Ministry of Commerce and Industry Resolution No. 287 of 2016 Issuing the Executive Regulations of Law No. 1 of 2016 Promulgating the Companies Law

Ministry of Commerce and Industry Resolution No. 287 of 2016
Issuing the Executive Regulations of Law No. 1 of 2016 Promulgating the Companies Law

Part One

Chapter One – General Provisions

Definitions

Article 1

In applying the provisions of these Regulations, the following terms and words shall have the meaning set out against each of them, unless the context of the text requires otherwise:
1. Law: the Companies Law promulgated by Law No. 1 of 2016.
2. Minister: the Minister of Commerce and Industry.
3. Ministry: the Ministry of Commerce and Industry.
4. Authority: the Capital Markets Authority.
5. Regulatory Authorities: the Ministry, the Authority and the Central Bank of Kuwait in respect of companies subject to any of them, or such other entities as the Law may determine.
6. Clearing Agency: a company licensed by the Authority to operate as a clearing agency.
7. Audit Office: the audit office licensed by the Authority to carry on the activity of asset valuer in respect of the articles regulating the valuation of assets.
8. Permanent Technical Committee: the committee competent to set the accounting rules prescribed by law concerning the practice of the auditing profession.
9. One-Stop Shop: the department established and formed at the Ministry for the purpose of issuing the licences required for companies to carry on their activities, and comprising representatives of the relevant government entities.
10. Founder: every person who actually participates in the incorporation of the company and signs its contract, personally or through a person acting on his behalf, and contributes to its capital by a cash or in-kind contribution or by work.
11. Company Contract: the memorandum of association of the company, or the memorandum of association and the articles of association, if any.
12. Registration: registration in the Commercial Register.
13. Publication: publication in the Official Gazette.
14. Publicity: registration together with publication in the Official Gazette.
15. Announcement: announcement in two local daily newspapers published in the Arabic language and on the website, if any.
16. Underwriter: a company licensed by the Authority to carry out the business of managing and marketing share subscriptions on behalf of the issuing company, preparing prospectuses, and carrying out all studies and procedures necessary for the issuance, registration and coverage of shares.
17. Treasury Shares: the shares which the company purchases, resells and uses out of its issued shares that are traded on the stock exchange, within the prescribed percentage.
Division: the separation of the company’s assets or activities, together with the liabilities and equity rights associated therewith, into two or more separate companies, each having an independent legal personality.
* The definition of “Division” was added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Non-Profit Companies

Article 2

Companies that do not aim to make a profit shall be incorporated under a contract or articles specifying the rights and obligations of the partners and other terms, and the company shall take one of the following forms:
1- General partnership
2- Limited partnership
3- Partnership limited by shares
4- Joint venture
5- Limited liability company
6- Single person company
The provisions of these Regulations shall apply to such companies insofar as they do not conflict with their nature.

Article 3

A non-profit company is prohibited from doing the following:
(a) Carrying on or supporting political activities.
(b) Carrying on any activity subject to any Regulatory Authorities without obtaining their approval.
(c) Converting into a for-profit company.

Article 4

The company’s trade name and its name, if any, followed by the phrase (Non-Profit), shall be stated on all papers and printed matter it uses in its business and on the contracts it concludes with third parties.

Article 5

Any net returns or profits realised by the company shall be deemed a surplus for it, and may not be used except to achieve its objects and the purposes for which it was established and to expand its activities.
The company may not, under any circumstances, distribute any of its returns or profits, directly or indirectly, to any of the partners or shareholders.

Article 6

The company shall submit to the Ministry, within the first three months from the beginning of the financial year, an annual report setting out the business and activities it has carried out and its sources of funding, accompanied by its balance sheet certified by the authorised signatories of the company and by its auditor, as well as any other information the Ministry may request.

One-Stop Shop

Article 7

A department for the One-Stop Shop shall be established at the Ministry, reporting to the Minister, to which a sufficient number of employees of the Ministry and of other entities shall be seconded, as follows:
(a) Employees of the Ministry from:
1. The Legal Affairs Sector
2. The Commercial Register Department
3. The Anti-Money Laundering and Combating the Financing of Terrorism Department
4. The Partnerships Department
5. The Shareholding Companies Department
6. The Administrative Affairs Department
7. The Development and Training Department
8. The Information Systems Department
(b) Employees of other entities from:
1. The Real Estate Registration and Authentication Department of the Ministry of Justice.
2. Kuwait Municipality.
3. The Ministry of Social Affairs and Labour.
4. The Public Authority for Civil Information.
5. The Ministry of Interior.
6. The Kuwait Chamber of Commerce and Industry.
7. The Kuwait Direct Investment Promotion Authority.
8. The National Fund for the Care and Development of Small and Medium Enterprises.
Departments or entities may be added to or removed from work in this department by a resolution of the Minister or whomever he authorises, according to the requirements of the public interest.

Article 8

The One-Stop Shop referred to in the preceding Article shall be competent to complete all procedures relating to the issuance of the licences required for companies to carry on their activities, in accordance with the procedures issued by a resolution of the Minister.

Article 9

The entities that have representatives at the One-Stop Shop shall ensure that they are selected from among persons of experience and competence, shall grant them the power to take decisions and issue the approvals required from their entities, and shall provide them with the data, information, forms and everything necessary to complete the work within the competence of such entity.

Article 10

The Ministry shall have a performance quality control section, reporting to the Minister, which shall be competent to supervise the One-Stop Shop, to receive complaints submitted by concerned parties regarding their transactions at the One-Stop Shop, and to take the necessary measures and decisions in this regard.

Article 11

The approval of the competent Regulatory Authorities, in advance as the case may be, shall be required for the incorporation of companies and for the Company Contract of a company subject to the supervision of any of them, as well as for any amendments made to the Company Contract.

Company Contract

Article 12

The founders or partners, as the case may be, may not omit the mandatory particulars required by the form prepared by the Ministry.
Outside the scope of the mandatory terms referred to above, they may adopt all or some of the provisions of the form, or add to them any other terms, insofar as this does not conflict with the mandatory provisions of the Law and these Regulations.

Company Capital

Article 13

(Without prejudice to the minimum capital of companies prescribed by special laws or by regulations issued by the Regulatory Authorities or by entities that issue licences to carry on activities other than, or together with, the Ministry of Commerce and Industry.)
(a) The minimum capital shall be KWD 100 for each of the following companies:
1. General partnership.
2. Limited partnership.
3. Limited liability company.
4. Single person company.
(b) The minimum capital of each of:
1. Holding company.
2. Professional company.
3. Special purpose company.
4. Non-profit company.
shall be according to the form it takes in accordance with the provisions of the Law.
(c) The minimum capital of each of:
1. Closed shareholding company / partnership limited by shares: KWD 10,000
2. Public shareholding company: KWD 25,000
* Replaced by Ministerial Resolution No. 258 of 2018 (Kuwait Al-Youm, Issue No. 1388, 15 April 2018).

Bases for Valuing In-Kind Contributions “Tangible or Intangible”

Article 14

With the exception of companies subject to the supervision of the Authority, companies shall be subject, in the valuation of tangible and intangible in-kind contributions, to the provisions set out in the following Articles.

Article 15

In-kind contributions shall be valued by one of the Audit Offices, at the request of the founders of the company or of those in charge of its management.
The valuation of contributions may not be assigned to the company’s auditor or to another auditor who is a partner in the company.

Article 16

Those in charge of the management of the company or the provider of the contribution, as the case may be, shall provide all information to the Audit Office carrying out the valuation, and those in charge of the management of the company or the provider of the contribution shall be liable for concealing any information or providing incorrect information in this regard.

Article 17

Those in charge of the management of the company shall provide the Ministry with a copy of the valuation report approved by the Audit Office, and the procedures for transferring ownership of the in-kind contribution at its value to the company shall be completed after its approval in accordance with the Law.

(g) Objection to the Company Name

Article 18

In the event of an objection to the name of a company, the application of the objecting company shall satisfy the following conditions:
1. The name of the objecting company shall have been registered in the register before the registration of the company objected to.
2. The company shall carry on the same activity as that carried on by the company objected to.
3. The application shall be submitted within ninety days from the date of publication of the name subject to the objection.
4. The application shall be signed by the company’s manager, the Chairman or his deputy, as the case may be.
The following documents shall be attached to the application referred to in the preceding paragraph:
1. A copy of the objecting company’s Company Contract and its amendments.
2. A copy of the company’s commercial licence.
3. The company’s commercial registration certificate.
4. Authentication of the signature of the manager, the Chairman or his deputy, as the case may be.
The company objected to shall be notified of a copy of the objection submitted against it, in order to respond to its contents within two weeks from the date of its receipt of the notification, and the Ministry shall decide on such application within sixty days from the date of its submission and shall decide either to accept the application and oblige the company objected to to change its name, or to reject the application, notifying both companies of its decision in either case.

