What is the main source of law authorising this entity form?

SPCs in Kuwait are primarily regulated by the Companies Law No. 1 of 2016 (“ Companies Law”) and its executive regulations issued by Decision No. 287 of 2016. In the event an SPC is established by a non-Kuwaiti person, formation thereof is governed by Law No. 116 of 2013 for the Promotion of Direct Investment in the State of Kuwait and its executive regulations issued by Ministerial Decision No. 502 of 2014.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

An SPC possesses separate legal personality from that of its partner.

(Maximum) period of existence

There is no maximum period for the duration of SPCs. Typically, the SPC’s memorandum of incorporation would specify the company’s term based on its objectives and purpose, provided that the duration of SPC may be extended upon the expiry of the initial duration or any extension thereof. In practice, the Ministry of Commerce and Industry of Kuwait (“MOCI”) allows the incorporation of different types of companies in Kuwait for an initial duration of up to 99 years.

Governing document(s)

SPCs are governed by their memorandum of incorporation, which includes, inter alia, the SPC’s name, registered address, objectives, capital, term, owner's details, management and liquidation. SPCs are also subject to the provisions of the Companies Law and its executive regulations.

Liability of incorporators / shareholders

The liability of the founder of the SPC is limited to its contribution to the company's capital.

(Governing) bodies

The owner of the SPC is responsible for its management. The owner may also appoint one or more managers to represent the company before competent courts and third parties. These managers will be accountable to the owner for the company's management. Any resolution regarding the appointment of a manager shall only be effective after the annotation of such resolution in the commercial register of the SPC held at the MOCI.

Other particularities

If the owner of an SPC liquidates the company or suspends its activities in bad faith before the expiry of its term or achievement of its objectives, the owner shall be personally liable for the company's obligations. Additionally, if it is proven that the owner did not separate its assets from the SPC’s assets in a manner prejudicial to bona fide third parties, the owner shall also be personally liable.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

SPCs have an independent legal personality that permits them to engage in international transactions and restructurings. The SPCs are only restricted regarding certain types of activities that require to be carried out by a shareholding company.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

An SPC cannot be publicly listed or issue securities to the public. These activities are reserved to public shareholding companies.

Can this type of entity be used for a non-profit or charitable organization?

SPCs can be and are often used for non-profit or charitable purposes.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

SPCs can be incorporated by individuals or legal entities. The key documents required from the founder of the SPC for its incorporation include:

For an individual founder:

• Copy of the Civil ID of the founder

For a legal entity founder:

• Memorandum and/or articles of association of the legal entity (as amended)
• Recent extract of the commercial register of the founder
• Valid commercial license of the founder

If the founder is a non-Kuwaiti company, all corporate documents of the entity must be duly legalized for use in Kuwait. Additionally, any documents not originally drafted in Arabic must be translated to Arabic and certified by the Kuwaiti Ministry of Justice (“MOJ”).

Involvement of notary, company register, governmental authorities

The incorporation of an SPC requires the involvement of several governmental entities, departments and authorities which include the MOCI, the MOJ, the Ministry of the Interior (“MOI”) and the notary public. The incorporation application is submitted online to the MOCI and must provide details including but not limited to: the capital, manager(s) and their powers, and 5 options for the company’s name reflecting the activities of the company. The MOCI seeks the approval of the MOI on the identity of the owner and manager. Once clearance is obtained from the MOI and the MOCI is satisfied that the application is complete and acceptable, the application is forwarded through an automated system to the MOJ for the signing by the owner of the memorandum of incorporation before a notary public. MOCI thereafter issues a certificate confirming the registration of the SPC with the commercial register. Subsequently, a second online application enclosing the lease agreement and rent receipt of the SPC’s office must be submitted to MOCI for the issuance of the SPC’s commercial license. During this process, approvals from the Kuwait Municipality and Kuwait Fire Force Directorate and any other concerned authorities (based on the company’s activities) should also be obtained. The commercial license of the SPC is issued by the MOCI once all these approvals are obtained.

If the founder of the SPC is non-Kuwaiti, formation of an SPC is subject to obtaining an investment license from the Kuwait Direct Investment Promotion Authority (“KDIPA”).

