19/03/2025
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19/03/2025
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KUWAIT CITY, March 19: The Ministry of Commerce and Industry is reportedly studying a legal proposal to automatically cancel commercial licenses that have been expired for over a year or inactive for six consecutive months. This comes in response to a growing number of visitors seeking assistance with issues ranging from disclosing "beneficial owner" information to canceling forgotten or suspended licenses to avoid penalties for non-registration.
Sources revealed that the ministry is weighing two contrasting legal opinions on the matter. The first, a conservative stance, argues that the ministry lacks the legal authority to unilaterally revoke licenses without a clear legal basis. Proponents of this view emphasize that such action could expose the ministry to legal and financial risks, particularly in cases involving the demolition of commercial centers tied to suspended licenses or those with years of unpaid financial statements. They stress that the license holder's procedural approval for cancellation is a legal necessity.
On the other hand, a second opinion supports the ministry's right to cancel licenses under the Companies Law. This view asserts that the ministry can revoke licenses if the associated business has been inactive for six consecutive months, if the company has expired or been liquidated, or if the license holder fails to renew it within a year of its expiration. Advocates argue that this approach aligns with Article 11/3 of Law No. 111 of 2013 on commercial establishment licenses and related ministerial decisions. They also highlight that the measure would alleviate the administrative burden caused by the surge in auditors seeking to fulfill "actual beneficiary" registration requirements.
The legal debate follows the discovery of a significant number of dormant licenses, some of which have been inactive since their issuance, while others have not submitted financial statements for years. This issue has been compounded by the ministry's recent enforcement of "beneficial owner" registration, which imposes penalties ranging from 1,000 to 10,000 dinars for non-compliance, and up to half a million dinars under the Anti-Money Laundering and Terrorism Financing Law.
Ministry officials are reportedly examining both legal perspectives in detail, with any final decision expected to adhere to the Companies Law, its regulations, and relevant ministerial decisions.
Progress on Beneficial Owner Registration
In a related development, sources indicate that commercial license holders are steadily registering their beneficial owner data, with approximately 60% of the 226,938 licenses subject to disclosure having complied so far. The ministry aims to achieve 90% compliance by June, in line with recommendations from the International Financial Action Task Force (FATF) to strengthen Kuwait's anti-money laundering and counter-terrorism financing measures.
To streamline the process, the ministry has added the "Actual Beneficiary Owner" service to the "Sahl Business" program, allowing users to complete the registration in clear, straightforward steps. This follows Al-Rai's March 16 report, which highlighted that 31,700 companies disclosed their beneficial owner information within just four days.
Under Ministerial Resolution No. 16 of 2025, all entities registered with the Ministry of Commerce, including sole proprietorships and companies of any type, are required to disclose their beneficial owners. However, companies listed on the Kuwait Stock Exchange, foreign stock markets, and government-owned companies are exempt from this requirement.
Key Perspectives
- Conservative View:
- The ministry lacks legal authority to unilaterally cancel licenses.
- Legal and financial risks arising from unapproved cancellations.
- License holder consent is a procedural necessity.
- Supportive View:
- Cancellation aligns with the Companies and Commercial Licensing Laws.
- Addresses the issue of procedurally unrenewed licenses.
- Reduces administrative strain from "actual beneficiary" registration demands.
As the ministry deliberates, the outcome of this legal debate will have significant implications for Kuwait's commercial regulatory framework and its efforts to combat financial crimes.