(h) Special Purpose Company

Article 19

Special purpose companies whose objects relate to securities, or which are established for the purpose of managing securities-based crowdfunding offerings, shall be subject to the controls and provisions applicable at the Capital Markets Authority; other than for such objects, they shall be subject to the provisions of these Regulations and the ministerial resolutions relating thereto.
The company shall take one of the following forms:
– Single person company.
– Limited liability company.
– Closed shareholding company.
The company shall be incorporated in accordance with the procedures followed for the incorporation of the form it takes, except with respect to capital, reserves and general meetings, in accordance with the controls issued by a resolution of the Minister.
* Replaced by Ministerial Resolution No. 22 of 2024 (Kuwait Al-Youm, Issue No. 1674, 11 February 2024).

(i) Right of Inspection and Inspection Fees

Article 20

Any concerned party may inspect at the Ministry the Company Contract, the minutes of the partners’ meetings and of its general meetings, and other information and documents kept by it concerning the company, by means of an application submitted to the competent department specifying precisely the document to be inspected, and may obtain a true copy thereof against a fee determined by a resolution of the Minister.

Chapter Two – Regularisation of the Status of Companies

Article 21

Existing companies shall regularise their status within six months from the date of entry into force of the provisions of these Regulations, as set out in the following Articles.

Article 22

General partnerships and limited partnerships shall regularise their status by amending the Company Contract so as to include the following:
1. The partners’ places of residence.
2. The method of appointing and removing the company’s manager, the limits of his authority, and his powers to delegate to others, particularly with regard to the dispositions provided for in Article (46) of the Law.
3. The beginning and end of the company’s financial year.
4. The provisions relating to the liquidation of the company and the division of its assets.

Article 23

Partnerships limited by shares shall regularise their status by amending their contract to include the particulars set out in the preceding Article, provided that, if the number of partners is less than five, the number of partners shall be increased so that it is not less than five partners, of whom at least three shall be shareholders.
The company shall convene the Ordinary General Meeting to appoint the company’s auditor and determine his fees, and a resolution shall be adopted by the Extraordinary General Meeting amending the Company Contract so as to require the deduction annually of a percentage of not less than ten percent of the net profits to form a statutory reserve for the company, which shall not be used except to cover the company’s losses, or to secure the distribution of profits to shareholders at a rate not exceeding five percent of the paid-up capital in the years in which the company’s profits do not permit the distribution of such percentage, due to the absence of a voluntary reserve permitting the distribution of such percentage of profits.

Article 24

Limited liability companies shall regularise their status by amending their contract so that the value of each share of the capital is not less than one hundred dinars, provided that the contract includes the names of those entrusted with the management of the company or a statement of the method of their appointment, and a provision requiring the appointment of one or more auditors for the company.

Article 25

The public shareholding company shall regularise its status as follows:
1. Amending the Company Contract by increasing the number of members of the Board of Directors so that it is not less than five members, in respect of a company whose contract provides for a smaller number.
2. Amending the Company Contract to set out the powers of the Board of Directors with regard to borrowing, mortgaging the company’s real estate, entering into guarantees, arbitration, settlement and donations.
3. Amending the Company Contract so that the meetings of the Board of Directors are not fewer than six meetings in a single financial year.
4. Appointing a Chief Executive Officer for the company, in respect of companies that do not have such a position.
5. Separating the position of Chief Executive Officer from the position of Chairman in companies in which these two positions are combined.
6. Appointing a secretary to the company’s Board of Directors.
7. Abolishing the position of managing director.

Article 26

A closed shareholding company listed on the Kuwait Stock Exchange (Boursa Kuwait) shall regularise its status as set out in the preceding Article, as a public shareholding company, from the date of listing, even if its listing is subsequently cancelled.
In this case, the phrase Kuwaiti Public Shareholding Company or the abbreviation (K.S.C.) Public shall replace the phrase Kuwaiti Closed Shareholding Company or the abbreviation (K.S.C.) Closed added to the company’s name.

Article 27

The closed shareholding company shall regularise its status as follows:
1. Amending the Company Contract to set out the powers of the Board of Directors with regard to borrowing, mortgaging the company’s real estate, entering into guarantees, arbitration, settlement and donations.
2. Amending the Company Contract so that the meetings of the Board of Directors are not fewer than six meetings in a single financial year.
3. Appointing a secretary to the company’s Board of Directors.
4. Abolishing the position of managing director.

Article 28

The holding company shall regularise its status according to the form it takes.

Article 29

Existing companies that carry on their objects in accordance with the provisions of Islamic Sharia shall regularise their status as set out in Article (15) of the Law.

Part Two
General Partnership

Chapter One – Disposal of Shares

(a) Assignment of Shares between Partners

Article 30

Shares shall be assigned between partners by the assignor or the assignee submitting an application to the Ministry to amend the Company Contract to reflect the assignment, provided that the application includes the names of the two parties to the assignment and the number of shares assigned, and that it is accompanied by a letter from the company confirming its knowledge of the assignment, or by an official notice served on the company through the process server of the Execution Department of the Ministry of Justice containing the said particulars.
The Company Contract shall be amended to reflect the assignment by an official instrument signed by the two parties to the assignment, without the need for the signature of the other partners, unless the contract provides otherwise, and the assignment of the share shall have no effect vis-à-vis the other partners or third parties except from the date of Registration.

(b) Assignment of Shares to Non-Partners

Article 31

Where the Company Contract provides that shares may be assigned to non-partners, the assignor or the assignee shall submit an application to the Ministry to amend the Company Contract to reflect the assignment, provided that the application includes the name of the assignee and the number of shares assigned.
The [contract of the] company shall be amended to reflect the assignment by an official instrument signed by the two parties to the assignment and the other partners, and the assignment of the share shall have no effect vis-à-vis the other partners or third parties except from the date of Registration.
* Completed from the context.

(c) Redemption of a Partner’s Share in Cases of Withdrawal, Expulsion, Death and Similar Cases

Article 32

A partner who does not approve an amendment to the Company Contract shall have the right to withdraw from the company, and in this case the company shall value his rights by agreement of the majority of the other partners; if he does not accept this, his rights shall be valued in accordance with the first paragraph of Article (11) of the Law, and the company shall redeem that partner’s shares.
The Company Contract shall be amended to reflect the redemption by an official instrument signed by the partner who has withdrawn from the company and the other partners, and the redemption shall not be effective vis-à-vis the company or third parties except from the date of Registration.

Article 33

In the event of a partner’s expulsion by a court judgment, the Company Contract shall be amended by Registration.
The provisions of the first paragraph of the preceding Article shall apply to the valuation of such partner’s share.

Article 34

In the event of the death of a partner, his interdiction or the declaration of his bankruptcy, where the Company Contract includes a provision permitting the company to continue among the other partners and the heirs of the deceased partner have not expressed their wish to continue in the company, the company shall value the partner’s rights as at the day on which any of the said events occurs, in accordance with the provisions on the valuation of in-kind contributions set out in the first paragraph of Article (11) of the Law, and the company shall redeem the partner’s share after paying its value to the person entitled to receive it.
The Company Contract shall be amended to reflect the redemption by an official instrument signed by the heirs of the deceased partner, or the guardian in respect of the interdicted partner, or the bankruptcy trustee in respect of the bankrupt partner, and by the other partners, and the amendment of the Company Contract shall not be effective vis-à-vis the company or third parties except from the date of Registration.

(d) Pledge of Shares

Article 35

A partner may pledge his share in the company; the pledge shall be concluded in writing, and the pledge shall not be effective vis-à-vis the company and third parties except from the date of its Registration.
The pledge shall be registered in the Commercial Register upon an application submitted to the Ministry by the pledgor partner and the pledgee creditor, provided that the application includes the name of the pledgor partner, the name of the pledgee creditor, the number of shares pledged and the amount of the debt secured by the pledge, and that a copy of the instrument of indebtedness and a letter from the company confirming its knowledge of the pledge, or an official notice served on the company through the process server of the Execution Department of the Ministry of Justice containing the said particulars, are attached to the application.

Chapter Two – Amendment of the Company Contract

Article 36

The Company Contract may not be amended except by a resolution issued by the partners’ meeting by the numerical majority of the partners who own three quarters of the capital, and the amendment shall take effect upon Registration.
The amendment shall be registered upon an application submitted to the Ministry signed by the company’s manager and setting out the amendment in respect of which the partners’ meeting resolution was issued, and the following documents shall be attached to the application:
1. A copy of the minutes of the partners’ meeting signed by the company’s manager, setting out the place and date of the meeting, the names of the partners who attended the meeting and the shares owned by each of them, and the names of the partners who approved the resolution and the shares owned by each of them.
2. The documents evidencing compliance with the procedures prescribed for convening the meeting.
3. A copy of the meeting attendance sheet setting out the name and signature of the partner, or of his proxy in the case of attendance by power of attorney, and a copy of his instrument of agency shall be attached.

Part Three
Limited Partnership

Article 37

In addition to the provisions set out in the Law regarding limited partnerships, the provisions relating to the general partnership shall apply to the assignment of the partners’ shares in the company, the attachment and pledge thereof, the expulsion of a partner and the amendment of the Company Contract.

Article 38

The limited partner may not, under any circumstances, be appointed as manager of the company or interfere in the acts of its management.