Timing (estimate)

The estimated time from submission of the MOCI incorporation application until the issuance of the commercial license typically takes around 3 weeks. This however depends on the activities of the company as certain activities require additional approvals from governmental authorities, which may have an impact on timing. If the SPC is owned by a foreign founder, then the estimated time frame from the submission of an investment license application to KDIPA until the issuance of the investment license by the KDIPA is up to 7 months.

Main costs, including registration and similar fees (excluding legal fees)

The registration fees for an SPC formed by a Kuwaiti founder at MOCI are approximately 140 Kuwaiti Dinars at the time of writing (broken down as follows: approximatively 80 Kuwaiti Dinars for the commercial license fee, and approximatively 60 Kuwaiti Dinars for the issuance of the articles of association).

For an SPC formed by a non-Kuwaiti founder through KDIPA, the registration fees are approximately 780 Kuwaiti Dinars.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The incorporation application must specifically state the company’s objectives/activities among the list of activities available at the MOCI’s online portal for incorporation of companies. When an SPC is incorporated by a foreign person, determination of the SPC’s activities is essential, with regard to a list of prohibited activities that are reserved for Kuwaitis.

Minimum number of incorporators / shareholders and residency requirements

An SPC is incorporated by a single person. Should there be more than one incorporator or shareholder, the company will, by force of law, convert into a limited liability company. There are no residency requirements for the incorporator of the SPC.

Minimum number of directors (or other applicable officers) and residency requirements

An SPC is typically managed by its owner or incorporator, who may appoint one or more managers to oversee the company's operations. These managers can be of any nationality but must be resident in Kuwait.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum capital requirement for an SPC is 100 Kuwaiti Dinars. The company’s capital must be sufficient to support its activities. The capital of the SPC must be deposited in a bank account opened by the owner or an authorized manager in the name of the company (this is however not subject to verification by MOCI).

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

The founder of the SPC is required to be physically present in Kuwait for the signing and authentication of the company’s memorandum of incorporation. However, they may delegate a representative to sign on their behalf in this respect by virtue of a notarized and, if applicable, legalized power of attorney.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Each entity established in Kuwait is required to register with the Kuwait Ministry of Finance (“MOF”) Department of Income Tax (“DIT”), within 30 days from the start of its activities or the date of signing a commercial arrangement. The registration application with the DIT for issuance of tax identification number and tax card must include the following details:

• The name of the company and its address within and outside Kuwait, along with submission of company’s corporate documents evidencing the same;
• The date of commencement of the company’s activities or date of signing a commercial arrangement;
• The name of the appointed local agent of the company, their address, and a copy of the agency agreement entered into (if applicable); and
• Any other information as may be required by the DIT.

Additionally, every SPC must notify the DIT of any changes that might affect its tax obligations within 30 days of the occurrence of the change. The company must also inform DIT if it has ceased its activities within 30 days from the date of cessation. Governmental bodies, public institutions, private entities, and other bodies are prohibited from dealing with any company that does not have a valid tax card, except for procedures related to registration and obtaining licenses to commence its activities.

What is the title of the applicable company registry?

SPCs incorporated by Kuwaiti persons are registered with the commercial register held at the MOCI. Whereas SPCs formed by foreign persons are also registered at the KDIPA’s investment register. Both these registries may be considered as governmental agencies responsible for maintaining comprehensive records of companies and their required approvals.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

Certain mandatory information must be filed with the commercial register and with other registries held at the MOCI such as the beneficial owner register. This information includes the memorandum of incorporation of the SPC, the ownership identification including founder’s and beneficial owners’ identities, share capital and identity and powers of the managers. This is in addition to information that must be periodically filed with the MOCI which includes the company’s financial statements.

An extract of the commercial register is accessible to individuals holding a Kuwait Civil ID with access to the MOCI’s online portal and includes the main details of the company, such as the company name, commercial license status, owner, manager(s), activities, signatory powers of manager(s), capital, registered address and branches of the company.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

For an SPC, there is no separate executive body. Instead, the single owner typically assumes the responsibilities that would otherwise be distributed among an executive body or board of directors in other types of companies or may appoint third-party manager(s) to fulfil these roles. The manager(s) hold the authority to act on behalf of the SPC and are responsible for its day-to-day operations within the powers granted to them under the company's memorandum of incorporation. Their powers can be restricted by provisions in the memorandum of incorporation or resolutions taken by the SPC owner.

