By Fahad Alburaikan, Co-Founding Partner, Alitqan Legal Group
Why was Kuwait a difficult market for foreign companies?
For many years Kuwait was among the most closed markets in the Gulf to foreign investment. This was not for any lack of opportunity, but because of a long-standing rule in Article 23 of the Kuwaiti Commercial Code: a foreigner could not engage in trade in Kuwait without a Kuwaiti partner holding no less than 51% of the capital, so that the foreign share could never exceed 49%, and any commercial activity conducted outside that framework, such as trading alone, was void. Article 24 of the same Code closed the other door by prohibiting foreign companies from establishing branches in Kuwait and permitting them to operate only through a local Kuwaiti agent.
In practice, a foreign company wishing to do business in Kuwait faced a choice between two options only: a partnership in which it surrendered majority ownership, or a local agent standing between it and the market and collecting a commission. That picture has changed fundamentally. Over the past decade, successive legislation has opened three routes by which a foreign company can establish a commercial presence in Kuwait under full foreign ownership and without a local agent. This article sets out those routes in practical terms for the investor, and then explains how to choose the one that fits a given project.
Route One: A branch licensed by the Kuwait Direct Investment Promotion Authority (KDIPA)
The first and most established route is licensing through the Kuwait Direct Investment Promotion Authority, created by Law No. 116 of 2013 as the government body dedicated to attracting foreign investment to Kuwait. Through KDIPA, a foreign company can establish a branch in Kuwait that it owns 100%, with no Kuwaiti partner and no local agent, and it also receives a package of incentives available on no other route: tax exemptions for extended periods, customs exemptions on equipment and materials required for the project, facilitation in the allocation of land and real estate, and long-term residency in Kuwait for the executives managing the branch.
This route is not, however, open to every activity or every company. KDIPA issues its licence according to conditions and criteria it sets, weighing the nature of the activity and its contribution to technology transfer, job creation and the diversification of the national economy; certain activities are excluded, and the process requires a complete application file and periodic follow-up. It is therefore best suited to companies with genuine investment projects that merit the incentives and can meet its requirements.
The role of Alitqan Legal Group
Alitqan Legal Group is accredited by the Kuwait Direct Investment Promotion Authority to submit and follow up applications on behalf of investors. The firm provides strategic advisory services, structures the entry of foreign companies into the Kuwaiti market, and manages the licensing process through to issuance.
KDIPA’s official list of accredited consulting firms and offices
Route Two: Entry through a GCC company
The second route rests on the Unified Economic Agreement of the Gulf Cooperation Council, approved by Kuwait under Law No. 5 of 2003, which requires each member state to treat GCC companies as it treats its own national companies. A company incorporated in any GCC state can therefore open a branch in Kuwait, wholly owned by the parent, directly through the Ministry of Commerce and Industry under procedures that have been settled and familiar for years. This is where the route becomes important for the foreign investor: if a foreign company already has an established company or branch in a GCC state, it can enter Kuwait through that entity even where its shareholders are non-GCC nationals, provided the parent holds a valid licence in one of the GCC states.
This route draws added strength from the recent legislative amendment described under Route Three. Now that the law permits a foreign company itself to establish a branch in Kuwait without a local agent, there is no longer any rationale for requiring a GCC company to be wholly owned by GCC nationals. In every case, the investor must still observe the laws governing its specific activity, the special conditions attached to certain commercial, professional and industrial activities, and the jurisdiction of the relevant regulatory authorities.
Route Three: A direct branch through the Ministry of Commerce under amended Article 24
The third route is the newest and the broadest. It was opened by Law No. 1 of 2024, which replaced the text of Article 24 of the Commercial Code. Where that Article once prohibited foreign companies from establishing branches in Kuwait and obliged them to operate through a local agent, its new text expressly grants a foreign company the right to establish a branch in Kuwait and conduct its business there without any need for a local agent, as an exception to the Kuwaiti-partner rule in Article 23. The explanatory memorandum to the law states that its purpose is to keep pace with the global trend of opening economies to all investors and to remove the local-agent requirement, which had become a burden on foreign companies and on the State alike.
The amendment did not stop at the Commercial Code. It also extended to Article 31 of the Public Tenders Law No. 49 of 2016, exempting a foreign company that bids in government tenders from the requirement of registration in the Kuwaiti commercial register and from the Kuwaiti-partner rule, thereby opening the door to contracting directly with government entities without an intermediary.
Despite the clarity of the text, this route is still, as of September 2026, awaiting the administrative framework that would translate it into procedure: the Ministry of Commerce and Industry has not yet issued a mechanism for accepting applications to establish foreign company branches independently of KDIPA. From a legal standpoint, a foreign company wishing to rely on Article 24 may take the necessary legal steps should the administrative authority decline to process its application on the ground that no implementing procedures exist; this naturally depends on the circumstances of each application and the nature of the activity to be carried on.
What has not changed: the limits of the new text
Investors should not read the amendment as granting every foreign company an unqualified right to carry on any activity it chooses in Kuwait. What amended Article 24 removed was specifically the nationality restriction and the local-agent requirement. The laws regulating individual activities, the jurisdiction of regulators such as the Central Bank of Kuwait and the Capital Markets Authority, and the special conditions attached to certain commercial, professional and industrial activities all remain in force, and a foreign branch is subject to them exactly as any Kuwaiti entity would be.
How should an investor choose the right route?
Choosing among the three routes is not an abstract legal question but a strategic decision, settled by answering three questions. First, does the project need incentives? If it is a capital investment of a scale that warrants tax and customs exemptions and land allocation, the KDIPA route is the most rewarding, however long its procedure. Second, does the company already have a presence in the Gulf? If it has a company or branch with a valid licence in a GCC state, entry through that entity is the fastest and most procedurally settled route, particularly for trading and service activities that do not require incentives. Third, can the company wait for the direct route to become operational? Amended Article 24 confers a clear right, and a company taking this route today will need legal support to pursue its application before the Ministry; it may be the ideal route for those who prefer not to be bound by KDIPA criteria and who have no GCC entity.
Conclusion
Within a few years Kuwait has moved from a market a foreigner could enter only with a partner or an agent to one that offers three routes to entry under full foreign ownership. The difference between a successful entry and a stalled one lies not in the legal texts but in selecting the route suited to the nature of the activity, the scale of the investment and the competent regulator, and in preparing the file rigorously before it is submitted. That is the role Alitqan Legal Group plays for its foreign clients seeking to enter the Kuwaiti market.
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