Part Four
Partnership Limited by Shares

(a) Shareholders’ Register

Article 39

The company shall have a special register kept with a Clearing Agency, in which shall be recorded the names of the shareholding partners, their nationalities and domiciles, the number of shares owned by each of them and the value paid for each share.
Any changes to the data recorded in the shareholders’ register shall be annotated therein in accordance with the data received by the company or the Clearing Agency.
Any interested party may request the company or the Clearing Agency to provide him with data from this register.

(b) Assignment, Attachment and Pledge of Shares

Article 40

The shares of the general partners shall not be tradable, and they may be assigned, attached and pledged in accordance with the provisions relating to the partners’ shares in the general partnership; the shares of the shareholding partner shall be traded, attached and pledged in accordance with the provisions relating to the closed shareholding company.

(c) Amendment of the Company Contract

Article 41

The General Meeting may not amend the Company Contract except with the approval of all the general partners in addition to a number of shareholders representing more than half of the shareholding partners’ shares in the capital, and such amendment shall take effect from the date of Registration.
The amendment shall be registered on the basis of an application submitted to the Ministry, signed by the manager of the company, setting out the amendment in respect of which the resolution of the partners’ meeting was issued, and the following documents shall be attached to the application:
1. A copy, signed by the manager of the company, of the minutes of the partners’ meeting, setting out the place and date of the meeting, the names of the general partners and the number of shares owned by the shareholders who attended the meeting, together with evidence of the approval of all the general partners in addition to a number of shareholders representing more than half of the shareholding partners’ shares in the capital.
2. The documents evidencing compliance with the procedures prescribed for convening the meeting.
3. A copy of the meeting attendance sheet setting out the name and signature of the partner or of his representative, in the case of attendance by virtue of a power of attorney, with a copy of the instrument of agency attached.

Part Five
Professional Company

Article 42

Professional companies may be incorporated among members of the following liberal professions:
1. Advocacy.
2. Accountancy.
3. Medicine.
4. Engineering.
5. Consultancy practised by members of professions that are regulated by law and licensed to be practised by the Regulatory Authorities.
Members of the professions may not incorporate commercial companies to carry on the business of the profession.

Article 43

Professional companies shall be subject to the supervision of the entities legally competent to supervise the regulation of the affairs of the profession practised by the company.
A special register shall be established at such entity, in which shall be registered the professional companies incorporated in accordance with the provisions of the Law, and the following data shall be entered therein:
1. The name and address of the company.
2. The names, nationalities and domiciles of the partners.
3. The number of shares or interests owned by each partner, their type and the value 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 data recorded in the register.
The aforementioned entity may issue certificates of the data annotated in the register referred to in the preceding paragraph.

Article 44

The Company Contract shall include the following data:
1. The professional name and address of the company.
2. The head office of the company.
3. The purpose of incorporating the company.
4. The term of the company, if any.
5. The names, surnames, nationalities, academic qualifications and place of residence of each of the partners.
6. The method of managing the company, the persons responsible for management and their powers.
7. The amount of the capital and the contribution of each partner, and a statement of each non-cash contribution, its nature and the value at which it was valued, the name of the person providing it, the conditions relating to its provision, and the rights of pledge and privilege attaching thereto, if any.
8. The provisions relating to the distribution of returns among the partners.
9. The financial year of the company.
10. The provisions relating to the liquidation of the company and the division of its assets.

Article 45

The incorporation of the company shall be subject to the same procedures prescribed for the form it has adopted, provided that there is attached to the incorporation application a letter evidencing the approval of the entity legally competent to supervise the regulation of the affairs of the profession to the incorporation of the company and the absence of reservations on the draft of its contract.
The company shall be registered in the Commercial Register, in addition to its registration in the special register prepared for this purpose at the entity legally competent to supervise the regulation of the affairs of the profession; the Company Contract and any amendments thereto, and the assignment, sale or pledge of interests, shall be publicised by Registration in the two aforementioned registers. The company shall not acquire legal personality, and may not carry on its business, except after its registration in the aforementioned special register.

Article 46

The company shall provide the Ministry with copies of the minutes of the meetings of its general meetings or of the partners’ meeting, as the case may be, and also with copies of its approved annual financial statements.
* Amended by Ministerial Resolution No. 160 of 2020 (Kuwait Al-Youm, Issue No. 1508, 8 November 2020).

Article 47

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

Article 48

The partners may not dissolve or liquidate the company before the end of its term except after notifying its clients by a period of not less than three months before commencing the dissolution and liquidation procedures, and the resolution of dissolution or liquidation shall not be annotated in the register prepared for that purpose at the entity competent to supervise the profession except after such notification.

Article 49

The company may not provide its services to its clients except through its partners and employees, and it shall not be entitled to carry on its activity through the employees of any other company practising the same activity; all of the foregoing unless otherwise agreed.

Article 50

A partner may not be a partner in more than one professional company, nor practise the profession for his own account or covertly through another person.

Article 51

The professional company shall submit an insurance policy concluded with local or international insurance companies having branches in the State of Kuwait against negligence or professional errors committed by the partners themselves or by any of its employees.
The validity of this policy shall extend for a period of three months after the expiry of the Company Contract, and it shall be renewed throughout the term of the company.
The entity supervising the profession shall determine the value of this policy in proportion to the number of partners in the company and its employees and the degree of risk, and at not less than the limits prescribed by the Insurance Companies and Agents Law No. 24 of 1961 and the resolutions implementing it.
The company shall not be granted a licence to carry on the activity by the supervising entity except after submitting that policy.

Article 52

Each partner shall be personally liable towards the company for his professional error, and the company shall be liable to compensate third parties for any damage sustained by them due to the error of the partner.

Article 53

The company shall be dissolved if all the partners in the company lose the conditions for practising the profession, and it shall be liquidated in accordance with the Law.

Part Six
Single Person Company

Article 54

Save where there is a special provision, the provisions governing the limited liability company set out in the Law and these Regulations shall apply to the single person company, insofar as they do not conflict with its nature.

Article 55

The articles of association of the company shall be in accordance with the form prepared by the Ministry, and the articles shall include the following data:
1. The name and address of the company.
2. The name, surname and nationality of the owner of the capital shares.
3. The head office of the company.
4. The term of the company, if any.
5. The objects for which the company was incorporated.
6. The amount of the company’s capital, and the number of cash or in-kind shares.
7. The names of the persons to whom the owner of the capital entrusts management, if any.
8. The provisions for its liquidation.
The provisions of the preceding paragraph shall apply to the conversion of sole proprietorships into a single person company, and with respect to the statement of capital, an audited financial position approved by the owner of the establishment shall suffice.

Article 56

If the owners of the capital shares of a single person company become more than one for any reason whatsoever, such as sale, gift, inheritance or otherwise, it shall be converted into a limited liability company.
In this case, the conversion shall be effected by Registration on the basis of an application submitted by the persons in charge of managing the company to the Registry Department within thirty days of the occurrence of any of the reasons referred to in the preceding paragraph.
It shall not be required to take conversion procedures if, before the conversion, the company had the form of a limited liability company, and in this case the conversion shall be effected upon an application by its owner, registered in the Commercial Register.

Article 57

It is a condition that the address of the company, its trade name and its capital, followed by the words (Single Person Company) or (S.P.C.), be included on all papers and printed matter used by it in its business and on the contracts concluded by it with third parties.

Part Seven
Limited Liability Company

Disposal of Shares

(a) Assignment of Shares between Partners

Article 58

In the case of an assignment of shares among the partners, the assignor or the assignee shall submit an application to the Ministry to record evidence of the assignment, signed by both parties and setting out the number of shares assigned, and the assignment shall be recorded by Registration in the Commercial Register.
The assignment of a share shall have no effect with respect to the other partners or third parties except from the time of Registration.
If the ownership of all the shares becomes vested in one partner for any reason whatsoever, the company shall regularise its status within six months from the date of occurrence of the reason, either by increasing the number of partners, by converting the company into a single person company, or by dissolving and liquidating the company in accordance with the procedures provided for in the Law and these Regulations.

Article 58 bis

In all cases, the partners’ cash contributions may be deposited within a period not exceeding the first financial year after the incorporation of the company, in accordance with the financial statements submitted to the Ministry at the end of the said financial year.
* Added by Ministerial Resolution No. 496 of 2017 (Kuwait Al-Youm, Issue No. 1351, 30 July 2017).

(b) Assignment of Shares to Non-Partners

Article 59

In the case of an assignment of a share to non-partners, the approval of the other partners shall be obtained, and in this case an application shall be submitted to the Ministry by the assignor or the assignee to amend the Company Contract, provided that evidence of the other partners’ approval of the assignment and of their waiver of the right of redemption is attached thereto.
In this case, the contract shall be amended to reflect the assignment by virtue of an official instrument signed by both parties to the assignment, without the need for the signature of the other partners, and the amendment of the Company Contract shall not be effective with respect to the partners or third parties except from the time of Registration.

