Ministry of Commerce and Industry Resolution No. 162 of 2020 Issuing the Regulations Organizing Professional Engineering Companies

Ministry of Commerce and Industry Resolution No. 162 of 2020
Issuing the Regulations Organizing Professional Engineering Companies

Chapter One – Definitions

Article 1

The following words, wherever they appear in these Regulations, shall have the meanings set out opposite each of them:
1. The Law: the Companies Law No. (1) of 2016.
2. The Regulations: the Executive Regulations for Professional Engineering Companies.
3. The Minister: the Minister of Commerce and Industry.
4. The Ministry: the Ministry of Commerce and Industry.
5. The Licence: the document issued in accordance with the provisions of the Law and these Regulations, which entitles its holder to practise the engineering profession through a commercial company.
6. The Commercial Engineering Register: a register kept by the Committee for Regulating the Practice of the Profession for Engineering Offices and Consultancy Houses at Kuwait Municipality, in which professional engineering companies are registered.
7. Professional Engineering Company: a company with an independent legal personality, established by two or more persons — depending on the form of the company — who are legally licensed to practise the profession, and whose object is the practice of that profession.
8. The Committee for Regulating the Practice of the Profession: the Committee for Regulating the Practice of the Profession for Engineering Offices and Consultancy Houses at Kuwait Municipality, governed by Ministerial Resolution No. (193) of 2007 and its subsequent amendments.
9. The Union: the Kuwaiti Union of Engineering Offices and Consultancy Houses.
10. Accredited Engineer: an engineer accredited by the Committee for Regulating the Practice of the Profession.

Chapter Two – General Provisions

Article 2

Kuwaiti engineers may establish professional engineering companies after submitting a certificate from the Committee for Regulating the Practice of the Profession. Engineers may not establish commercial companies to practise engineering works or consultancy, nor may they be partners, managers or employees in general contracting companies, construction materials trading companies or other companies related to these activities.

Article 3

A professional engineering company shall take one of the following company forms:
1. A general partnership.
2. A closed shareholding company.
3. A limited partnership.
4. A limited liability company.

Article 4

A professional engineering company shall be named after one or more of the partners with the addition of the phrase (and Partners or and their Partners), or shall adopt an invented name for the practice of its activity — depending on the form of the company. In all cases, the name of the professional company shall be followed by the phrase Professional Engineering Company.

Article 5

Professional engineering companies shall be subject to the Committee for Regulating the Practice of the Profession, with which a special register shall be established in which the professional engineering companies established in accordance with the provisions of the Law and these Regulations are registered. The following particulars shall be entered therein:
1. The name and address of the company.
2. The names and domiciles of the partners.
3. The number and type of shares or interests owned by each partner and the amount paid for each share or interest.
4. The names of the managers or the Board of Directors and their powers.
5. Any changes to the particulars recorded in the Professional Engineering Register.
The Committee for Regulating the Practice of the Profession may issue certificates of the particulars entered in the register referred to in the preceding paragraph.

Article 6

The Ministry shall have competence to license the establishment of a professional engineering company in accordance with the procedures and controls provided for in the Law, the aforementioned Regulations and these Regulations.
The professional company shall be registered in a special register at the Ministry called the Professional Engineering Register. A professional company shall not acquire legal personality nor commence its business until after its registration in that register.

Article 7

The company shall provide the Ministry with copies of its memorandum of association and of the minutes of its general meetings or of the partners’ meeting — as the case may be — as well as copies of its approved annual financial statements.

Chapter Three – Conditions of Establishment

Article 8

The application to establish a professional engineering company shall be submitted to the Kuwait Business Center (One-Stop Shop), accompanied by a certificate from the Committee for Regulating the Practice of the Profession. The establishment of a professional engineering company shall be subject to the same procedures prescribed for the form it takes.

Article 9

The Company Contract shall include the following particulars:
1. The name and address of the company.
2. The head office of the company.
3. The object of establishing the company.
4. The term of the company, if any.
5. The names, titles and academic qualifications of the partners and the place of residence of each of them.
6. The method of managing the company, the persons responsible for its management and their powers.
7. The amount of the capital and the share of each partner, and a statement of each non-cash contribution, its nature, the value at which it was assessed, the name of its contributor, the conditions of its contribution, and the rights of mortgage and lien attached to it, if any.
8. The provisions on distributing the return among the partners.
9. The financial year of the company.
10. The provisions on liquidating the company and dividing its assets.
11. The conditions for appointing the manager, his powers, remuneration, term of management of the company and the method of his removal.
12. The method of distributing profits.
13. The method of transferring contracts to a commercial engineering company, another engineering office or another engineering consultancy house.

