Ministry imposes 10-day deadline for disclosure of beneficial ownership, waives penalties for 140,000 dormant entities
Revamped Report:
Got the lowdown on the scoop about expired commercial licenses and their under-the-radar proprietors in Kuwait's bustling business landscape. Seems like the Ministry of Commerce and Industry is giving a 10-day ultimatum, threatening fines ranging from a grand 1,000 to a whopping 10,000 dinars, if companies and institutions don't come clean with their beneficial owners' names.
Now, don't get too excited just yet, 'cause it ain't all businesses under this gun. 140,000 corporations, both personal and joint-stock, as well as solo endeavors, whose commercial licenses have expired for over a year, can breathe a sigh of relief. These entities are temporarily shelved, in the process of being cancelled, and won't face the aforementioned fines. Listed companies, however, are exempt from this moratorium.
The Ministry is planning to reintegrate these expired licenses into their system, giving relevant government agencies access to their data. The owners, though, can only carry out dissolution and liquidation proceedings. These licenses were previously transferred to a secret, electronic system, serving as a digital hideout.
Turns out that approximately 62% of the 228,000 commercial records hibernating in the depths of this system have licenses that have expired for at least a year - some for as long as 40 years! Many of these licenses were never fully processed due to legal battles, budgetary issues, or abandoned business ventures.
The Ministry plans to bring this data out of the shadows and integrate it into their primary system. However, they'll maintain a separate interface for these expired licenses, allowing business owners to initiate closure procedures if they wish, and giving key government bodies, like the Ministries of Justice and Interior, the Public Institution for Social Security, and the Public Authority for Manpower, access to this information.
There's been a lot of chatter about whether the Ministry will keep this window open indefinitely or kickstart the dissolution and liquidation process themselves. Multiple financial, legal, and procedural roadblocks make that an uphill battle. For starters, appointing auditors for the numerous companies involved requires a hefty investment of resources.
While the Ministry can suspend licenses that have expired for over a year and initiate dissolution for inactive businesses for more than three years, removal from the commercial registry requires an application from the owners. This application comes with its own set of legal requirements, including insurance clearance, labor file resolutions, and settling outstanding legal or financial obligations.
So, companies with expired licenses are facing two options. The Ministry may cancel licenses that have been inactive for over a year, while entities remaining inactive for three years will encounter dissolution and liquidation procedures.
In the meantime, efforts are being made to encourage compliance with beneficial ownership disclosure requirements. As of yesterday, approximately 11,000 commercial entities were still in the dark about this requirement. This includes 5,740 sole proprietorships, 4,970 single-person companies, and 199 joint-stock companies. By June 10th, the Ministry plans to start imposing financial penalties on those who haven't complied, as per the latest Financial Action Task Force (FATF) recommendations. These guidelines emphasize swift implementation of transparency, anti-money laundering, and counter-terrorism financing measures to boost confidence in Kuwait's business environment.
The ministry's plan to reintegrate expired commercial licenses into their system raises questions about the finance and business implications for affected companies. The Ministry's efforts to encourage compliance with beneficial ownership disclosure requirements may impact the financial and business operations of approximately 11,000 commercial entities, particularly those who haven't yet complied by June 10th.