Certain powers are typically reserved for the owner, such as making donations, disposing of the company’s assets, granting guarantees, and agreeing to arbitration; however, these may be explicitly delegated to the manager(s). The SPC manager represents the company in its relations with third parties and before the judiciary, has the authority to sign agreements, appoint or dismiss employees, and enter into transactions on behalf of the company, subject to any restrictions outlined in the memorandum of incorporation.

The manager must also hold an owner’s meeting within three months of the end of the financial year. During this meeting, the manager is responsible for presenting a comprehensive report on the company's activities and financial position for the last financial year. If there is a supervisory board, the manager must also present their report to the owner. Additionally, the manager must present the auditor's report on the company's financial statements. The manager is tasked with ensuring the preparation and presentation of the company's financial statements. They must also propose the distribution of profits for the company.

Managers are jointly liable for breaches of the law or provisions of the memorandum of incorporation, as well as for any acts of mismanagement, towards the company, its owner, and third parties.

How are the members of the executive body appointed, dismissed and replaced?

Managers are appointed pursuant to the appointment process outlined in the memorandum of incorporation of the SPC. If the memorandum does not specify the appointment process, the owner of the SPC must adopt a resolution regarding their appointment. Any dismissal or replacement must be also by a resolution adopted by the owner, provided that if the manager(s) is appointed in the memorandum of incorporation, any resolution relating to the dismissal or replacement of manager(s) is only effective after the annotation of the same on the commercial register of the company.

Is it possible to appoint corporate directors or must all directors be natural persons?

For an SPC, all directors must be natural persons. It is not possible to appoint an entity as a director.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

In Kuwait, SPCs do not require a separate executive body or non-executive directors. The single owner manages the company directly or appoints a manager, who is responsible for day-to-day operations within the powers granted by the company's memorandum of incorporation.

In contrast, shareholding companies in Kuwait typically employ a one-tier board structure, combining both executive and non-executive directors in a single board.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

In an SPC, governance revolves around the sole owner who assumes all decision-making responsibilities in case no managers have been appointed. Unlike companies with multiple shareholders requiring general meetings, an SPC consolidates power with its sole owner. The owner holds exclusive authority over strategic decisions, financial management, appointment, dismissal or restriction of the authority of the company manager(s), appointment of the auditor, distribution and reinvestment decisions and operational oversight.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Since the company subject of this questionnaire is an SPC, all decisions are made by the sole owner. As a result, quorum and majority requirements are not applicable. The sole owner has full authority to make decisions without the need for additional approval or meeting specific quorum requirements.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

The company is directly controlled by the single owner or their appointed manager. This is because the core principles of corporate governance, like board oversight and separation of ownership and control, are designed for companies with multiple shareholders and a complex ownership structure.

SPCs typically bypass complex corporate governance rules.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The provisions governing limited liability companies apply to the SPCs to the extent they do not conflict with the latter’s nature. Therefore, similarly to the powers granted to shareholders in limited liability companies, the owner of an SPC must review and approve the financial statements and the auditor’s report annually within three months after the financial year end. The SPC’s financial statements are then submitted to the MOCI for review.

Is the entity permitted to determine its own financial year?

An SPC has the flexibility to determine its own financial year. The memorandum of incorporation of an SPC should include a provision wherein the financial year is determined.

Is the entity subject to any statutory (external) auditor obligations?

SPCs must appoint one or more auditors to audit their accounts. This appointment must be renewed annually by a resolution of the owner. The auditor’s role, including their appointment, powers, responsibilities, remuneration, dismissal, and resignation, follows the guidelines for Kuwaiti shareholding companies. Auditors must be Kuwaiti nationals, hold valid Civil IDs, be licensed to practice, and be registered in Kuwait’s auditors’ register.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

There are no statutory requirement for SPCs in Kuwait to appoint other persons such as executive officers, secretaries, or internal auditors.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

In an SPC, ownership interests are referred to as “quotas.”