Article 60

If it is not possible to obtain the approval of the partners to the assignment referred to in the preceding Article, the assignor shall submit an application to the Ministry including the following data and documents:
1. The name and address of the company.
2. The number, type and value of the shares assigned.
3. The name, nationality and address of the assignee.
4. The conditions on which the assignment was made.
5. An acknowledgement by the assignee of acceptance of the assignment on the conditions set out in the preceding clause.
The application shall be examined by the Ministry and, after verifying its data, the applicant shall be required to publish the conditions of the assignment in the Official Gazette at his own expense. If fifteen days elapse from the date of publication without any of the partners submitting to the Ministry an application expressing his wish to exercise his right to redeem the assigned shares, the assignor may dispose of his share within the fifteen days following the aforementioned period.
The Company Contract shall be amended to reflect the assignment by virtue of an official instrument signed by both parties to the assignment, without the need for the signature of the other partners.
If the assignment is not completed within the said period, the application shall be deemed null and void.
However, if one of the partners wishes to redeem the assigned share, he shall, within the first fifteen days from the date of publication, submit an application to the Ministry to redeem the assigned share, accompanied by a certified cheque in the name of the assignor for the full value of the assigned share; a copy of the cheque shall be kept with the application submitted to the Ministry after inspecting the original cheque and returning it to the applicant for redemption, with his signature on the copy acknowledging receipt of the original cheque.
If the procedures are not completed within fifteen days from the date of submission of the redemption application, or if the assignor refuses to complete the assignment, each of them may resort to the courts.

(c) Transfer, Redemption and Pledge of Shares

Article 61

Unless the Company Contract provides for the right of the other partners to redeem the share of a deceased partner, his share shall pass to his heirs, and the Company Contract shall be amended on the basis of an application including the name of the deceased partner, submitted to the Ministry by one of the heirs, accompanied by the partner’s death certificate, the certificate of inheritance (determination of heirs) and the Sharia distribution of estate deed (qassam shar’i) setting out the distribution of the partner’s shares among his heirs.
The Company Contract shall be amended to reflect the transfer of the shares to the heirs by an official instrument signed by one of the heirs, without the need for the signature of the other partners, and this amendment shall not be effective against the partners or third parties except from the time of Registration.
If the distribution of the shares results in fractions in the portions, the deceased partner’s share shall be registered in the name of the heirs in full, provided that they choose, by the majority required for the management of jointly owned property pursuant to Article 821 of the Civil Code, the person who shall represent the share before the company and third parties.
The transfer of these shares to the heirs shall not result in the number of partners exceeding the maximum prescribed by law; otherwise these shares shall be treated as a single share in relation to the company, unless the heirs agree in writing to the transfer of these shares to a number of them that falls within the maximum number of partners, provided that this agreement is attached to the company’s file at the competent department.

Article 62

In the event of the bankruptcy of a partner, the partners may redeem his share in the company after valuing that share on the basis of the first paragraph of Article (11) of the Law. The redemption shall be effected by an application to the Ministry to amend the Company Contract to reflect the redemption, provided that the application includes the name of the partner or partners benefiting from the redemption and the number and value of the shares redeemed by the partner.
The Company Contract shall be amended to reflect the redemption by an official instrument signed by the partners benefiting from the redemption and the bankruptcy trustee, without the need for the signature of the other partners, and this amendment shall not be effective with respect to the other partners or third parties except from the time of Registration.

Article 63

Where a partner pledges his share in the company, the pledge shall be made by virtue of a notarised official instrument, provided that the pledge is registered in the Commercial Register by virtue of an application submitted by the pledgee creditor, accompanied by a true copy of the pledge instrument and a copy of the notification of the company thereof.

Article 64

A register of partners shall be prepared at the head office of the company, including the following:
1. The names, nationalities and places of residence of the partners.
2. The number of shares owned by each partner and whether they are cash or in-kind.
The company shall keep the books provided for in the Commercial Code promulgated by Decree-Law No. 68 of 1980 which traders are obliged to keep.
Each partner shall have the right to inspect, at the head office of the company, these registers and books and the accounts, documents and records of the company, and any condition or resolution to the contrary shall be null and void.

Article 65

Where an application is submitted to the Ministry to take the procedures for convening the General Meeting of the partners due to the manager’s refusal to issue the invitation in the cases provided for in Article (111) of the Law, and there is attached evidence that the manager of the company was formally served with a notice by the process server of the Execution Department of the Ministry of Justice and that fifteen days have elapsed from his being served with the notice without his commencing the procedures for convening the meeting, the Ministry shall issue the invitation thereto within fifteen days from the date of its receipt of the application.
The representative of the Ministry shall attend the meeting, and the meeting shall be chaired by the person chosen by the General Meeting for this purpose; a copy of the minutes of the meeting signed by the chairman of the meeting shall be delivered to the representative of the Ministry, and a copy thereof to the manager of the company at its head office.

Part Eight
Public Shareholding Companies

Chapter One – Conditions of Incorporation

(a) Procedures for Opening the Account of the Company under Incorporation

Article 66

An account for a shareholding company under incorporation shall be opened in accordance with the following procedures:
1. The Ministry shall, at the request of the Founders, issue a letter to one of the banks licensed by the Central Bank of Kuwait to receive subscription amounts, to open an account for the company under incorporation, provided that such letter sets out the name of the company, the amount of its capital, the names of the Founders and the percentage of their holdings, the amounts to be deposited by each of them, the number of shares offered for subscription, and the amounts payable by the subscribers.
2. The bank shall open the account and provide the Ministry with the account number and evidence of the Founders’ deposit of the amounts required to be deposited by them.

Article 67

The bank referred to in the preceding Article shall retain all the funds collected from the subscribers for the account of the company under incorporation, and it may not deliver them except to the first Board of Directors, after refunding the amount in excess of the shares offered; in this case the bank shall complete all the procedures and documents necessary to convert the company’s account from that of a company under incorporation to that of an existing company, unless the legal representative of the company decides to transfer the amounts to the company’s account with another bank.

Article 68

Where the Founders are obliged to refund the amounts to the subscribers, the bank shall refund the amounts to the subscribers on the basis of a statement submitted by the Founders to the bank, including the names of the subscribers, the amount to be refunded to each of them and the data necessary to transfer these amounts to their bank accounts.

Article 69

The Ministry may request the bank with which the account of the company under incorporation is opened to provide it with any data or information on this account, until the completion of the procedures for incorporating the company.

Article 70

The Founders shall submit the application for incorporation of the company to the One-Stop Shop in accordance with the form prepared by the Ministry, accompanied by the documents prescribed by law, and the One-Stop Shop shall, before receiving the application, verify the fulfilment of all the conditions and documents required by the Law for the incorporation of the company.

Article 71

The One-Stop Shop shall, after examining the application and verifying the absence of any impediments to the incorporation of the company, prepare the draft ministerial resolution and submit it to the Minister for issuance, within thirty days from the date of submission of the application.
The One-Stop Shop shall annotate in the register referred to in Article 124 of the Law the date and number of the application, the names of its applicants, and the resolution incorporating the company and the date of its issuance.

Article 72

The Founders shall be notified of the resolution approving the incorporation of the company and invited to sign and notarise the Company Contract within a period not exceeding one week from the date of issuance of the resolution, and a copy of the Company Contract shall be deposited in its file at the Ministry.
In the event of refusal of the incorporation of the company, the Founders shall be notified of the reasoned resolution of refusal by registered letter, or it shall be delivered by hand to any of them or to their legal representative.

Article 73

The company issuing the shares shall conclude with the Underwriter an underwriting agreement to regulate the relationship between them, and this agreement shall include the Underwriter’s undertaking to exert its best efforts to attract purchasers for the shares offered for subscription, together with an undertaking to purchase part or all of the shares issued at the price agreed under the underwriting agreement concluded between it and the issuing company.

Article 74

The Underwriter shall carry out the business of underwriting the shares offered for subscription in accordance with the agreement referred to in the preceding Article, and shall act on behalf of the issuing company in marketing these shares, including related publication in the media.

Article 75

The company issuing the shares may entrust the subscription tasks to more than one company in a single subscription.
The Underwriter may entrust one or more other Underwriters with the performance of its obligations, or may underwrite the subscription for its own account or on behalf of its clients; in all cases, it shall be liable towards the issuing company for its obligations arising from the underwriting agreement, unless that agreement provides otherwise.

Article 76

The Underwriter may re-offer the shares in a public subscription or in a private subscription on the same terms set out in the subscription prospectus approved by the Authority, within a maximum period of one year from the date of approval of that prospectus, without being bound by the nominal value of the security stated in the subscription prospectus.

Article 77

The Underwriter shall, within the scope of its tasks relating to the preparation of the subscription prospectus, obtain the necessary undertakings from the company issuing the shares that all the information it obtains is correct, accurate and complete.

Article 78

The Underwriter shall be responsible for disclosing in the subscription prospectus all the information it obtains from the company issuing the shares, and the company shall provide it with any information or material amendments arising thereto, including the data contained in the subscription prospectus, during the subscription period.

Chapter Two – Constituent General Meeting

Article 79

Where there are in-kind contributions, whether tangible or intangible, in the formation of the company’s capital, the Founders shall submit the valuation of these contributions prepared by one of the Audit Offices approved by the Authority, as provided for in Article (11) of the Law and the provisions of these Regulations, together with the report to be submitted to the Constituent General Meeting containing adequate information on all the incorporation operations, the amounts spent and the supporting documents thereof, at least seven days before the meeting; and the invitation addressed to the subscribers to attend the meeting shall indicate the place where these two reports are kept for inspection.

