The new bill will introduce some significant concepts and changes to the industry of the commercial agencies in Kuwait, in particular it provides new definition for an agent which includes for the first time the Franchisee and licensee where they will be treated as agent and be subject to the same provisions and sets out new rule pertaining the restriction of exclusivity and monopoly as outlined in article 4 ,where it goes to not restrict the import of any services, goods or products by its local agent or distributor, even if the agency is granted on exclusive basis and even if it is agreed to include the right to use the trademark exclusively , where the new bill will permit each service or product to be imported and distributed by more than one agent or distributor or service provider .
Furthermore new commitments and obligations shall be imposed on the local agent to be fulfilled as outlined in other articles, to name a few:
– Providing of goods, products or services as requested and provided under the agency to be permanently available and in reasonable prices , as well as the case of spare parts for goods that need such parts provided that the goods are available in the country of production.
Securing workshops for maintenance and repairs which are required for the goods and by the agency and it should be served in appropriate costs, and to maintain all the guarantees provided by the producers or manufactures taking into account the standard specifications of the State.
The new Bill requires that the commercial agent must be a Kuwaiti citizen and in case a company desires to register any agency agreement, the ownership percentage of the Kuwaiti partner in the company’s capital must be not less than 51%.
The aim of the legislature sought from the new bill is to contribute in the freedom of trade and assist in reducing the bureaucracy and decrease the waiting time and the documentary cycle , where the Ministry of Trade and Industry shall be obliged to decide on the agency registration applications within 30 days from the date of application, otherwise it will considered acceptable .
The new bill also restricts the power of the official authorities to issue circulars, decisions or instructions to restrict the free trade and import , based on the provisional seizure or bans orders , and this issue will liberate the market and facilitate the work of commercial agencies in Kuwait.
It is important to mention that the new Bill has dealt with the provisions of the Commercial Agency from a procedural and formality perspective , and referred to the rules and provisions contained by Law 68 of 1980 ( the Trade Code), which is specifically organized under Chapter V ,Articles 260 – 296 .
This Bill includes 27 articles which cover the definition of commercial agency and the conditions that need to be fulfilled by those who engage in acts of agencies subject to penalties and fines in the event of non – compliance by its provisions, as defined therein and in its executive regulation which will be issued thereafter .
It is expected that the draft law will be subject to vote in the first deliberation of the parliament ( Kuwait national assembly ) on Dec. 2 , 2014 , if it is not ratified the second deliberation will take place on 16 /12/2014 .
Adib A. Dib, IDI agency and distribution country expert for Kuwait