Are different classes of ownership interests possible? If so, what are some examples of different classes?

It is not possible to have different classes of ownership interests in an SPC. The capital of an SPC is divided into cash and in-kind quotas of equal value that are not divisible. Different classes of shares are specific to shareholding companies only.

What documentation is required for the transfer of ownership interests?

An application for the transfer of the entire quotas to a new owner must be submitted to the MOCI and must enclose a resolution of the sole owner approving the transfer, a copy of the Kuwait Civil ID of the new owner (for individuals) or the constitutional documents of the new owner (for corporates), Kuwaiti Civil ID of manager in addition to a draft of the new memorandum of incorporation. Following the approval of the MOCI, the new memorandum of incorporation must be signed before a notary public at the MOJ. Then, a second application must be submitted to MOCI for annotation of the memorandum of incorporation and issuance of the company’s new commercial license.

If the transfer of quotas is made to several purchasers, then the legal structure of the company must be converted into a limited liability company de jure.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

In principle, there are no additional formal requirements for the transfer of ownership beyond those stated in our response to Question 29.

Are there any applicable stamp duties imposed when transferring ownership interests?

No stamp duties are imposed when transferring ownership interests, except for the stamp needed for the authentication of the new memorandum of association. However, an estimated fee of 350 Kuwaiti Dinars is payable to carry out the transfer procedure of the quotas.

How are shares issued? (including information on payment obligations, registration requirements)

An SPC is not fully incorporated until the cash contribution value is fully paid and, where applicable, in-kind contributions are transferred. Additional quotas are issued through a sole owner resolution approving the capital increase. The owner must pay the nominal value of the new quotas and submit an application to the MOCI. The memorandum of association is then amended and registered to reflect the new capital.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

The Companies Law allows for the capital of an SPC to include in-kind contributions, which must be valued by a licensed auditing firm.

SPCs may not issue quotas with an issuance premium. Issuance premiums are explicitly permissible in shareholding companies only.

The capital of an SPC must be fully paid upon incorporation or increase. Please refer to the answers to Questions 32 and 33.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Cancellation of shares is not regulated for SPCs, nevertheless, these can be cancelled by operation of capital reduction. The concept of share repurchase does not apply to SPCs, as there are no multiple shareholders to buy back shares from.

The Companies Law permits SPCs to reduce or decrease its capital through a process overseen by the MOCI. A report explaining the reasons for the capital decrease must be submitted along with the company’s recent financial statements to the MOCI for review. A capital decrease typically requires a resolution passed by the owner of the SPC. This resolution must be filed and registered with the MOCI for annotation of the new share capital of the company.

Any requirements with respect to distributions to shareholders?

For an SPC, all dividend distributions will go to the sole owner of the company, provided they are approved by a sole owner resolution. Such distribution shall be valid if the profits of the company are real, if these are made in accordance with the generally accepted accounting principles, and do not affect the paid-up capital of the company.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

This is not applicable to SPCs which have a sole owner.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The maintenance of the existence and legal good standing of an SPC requires mainly the renewal of its commercial license every 4 years for a fee of 80 Kuwaiti Dinars and maintaining a valid office lease for the company’s headquarters. If the company’s business activities require obtaining a license from a public authority (e.g. Public Authority for Industry or Communications & Information Technology Regulatory Authority), the SPC must ensure that such license is renewed prior to the end of its term.

It is worth noting in this regard that a company is deemed to be in good standing if it maintains valid registers, submits approved financial statements timely, and has a valid operating address matching the address registered in its commercial register.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

Until recently, based on the Income Tax Law and as implemented by the DIT, Kuwaiti companies were not subject to income tax. However, a flat 15% income tax is levied on the net income and capital gains of any foreign corporate entity, whether a company or partnership, that conducts business in Kuwait, regardless of where it is incorporated.