Article 80

The invitation to attend the Constituent General Meeting shall be addressed to all the Founders by the following means of communication:
1. Electronic mail.
2. Fax.
The invitation shall be made twice, the second time being after a period of not less than seven days from the date of the first invitation and at least seven days before the meeting is held.
The invitation to hold the first meeting may include the setting of a date for the second meeting in the event that the quorum of the first meeting is not met.

Article 81

For the Announcement by the means referred to in the preceding Article to be valid, the shareholder shall have provided the company or the Clearing Agency with the details of his e-mail address or his fax number, and shall have consented to being notified through these means.
No change by the shareholder to any of the details referred to in the preceding paragraph shall be taken into account unless he has notified the company or the Clearing Agency of such change at least five days before he is notified.
In the event of a dispute concerning receipt of the Announcement, a certificate issued by the e-mail service operator shall be relied upon in this regard.

Chapter Three – Capital

(a) Conditions for Issuing Shares below Nominal Value

Article 82

A shareholding company may issue capital increase shares at a value of less than one hundred fils on the following conditions:
1. The company shall be listed on the Kuwait Stock Exchange (Stock Exchange).
2. The market price of the company’s share on the Kuwait Stock Exchange (Stock Exchange) shall be less than one hundred fils.
3. The company shall not have accumulated losses exceeding the reserves and retained earnings, or the company shall have reduced its capital by the amount of the accumulated losses and this shall not have resulted in the share price on the Kuwait Stock Exchange (Stock Exchange) exceeding one hundred fils.
4. The company shall have resolved to increase the capital at nominal value without an issuance premium, and all or part of the increase shares offered for public subscription shall not have been covered.

Article 83

In the issuance of shares at less than nominal value by the company specified in the preceding Article, the following procedures shall be observed:
1. The company shall submit an application to the Ministry including the justifications explaining its need to issue those shares and evidence that it satisfies the conditions specified in the preceding Article.
2. The Ministry shall notify the Authority of the application of companies licensed by the Authority or listed on the Stock Exchange, and the Authority shall issue its decision of acceptance or rejection within ten working days from the date of being so notified, provided that a decision of rejection shall be reasoned, and the Ministry shall be notified of the decision in either case.

(b) Rules for Share Splits

Article 84

The company may split its shares, provided that the nominal value of the share after the split shall not be less than the minimum provided for in Article (150) of the Law.

Article 85

A company wishing to split its shares shall, before announcing the invitation to convene its Extraordinary General Meeting, submit to the Ministry an application to hold the meeting, accompanied by a summary of the agenda.
The Ministry shall notify the Authority of the company’s application and the documents attached thereto, and the Authority shall, within ten working days from the date of being notified, issue its decision of acceptance or rejection, provided that a decision of rejection shall be reasoned, and shall notify the Ministry of the decision in either case.

Article 86

If the Authority approves the company’s application, the matter shall be submitted to the company’s Extraordinary General Meeting to take its decision thereon.

Article 87

If the Extraordinary General Meeting issues a resolution approving the split of the company’s shares, the Authority shall be notified of the resolution by the company, and the Authority shall notify the Kuwait Stock Exchange (Stock Exchange) with respect to listed companies.
The company shall specify in the aforementioned notification the date on which the split resolution starts to apply after the Publicity of the Meeting’s resolution, provided that this is announced at least one week before that date.

Article 88

The split resolution shall apply to the shareholders whose names appear in the company’s shareholders’ register at the end of the trading day specified by the company as set out in the preceding Article.

Article 89

The Clearing Agency that keeps the company’s shareholders’ register shall amend the necessary entries in accordance with the share split resolution effected on the shareholders’ shares, and shall register the ownership of the shares resulting from the split.

Article 89 bis

In all the cases provided for in the preceding Articles, the minimum capital of a shareholding company, whatever its activity, and the amount required to be paid upon incorporation shall be as follows:
(a) Closed shareholding company: KWD 10,000.
(b) Public shareholding company: KWD 25,000.
Without prejudice to the minimum capital of those companies prescribed under the provisions of special laws or regulations.
* Added by Ministerial Resolution No. 496 of 2017 (Kuwait Al-Youm, Issue No. 1351, 30 July 2017).

Chapter Four – Amendment of Capital

(a) Capital Increase

Article 90

A capital increase may be covered by shares whose value is paid in either of the following two ways:
1. Conversion of the profit shares provided for in Article (176) of the Law into shares.
2. Addition of the assets of the merged company in respect of the merging company, in a merger by absorption.
Provided that the nominal value of the increase shares shall be equal to the nominal value of the original shares.

Article 91

If the company has an authorised capital and an issued capital, and the increase is made to the issued capital, the increase shall be entered in the Register pursuant to a resolution of the Board of Directors.
However, if the authorised capital is not sufficient for issuing the increase shares, or if the increase is to the company’s authorised capital, the entry shall be made pursuant to a resolution of the Extraordinary General Meeting.
In all cases, the entry of the capital increase shall indicate that the increase shares have not been subscribed, provided that the entry shall be amended in accordance with the outcome of the subscription.
The entry shall be deemed approval by the Ministry of the resolution of the Board or of the General Meeting.

(b) Procedures and Rules for Assigning the Pre-emption Right to Subscribe for Capital Increase Shares of Shareholding Companies

Article 92

Holders of the pre-emption right to subscribe for the capital increase shares of a shareholding company may, during the subscription period, assign this right to the company’s shareholders or to others, for or without consideration, and the assignment may be of all or some of the increase shares for which each of them is entitled to subscribe.
The assignees may subscribe for those shares or assign the pre-emption rights devolved to them up until at least five days before the closing of the subscription.

Article 93

The assignment of pre-emption rights shall be made in the presence of the assignor and the assignee, or their representatives, before the Clearing Agency, to record the assignment on the form prepared by the Ministry for this purpose; and the Agency shall issue to the assignee a certificate evidencing his entitlement to subscribe for the assigned shares, stating the name of the assignor and of the assignee and the number of pre-emption shares for which the assignee is entitled to subscribe.

Article 94

The Clearing Agency shall notify the company issuing the shares of the assignments made of pre-emption rights to subscribe for the capital increase shares at least two working days before the closing of the subscription.

Article 95

If shares are neutralised from voting, such neutralisation shall extend to the capital increase shares arising from those shares; this provision shall not apply to pre-emption rights arising from Treasury Shares where the company assigns these rights.

Article 96

The subscription prospectus for capital increase shares allocated to the company’s shareholders shall be deemed a subscription prospectus for the pre-emption subscription rights, after the information relating to these rights has been included therein.

Article 97

The subscription prospectus shall be submitted to the Authority within six months from the date of the increase resolution, and the subscription procedures for the capital increase shall commence within thirty days from the date of the Authority’s approval of the subscription prospectus or from the date on which the prospectus is deemed effective, whichever is earlier.

Article 98

In all cases where the subscription does not exhaust all the shares offered during the original subscription period, the company’s Board of Directors may open the subscription for a further period not exceeding three months; if the subscription does not exhaust all the shares by the end of the new period, the body that resolved the capital increase shall either revoke the capital increase or be content with the amount subscribed, and reduce the capital in both cases, and the reduction shall be entered in the Register on the basis of that body’s resolution.

Article 99

If it is decided to be content with the amount subscribed, the company’s Board of Directors shall submit an application to the Ministry and announce this to the subscribers, and any subscriber shall have the right to withdraw his subscription within a period not exceeding fifteen working days from the date of the Announcement; the Ministry may not decide on the application to reduce the capital until this period has expired; and if the percentage of shares whose subscription has been withdrawn does not exceed ten per cent of the total increase shares offered for subscription, the subscription shall be deemed final.

Article 100

If the capital increase resolution is reversed, the company’s Board of Directors shall announce this and refund in full and immediately to the subscribers the amounts paid, together with any return they have generated, if any.
In this case, the company shall bear all the amounts spent on the increase works.

Article 101

If it appears after the closing of the subscription that it has exceeded the shares offered, the shares shall be allotted to the subscribers in proportion to what they subscribed for, the distribution shall be made to the nearest whole number, and the company’s Board of Directors shall dispose of the share fractions for the company’s account.

Article 102

When a capital increase is covered by converting a debt owed by the company into shares, the conditions and criteria set by the Permanent Technical Committee, and issued by a ministerial resolution annexed to these Regulations, shall be followed.

(c) Issuance Premium

Article 103

The company’s management shall determine the issuance premium to be added to the nominal value of the share upon subscription for the capital increase, provided that a report including the bases for calculating the issuance premium shall be attached to the increase application.
This shall be in accordance with the conditions and criteria set by the Permanent Technical Committee and issued by a ministerial resolution annexed to these Regulations.

(d) Capital Reduction

Article 104

The Extraordinary General Meeting may, on a reasoned proposal by the Board of Directors and after the approval of the Authority, resolve to reduce the company’s capital where a resolution on the division of the company is issued.

