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The Ministry of Commerce and Industry has increased oversight of businesses suspected of commercial concealment arrangements in which operators use licenses registered in other names to conduct activities they would otherwise be prohibited from pursuing, according to the Times Kuwait. Decree-Law No. 78 of 2026 on Combating Commercial Concealment, published in the Official Gazette on August 9 2026, criminalises enabling any person to carry out economic activity in violation of ownership rules or foreign investment limits that cap participation at 49 percent in many sectors. The legislation, which takes effect six months after publication on February 9 2027, aims to curb unfair competition and ensure compliance with licensing regulations, the Times Kuwait stated in its October 14 article. Officials have been granted enhanced powers to inspect premises, request documents and coordinate with other government bodies to identify violations during the remaining preparation period.
Penalties under the law include prison terms of one to three years and fines ranging from 10,000 to 100,000 Kuwaiti dinars or the full value of illicit profits, whichever is greater, the Times Kuwait reported. Courts can also order confiscation of proceeds and equipment used in the offence, permanent closure of the establishment, revocation of the commercial license and deportation of convicted foreigners after they serve their sentences. Fines may be multiplied according to the number of people or activities involved in a violation, a provision highlighted across multiple Times Kuwait reports on the decree. The law further allows for settlement before final judgment upon payment of at least half the maximum fine provided the arrangement is regularised.
The legislation strengthens coordination between the Ministry of Commerce and Industry, the Ministry of Interior, the Public Prosecution, the Kuwait Financial Intelligence Unit and various financial institutions including banks and insurance companies to detect discrepancies in beneficial ownership and profit distribution, according to the Times Kuwait. Financial records that fail to align with declared ownership percentages often serve as indicators of concealment, the publication noted in its coverage. Whistleblowers stand to receive rewards of up to 10 percent of collected fines, an incentive introduced to encourage reporting of hidden ownership structures. Legal analyses published by Kuwaiti law firms have described the measure as the first dedicated statute targeting the longstanding practice known locally as tasattur.
Businesses and license holders have been urged to review their ownership, management and operational arrangements before the February 2027 deadline to avoid falling foul of the new rules once they become enforceable, the Times Kuwait advised in its October 17 follow-up article. The six-month transitional window following publication allows time for restructuring without immediate penalties for past conduct, although continuing violations after the effective date will trigger full liability because concealment is treated as an ongoing offence. Several law firms have issued guidance recommending that entities update commercial registry entries and ensure registered owners match actual operators and beneficiaries. The Ministry of Commerce and Industry is expected to issue executive regulations that will provide further implementation details.
The new framework builds on earlier indirect approaches to the issue through civil and commercial laws that treated certain nominee arrangements as contrary to public order, according to legal summaries carried by the Times Kuwait. Previous court rulings had already restricted such practices, yet the dedicated criminal law marks a significant escalation in enforcement and deterrence. Coordination with electronic payment providers and investment companies will help authorities cross-check transaction flows against declared ownership, the publication explained. This integrated approach is intended to close loopholes that previously allowed concealed operations to persist.
In parallel with stepped-up checks, the authorities have emphasised public awareness campaigns to inform commercial registrants of their obligations under the forthcoming law, the Times Kuwait reported. Companies that fail to align their structures risk not only criminal sanctions but also publication of convictions and loss of trading rights. The decree repeals any contradictory prior provisions and assigns implementation responsibility to the Minister of Commerce and Industry. Businesses operating in sectors with strict Kuwaiti ownership requirements have been identified as particularly affected by the changes.