The DIT had granted a concession to corporate entities incorporated in Kuwait or other GCC countries (“GCC Corporate Entities ”). This means that, until recently, only non-GCC corporate entities (the “ Non-GCC Corporate Entities ”) were subject to this income tax. This tax also applies to shareholders of GCC Corporate Entities who are themselves Non-GCC Corporate Entities, provided they conduct business in Kuwait. With the issuance of Decree Law No. 157 of 2024 (the “Decree Law ”) on 31 December 2024 and its Executive Regulations (the “Regulations ”) more recently on 30 June 2025, significant amendments have been introduced, particularly for multinational entities (“MNEs ”) operating in Kuwait. The new Decree Law aligns Kuwait’s tax framework with Pillar Two of the OECD initiative, establishing a global minimum corporate tax rate of 15%.

• Scope of Application for MNEs

Under the Law, a group of MNEs is defined as any group with a presence—whether direct or through a permanent establishment—in more than one jurisdiction, including the State of Kuwait. The Decree Law applies to any entity (Kuwaiti or foreign) within such a group that meets a consolidated revenue threshold of €750 million for at least two of the preceding four tax periods.

• Exemptions

Certain exemptions apply under the Decree Law, including for entities such as government bodies, non-profit organizations, pension funds, and certain investment and real estate funds which are excluded from the scope of application.

• Tax Rate for MNEs

A “top-up tax” applies where the actual tax paid by an MNE in a jurisdiction falls below the 15% global minimum rate. The Regulations provide a comprehensive methodology for determining the effective tax rate in Kuwait, including how to calculate taxable income after applying substance-based exclusions, and how to compute any top-up tax required to reach the minimum rate.

• Administrative Requirements and Filing Obligations

Each in-scope taxable entity is required to register with the Kuwaiti Tax Authority within 120 days of becoming subject to the Decree Law. The registration deadline for MNEs is 30 September 2025.

• Penalties for Non-Compliance

Failure to comply with the Decree Law results in significant penalties. Delayed filings incur penalties between 5% and 25% of the final tax amount. Unpaid tax attracts a 1% monthly penalty, and discrepancies in filings can lead to fines up to 25% of the tax differential.

Severe violations, including tax evasion, may result in imprisonment and fines of up to five times the amount of evaded tax for repeat offenses. Additional penalties apply to confidentiality breaches and other serious offenses, which may be referred to Public Prosecution in accordance with Articles 108 to 110 of the Regulations.

• Repeal of Previous Tax Laws

The Decree Law repeals certain earlier tax legislation relating to MNEs. It establishes a unified and modernized framework for taxing MNEs in Kuwait, effective January 2025.

Summary of any specific matters, e.g. recent or prospective major legal developments

Under the Ultimate Beneficial Ownership Resolution No. 4 of 2023, there are significant requirements imposed on companies, including SPCs, to ensure transparency and compliance with anti-money laundering regulations. SPCs are required to disclose the identity of individuals who ultimately own or control the company, directly or indirectly. This includes providing information such as full names, nationalities, identification numbers, and details of ownership or control. Companies must maintain a register of beneficial owners and ensure that the information is accurate and up to date. This register should be readily available for inspection by the MOCI and other relevant authorities. SPCs must report any changes in beneficial ownership to the MOCI within a specified period. Failure to comply with these reporting obligations may result in penalties or sanctions.

With the issuance of Ministerial Resolution No. 16 of 2025, amending certain provisions of Resolution No. 4 of 2023, additional developments have been introduced:

• Enhanced Registration Requirements

Entities are now required to provide more detailed information, including their legal status, name, legal form, and Articles of Incorporation.

Foreign entities must register not only the name and address of their legal representative in Kuwait but also ensure that this representative is duly recorded in the registrar's records.

• Strengthened Enforcement Measures:

MOCI has been granted broader powers to impose administrative sanctions, including warnings, administrative fines ranging from 1,000 to 10,000 Kuwaiti Dinars per violation, and suspending a company’s registration for up to three months.

Persistent violations exceeding three months may lead to the entity's permanent removal from the commercial register upon a court order.

• Administrative Fines for Non-Compliance:

Specific fines for non-compliance with UBO obligations now range between 1,000 and 10,000 Kuwaiti Dinars per violation, aligning with Law No. 106 of 2013 concerning Anti-Money Laundering and Combating the Financing of Terrorism.