Article 105

Objection shall be available to the company’s creditors whose debts arose before the capital reduction resolution, by a statement of claim filed in accordance with the procedures provided for in the Civil and Commercial Procedures Law, within one month from the date of Publicity of the reduction resolution.
The filing of the action shall result in the suspension of any distributions to shareholders arising from the reduction resolution, unless the court decides to authorise the company to make those distributions.

Article 106

The company’s capital shall be reduced by reducing the nominal value of each of its shares equally, by amending the capital and the nominal value of the share in the shareholders’ register held by the Clearing Agency; the share deposit receipts shall be deemed cancelled and shall be replaced by new receipts stating the new nominal value in addition to the other data and the entries made on the shares.

Article 107

Where the company’s capital is reduced by cancelling a number of shares equal in value to the amount resolved to be reduced from the capital, part of the shares owned by all the shareholders shall be cancelled in proportion between the shares each owns and the total cancelled shares.
The reduction shall be made by amending the capital and the number of shares in the shareholders’ register held by the Clearing Agency; the share receipts shall be deemed cancelled and shall be replaced by new receipts stating the new nominal value in addition to the other data and any entries that may have been made on the shares.

Article 108

Where the company’s capital is reduced by the company purchasing a number of its shares equal in value to the amount it wishes to reduce from the capital, the following procedures shall be followed:
1. Publication of the reduction resolution, the price set for purchasing the share, and the relevant dates and procedures on the Kuwait Stock Exchange (Securities Exchange).
2. Shareholders wishing to sell their shares to the company shall submit an application to that effect to the Clearing Agency in accordance with the procedures and within the dates specified in the company’s announcement.
3. If the applications to sell shares submitted by the shareholders exceed the amount required to be purchased, the purchase shall be made from each shareholder in proportion to what he offered for sale compared with the total number of shares offered for sale.
4. If the sale applications fall short of the amount of shares required to be purchased, the Board of Directors may either reverse the purchase decision, or purchase the amount offered for sale by the shareholders and complete the remainder through the Kuwait Stock Exchange (Securities Exchange), or be content with what has been purchased.
5. The reduction shall be made by amending the capital and the number of shares in the shareholders’ register held by the Clearing Agency, and the share deposit receipts shall be deemed cancelled.

Article 109

If the company’s capital is reduced in accordance with any of the preceding cases, the nominal value may be refunded to some shareholders, provided that the names of these shareholders, the number of their shares and the justifications for redeeming their shares are presented to the Extraordinary General Meeting; the reduction shall be made by amending the capital and the number of shares in the shareholders’ register held by the Clearing Agency, and their share deposit receipts shall be deemed cancelled.
Holders of the redeemed shares shall be granted dividend (jouissance) shares having all the rights prescribed for ordinary shares except recovery of the nominal value upon liquidation of the company.

(e) Trading and Cancellation of Profit Shares

Article 110

The assignment of profit shares shall be made in the presence of the assignor and the assignee, or their representatives, before the Clearing Agency that keeps the company’s shareholders’ register, to record the assignment on the form prepared by the Ministry for this purpose.
Profit shares may be assigned for all or some of the years, and the assignment of profit shares may also include the debt from which they arose.
The Clearing Agency shall issue to the assignee a certificate of what has been assigned, provided that the Agency shall notify the company issuing the shares of the assignment made.

Article 111

Profit shares shall be cancelled if the right by reason of which these shares arose is extinguished, in accordance with the conditions agreed with the company upon their issuance.

Chapter Five – Management of the Public Shareholding Company

Article 112

The term of membership of the Board of Directors shall begin from the date of issuance of the General Meeting’s resolution electing the Board members.
A new Board of Directors shall be elected for a similar term immediately upon the expiry of its predecessor’s term; if there are serious reasons making it impossible to hold the elections on time, the Board shall continue to manage the company until the date set by the Ministry for this purpose.
The Ministry shall invite the company’s Ordinary General Meeting to convene to elect a new Board of Directors where there are no reasons preventing the election of the Board and the existing Board refuses to call the General Meeting to convene, or where the date set by the Ministry, referred to in the preceding paragraph, passes without the Meeting being called to convene.

Article 113

The Ministry shall issue a certificate of the names of the members of the Board of Directors of the company and of the persons authorised to sign on its behalf, which shall be deposited in the company’s file at the competent department and annotated in the Commercial Register.
The validity of the aforementioned certificate shall run for a period not exceeding the term of the Board, unless any change occurs therein.
The company shall notify the Ministry of any change occurring in the names of the members of the Board of Directors and of the authorised signatories, together with the documents supporting the same, within one week from the date on which the change takes place.
The particulars of the certificate shall be amended in accordance with such changes upon the request of the company or of the member to whom the change relates, provided that, in this case, he shall attach to his request evidence that the company has been notified thereof.
The company and any interested party may request a certified copy of this certificate and of the amendments after payment of the prescribed fees.

Article 114

The Board of Directors shall have a secretary, from among the company’s employees, who shall record the minutes of the meetings, which shall be signed by him and by all the members present; everything that took place at the meeting shall be recorded, in particular any objections to any of the resolutions adopted by the Board and the reasons for the objection.
He may sign the certificates issued by the company concerning the resolutions adopted at the meetings of the Board of Directors.
The meetings of the Board of Directors shall have a special register kept at the company, in which the minutes of the meetings shall be recorded in sequential numbers for the year in which the meeting was held, stating the place and date of the meeting and the time of its commencement and conclusion.

Article 115

A list shall be prepared of the alternate members who did not win in the election of the Board of Directors, in order according to the number of votes obtained by each of them. If the office of a member of the Board of Directors becomes vacant and the vacant offices have not reached one quarter of the original offices, he shall be succeeded by the person holding the highest number of votes on that list and, if an impediment arises in respect of that person, by the next in order, provided that the new member shall complete the term of his predecessor.
If, however, the vacant offices have reached one quarter of the original offices, the Board of Directors shall invite the Ordinary General Meeting to convene within two months from the date on which the last office became vacant, and it shall elect persons to fill the vacant offices.
If the Board of Directors does not call such General Meeting within the said period, the Ministry shall call it within two weeks from the date of expiry of the aforesaid period, without prejudice to the right of the shareholders who have representatives on the Board of Directors to appoint persons to succeed them if the office of any of them becomes vacant during the term specified for the Board.

Article 116

Shareholders who have appointed representatives on the Board of Directors may participate in the nomination and election of the remaining members of the Board in proportion to the shares they hold in excess of those used in the appointment, and they may not ally with other shareholders with that proportion to appoint one or more representatives on their behalf on the Board of Directors.

Article 117

The Chairman of the Board of Directors of a public shareholding company may not hold the chairmanship of the Board of Directors of another public shareholding company.

Chapter Six – General Meeting

Article 118

Every shareholder registered in the company’s special register, and the holders of bonds and sukuk, shall have the right to attend the Ordinary and Extraordinary General Meetings in person or by proxy. For the proxy to be valid, it shall be by virtue of a power of attorney permitting the same or an authorisation prepared for that purpose by the company or by the entity keeping the register and stamped with the seal of either of them, as the case may be. The holders of bonds and sukuk shall not have the right to vote on resolutions.
The power of attorney referred to in the first paragraph may be for attending one or more meetings of the General Meeting, and a power of attorney issued for attending a specific meeting shall be valid for attending the meeting to which it is adjourned for lack of quorum.
Attendance at the meeting may also be by means of the electronic system – established by the entity keeping the register and approved by the Authority – for each of the shareholders and their proxies, the representatives of the concerned Regulatory Authorities, the auditors, and every person whose attendance at the meeting is required, and expressing opinions and voting on the matters presented at the meeting shall be in accordance with that system.
* Amended by Ministerial Resolution No. 85 of 2020 (Kuwait Al-Youm, Issue No. 1488, Supplement 5, 5 April 2020).

Article 119

The powers of attorney or the authorisation referred to in the preceding Article shall contain the following particulars:
1. The four-part name of the shareholder, or the name of the company or establishment as recorded in the Commercial Register.
2. The number of shares.
3. The Civil ID number / Commercial Register number of the shareholder.
4. The four-part name of the proxy.
5. The Civil ID number of the proxy.
6. The name and capacity of the signatory of the power of attorney – provided that a copy of the power of attorney under which he acts shall be attached where the signatory of the power of attorney is an agent.
7. The date on which the power of attorney was executed.
For the power of attorney to be accepted, it shall expressly state the proxy’s right to attend the general meetings and to vote on the items of their agenda, and it shall be issued for a specific meeting, provided that the original authenticated power of attorney is submitted; a special power of attorney shall be retained, whereas for a general power of attorney sight thereof shall suffice, on condition that the principal signs its copy as conforming to the original under his responsibility.

Article 120

Upon the issuance of a resolution by the General Meeting dissolving the Board of Directors, and where it is not possible to elect a new Board at the same meeting, the General Meeting may resolve either that the former Board shall continue, with the same composition, to manage the company’s affairs until a new Board of Directors is elected, or to appoint a temporary administrative committee whose principal task shall be to invite the General Meeting to convene to elect the new Board.
In either case, if no invitation is made to hold the General Meeting to elect a new Board of Directors within one month from the date of dissolution of the Board, the Ministry shall invite the General Meeting to convene within fifteen days from the date of expiry of the aforesaid period.

