Kuwait client case studies in 2021
UAE testing, certification business establishes Kuwait company
Our Client provides testing, inspection and certification services to major clients within the oil and gas, petrochemical, mining, construction, engineering, power etc. industries. Our Client is a multi-national business with offices around the Middle East, and is headquartered in the UAE.
Our Client enlisted Healy Consultants Group PLC to assist them to set up a company in Kuwait, as they had fallen out with their existing Kuwait-based sponsor. Consequently, Healy Consultants Group PLC had to rapidly i) establish a new company ii) secure an appropriate office premises iii) locate a trustworthy national sponsor iv) open a new corporate bank account and v) transfer existing visas to the new entity.
- Our Client called visited Healy Consultants Group PLC’s Dubai office to understand how we could assist them to quickly establish a new business in Kuwait.
- Our Client Engagements Manager Henry explained the process, fees and timelines to our Client.
- Following the call, Henry prepared and submitted a business setup proposal to our Client, detailing the due diligence requirements, costs and timeframe for the engagement from A to Z.
- Healy Consultants Group PLC requested that our Client confirm the intended corporate structure of the Kuwait entity.
- Healy Consultants Group PLC subsequently prepared a detailed engagement project plan mapping out a step-by-step plan to engagement completion.
- After settling the first instalment of Healy Consultants Group PLC’s fees and providing the due diligence required, Healy Consultants Group PLC shortlisted a potential high quality corporate nominee shareholder for our Client.
- Our team then scheduled and hosted a meeting between the shareholder and our Client so that they could confirm exact services, fees and complete any required contracts, independent of our Firm.
- We requested our Client to confirm their specifications for a Kuwait-based office. Our Kuwait team secured a suitable option for our Client’s consideration.
- Our Client promptly confirmed that the office was suitable, signed the lease and settled the landlord’s fees to secure the premises.
- Our team drafted the power of attorney document and sent the same to our Client for i) their signatures ii) notarisation by a public notary iii) apostillation by the ministry of Foreign Affairs and iv) legalisation at the Kuwait Embassy in their home country before couriering the originals to our Kuwait team.
- Within a week of receiving the required document in Kuwait, Healy Consultants Group PLC’s Kuwait team submitted the complete company incorporation application to the Ministry of Commerce and Industry and signed the relevant documents in front of a government official.
- Our Kuwait team secured company numbers two weeks after submitting the quality company incorporation application.
- Due to numerous delays caused by Covid-19, lockdowns and government slowdowns, our Kuwait team only secured all required ministerial approvals and the commercial license eight weeks after company incorporation was approved.
Corporate bank account opening
- Immediately after receiving the commercial licence, our Kuwait team met with the National Bank of Kuwait (NBK) to sign corporate bank account opening forms.
- Within a week, the account numbers were released by NBK. Our Client proceeded to immediately inject the share capital of KWD1,000 to complete bank account opening.
- Once the share capital funds were received in the account, NBK confirmed the same and prepared online banking forms for the nominee resident director’s signatures.
- NBK approved the online banking request and provided our Client with a KNet card, required to activate their online banking profile.
- Immediately after receiving the KNet card, Healy Consultants Group PLC’s Kuwait team, under written instruction from our Client, proceeded to email scans of the KNet card to our Client.
Our Client engaged Healy Consultants Group PLC for ongoing renewal support services and, at the time of writing, was additionally considering hiring Healy Consultants Group PLC for visa support services in Kuwait.
Healy Consultants oversaw establishment of commercial agency
Our Client is a UK-incorporated company which specializes in providing catering services in remote construction and work sites. Expansion of Kuwait’s oil production capacity, principally through the ambitious ‘Kuwait Project’, is expected to create a wealth of opportunities for contractors across a range of disciplines and Brian, our Client, wanted to explore opportunities in this exciting new era. While he believed his company had the capabilities to win contracts in Kuwait, Brian wanted to retain the UK identity of his company (principally for marketing purposes in Kuwait), but during his preliminary research he had been made aware of the restrictions under which foreign companies can operate in Kuwait.
Brian contacted Healy Consultants, requesting further information on the best options to allow him to conduct business in Kuwait. During the telephone conversation with Healy Consultants, the accounting, tax, and legal implications of setting up a business in Kuwait were explained to Brian, who for his part outlined his preferred corporate structure.