Article 10

The memorandum of association or the articles of association of a professional engineering company, publicised in accordance with the provisions of the Law, the aforementioned Regulations and these Regulations, may not be invoked against third parties until after the company is registered in the Professional Engineering Register at the Ministry.
If the failure of publicity is limited to one or more particulars of either of them, those particulars alone shall be unenforceable against third parties.
Nevertheless, third parties acting in good faith may rely on the existence of the company or on any amendments to its contract, even if the publicity procedures have not been completed.

Article 11

Without prejudice to the provisions of Article (28), the term of the licence of a professional company shall be (4) four years from the date of its issuance. This term shall be linked to the renewal of the registration of the company’s owners in the registration record at the Committee for Regulating the Practice of the Profession, and subject to the licensees submitting the financial statements within the legally prescribed deadlines. In the event of breach of this obligation, the provisions of Article (11) of Law No. 111 of 2013 on Professional Shop Licences shall apply.

Article 12

The capital of a professional engineering company, whatever form it takes, shall not be less than 100,000 (one hundred thousand Kuwaiti dinars).

Chapter Four – Management of the Professional Company

Article 13

A closed shareholding company shall be managed by a Board of Directors composed of a number of its shareholders. The articles of association of the company shall specify the powers of the Board and the provisions relating to its formation.
The authority of the Board of Directors of a closed shareholding company may not include anything that prejudices the independence of the shareholders in their technical practice of the profession.

Article 14

A general partnership, limited partnership or limited liability company shall be managed by one or more of the partners. If there are several managers and the Company Contract does not provide for a specific rule, decisions shall be taken by their absolute majority. In the event of a tie, the managers shall refer the matter to the partners for a decision, and approval shall be by a majority of the partners.
The authority of the manager — in professional engineering companies that are general partnerships, limited partnerships and limited liability companies — may not include anything that prejudices the independence of the partners in their technical practice of their profession.

Chapter Five – Partners’ Rights and Duties

Article 15

A partner or shareholder in a professional engineering company may not be a partner or shareholder in another professional company practising the same profession, nor may he practise the profession for his own account or through another person, whether concealed or under an assumed name.

Article 16

Each partner, shareholder or accredited engineer in a professional engineering company shall be personally liable for his professional errors towards the company and the other partners or shareholders, as the case may be, and the company shall be liable for the errors of the partners towards third parties.

Chapter Six – Practice of the Company’s Activity

Article 17

A professional engineering company shall not practise its activity except through its licensed partners or shareholders, or the accredited engineers working for it.

Article 18

A professional engineering company shall be competent to practise only the profession that is the subject of its activity. It may not practise professional business or participate through the establishment of professional companies; nevertheless, it may own financial and real estate assets to serve its objects.

Article 19

A professional company may not provide its services to its clients except through its partners, shareholders or employees, and it shall not be entitled to carry on its activity through the employees of any other company practising the same activity, unless otherwise agreed.

Article 20

A professional company may engage engineering specialists or administrative employees under the supervision and responsibility of the company, under employment contracts in accordance with the requirements of Law No. 6 of 2010 on Labour in the Private Sector and the laws amending it.

Article 21

A professional engineering company shall not be granted a licence to practise the activity except after submitting an insurance policy concluded with local or international insurance companies having branches in the State of Kuwait, to compensate for professional errors committed by the partners, shareholders or employees of the company, provided that the validity of this policy extends for six months after the expiry of the Company Contract, and that it is renewed throughout the term of the company. The policy shall not be less than KD 1,000,000 (one million Kuwaiti dinars), unless the regulations on the practice of the profession for engineering offices and consultancy houses prescribe another rate.
The professional engineering company shall disclose the insurance policy to clients.

Chapter Seven – A Partner’s Loss of the Licence to Practise the Profession, Withdrawal or Death

Article 22

If a partner or shareholder in a professional engineering company temporarily loses the licence to practise his profession, or a disciplinary or criminal judgment is issued against him barring him from work for a temporary period, he shall refrain from working in the company — immediately and completely — until he regains the licence or the period of the bar ends.
The professional engineering company shall be dissolved if the company is reduced — for any reason whatsoever — to a single partner, unless that partner, within (6) six months from the date of the loss or bar, admits one or more other partners.

Article 23

If a partner or shareholder in a professional engineering company permanently loses the licence to practise his profession, he shall thereby be deemed to have withdrawn from the company, while retaining his percentage of the returns of the contracts concluded with the company’s clients until the issuance of the financial statements for the financial year following his loss of the licence.

