Kuwait has introduced new legislation to combat commercial cover-ups, aiming to prevent foreigners from operating businesses without the proper licenses. The Ministry of Commerce and Industry has finalized a draft decree-law designed to strengthen enforcement and ensure transparency in the business sector.
The new law specifically targets commercial cover-up practices, where foreigners, whether individuals or entities, bypass licensing restrictions by using local trade names, licenses, or approvals that don’t correspond to their actual business activities. This includes engaging in illegal economic activities under the guise of legitimate businesses, often facilitated by local individuals or companies.
Key Provisions of the New Law
- Prohibition of Commercial Cover-ups: The law explicitly bans any natural or legal person from helping foreigners evade business regulations by allowing them to use a trade name, license, or official approval to conduct economic activities illegally.
- Obstructing Authorities and Misleading Information: The law also criminalizes actions aimed at obstructing competent authorities from fulfilling their duties. This includes withholding required information or providing false or misleading data to authorities.
- Penalties for Violators: Article 4 of the law stipulates that anyone violating these rules will face penalties under Kuwait’s Penal Law for fraud. In addition to fines, the violator’s business may be shut down, and they could face removal from the market. To ensure accountability, final rulings will be publicly published on the Ministry of Commerce’s website.
- Inspection and Enforcement: The law grants the Minister of Commerce, or their designated representative, the authority to appoint judicial officers. These officers will conduct inspections, monitor compliance, and take action against suspected violations related to commercial activities.
Impact on Business Environment
This new law is a critical step in Kuwait’s broader efforts to regulate its business environment and ensure fair competition. By targeting illegal business practices and promoting transparency, the government aims to safeguard the local economy and encourage legitimate investments that adhere to the country’s laws and regulations.
The move is seen as part of Kuwait’s ongoing efforts to create a more transparent and fair investment climate, which will ultimately benefit the private sector and help in attracting legitimate foreign investments.