Article 121

The representative of the Ministry, where he attends the General Meeting, shall prepare a report on the proceedings and events of the meeting, provided that the report shall include, in particular, the following:
1. The legal quorum for holding the meeting.
2. The validity of the powers of attorney for attendance.
3. Any complaints raised by the shareholders during the meeting.
4. The resolutions adopted by the General Meeting.
5. Any violations of the Law, the Regulations or the Company Contract that may occur during the meeting.
Without prejudice to the cases in which the Ministry calls the General Meeting, the representative of the Ministry may not express any opinion on any dispute raised during the meeting, and the Board of Directors shall provide the Ministry with a certified copy of the minutes of the General Meeting, consistent with what is stated in the report of the Council of Ministers, within two weeks from the date on which it was held.
* Thus in the Official Gazette (“the report of the Council of Ministers”); the context indicates the report of the Ministry’s representative.

Article 122

Before the Extraordinary General Meeting is held, the Board of Directors shall obtain the approval of the Ministry if the matter included on the agenda relates to the company’s name, objects or capital, except for a capital increase by way of issuing shares in consideration of profits realised by the company or as a result of adding its reserves that may be so used to the capital. The Ministry shall verify that the resolution issued by the said General Meeting is consistent with what the competent department has previously approved, before the Publicity procedures are taken.
In all cases, the resolutions of the Extraordinary General Meeting shall not be effective until the procedures for their Publicity have been taken.

Article 122 bis

Without prejudice to the approvals required under Article (219) of the Companies Law in the cases referred to in the preceding Article of these Regulations, it shall be sufficient, for the Ordinary and Extraordinary General Meeting to be held, merely to notify the Ministry of the agenda and of the date and place of the meeting at least seven days before it is held, without being obliged to submit the financial statements or any other requirements.
* Added by Ministerial Resolution No. 598 of 2017 (Kuwait Al-Youm, Issue No. 1363, 22 October 2017).

Article 123

In the event of the delisting of a listed company from the Stock Exchange, the company shall invite the Ordinary General Meeting to convene in order to present to it the reasons for the delisting of the company.

Chapter Seven – Company Accounts

Article 124

The Board of Directors shall prepare an annual report on the ended financial year containing the particulars set by the Permanent Technical Committee and issued by a ministerial resolution annexed to these Regulations.

Article 124 bis

1) The balance sheet of the shareholding company shall include an item providing for the calculation of a percentage of (1%) of the company’s annual net profits in favour of the Kuwait Foundation for the Advancement of Sciences, in accordance with the Amiri Decree issued on 12 December 1976 recognising the legal personality of the Kuwait Foundation for the Advancement of Sciences.
2) The percentage provided for in the preceding paragraph shall be deducted annually and remitted to the Foundation.
* Added by Ministerial Resolution No. 184 of 2022 (Kuwait Al-Youm, Issue No. 1618, 15 January 2023), effective from 1 January 2023.

Chapter Eight – Auditor

Article 125

The report submitted by the auditor to the Ordinary General Meeting shall include, in particular, the following particulars:
1. Whether the auditor has obtained the information he deems necessary for the performance of his mission.
2. Whether the balance sheet and the profit and loss accounts are consistent with reality, include everything provided for by the Law and the Company Contract, and express faithfully and clearly the true financial position of the company.
3. Whether the company keeps proper accounts.
4. Whether the inventory has been conducted in accordance with the established principles.
5. Whether the particulars contained in the report of the Board of Directors are consistent with what is contained in the company’s books.
6. Whether any violations of the provisions of the Law or the Company Contract have occurred during the financial year, stating whether such violations still exist, within the limits of the information available to him.
7. That the audit procedures have been carried out in accordance with professional principles and the instructions of the Regulatory Authorities in this regard.
8. Clarification of the documents evidencing the accuracy of the company’s financial position, and their submission upon request.
9. The date of the report.
10. The name of the Audit Office or of the professional company in which the auditor works, and the name and signature of the auditor, his licence number, his classification category and his address.
11. Other particulars set by the Permanent Technical Committee in light of the instructions issued by the body supervising the regulation of the profession.

Article 126

The Board of Directors, or a number of shareholders representing twenty-five per cent of the issued capital, may request the replacement of the auditor during the financial year, by inviting the Ordinary General Meeting of the company to consider the request to replace the auditor, in accordance with the procedures set by the Permanent Technical Committee and issued by a ministerial resolution annexed to these Regulations.

Part Nine
Closed Shareholding Company

Article 127

The company may have a Chief Executive Officer, selected from among the members of the Board of Directors or from others.
The positions of Chairman of the Board of Directors and Chief Executive Officer may be combined, and a person may be a member or chairman of the Board of Directors of more than one closed shareholding company.

Article 128

In addition to the methods of sending the invitation to attend the meeting of the Constituent General Meeting provided for in Article (237) of the Law.
The invitation to attend the meeting of the Constituent General Meeting or of other Ordinary or Extraordinary General Meetings of the company shall be sent by one of the following methods:
1. E-mail.
2. Fax.
Provided that the invitation shall be made twice, the second time being after the lapse of a period of not less than seven days from the date of the first invitation and at least seven days before the meeting is held; the invitation sent for holding the first meeting may specify the date of the second meeting in the event that the quorum of the first meeting is not complete.

Article 129

For notification by the means referred to in the preceding Article to be valid, the shareholder shall have provided the company or the Clearing Agency with the particulars of his e-mail address or his fax number, and shall have consented to being notified through these means.
No change by the shareholder to any of the particulars referred to in the preceding paragraph shall be taken into account unless he has notified the company or the Clearing Agency of such change at least five days before he is notified.
In the event of a dispute concerning the receipt of the notification, a certificate issued by the e-mail service operator shall be relied upon in this regard.

Article 130

Companies wishing to increase their capital by way of public subscription shall submit to the Ministry an application, accompanied by the approval of the Authority or of the Central Bank of Kuwait – if the company is subject to the supervision of either of them – to set a date for holding an Extraordinary General Meeting to approve the increase. If the Extraordinary General Meeting approves the increase, the Ministry shall be provided with a copy of the minutes of the General Meeting so that a resolution may be issued by the Minister approving such increase by way of public subscription.
From the date of issuance of the Minister’s resolution licensing it to increase the capital by way of public subscription, the company shall be deemed to have been converted into a public shareholding company, and it shall regularise its status accordingly in accordance with the provisions of the Law and these Regulations.
Every closed shareholding company listed on the Kuwait Stock Exchange (Securities Exchange) at the time the Law comes into force shall regularise its status as a public shareholding company.
In all cases, every closed shareholding company whose shares have been listed for trading on the Kuwait Stock Exchange (Securities Exchange) shall be deemed a public shareholding company from the date of listing, and in the event of its withdrawal or delisting from the Securities Exchange, the company shall revert to what it was before listing.

Part Ten
Conversion, Merger, Division and Dissolution of Companies

Chapter One – Conversion of Companies

Article 131

Any company may convert from one legal form to another, subject to the following conditions:
1. The issuance of a resolution by the Extraordinary General Meeting of the company for its conversion into another form, by the same procedures prescribed for amending the Company Contract.
2. The lapse of at least two financial years since the Registration of the company in the Commercial Register.
3. The company shall not be in the stage of liquidation.
4. The company shall have realised a return on the partners’ equity in the last two financial years at a rate of not less than 5% of the paid-up capital.
5. The paid-up [capital] of the company upon conversion shall not be less than the minimum prescribed for the capital of the company into which it is intended to convert.
6. The form of the company into which it is intended to convert shall be legally consistent with its objects.
7. The preparation of a detailed report, approved by the auditor, valuing the company’s assets and liabilities in accordance with the provisions of the first paragraph of Article (11) of the Law, and the results of the balance sheets of the last two financial years.
8. The completion of the procedures prescribed for conversion provided for in the following Article.

Article 132

In the event of the conversion of the company, the following procedures shall be followed:
First: Submission of the conversion application to the Ministry on the form prepared for that purpose, accompanied by the following:
1. A copy of the minutes of the meeting of the Extraordinary General Meeting or of the partners’ meeting at which the conversion resolution was adopted.
2. A copy of the last two financial balance sheets signed by the auditor and by the partners in the case of partnership companies, and by the Board of Directors in the case of shareholding companies.
3. A copy of the Company Contract and of all amendments or entries made thereto up to the date of submission of the application.
4. A copy of the company’s licence, valid for a period of not less than six months.
5. An economic feasibility study for the conversion project if the capital exceeds five million Kuwaiti Dinars.
Second: The Ministry shall examine the application and issue its decision approving the conversion if it finds that the documents are complete; in the event of rejection, the company shall be notified of the reasons for the rejection.
Third: Taking the publication and Announcement procedures at the company’s expense.
Fourth: Amending the Company Contract in accordance with the form into which it is converting.
Fifth: Registration of the conversion in the Commercial Register.
In all cases, the company applying for conversion shall complete all conversion procedures within six months at most from the date of submission of the application, and if the conversion procedures are not completed within that period, the application shall be deemed never to have been made.

