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‘Business nowadays comes in hand with law’

Kuwaiti laws ensure protection of its market, people

By Ahmed Al-Naqeeb Arab-Times Staff KUWAIT CITY, Dec 3, 2014:

The Middle East has always been a business oriented region, so it is only expected for these countries to carry this ancient practice into the modern world. Considering Kuwait has its own history in trade and business, in addition to the discovery of its oil wells, business and trade bloomed, it became a target for international companies to invest in, making it a potential international business hub. Unlike the simple days of olden trade, business nowadays comes in hand with law, which means business is now well structured, with its own laws and regulations, which in turn means that lawyers are very much a part of the practice. Celeste Altamiranda, an Argentinean lawyer at Al-Markaz Law firm explained that in order to directly practice business in Kuwait, one must be a Kuwaiti citizen or a GCC citizen over the age of 21. As per foreigners wishing to perform any business activity in the country, there are two means of accomplishing this purpose, you can either form a company under the categories of companies that the Kuwaiti law recognizes, or you may engage in an agency agreement with a Kuwaiti body, whether it may be an individual or a company. Advice From her relevant experience providing legal advice to foreign companies and entrepreneurs from numerous countries, wishing to enter the Kuwaiti market, Celeste noted that either way, there’s always going to be a Kuwaiti element in the intended business, and that the capital of the Kuwaiti element shall not be less than 51 % of the total capital in the joint store. When asked for her opinion on why the government does not allow a foreigner to own 100% of the company, Celeste said that she believes the current legislation regarding the practice of business in Kuwait is coherent with the politics of the country. Given the obvious importance for the country’s economy, the government tends to protect and control all business transactions that take place inside Kuwait, assuring the participation of its citizens in the revenues as well as the liabilities that may arise from any business transaction. 

Furthermore, Celeste pointed out that not all of the 7 categories recognized by the current legislation are open for foreign partnership, but the most used one is the “Limited Liability Company,” because it has the minimum requirement of two partners, which in numerous cases, would be the Kuwaiti and the foreigner. Terms and regulations does not stop there, as Celeste further clarified that no matter what type of company one decides to establish, there is always going to be a minimum required capital that the company has to begin its operations with. Diversified In the case that the intended company’s activities are diversified, for example it’s going to operate in construction, design and landscaping. At the ministry, these practices are categorized separately, meaning in order for the company to conduct these three practices; it is going to have to meet the requirements of each practice. This is where law firms come in, as they are approached by clients for consultation on whether to go on and meet the requirements for each activity or just simply acquire a general contracting license, but since the Kuwaiti government is no longer issuing general contracting licenses for the time being, due to the large number of currently registered companies of the same type, one can either search for a registered inactive general contracting company that is willing to transfer the license in exchange for a fair fee, or approach an active one, and make them your representatives or agents in the country. In regards to the limitation imposed by the ministry of commerce and industry in terms of foreigners conducting businesses in Kuwait, Celeste affirmed that this is only because the ministry is keen on protecting the local market, and that considering the particular situation of each commercial activity, the ministry has deemed these actions necessary. Based on her opinion on whether this course is on the right track, Celeste affirmed that it is indeed on the right track, but at the same time it has its down side, explaining that placing these limitations are in result, limiting the Kuwaiti manpower’s potential in terms of competing with international companies, as it is known that to assure that an industry develops in all its potentials, it is sometimes necessary to face fierce competition. But on the other hand, by the end of the day, Kuwait is a geographically small, wealthy country so it’s only understandable for the government to place these limitations in order to protect its own market, and by doing so, its own people.