Kuwait Suspends 45,000 Business Licenses for Non-Article 19 Partners

The Ministry of Commerce, in collaboration with the Public Authority for Manpower, has announced the suspension of the establishment and renewal of existing business entities and the temporary amendment of all companies and institutions. This suspension affects licenses where one of the partners or managers does not fall under Article 19, based on the partners’ incompatibility.

This announcement confirms the news exclusively reported by Al-Rai. The Ministry of Commerce stated that it will review the regulations governing the work of individuals under various residency articles, including Articles 17, 18, 19, 20, 22, and 24.

### Residency Regulations

According to sources, the Manpower Authority clarified that properties covered by the circular do not need to be registered in the Ministry of Justice’s registry. The combination of worker and employer roles is not permitted. Under Article 18 of the Executive Regulations of the Foreigners Law, workers with a work permit are subject to the supervision of employers, as stipulated by Law No. 6 of 2010 regarding work in the private sector. Article 19 allows for ordinary residency to be granted to a foreign investor or partner in a commercial or industrial activity, provided the expatriate is a partner and submits two budgets certified by the Ministry of Commerce and Industry.

### Status Amendments

Expats currently holding residency under Article 18 are required to amend their status to Article 19 to maintain their roles as partners or investors. Failure to do so will necessitate the sale of their shares. Approximately 10,000 expatriates holding work permits under Article 18 have obtained the status of partner or managing partner, with around 45,000 licenses affected. The Manpower Authority emphasized that the executive regulations do not prevent non-citizen residents from being partners or investors. However, expatriate partners with Article 18 residency must transition to Article 19 or relinquish their ownership. It is deemed legally incorrect for expatriates to be listed as partners while working for employers due to the different legal statuses of workers and partners.

### Compliance and Inspections

The Manpower Authority has found through inspections that many expatriates holding partner status under Article 18 do not actively participate in commercial activities. This constitutes a violation of the Labor Law and raises concerns about human trafficking.

### Transition Period

Those unable to amend their residency status will be given a grace period to transition to Article 19 or liquidate their shares to avoid negative impacts on their rights and the market. This measure aims to preserve the legal and financial positions of these individuals.

### Legal Violations

Due to the legal violations identified by the Manpower Authority, the Ministry of Commerce has banned expatriates from owning businesses under Article 18 as partners or managing partners. Current holders of such titles must transfer their residency to Article 19 or relinquish their ownership. This regulatory change is intended to ensure compliance with the law, protect investment opportunities for citizens, and verify that workers are employed by their registered employers.