Company Registration in Kuwait- An Overview
Kuwait is located in Eastern Arabia. It is an independent country which has lot of natural resources. Crude oil is one of the largest natural resources in Kuwait. There is a robust financial system present in Kuwait, which attracts different types of foreign investors in the country. There is access to different forms of banking and financial facilities in Kuwait. Kuwait has a population comprising of 4 million people, out of which more than 2.8 million people are expats and 1.2 million people are Kuwaiti Nationals.
The export of oil contributes to almost half of Kuwait’s GDP. Due to this there are different foreign companies that establish oil and gas companies in Kuwait. The oil and gas sector contributes the largest per capital income in Kuwait. Oil reserves in Kuwait were discovered in 1930, and this country has the sixth largest oil reserve in the world.
Kuwait ranks as the fourth largest economy as per the Gross Capita (GDP Basis). Due to this, the consumer market is large and contributes to the progressive development. Kuwait is a multi lingual nation. However majority of the languages spoken include Arabic and English. Most of the government and regulatory departments liaise in English and Arabic. Hence forming a business in Kuwait is quite straightforward and investors go for company registration in Kuwait.
There is lot of foreign investment in Kuwait in different sectors such as financial services, oil and gas sector. Kuwaiti Dinar is one of the world’s richest currencies. Due to this, good exchange rates can be secured through foreign exchange transactions. Due to the above reasons, investors would go for the process of company registration in Kuwait.
Benefits of Company Registration in Kuwait
There are different benefits offered to an investor going for company registration in Kuwait:
- Infrastructure Facilities
Kuwait offers world class infrastructural facilities. This would include modern construction, natural resources and other form of facilities. There is a robust financial system present in Kuwait, which attracts different types of foreign investors in the country.
- Oil and Gas Sectors
The oil and gas sector is booming in Kuwait ever since 1930s. More than half of the GDP of Kuwait comes from this sector. Kuwait offers the 6th largest exporter of crude oil in the world.
- Good Exchange Rates
Kuwaiti Dinar is one of the world’s richest currencies. Due to this, good exchange rates can be secured through foreign exchange transactions. Due to the above reasons, investors would go for the process of company registration in Kuwait.
- Demographic Area
Kuwait is present in the Gulf. Hence if offers progressive demographic area for investors to carry out business. There is access to different forms of banking and financial facilities in Kuwait. Kuwait has a population comprising of 4 million people, out of which more than 2.8 million people are expats and 1.2 million people are Kuwaiti Nationals.
Eligible Business Structures for Company Registration in Kuwait
The following are eligible business structures for company registration in Kuwait:
- Kuwait Joint Venture LLC (JV LLC)
The JV LLC in Kuwait is one of the most utilised business structure. For setting up this form of business, one director of any nationality is required. A Kuwaiti Shareholder who controls 51% stake in the company is also required to be appointed. A foreign shareholder is restricted to own only 49% stake in this form of entity. The liability of the shareholders and directors is limited to a particular amount. The minimum paid up capital for this form of entity is Kuwait Dinar 1000 (KD).
- Wholly Owned Foreign Entity (WLL)
The Kuwaiti Foreign Direct Investment Law allows 100% foreign ownership in some form of entities. This would only be after securing the required consent and approvals from the Kuwaiti Direct Investment Promotion Agency (KDIPA). However, registering this entity would take about 180 days. The minimum paid up capital to form this type of entity is between USD 70,000 to USD 1, 40,000. Due to this, the activities which are planned by this company must be implemented taking national significance.
- Kuwait LLP (Kuwait Limited Liability Partnership)
The limited liability partnership in Kuwait is another form of business structure which is utilised. There are partners in this type of entity. One of the partners must be a local individual. Consent from the KDIPA must be taken related to the partners. This form of entity has certain forms of tax benefits. Annual Statements must be submitted by this form of entity.
- Kuwait Free Zone Company (Shuwaikh Companies)
Usually there is no form of tax in these free zones. Custom duties and other duties would not also be levied on companies that carry out activities in this free zone.
- Kuwait Joint Stock Company
This form of company is similar to public limited companies that offer its shares in a public stock exchange. Foreigners can also be shareholders of this form of entity. 49% shareholding must be the maximum unless exemption is got from the KDIPA. To form this type of entity, such entity must be registered with the Ministry of Commerce and Investment.
