Kuwait

By Attorney Abdulrahman Alhouti Money laundering crimes initially arise from generating illegal financial profits through arms trafficking, drug trafficking, smuggling, embezzlement, bribery, electronic fraud, and other legally criminalized financial gains. Because these funds are considered "unclean," as bankers call them, their owners need to legitimize them and conceal their source by introducing them into the financial system through small cash deposits in bank accounts, or by purchasing a series of monetary instruments such as checks and others, or tangible assets such as cars, land, and real estate, and then reselling them and collecting the money to deposit it in a bank account elsewhere. This process is considered a first step, after which the money launderer needs to conduct a series of banking operations by transferring funds through a chain of accounts in various banks worldwide, making it difficult to trace their source. Subsequently, the owner of these funds invests them in real estate, assets, or commercial projects, thus successfully integrating illegal money into the financial system of the country where they invest, becoming part of legitimate funds. The international community's treatment of money laundering as a global problem has led to the adoption of necessary measures to combat it and limit its impact on destabilizing financial stability and facilitating criminal activities funding. These measures aimed to protect financial systems and enhance economic transparency. The Financial Action Task Force (FATF), established in 1989, is one of the most prominent global measures to combat money laundering as the main international organization responsible for setting policies to combat money laundering and terrorist financing. Its forty recommendations form the basic framework for global efforts in this field. Key recommendations include enhancing financial institutions' transparency by requiring them to report suspicious transactions, identifying customers to ensure banks and financial companies are not exploited in money laundering operations, promoting international cooperation between countries to exchange information about suspicious financial activities, and imposing strict penalties on entities and individuals involved in money laundering. When discussing the most important global measures to combat money laundering, we cannot overlook the United Nations Convention against Transnational Organized Crime in 2000, which came into effect in 2003. One of its key outcomes was requiring signatory countries to establish anti-money laundering laws and facilitate judicial cooperation for extraditing criminals involved in these crimes. The Gulf Cooperation Council (GCC) countries, including Kuwait, are keen to comply with FATF requirements by updating their legislation and implementing effective anti-money laundering policies. The GCC has taken serious steps in this field, such as establishing the Permanent Committee for Combating Money Laundering and Terrorist Financing to enhance cooperation between Gulf countries, supporting intelligence information exchange between regulatory and banking authorities, and adopting advanced electronic systems to monitor suspicious financial transactions. For its part, Kuwait seeks to continuously strengthen its anti-money laundering procedures, building on key steps taken in this field over the years, most notably the issuance of Law No. 106 of 2013 regarding combating money laundering and terrorist financing, which complies with FATF recommendations, as well as establishing a Financial Intelligence Unit to monitor suspicious financial activities. Kuwait has also developed supervision of the banking sector, where the Central Bank of Kuwait has imposed strict requirements on banks to enhance and update customer data systems to ensure monitoring and reporting of any unusual financial activities. The current Kuwaiti government, through relevant authorities, seeks to take more measures to improve the international classification in the field of anti-money laundering.    

By Lawyer Abdulrahman Al-Houti In line with Kuwait Vision 2035, the State of Kuwait seeks to diversify its energy sources and reduce dependence on oil as the primary source of revenue and energy. Within this strategic framework, renewable energy projects have become a central pillar of the country’s pursuit of sustainable development. Recognizing the importance of private sector participation in achieving this objective, the government has established a comprehensive legal framework regulating the involvement of both local and foreign investors in clean energy projects, ensuring the protection of public interest and the creation of mutual benefits for all parties. Law No. 116 of 2014 on Public-Private Partnership (PPP) provides the private sector with the opportunity to undertake the development, financing, operation, and maintenance of public projects, including renewable energy initiatives, through long-term partnership agreements. This legislation serves as the primary legal foundation for renewable energy projects in Kuwait, containing clear provisions that balance asset ownership with the investor’s rights as a partner in development, while also establishing mechanisms for the allocation of risks and returns. Complementing this legal framework, Law No. 39 of 2010 concerning the establishment of Kuwaiti joint-stock companies for the construction and operation of power and desalination plants permits private sector entities to produce electricity and water from conventional or renewable sources, provided they obtain prior licenses from the competent ministries. Such licensing is a precondition for commencing any production or distribution activities, ensuring environmental and technical safety. Given the environmental nature of these projects, the Environmental Protection Law requires investors to prepare an Environmental Impact Assessment (EIA) prior to project implementation. The Public Authority for Environment must approve the study to ensure compliance with sustainability standards and reduction of carbon emissions. Additionally, implementing companies are obligated to apply environmental monitoring plans during operations, and to manage waste and chemical materials used in maintenance, in accordance with public safety requirements. Renewable energy projects are also linked to municipal regulations concerning land allocation and licensing of buildings and facilities. Land is typically granted on a usufruct basis for a defined period, after which ownership reverts to the State upon expiration of the concession. From a contractual perspective, renewable energy projects are generally implemented under the PPP model, which includes a set of sub-agreements, such as the Design and Build Agreement, the Operation and Maintenance Agreement, and the Power Purchase Agreement (PPA). The PPA serves as the cornerstone of these projects, establishing the price of energy sold to the State, the duration of the commitment, and the mechanisms for price adjustment or contract termination in case of breach. These contracts are typically long-term (often exceeding 20 years), providing financial stability for investors and enhancing their ability to secure funding from banks and financial institutions. Moreover, Law No. 116 of 2014 allows investors to request government guarantees regarding the State’s obligations related to energy purchase, or compensation in cases of emergency events, contractual amendments, or early project termination. A practical example of this legal framework is the Shagaya Renewable Energy Complex, where several local and international consortiums have been qualified to operate in its third phase, in accordance with Law No. 39 of 2010 on the establishment of joint-stock companies for power and water plants and its amendments, and Law No. 116 of 2014 on PPPs. In the coming period, the project will enter a new phase, marking a significant step toward achieving Kuwait’s national development goals in renewable energy.  

