Kuwait has recently enacted a new Law No. 1/ 2024 which was published on 21/1/2024 in the Kuwait Gazette, granting foreign companies the right to set up branches in Kuwait to carry out its work and business without appointing a local contract agent, logistic sponsor, or distributor. The new law aims to eliminate any constraints that foreign companies used to encounter while participating in tenders or doing business in Kuwait was conducted only through a local agent or in partnership with a Kuwaiti citizen or entity who should own at least 51% of the company’s shares (Article 23 of Law No.68/1980). The new law amends Article 24 of the Kuwait Commercial Law No.68/1980 and Article 31 of the Public Tenders Law No.49/2016.
Article (24) of Law No. (68) of 1980 is hereby replaced with the following wording:
“Notwithstanding the provisions of Article (23), Clause (1), a foreign company may establish a branch in Kuwait and commence its operations therein without the need for a local agent.”
And the text of Article (31) of Law No. (49) of 2016 is hereby replaced with the following wording:
“General Conditions in Contracting:
Subject to Law No. (1) of 2016 and Law No. (116) of 2013, and in accordance with relevant international agreements, the following conditions are required for those submitting bids in public, limited, or direct contract tenders:
First: To be an individual or a company – registered in the Commercial Register.
Second: To be registered in the register of suppliers or contractors or as per the nature of the tender or direct contract.
In case the tender applicant is foreign, the provisions of the first clause of this article, and the provisions of Article (23) of the referred Decree-Law No. (68) of 1980 shall not apply.”
Accordingly, registration in the commercial register is no longer required.
It is expected that the new law No.1/2024 brings with it new opportunities that attract foreign companies/investments to boost the local economy and enhance market competition. But at the same time, it fetches new challenges that need to be addressed and tackled by lawmakers in the anticipated executive regulation. Also, foreign companies should contemplate the administrative and operational requirements, employment, taxation, governmental dealings, collections, and associated cost and expenses that make the foreign companies decision very hard to adopt and thrive. Foreign Companies should wait and see how the new Law will be interpreted and implemented by the relevant official government authorities.
Adib A. DIB, IDI Country Expert for agency & distribution in Kuwait
