Protecting a minority foreign partner in a Kuwait WLL

The situation

A WLL's memorandum and partner meetings are governed by the Companies Law. Decree-Law 106 of 2024 changed quorums for WLL extraordinary meetings.

The law

• Companies Law No. 1 of 2016 (as amended, including Decree-Law 106 of 2024): Governs company forms, WLL partner meetings, accounts and liquidation; Decree-Law 106 of 2024 eased WLL extraordinary meeting quorums
• Commercial Code ownership rule and Law No. 1 of 2024: Foreign ownership of a Kuwaiti company is generally capped at 49%; Law 1 of 2024 on dropping the local agent rule is not yet in practical effect

What it means for you

Since late 2024 an extraordinary meeting can proceed at a second call with partners holding over 50%, and pass decisions with over 50% of capital. That makes a 51% partner stronger than before. Negotiate reserved matters, manager appointment rights, profit sharing and exit terms in writing, and check enforceability with a Kuwaiti lawyer.

What to do

1. List the decisions you need a veto on.
2. Draft reserved matters in the memorandum.
3. Agree exit and deadlock terms.
4. Have a Kuwaiti lawyer review enforceability.

Related

• Doing business in Kuwait without a local agent
• Kuwaiti or GCC owned company and income tax
• Activities that need extra approvals in Kuwait
• Choosing between a WLL and a KDIPA entity
• Foreign ownership limit in a Kuwait WLL
• Income tax on a foreign partner's share of a Kuwait WLL