentioned law or refer to the following address:
Kuwait Stock Exchange Market
P.O.Box (22235) Safat 13083 State of Kuwait
Tel: 22423130/3 – 22422630
Fax: 22420779 – 22421365
E-mail: webmasters@kuwaitse.com
Website: www.kuwaitse.com
C- Participating in Companies:
Among the most important privileges of Kuwaiti Business Market:
– Comprehensive infra structure.
– Availability of means of communications.
– Strategic geographic location.
– Neighboring high density populated countries, which makes Kuwaiti a gateway to these countries.
– Availability of modern ports.
– Existence of a free trade zone on the Kuwaiti-Iraqi borders, with large warehouses.
– Low custom tax (approximately limited to 5% on most goods)
* Participation in companies is done pursuant to the provisions of the Law of Companies No. (15) of 1960”, which states that establishing companies in Kuwait, or sharing in companies existing in Kuwait in a percentage not exceeding (49%), provided the remaining percentage (not less than 51%) be for the Kuwaiti partner. Herein below is a review of the types of companies in Kuwaiti law:
1- Partnership Company:
Established among two or more persons, under a specific name and title to practice commercial business. Partners are jointly liable, in all their monies, for company obligations.
2- Limited Liability Company:
Composed of a limited number of persons, not more than thirty. The liability of each member falls within the limits of the capital paid by him (i.e. his share of the of the capital). This type of company is not allowed to issue tradable shares and is not subject to public offering.
3-Limited Partnership Company:
Established among two or more persons, wherein partners are divided into two categories:
a) Joint Partner: who has the right to manage the company, and is jointly liable to all the obligations of the company with his own monies.
b) Silent Partner: his role is limited to his monetary share in the company and is not liable to its obligations but within the limit of his share.
4- Joint Stock Company:
Wherein partners are either of two categories: Joint partners; shouldering management and liability, or Silent partners; not liable for debts and obligations of the company.
5- Particular Partnership Company:
A commercial company that is established among two or more persons and is confined to the relationship between the partners, i.e. is not applicable to others, and does not have a legal personality.
6- Shareholding Companies; are divided into:
A- General Shareholding Company:
Composed of a number of persons underwriting in tradable shares via public underwriting, and are not liable for the obligations of the company but within the nominal value of their shares in it. (a decree is issued with its establishment).
B- Closes Shareholding Company:
Composed of a number of persons underwriting in non-tradable shares, where establishing members pay the capital. This sort of company is not entitled for public offering, and its establishment should be licensed by the Ministry.
7- Holding Companies:
A company with the objective of obtaining Kuwaiti and foreign shareholding companies, as well as shares or stocks of Kuwaiti or foreign limited liability companies, or to share in the establishment of the above two types of companies, providing them with loans, and sponsoring them before other parties.
D- Incorporation of Kuwaiti Companies Where Foreigners Possess 100% of their capital:
The Council of Ministers issued its resolution No. 1006/2 year 2003 regarding the incorporation of Kuwaiti companies where foreigners possess 100% of their capital. Herein below is the text of the resolution:
By virtue of Minister of Commerce & Industry order upon the recommendation of Investment Committee, a license is issued to incorporate Kuwaiti Shareholding Closed Companies, where the share of the foreigners therein shall be 100% of their capital in accordance with the following conditions and terms:
1- The company’s capital shall be sufficient to achieve its objectives and shall be fully subscribed to be the founders.
2- In corporation thereof shall fulfill the procedures, rules and conditions contained in law No. 15/1960 regarding these companies.
3- A company shall proceed with its activity or enterprises shown in the Council of Minister’s resolution No. 1006/1 of the year 2003 referred thereto, subject to the fact that a company incorporation would result in the achievement of one of more of the following objectives:
A- A transfer of modern technology and administration and practical, technical and marketing expertise.
B- Expansion and activation of the role of Kuwait private sector.
C- Creation of job opportunities for national labors and contribution to training thereof.
D- Support of national products exports.
E- Free Zone:
The free commercial zone is considered as an independent leading project managed by the private sector, with the full support of the government of the State of Kuwait. Provisions of the free zone law were set after the best international legislative texts as represented in Kyoto International Treaty concerning custom tariff procedures. The content of the Kuwaiti law is elevated to the level of the laws of the best free zones in the world. The said law exempted the following from taxes and custom duties:
– Projects incepted in the free zones and profits achieved from practicing their activities within such zones.
– Goods imported to the free zones or exported there from.
– Tools and supplies of whatever type required for working inside the free zones.
– The free trade zone avails complete freedom in transferring capitals and profits, without any restrictions on the price of foreign exchange.
· Shwaikh port is the closest port ever to an international airport, and to a capital city.
· It is as well the closest port to Iran.
· It is under the administration of the private sector.
· Trustworthy commercial traditions.
· Availability of water and electricity supplies.
· Modern communications and technologies.
· Excellent land and marine transport systems.
· No minimum limit of Investment/capital.
Kuwait free trade zone avails four different types of licenses that cover all the needs of the investors, for the purpose of which the administration of Kuwait free trade zone issues the necessary documents. Herein below is a brief about these types of licenses:
– Commercial license, which satisfies the needs of those involved in commercial activities, like import and export, distribution and storage. The cost of this license is K.D. 750/-.
– Industrial license, which enables the investor to work in the industrial field, assembly, folding and refolding. The cost of this license is K.D. 1000/-.
– Services license, needed by the investor who works in the field of rendering services like financial, administrative, legal, engineering and auditing services. The cost of this license is K.D. 500/-.
It is worthy mentioning that there is possibility for altering activity within the limits of the above mentioned licenses. Such amendment should be based on the request of the investor, and the cost is the same as for issuing a new license.
In case of amending the details of the license that are not related to activity, the cost shall be only K.D. 100/-.
The term of the license is one year as of issuance date, renewable to similar periods, provided the investment contract in Kuwait free trade zone is valid, and that all dues are paid.
For more information, please review the law No. 26 of 1990 concerning free zones or refer to the following address:
Free Commercial Zone – Kuwait
P.O. Box (64585), Shwaikh B, Postal Code 70456
Tel: (965) 1802808
Fax: (965) 24822067
E-mail: info@nrec.com.kw
Website: www.kuwaitfreezone.com