It has been promising to see that Kuwait has taken further steps towards becoming a world-class commercial and financial regional hub for local and foreign companies. A number of recent changes have been designed to improve Kuwait’s overall investment climate, and fostering its competitiveness, as showcased by the passing of several new economic laws, including the Direct Investment Promotion Law as well as the recent reduction of minimum capital requirements for all entities.
The country’s unique strength is based on its strategic location, an open and stable economy, 10 per cent of the world’s proven oil reserves, sound macroeconomic conditions with high purchasing power reflecting a high income per capita, investor grade rating, low risk classification, adequate infrastructure, friendly, youthful and dynamic society, and a good record in human development indicators.
For businesses, one of the most exciting aspects of the Direct Investment Law is the one-stop shop for business registration. The Law provides that the Kuwait Direct Investment Promotion Authority will have a specialised unit comprising of officials from the various relevant government departments, They will, in coordination with KDIPA, assist with the establishment and licensing for such entities — an effort that aims to cut through the tremendous bureaucratic red-tape.
More recently, in early May, the Ministerial Decision No. 234 of 2015 was issued, which amends Ministerial Decision No. 425 of 2013 regarding the issuance of the executive regulations to the Companies Decree Law No. 25 of 2012. Pursuant to this Ministerial Decision, the minimum capital requirements for all companies, depending on their respective legal forms, have been reduced.
Excluded from this decision are companies that are established by laws or regulations issued by supervisory authorities other than the Ministry of Commerce & Industry.
The decision reduces the minimum capital requirements for commercial entities that are ‘general partnerships’, ‘limited partnerships’, ‘partnerships limited by shares, ‘single person companies’, ‘limited liability companies’, and sole proprietorship to KD1,000, whereas the minimum capital for closed shareholding companies has been reduced to 10,000 Kuwaiti dinars and it will be 25,000 dinars for public shareholding companies.
These are without doubt positive steps towards making the starting of commercial entities in Kuwait easier and closely benchmarked against global best practices.
The writer is General Manager at Aeon Gulf.
