Law No. 1 of 2016 Promulgating the Companies Law

State of Kuwait

Council of Ministers

Law No. (1) of 2016 Promulgating the Companies Law

Having reviewed the Constitution and the relevant laws and decrees, and following the approval of the National Assembly, we hereby ratify and promulgate the following Law:

Article (1) - Promulgation Provisions

The provisions of the accompanying Companies Law shall come into force and shall apply to companies incorporated in the State of Kuwait or whose principal place of business is located therein.

Article (2) - Promulgation Provisions

The provisions of the accompanying Law shall apply to companies existing as of the effective date thereof. Such companies shall regularize their status in accordance with its provisions within the time limits and pursuant to the procedures prescribed by the Executive Regulations.

Article (3) - Promulgation Provisions

Decree-Law No. (25) of 2012 promulgating the Companies Law, together with the laws amending it, is hereby repealed. Any provision that conflicts with the provisions of this Law shall also be repealed.

Article (4) - Promulgation Provisions

The Minister of Commerce and Industry shall issue the Executive Regulations of this Law and the decisions necessary for its implementation.

Article (5) - Promulgation Provisions

The Prime Minister and the Ministers, each within their respective jurisdiction, shall implement this Law. It shall be published in the Official Gazette and shall enter into force from the date of its publication.

Emir of Kuwait
Sabah Al-Ahmad Al-Jaber Al-Sabah

Companies Law

Part One

General Provisions

Definitions

Article (1)

For the purposes of applying the provisions of this Law, the following words and expressions shall have the meanings assigned to each of them below:

Announcement: An announcement published in two local Arabic-language daily newspapers and on the company's website, if any.

Publication: Publication in the Official Gazette, Kuwait Al-Youm.

Registration: Registration in the Commercial Register.

Public Disclosure: Registration together with publication in the Official Gazette.

Authority: The Capital Markets Authority.

Ministry: The Ministry of Commerce and Industry.

Minister: The Minister of Commerce and Industry.

Regulatory Authorities: The Ministry, the Authority and the Central Bank of Kuwait in respect of companies subject to the supervision of any of them, or such other authorities as may be prescribed by law.

Founder: Any person who actively participates in the incorporation of a company, signs its memorandum of association personally or through a representative, and contributes to its capital by means of a cash contribution or an in-kind contribution.

Company Contract: The company's memorandum of association, or its memorandum and articles of association, where applicable.

Article (2)

The provisions contained in this Part shall apply to all companies, subject to the specific provisions governing each form of company stipulated in this Law.

Article (3)

A company shall be incorporated by virtue of a contract under which two or more persons undertake to contribute to a profit-making enterprise, each by providing a contribution in the form of property or work, with a view to sharing the profits or losses resulting from such enterprise.

In the cases stipulated by law, a company may be incorporated by the unilateral act of a single person.

Companies that do not seek to generate profit may also be incorporated pursuant to a contract or articles specifying the rights and obligations of the partners and other applicable terms and conditions.

The transfer of partners' interests in such companies shall be subject to the partners' right of redemption in accordance with the specific conditions stipulated in the company's contract, in addition to the conditions prescribed by this Law. The company may not issue negotiable bonds or sukuk, nor may it receive donations.

The company may adopt a specific name derived from its purpose, and its business name may include the name of one or more partners.

The Executive Regulations shall regulate the provisions applicable to such companies and prescribe the model form of their memorandum of association. The company shall adopt one of the forms stipulated in Article (4) of this Law that is appropriate to its nature, provided that it may not take the form of a Public Shareholding Company.

Article (4)

A company shall take one of the following forms:

1. General Partnership.

2. Limited Partnership.

3. Partnership Limited by Shares.

4. Joint Venture Company.

5. Shareholding Company.

6. Limited Liability Company.

7. Single Person Company.

Any arrangement that does not adopt one of the forms referred to in the preceding paragraph shall render the persons who entered into it personally and jointly liable for the obligations arising therefrom.

Article (5)

The Ministry shall notify the founders of the incorporation of the company within three business days following completion of the required documents and procedures in accordance with the provisions of this Law and its Executive Regulations.

The Executive Regulations shall regulate the procedures for incorporating a company or amending its company contract, issuing the licenses required for carrying out its activities, and completing any other procedures or approvals falling within the jurisdiction of more than one authority, in a manner that ensures that all such procedures are completed through a dedicated department at the Ministry comprising representatives of the relevant government authorities.

Article (6)

The approval of the Central Bank of Kuwait or the Authority, as the case may be, shall be obtained for the incorporation of companies and for the company contract of any company subject to the supervision of either of them.

Article (7)

With the exception of a Joint Venture Company, the company contract shall be made in writing in an authenticated official instrument; otherwise, it shall be null and void.

The partners may invoke, against one another, the nullity resulting from failure to execute the contract in writing in the manner specified in the preceding paragraph. However, they may not invoke such nullity against third parties, while third parties may invoke it against them.

If the company contract is declared null and void at the request of a third party, the company shall be deemed never to have existed in relation to such third party. If the contract is declared null and void at the request of a partner, the nullity shall have effect in relation to that partner only from the date on which the action was filed.

Article (8)

The founders or partners of the company, as the case may be, shall be jointly liable for compensating any damage sustained by the company, the partners, or third parties as a result of the nullity of the company contract.

Article (9)

With the exception of a Joint Venture Company, the company contract and any amendments thereto shall be publicly disclosed in accordance with the provisions of this Law. If the contract is not publicly disclosed in the prescribed manner, it shall not be enforceable against third parties.

If the failure to make public disclosure is limited to one or more particulars required to be disclosed, only those particulars shall be unenforceable against third parties.

Nevertheless, a third party acting in good faith may rely upon the existence of the company or any amendments to its company contract even if the public disclosure procedures have not been completed.

The company's managers or members of its Board of Directors shall be jointly liable for compensating any damage sustained by the company, the partners, or good-faith third parties as a result of failure to make the required public disclosure.

Article (10)

The company contract of a Shareholding Company, whether public or closed, shall comprise a memorandum of association and articles of association.

All other companies, with the exception of Joint Venture Companies, shall have a memorandum of association. The partners may also adopt articles of association, which, where adopted, shall constitute an integral part of the company contract.

The Executive Regulations shall prescribe the model memorandum and articles of association for the companies stipulated in this Law. Such models shall contain the particulars and conditions required by the Law and the Executive Regulations, as well as those conditions from which the partners and founders may not agree to derogate.

The partners may include such additional conditions as they deem appropriate, provided that such conditions do not conflict with the mandatory provisions of the Law and its Executive Regulations.