20/11/2024
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20/11/2024
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KUWAIT CITY, Nov 20: The Ministry of Commerce and Industry has temporarily banned Article 18 residency holders expatriates—from establishing companies, acting as partners or managing partners, or registering in the commercial registry unless their status aligns with Article 19 regulations. This measure, informed sources stated, aims to prevent combining worker and employer roles and will remain in place until new regulatory controls are implemented.
Data from the Public Authority for Manpower reveals that approximately 9,600 private sector employees holding Article 18 residencies are listed as partners or managing partners in limited liability companies, linked to nearly 44,500 business licenses.
The Ministry of Commerce is currently collaborating with the Ministry of Interior and the Manpower Authority to devise mechanisms addressing the status of Article 18 residency holders involved in business partnerships. Proposed changes include revising Article 19 requirements, such as increasing the minimum contribution value of 100,000 KD and the three-year ownership condition. Additional recommendations suggest restricting companies with Article 18 contributors from opening multiple branches unless operational needs justify expansion.
While regulatory revisions are underway, existing companies with Article 18 shareholders will continue their operations without changes. New rules are expected to safeguard the legal and financial rights of stakeholders while offering a one-year grace period for affected partners to transition to Article 19 or adapt to the updated conditions.
The Executive Regulations of the Foreigners’ Residence Law grant Article 19 status to expats as investors or partners under specific terms. These new arrangements aim to encourage foreign investment, improve Kuwait’s business environment, and curb residency trading.
Difference Between Article 18 and Article 19
Article 18: Workers under this residency are subordinate to their employers, as defined by the 2010 Private Sector Employment Law, which categorizes them as employees working under the supervision and management of employers in exchange for wages.
Article 19: Residency is granted to foreign investors or partners in commercial or industrial activities if they own a share of no less than 100,000 KD, reflected in their last three certified budgets.
The ongoing reforms are part of a broader initiative to attract serious investors while maintaining market stability and protecting stakeholders' rights.