- Branch Office
If you want to conduct business as a foreign company, then opening a branch office in Kuwait would be appropriate. A branch office in Kuwait is a mere extension of the foreign parent company. There is no limited liability for the branch office and all the liability comes under the parent company.
- Representative Office
A representative office in Kuwait is a mere extension of the foreign parent company. A representative office is not allowed to carry out profit making activities in Kuwait. Financial statements do not require to be submitted by the representative office in Kuwait. Activities such as promotion and marketing for the foreign company can be carried out by the representative office.
- Commercial Agency Agreement
If significant amount of capital is not required to be invested in Kuwait, then an investor going for company registration in Kuwait can utilise the above form of commercial agreement. An investor going for company registration in Kuwait would consider this form of agreement with an agency. The agent would carry out all the operations of representing the company in Kuwait.
Eligibility Criteria for Company Registration in Kuwait
The following eligibility criterion has to be sufficed for company registration in Kuwait:
- Minimum Shareholders
Minimum of two shareholders are required for company registration in Kuwait. Out of both the shareholders at least one of the shareholder must be a national of the Emirates.
- Minimum Directors
There has to be minimum of two directors for company registration in Kuwait. The directors can be of any nationality.
- Foreign Ownership Restriction
Foreign ownership in Kuwait is allowed. However, only 49% ownership is allowed for a foreign shareholder. A Kuwaiti or a GCC national is required to hold 51% ownership in the company.
- Minimum Capital Requirement
The applicant must satisfy the criteria for minimum capital requirement for Kuwaiti JV LLC. The minimum paid up capital for this form of entity is Kuwait Dinar 1000 (KD).
Procedure for Company Registration in Kuwait
The below procedure would be for forming a WLL company in Kuwait. This form of entity has 100% foreign ownership.
The following procedure has to be adopted for company registration in Kuwait:
The applicant for company registration in Kuwait has to file an application with information on the shareholders and directors of the company. This application has to be made to the Ministry of Commerce and Investment (MOCI). The Social Security and the identity of the applicant is required. This would act as evidence as a local partner. Along with this application, the copy of the lease agreement must also be attached.
• The applicant would have to submit the following documents:
• Copy and information related to the articles of association of the company
• Copy and information related to the commercial license in Kuwait
• Commercial Register Copy
• Passport information of the applicant in case the applicant is a foreign individual
• Copy of the resolution taken by the shareholder related to the company.
An administrative and ministerial fee of KD 300 has to be paid by the applicant to the MOCI. The manager has to be a director of the company in managing the office in Kuwait. Leased Premises is required for forming the company.
- Seeking Approvals
After completing the online application, approvals would be carried out by the ministry. This would include reserving the name of the company. The department would also request the company to deposit the paid up capital of the company in the bank. This would be frozen for a particular period of time.
- Memorandum of Association Submission
Once the above process is carried out; a draft of the MOA would be submitted to the Department of companies. When this is approved, the certificate of incorporation would be provided.
- Apply for Membership in the Chamber of Commerce
Once the certificate of incorporation is obtained, the company would have to officially apply for membership in the Chamber of Commerce and Industry. Apart from this, membership has to be applied to the public authority for civil information. Once this is carried out the company would be officially registered.
Compliances for Company Registration in Kuwait
The following compliances have to be carried out once the company is registered in Kuwait:
Corporate Tax at the rate of 15 % is applicable to companies in Kuwait. Withholding tax and capital gains tax is also levied at the rate of 15%.
- Foreign Direct Investment
Foreign Direct Investments are allowed in Kuwait. Such companies can secure a 10 year tax holiday.
- Appointment of Auditor and Director
Kuwaiti companies require to appoint a director and an auditor.
- Lease Agreement
All companies which are incorporated in Kuwait would have to sign lease agreement. This would be required as per the Ministry of Commerce and Investment.
Annual Financial Statements have to be submitted to the MOCI within three months at the end of the financial year. Such statements have to be prepared in accordance with the IFRS standards.
- Copy and information related to the articles of association of the company
- Copy and information related to the commercial license in Kuwait
- Commercial register Copy
- Passport information of the applicant in case the applicant is a foreign individual
- Copy of the resolution taken by the shareholder related to the company.