Healy Consultants’ first task was to prepare a cost proposal for Brian, based on the scope of the project and services he had indicated by email. Healy Consultants also outlined the benefits and disadvantages of different Kuwait corporate structures, including incorporating a new limited liability company (LLC) or operating as a foreign company through a commercial agency. Brian received the proposal and confirmed his intention to proceed by return email, to which he also attached a signed client engagement letter. He also indicated his intention to proceed with a commercial agency agreement, since he did not want the restriction and expense of incorporating a new Kuwait LLC (which would require a 51% Kuwaiti shareholder).
Following the transfer of engagement funds into our bank account, Healy Consultants proceeded to draft a commercial agency agreement on Brian’s behalf. This would also involve a Kuwaiti national or company to be the agent in return for a fixed fee. Healy Consultants uses the services of a reliable, reputable local businessman called Nader, who acts as commercial agent for our Clients to fulfill these statutory requirements. Under normal circumstances we advise our Client to meet the agent in person at this early stage to establish a rapport, although on this occasion Brian’s company was busy servicing existing contracts in a remote area of Turkmenistan and he was therefore unable to attend a meeting in Kuwait. Instead, Brian requested us to push on a draft a suitable agency agreement for his review by email. Healy Consultants drew up the agency agreement (which would ultimately be submitted to the Ministry of Commerce and Industry for approval), containing details such as the activities to be undertaken by the company, the scope of Nader’s role and authority with the company, his fee, and the duration of the agency (which we advise to be fixed at two years, renewable). Typically, Nader prefers to play no day-to-day role in the company other than to take care of licensing formalities, obtain visas for the Client’s employees, and represent the principal on an official basis, where required, and this was the agreed scope of Nader’s role on this occasion too.
With a draft agreement in place, Healy Consultants emailed the document to Brian for his review. He responded quickly with some minor comments which required amendment, and the updated document was re-mailed to him for approval and signature the following day. The original, signed agency agreement was received two weeks later, and Healy Consultants arranged for Nader to also sign it. The agency had been created.
Employment visa application
The next stage was to register the new agency at the Kuwait Chamber of Commerce and Industry (KCCI), which Healy Consultants was able to do in one day by visiting personally. The KCCI issued a Certificate of Registration the following day, which we picked up in person. The next step was to then register the agency at the Commercial Agencies Register at the Ministry of Commerce and Industry in Kuwait City, a task which can only be undertaken by the Kuwaiti agent (in this case, Nader).
Nader was required to complete two copies of the Ministry of Commerce and Industry agency registration form, and also submit:
- An original copy of the signed agency agreement, notarized by a Kuwaiti notary public – Healy Consultants organised this;
- A translation of the agency agreement into Arabic – Healy Consultants had organised this as soon as it had been approved by both parties by a translation company in Kuwait City;
- A copy of the agent’s commercial license supplied by Nader;
- A copy of Nader’s passport.
Three working days later, the Ministry of Commerce and Industry provided a signed, stamped copy of the application, and published details of the new agency in the Official Gazette.
Although the agency was now fully set up, it was still unable to bid for certain government and public contracts because it was not on an Approved Contractors’ list.
To achieve this, the agency was required to submit financial and technical information (which would prove its ability to carry out projects) to the Central Tenders Committee (CTC) for each contract. Healy Consultants prepared this information in the CTC’s preferred format for the first contract, and has subsequently done so for three further contract bids to date.
The final piece of the engagement for which Brian required our assistance was to set up a physical presence in Kuwait. Although Nader has an office which serves as the agency’s headquarters in Kuwait, Brian now uses Healy Consultants’ company secretarial and virtual office services in Kuwait, including phone answering and mail forwarding. This has proved invaluable to Brian, who is completing other overseas contracts before relocating to Kuwait.
Oil contractor set up LLC
Our Client is an international company specializing in onshore and offshore oil exploration and production, as well as oil well maintenance. David contacted Healy Consultants to discuss the prospect of incorporating an entity in Kuwait to enable it to bid on projects related to the expansion of the country’s oil production capacity. David is based in Dubai and knew Kuwait reasonably well after overseeing previous projects there.
Healy Consultants outlined to David all issues relating to Kuwait company incorporation, in particular the high levels of bureaucracy and costs of doing so (for example, the paid up capital of an LLC is KD7,500 (US$26,000). For his part, David indicated his requirement for a limited liability company (LLC), even though he was aware that this would require a 51% Kuwaiti shareholding. Healy Consultants advised David that we could offer a nominee shareholder if required. Our nominees play no active role in the day-to-day running of the business. Healy Consultants emailed David a detailed cost breakdown, tailored to his specific requirements, and he replied the following day with written confirmation that he wished to proceed. As such, he completed our Client engagement letter (which outlines the required corporate structure, including shareholders and directors), and also settled our engagement fees. At this point, Healy Consultants was able to begin the preliminary phases of the engagement while waiting for the due diligence on the company directors, David and his business partner Simon.
