The Ministry of Commerce and Industry has recently issued the ministerial resolution no. 565/2017 releasing the Executive Regulation of the new Commercial Agencies Law no. 13 of 2016 (“CAL”).
The Executive Regulation (“Regulation”) aims to arrange, clarify and sets out certain requirements and formalities to be followed in order to maintain and efficiently implement the provisions of the CAL by the concerned parties. This paper provides the reader with a brief summary of some of the key elements and main features of the Regulation.
The Regulation shades light on the key areas of the CAL such as: registration obligations and requirements, publication and announcement, de-registration, registration renewal, enforcement.
1-Registration obligation and requirements
Pursuant to Article 2 of the Regulation , all commercial agencies complying with the provisions of the CAL and this Regulation shall be registered in the commercial agencies register. The agent or distributor or their legal representative shall submit the application for registration to the competent department on the form prepared for this purpose in two original copies enclosing the following documents:
- Original agency contract attested by (a) the competent official authorities in the principal's country, (b) the Kuwait Embassy in this country and (c) the Kuwaiti Ministry of Foreign Affairs, and a copy of the original contract thereof.
- CD containing the agency contract and related documents.
- An attested Arabic translation of the agency contract and any other documents issued in a foreign language.
- A certificate of the distributor’s commercial register.
- A proof shows that the individual is holding a Kuwaiti nationality, or that the ownership of the Kuwaiti partner or partners in the company is not less than 51% of its capital.
- A copy of the commercial license issued to the agent or distributor to carry out the activity covered by the agency in force.
- Certificate from Kuwait Chamber of Commerce and Industry.
- Acceptance and consent of the concerned authorities, where it is requested subject to the nature of the products.
In addition Articles 3 & 4 of the Regulation outline the administrative processes of registering the agency.
2- Publication and announcement
Articles 5,6 & 7 set out the processes and formalities of announcement where the Ministry of Commerce and Industry (“MOCI”) shall provide the distributor /agent whose agency or distribution contract has been successfully registered, a letter addressed to the Ministry of Information to announce in the official gazette the registration of the agency and all the essential data relating to it. However, if the manufacturer or supplier of the product or the service has already a registered distributor /agent with the Register of commercial agencies, the new distributor/agent shall, in addition to that, announce
its agency registration in two daily newspapers issued in Arabic language in accordance with the prescribed form within two (2) weeks from the date of registration of the agency. If the announcement is not made as stated, the registration shall be suspended until the publication is done and the distributor/ agent shall be notified thereof.
Pursuant to Article 9 the registration of the agency shall be deregistered from the register upon the request of the agent or distributor, or his legal representative, within three months from the expiry or termination date of the agency for any reason, or in case the agent or distributor did not meet or fulfill the terms and conditions stipulated in Article 2 of the CAL.
The distributor shall submit the deregistration application in three copies of the original form prepared for that purpose, along with the registration certificate of the original agency and other required documents.
On the other hand the MOCI can order to deregister the registration of the agency in case of malpractice or submission of incorrect data or documents. To this extent, MOCI shall notify the concerned parties of this incident. Failure to attend, or non -submission of reasons acceptable to MOCI, this gives the MOCI the grounds to deregister the registration and notify the parties accordingly (Art .10) .
4- Registration renewal
Articles 12&13 deal with the renewal and the amendment of the agency or extracting in lieu of the registration certificate for the competent department, accompanied by the some required documents ( letter of renewal or continuity duly attested ...) . If the term of distribution or agency agreement is fixed-term and states that it is automatically renewable unless one party informs the other party of its desire not to renew, the agency's registration shall be renewed provided that a letter of continuity is submitted to MOCI.
5- Enforcement authority
The Regulation grants the designated official officers the powers and competences to carry out their responsibilities and ensure the strict implementation and compliance of the CAL in accordance with its provisions and requirements.
We were expecting that the Regulation should come in a form which sufficiently covering and dealing with some uncertain current issues which still not being answered or addressed accordingly, but as drafted it does not provide the business community and legal practitioners with clear answers, since it includes detailed procedural information only. Although, we have only addressed some points in this article, further insights on this Regulation and the CAL will be reported in the near future once the MOCI, targeted stakeholders and courts deal and interpret its legal aspects.