Article 24

In the event of the withdrawal or death of the partner after whom the professional engineering company is named or whose name is included in its name, the name of the company shall be amended within (6) six months from the date of the withdrawal or death. The company may continue to bear his name or include it in its name with his written consent or the written consent of his heirs, as the case may be.

Article 25

If one of the partners or shareholders in a professional engineering company dies, the company shall continue among the remaining partners, and his share shall pass to his heirs after its valuation in accordance with Article (11) of the aforementioned Companies Law as at the date of the partner’s death. The heirs shall also have a share of any rights that newly accrue to the company if they result from transactions prior to the death of the deceased, at most until the issuance of the financial statements for the financial year following the death. Pending lawsuits are excepted from this until they are decided by a final court judgment.

Article 26

The memorandum of association of a professional engineering company, or a special agreement between one or all of the heirs of the deceased partner or shareholder and the remaining partners in the company, may provide that one of the heirs of the deceased partner shall take the place of the deceased in his share in the company if he is licensed to practise the profession.

Chapter Eight – Withdrawal or Assignment of Interests and the Right of Redemption

Article 27

Withdrawal, assignment, sale or pledge shall be enforceable against third parties after being annotated in the Commercial Engineering Register.

Article 28

Subject to the aforementioned Companies Law, a partner may assign, sell or pledge his interests or shares, provided that in all cases they pass to one of the licensed engineers.

Article 29

A partner who has lost the right to practise the profession shall be granted a period of (6) six months to assign his interests or shares in the company; otherwise, the company shall redeem them. In the event of redemption, the interests shall be valued in accordance with Article (11) of the aforementioned Companies Law. The same rule shall apply to a deceased partner, unless among the heirs there is a person licensed to practise the profession and the heirs agree that he shall take the place of the deceased.

Chapter Nine – Conversion, Dissolution and Liquidation of the Professional Engineering Company

Article 30

Subject to the provisions of the aforementioned Companies Law, any professional engineering company may convert into any of the company forms referred to in Article (3) of these Regulations, in accordance with the provisions and procedures prescribed for amending the Company Contract, provided that at least two financial years have elapsed since its registration in the Professional Engineering Register.
The conversion of the company shall not take place except after a certificate from the Committee for Regulating the Practice of the Profession, the completion of the publication and announcement procedures, and the preparation of a report valuing the company’s assets and liabilities in accordance with the provisions on valuing in-kind contributions set out in Article 11 of the aforementioned Companies Law.

Article 31

A professional engineering company shall be dissolved by a decision of the Minister if all the partners lose the conditions for practising the profession, upon a request from the Committee for Regulating the Practice of the Profession accompanied by the supporting documents, and it shall be liquidated in accordance with the aforementioned Companies Law.

Article 32

The partners may not agree to dissolve or liquidate a professional engineering company before the end of its term except after notifying its clients at least six months before commencing the dissolution and liquidation procedures. The decision on dissolution or liquidation shall not be annotated in the Professional Engineering Register at the Ministry of Commerce except after attaching proof that the notification has been completed.

Article 33

Without prejudice to the requirements for establishing companies, existing engineering offices and consultancy houses that are carrying on their activity may convert into one of the company forms set out in Article (3) of these Regulations, and may retain the same name or create a new name, provided that all the legal rights and obligations of the former entity are transferred to the new entity.

Chapter Ten – Final Provisions

Article 34

The provisions of the Law and its aforementioned Executive Regulations shall apply to a professional engineering company — where no special provision exists and insofar as they do not conflict with its nature.
A partner or shareholder in a professional engineering company, whatever its form, shall not acquire the status of a merchant by virtue of his partnership or ownership of shares.

Article 35

A company that has ceased practising its activity shall be granted a period of (6) six months to regularise its status in conformity with the provisions of the Law, the aforementioned Regulations and these Regulations. The Minister may extend this period for one or more equal periods if he deems it expedient.
The company shall be dissolved upon the expiry of the period without regularising its status.

Article 36

Without prejudice to the Companies Law, professional engineering companies shall not be entitled to obtain more than one licence to practise the profession or to open a branch within the State of Kuwait, unless they submit a certificate from the Committee for Regulating the Practice of the Profession.

Article 37

Professional engineering companies shall notify the Ministry and the Committee for Regulating the Practice of the Profession within thirty days from the date of changing their address.

Article 38

Every resolution contrary to the provisions of these Regulations is hereby repealed, and the regulations and resolutions in force shall continue to apply insofar as they do not conflict with their provisions.

Article 39

These Regulations shall be published in the Official Gazette and shall come into force from 1 January 2021, and the officials, each within his competence, shall implement them.

Issued on 22 October 2020 and published in the Official Gazette Kuwait Al-Youm on 8 November 2020.