The first step was to tie-up an agreement between David, Simon, and the Kuwaiti nominee shareholder. This agreement would outline the precise role the nominee would play in the company, which in the vast majority of cases is simply limited to fulfilling statutory regulations. Typically, we recommend our Client visit Kuwait to meet the Healy Consultants nominee shareholder where possible, or alternatively convene a video conference to enable both parties to make contact and discuss the terms of the agreement. As such, we organised a video conference between the two parties, and Healy Consultants prepared a draft agreement reflecting the discussions that took place, including annual fees. The agreement was then e-mailed to David and Healy Consultants nominee shareholder for their comments, approval, and signature.
The company incorporation process began with Healy Consultants completing an application form from the Companies Department at the Ministry of Commerce, giving details on the company’s intended business and the shareholders and directors, as well as due diligence. This was submitted to the Department of Partnerships at the Ministry, which issued a letter on the same day giving its preliminary approval for the company registration. Healy Consultants next filed an application for name approval with the Commercial Registrar, and with this completed on the same day we went back to the Department of Partnerships to collect three documents addressed to the Central Bank, the Criminal Investigation Department and the Municipality. These documents give comments on the company’s scope of activity.
The document addressed to the bank instructs it to accept the capital deposit in an account in the company’s name. Healy Consultants took this document to the Central Bank in Kuwait City, depositing by cheque the required amount (KD7,500), for which the bank issued a certificate confirming the same. A copy of this certificate was then e-mailed to David in Dubai. Healy Consultants’ next task was to visit the Criminal Investigation Department in Kuwait City to obtain a certificate confirming the clean criminal record of the shareholders, a process which took two days to complete.
The next stage of the process was to arrange for the Municipality to visit the company’s office premises to verify its compliance with health and safety regulations. Because David and Simon were unable to visit Kuwait during the incorporation process and locate suitable office space, they requested the use of Healy Consultants’ virtual office to fulfill this task, and a draft lease agreement between Healy Consultants and our Client was submitted to the Municipality and Fire Department, who inspected the premises. Two weeks later the Municipality issued a certificate confirming adherence to the health and safety specifications.
Healy Consultants then visited the Department of Partnership again to obtain the company’s Memorandum of Association, which we couriered to David and Simon in Dubai for their signatures and return to us. Shortly thereafter, Healy Consultants visited the Ministry of Justice in Kuwait City, to arrange to have the Memorandum notarized. With this step complete, Healy Consultants approached the Department of Partnerships to obtain a so-called ‘License to Start Activity’. This involved submitting the notarized Memorandum and the lease agreement, as well as a receipt confirming first rent had been paid. Within two days, the Department had issued the license.
Healy Consultants then visited the Commercial Registrar to officially register the company, and the Registrar issued a registration certificate on the same day, a copy of which was emailed to David and Simon in Dubai. Included in the package to our Client was also a completed application form for Kuwait Chamber of Industry & Commerce registration, which required our Client’s signature and return to us. Once the Chamber application had been returned, Healy Consultants submitted it, and registration was complete the following day.
The closing phases of the engagement involved registering the company with the Civil Data Department, which issued a Civil Data number for the company, required when it deals with government agencies. The final stage of the incorporation process was for Healy Consultants to visit the Ministry of Labor and Social Affairs to open a labor file for the company. Although the incorporation process was lengthy and involved many steps, Healy Consultants provided regular status updates to David and Simon, ensuring that they were kept abreast of developments. They were so happy with our service that they decided to upgrade their virtual office service in Kuwait by renting space in our office to enable them to conduct meetings in Kuwait until they received a contract which would enable them to invest in new premises.
To enable our Clients to live in Kuwait, however, Healy Consultants applied for residence and employment visas on their behalf. The first step in this was to obtain an Iqama (work and residence permit), the process for which involved arranging for the Kuwaiti nominee to apply to the Ministry of Labor and Social Affairs. Our Client’s new company also applied for a No Objection Certificate from the Criminal Investigation Department. At this stage, we requested David and Simon to visit Kuwait to undergo medical tests, which were required as part of the residence permit approval process.