By Lawyer / Abdulrahman Al-Houti The amendment of certain provisions of the Companies Law under Decree No. 106 of 2024 represents a pivotal step towards improving Kuwait’s business environment, enhancing its attractiveness to investment, raising transparency, and achieving sound corporate governance. The amendment addresses a particularly important aspect directly affecting limited liability companies, hereinafter referred to as LLCs, especially concerning the quorum for general assembly meetings and the procedures for calling such meetings. The amendment has increased the flexibility of the legal framework governing LLCs by aligning the quorum requirements for extraordinary general assemblies with those of extraordinary general assemblies in joint-stock companies. The amendment represents a significant step toward improving Kuwait’s business environment by standardizing regulatory procedures across different types of companies. It provides partners in limited liability companies (LLCs) with greater flexibility in making decisions that require shareholder approval, thereby enhancing managerial efficiency, accelerating decision-making, and reinforcing the stability and attractiveness of LLCs as an investment option. In my view, the amendment has resolved many issues related to the quorum for extraordinary general assemblies in LLCs and the adoption of appropriate decisions, including the problem of some partners occasionally obstructing the convening of such meetings. It also provides greater clarity regarding the legal mechanisms governing these meetings, thereby safeguarding the interests of all partners. According to the amended provisions, an extraordinary general assembly meeting of an LLC is not valid unless attended by partners representing three-quarters of the company’s capital. If this quorum is not met, a second meeting may be held with partners representing more than half of the capital, with decisions in all cases adopted by a majority exceeding half of the capital. This part of the amendment strikes a balance between ensuring a sufficient quorum to validate meetings and preventing the obstruction of essential company decisions, such as amending the management clause of the contract or adjusting capital. Decisions are therefore made with the participation of a substantial proportion of the partners. The amendment also grants the Ministry of Commerce and Industry the authority to call the general assembly if the company’s manager refuses to do so, based on a justified request from partners representing no less than half of the capital. This reduces the likelihood of managerial abuse in LLCs, encourages active participation by partners in guiding the company’s course, and provides a legal mechanism enabling them to demand the convening of the general assembly to discuss any critical matters that may be contentious or require approval by either the ordinary or extraordinary general assembly. I believe that this amendment has a supportive economic impact on Kuwait’s efforts to attract investment and create greater opportunities for improving the business environment by strengthening confidence in the legal framework governing LLCs, which includes clear provisions and mechanisms that protect the rights of partners. This clarity facilitates investors’ understanding of their rights and obligations. Legally, the amendment’s step to align the quorum for general assemblies of LLCs with that of joint-stock companies reflects Kuwait’s pursuit of unified corporate regulations, which reduces complexity, facilitates the application of the law, and ensures the legislative stability required for investment. Empowering the Ministry of Commerce and Industry to play a role in calling the general assembly provides the state with a necessary supervisory role to ensure proper business conduct and enhances Kuwait’s reputation as an attractive hub for business and investment.  

By Attorney: Abdulrahman Alhouti Digital transformation provides an advanced and rapid mechanism for carrying out daily and governmental transactions. It has become an indispensable necessity. However, this does not mean that using its tools is free from legal risks—particularly in the fields of telecommunications and information technology—necessitating the implementation of precautionary legal frameworks to safeguard against these risks. Service providers in these two sectors, in particular, face several challenges that make the legal aspect an indispensable element for the success of investment in Kuwait’s telecommunications and digital transformation sector. The legal framework acts as a guarantor for conducting activities within the state’s legal boundaries by ensuring full compliance with existing laws and their continuous updates, including matters related to licensing and regulations, as well as service provision contracts, cloud computing agreements, cybersecurity, dispute resolution, and customer data protection. These areas require strict legal controls to guarantee the proper and lawful fulfillment of these responsibilities. As for protecting personal data from the growing risks associated with digital developments, the state has taken several successful steps to strengthen this protection by regulating the relationship between digital service providers and users—especially regarding the collection and processing of data, information security, and data storage within the country. The regulations establish specific conditions for the collection and processing of personal data. They require service providers to fulfill several requirements before offering any digital service to users. These include obtaining the user’s explicit and prior consent for the collection or processing of their personal data, ensuring the user is fully informed of all relevant terms and obligations, clarifying the purpose of data collection—limiting it strictly to what is necessary for service delivery—and clarifying the manner in which the data will be used. The regulatory frameworks also govern the lawful processing of personal data, obligating service providers to manage such data both during and after service delivery in accordance with defined rules. These include providing clear and transparent information about data collection and processing policies, specifying the purpose of processing, and stating the legal basis upon which the processing is conducted. These controls play a critical role in preventing the unauthorized or excessive use of personal data and in ensuring that service providers fulfill their obligation to protect customer information by implementing both technical and organizational measures to safeguard it against loss, damage, unauthorized access, and unapproved alteration or addition. Within this framework, it is important to highlight a critical issue: the storage of data outside Kuwait, for which clear restrictions have been established to categorically prohibit the storage of sensitive state data beyond national borders, thereby reinforcing digital sovereignty and safeguarding the national infrastructure. All the matters outlined above represent critical areas of awareness for anyone engaging with digital tools. Beyond these main points, there exist numerous intricate details that specialized legal professionals must consider when offering enhanced legal protections for both service providers and users across all sectors. In conclusion, as risks escalate in any emerging field, so too does the imperative for legal protection to foster a secure environment where services can be exchanged seamlessly and with confidence between users and providers alike.