| Kuwaiti law permits foreign persons or entities to establish a permanent presence in Kuwait by forming and investing in the following Kuwaiti companies:
Kuwait Operations
A foreign company can conduct business in Kuwait through a local sponsor (Kuwait Agent)
Limited Liability Company (“WLL”)
Both foreign individuals and corporate bodies may establish this type of entity. However, Article 191 of the Companies Law provides that a Kuwaiti must own at least 51% of the WLL shareholding. The WLL provides the limited liability shield and is nontaxable since Kuwait has no individual income tax and its corporate tax applies only to non-Kuwaiti corporate bodies.
Shareholding Company (K.S.C.)
A K.S.C. can be formed to conduct business in Kuwait. Its Kuwaiti portion of the ownership should not be less than 51%, a non-Kuwaiti can be a member of a shareholding company if his or her membership in that company contributes foreign capital or foreign expertise.
Closed Shareholding Company (“K.S.C. Closed”)
A closed Kuwaiti Shareholding Company (KSC Closed) is the other type of company open to non-Kuwaiti entities. Articles 68 and 94 of the Companies Law provide for this type of companies as an exceptional kind of Shareholding Company. The general rule is that the shareholders of the companies must be Kuwaiti nationals. As an exception, foreigners may own 49% of the share capital of a KSC Closed after obtaining the approval of the concerned authorities. The company’s objects cannot be banking or insurance.
Joint Ventures
Two or more persons, who are jointly and severally liable, may form a Joint Venture. Its objectives, terms and conditions are usually set out in its joint venture contract. The Joint Ventures is not a legal entity and does not require a registration in the commercial register. Joint Venture partners are separately registered in their own names. It is common for foreign contractors to form a joint venture or consortium to carry out major contracts.
Partnerships
Kuwait commercial companies law governs the formation of partnerships. The Kuwaiti share of the capital must be at least 51%.
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