How to start a business in Kuwait

Many of us come up with innovative ideas that could be, might be, the next best business idea. It is not easy to take those first steps though. Starting a business is always a bittersweet experience. My experience was bittersweet. The idea required long hours of hard work at the beginning but turned out to be my biggest achievement.

Commercial laws in Kuwait have taken a major leap in the past two years and will continue to change now that we are going through some difficult economic reform. I have received plenty of questions asking about how to start a business in Kuwait and thought I would answer the basic questions here.

How to register an app or online business?
Question: I would like to start my own business, my business idea is actually an app. I want to register in Kuwait commercially but I am not sure if I start a business online or from home?
Fajer: Unfortunately under Kuwaiti commercial law for you to obtain a commercial license/ permit, you must have a physical commercial location. Other countries in the Gulf Cooperation Council do not have such requirements. Commercial locations are in specified areas only and that does not include residential areas so you cannot start a business from your home.

Question: How do you know which areas are commercial?
Fajer: Well, when you register to obtain a permit (after having provided all the required documents and met all the required qualifications), the Ministry of Commerce will send a representative to check your location, representatives from the Ministry of Health will be sent to check health and safety for kitchens and restaurants, the Fire Department will check health and safety as well. With that said, some commercial areas can be for specific businesses as well, so maybe only a restaurant can open in that location or only a bookstore and so forth.

Fortunately there are plenty of platforms in Kuwait that support small startups or businesses and can be legally used for you to pursue your business endeavors and test out your business idea before taking the major steps of starting a business. These can be markets, applications by big companies, community centers, exhibitions and so on.
As for online businesses or applications, you will still need a physical place, a lot of successful local applications in Kuwait have physical spaces for legalities that they don’t really use, as most of their work is based online.

How long will it take to get a license?
Question: How long does the process of obtaining a permit take?
Fajer: As I mentioned above many different entities are involved in order for you to obtain a permit, therefore it can take from a month to a few months. The issue is not with the process itself as much as with the fact that the procedures are not clear. In my opinion, any procedure provided by the government should be written clearly and easily accessible to the layman. My advice is to do your research whether personally or through a lawyer  and find out what the requirements are for your business and then submit your papers.

Online payments?
Question: Can I legally receive online payments if I do not have a registered company?
Fajer: No. Local companies that provide online payment platforms will not provide their services to non-registered companies.

Ownership
Question: Is it true that I have to be from Kuwait to obtain a commercial license? Or have a Kuwaiti partner that owns a majority of the shares?
Fajer: Previously a Kuwaiti citizen had to own 51 percent of the shares of the company but with the new reform laws there are some exceptions to that rule. With that said, I don’t think the new laws are of any significance to those that want to set up small businesses without getting into the details. So yes you will need to have a Kuwaiti or Kuwaiti partners that own the majority of the shares.
Legalities

Question: What should we keep in mind from a legal perspective before starting a business?
Fajer: Each business has its different needs, but I shall answer this question generally.
1)    The type of company you want to establish should be the first thing you consider. There are multiple options under Kuwaiti law and each type has its own responsibilities and consequences depending on the partnership that you would like to create.
2)    When you submit your papers to obtain a permit, you will need to also register your company’s trademark including the logo. So I advise that you finalize those issues internally before submitting your documents.
3)    A general partnership agreement can be found at the Ministry of Commerce, also the general draft for the articles of association of the company (should your company need one). I advise you to read and review them carefully even if they are general and are commonly used in Kuwait. Internal policies are also things that you should consider.

There are other elements that you will need to carefully plan out like your mission, vision and so on. It will require a lot of planning and commitment but hopefully you will find a pot of gold at the end of a very long road.
For any legal questions or queries, email ask@fajerthelawyer.com.

This article was published on 31/01/2016