Article 132 bis

Subject to Article (252) of the Law, any company that has converted into another legal form may revoke such conversion within one year from the date of completion of all conversion procedures. The revocation of the conversion shall be by a resolution issued in accordance with the procedures and provisions prescribed for amending the Company Contract, and on condition that its annual financial statements have not been issued.
The revocation of the conversion shall have the effect of restoring the converted company to what it was before the conversion vis-à-vis all persons.
* Added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Chapter Two – Merger of Companies

Article 133

A merger may take place between two or more of the following companies:
1. General partnership.
2. Limited partnership.
3. Partnership limited by shares.
4. Single person company.
5. Limited liability company.
6. Shareholding company of all types.
7. Professional companies.
8. Non-profit companies.

Article 134

The following shall be required for the merger of companies:
First: The preparation by the companies party to the merger of a draft merger contract in accordance with the form prepared by the Ministry, provided that it shall contain the following particulars:
1. The reasons for and objects of the merger.
2. The terms of the merger agreed between the merging companies.
3. The preliminary valuation of the assets and liabilities of each company.
4. The entity that undertook the valuation of the assets and liabilities.
5. The date adopted as the basis for the valuation.
6. The consideration that the partners or shareholders will receive in the absorbing company or the new company, and the bases followed in its assessment.
Second: The approval of the competent Regulatory Authority of the draft merger contract.
Third: The submission of a report containing the opinion of the auditor of the merged company on the particulars on the basis of which the share that the merged company will obtain in the absorbing company, or in the company to be incorporated as a result of the merger, was calculated.
Fourth: The deposit of the draft contract, accompanied by the valuation report and the auditor’s report, at the head office of the companies party to the merger at least ten days before the Extraordinary General Meeting is held to consider it, and the notification of the shareholders or partners thereof, within the aforesaid period, by the same methods by which the general meetings of the company are announced.
Every shareholder or partner shall be entitled to obtain a copy thereof.
Fifth: The issuance of a resolution by the Extraordinary General Meeting of the companies party to the merger, by the majority prescribed for amending the Company Contract in accordance with the provisions of the Law and these Regulations, approving the merger resolution.
The merger shall be effected by way of absorption and division, or consolidation.
Sixth: Obtaining the approval of all the partners or shareholders in the company of the merger resolution if the merger would lead to an increase in the financial burdens of the partners or shareholders or prejudice their rights in any of the companies party to the merger.

Article 135

In the event of a merger, the following procedures shall be followed:
First: Submission of the merger application to the Ministry on the form prepared for that purpose, accompanied by the following:
1. A copy of the draft merger contract.
2. A copy of the preliminary valuation of the company’s assets and liabilities.
3. A copy of the Company Contract and of all amendments or entries made thereto up to the date of submission of the application.
4. A copy of the auditor’s report containing his opinion on the particulars on the basis of which the share that the merged company will obtain in the absorbing company, or in the company to be incorporated as a result of the merger, was calculated.
5. A copy of the company’s licence.
6. A copy of the approval of the Authority of the draft merger contract, or of the Central Bank of the merger, as the case may be.
7. An undertaking by the absorbing company or the new company to be substituted for the merged company in all its rights and obligations, in the case of a merger by way of absorption or consolidation; in the case of a merger by way of division and absorption, the undertaking shall be joint and several among the absorbing companies for the obligations of the merged company.
Second: The Ministry shall examine the application and, if it deems that other particulars should be added to the draft merger contract, it shall notify the companies party to the merger to add them, and they shall return it to the Ministry once again for the issuance of a decision approving or rejecting the merger.
Third: In the event of approval, the Ministry shall notify the companies party to the merger to hold the Extraordinary General Meeting to complete the procedures as set out above, within a period not exceeding thirty days from the date of notification of the approval.
In the event of rejection, the companies party to the merger shall be notified of the reasons for the rejection.
Fourth: If the Extraordinary General Meeting approves the merger, the publication procedures shall be taken, and the resolution shall not be effective until thirty days have elapsed from the date of publication.
The company shall notify the Ministry of any objections to the merger submitted to it by the creditors.
Fifth: The merger shall be annotated in the Commercial Register after the contract has been drawn up in the form required by the Law for the new form of the company.

Chapter Three – Division of Companies

Article 136

A company may be divided into two or more companies, and each of the companies resulting from the division shall have an independent legal personality in accordance with the procedures prescribed for the incorporation of companies. The procedures, rules and conditions prescribed in the Law and these Regulations shall be followed with respect to the valuation of the in-kind contribution.
* Replaced by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Article 136 bis

The companies resulting from the division may take any of the forms of companies subject to the provisions of the Law and these Regulations, after fulfilling the legal procedures for completing that form and without being bound by the legal form of the company subject to the division. The dividing company may not carry on the same activity that is the subject of the division, nor may a branch be converted into a company except by taking the procedures for the incorporation of companies.
* Added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Article 136 bis (A)

The manager of the company or the Board of Directors – as the case may be – shall prepare the detailed division plan, which shall include the assets and liabilities pertaining to the dividing company and to the company resulting from the division, for presentation to the Extraordinary General Meeting, accompanied by the following:
1. The reasons for the division.
2. The manner of dividing the assets and liabilities.
3. The auditor’s report.
4. The draft amendment of the memorandum of association and the articles of association – as the case may be – of the dividing company, and the draft memorandum of association of the companies resulting from the division.
5. The agreements relating to the rights of creditors after the division with the dividing company and the divided companies, and the procedures taken in respect of them.
6. The approval of the Regulatory Authorities for each of the activities subject to their supervision.
* Added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Article 136 bis (B)

The Ministry shall receive division applications that fulfil the legal requirements in accordance with the provisions of the Law and these Regulations.
* Added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Article 136 bis (C)

The companies resulting from the division shall be successors to the company subject to the division and shall be legally substituted for it, within the limits of what has devolved to them from the company subject to the division in accordance with what is contained in the division resolution, provided that a provision shall be included in the memorandum of association of the newly formed company indicating the relationship between it and the dividing company. Its shareholders shall have the right to object to the division resolution in accordance with Article (220) of the Law.
* Added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Article 136 bis (D)

The division resolution shall be subject to Publicity, and it may not be implemented until thirty days have elapsed from the date of its publication in the Official Gazette. The creditors of the dividing company may, within the said period, object to the division before the company by an official notice, and the division shall remain suspended unless the creditor waives his objection, or his objection is rejected by a final judgment, or the company pays the debt if it is due or provides sufficient guarantees for its payment if it is deferred. If no objection is submitted within the said period, the division shall be deemed final.
* Added by Ministerial Resolution No. 60 of 2023 (Kuwait Al-Youm, Issue No. 1631, 16 April 2023).

Part Eleven
Supervision and Inspection

Article 137

A register called the Complaints Register shall be established at the Ministry, in which the complaints submitted by stakeholders shall be entered. Any interested party may submit a complaint to the Ministry, accompanied by the documents evidencing the truth of the facts stated therein. The Ministry shall enter the complaint in the aforementioned register and examine it, and for that purpose it may correspond with such relevant entities as it deems fit in order to ascertain the truth of what is stated in the complaint and to prepare a report thereon.
The Ministry shall send the company complained against and the competent Regulatory Authorities a copy of the complaint and its attachments, provided that the company shall respond within the period specified by the Ministry.
Where the complaint relates to a professional company, the Ministry may seek the opinion of the body legally competent to supervise the regulation of the affairs of the profession.
If it becomes evident to the Ministry that there are violations of the provisions of the Law or the Company Contract, or that those in charge of its management or its Founders have engaged in acts that harm the interests of the company, the partners or the shareholders, or that affect the national economy, the Ministry shall invite the Ordinary General Meeting or the partners’ meeting – as the case may be – to convene to rectify such violations within fifteen days from the date on which the meeting is held, and shall notify the Regulatory Authorities and the competent investigation authorities thereof.

Article 138

Shareholders or partners holding at least five per cent of the company’s capital who wish to have an accounts examiner appointed to carry out an inspection of the company shall submit to the Ministry an application stating the justifications for such application, the facts they attribute to the manager, the members of the Board of Directors, the auditor or the Chief Executive Officer of the company, and the violations committed by them in the performance of their duties. The application shall be accompanied by evidence of payment of the fee, amounting to two hundred dinars, which is non-refundable, and a written undertaking to pay the costs of the accounts examiner to be appointed for this purpose.
The competent department shall examine the application and, if it deems it acceptable, shall appoint an accounts examiner to carry out the inspection of the company and notify him to carry out the task, while notifying the applicant and the company thereof and instructing the company to provide the appointed accounts examiner with the required particulars.
If the Ministry rejects the application, the applicant shall be notified of the rejection by registered letter or by hand, stating the reasons for the rejection.
If it becomes evident from the inspection that the facts stated in the application are untrue, the result of the report shall – at the request of the person complained against – be published in two daily newspapers and on the company’s website, if any, at the applicant’s expense.
If, however, the report reveals the existence of violations, the competent department shall take the procedures provided for in the Law and these Regulations.

Issued on 12 July 2016 and published in the Official Gazette Kuwait Al-Youm on 17 July 2016.