In a significant move, the Ministry of Commerce and the Public Authority for Manpower in Kuwait have jointly announced the suspension of establishing and renewing business entities where partners or managers are not under Article 19 residency. This decision impacts 45,000 business licenses and approximately 10,000 expatriates currently under Article 18 who must transition to Article 19 to retain their roles as partners or managing partners.

Residency Regulations Overview

This announcement, initially reported by Al-Rai, reveals that the Ministry of Commerce will review regulations for individuals under various residency articles, including Articles 17, 18, 19, 20, 22, and 24. The Public Authority for Manpower clarified that properties affected by this suspension do not need to be registered in the Ministry of Justice’s registry. Importantly, combining roles of worker and employer is not allowed under the new regulations.

Key Residency Articles

• Article 18: Covers workers with a work permit under the supervision of employers as per Law No. 6 of 2010 regarding work in the private sector.
• Article 19: Grants ordinary residency to foreign investors or partners in commercial or industrial activities, provided they submit two budgets certified by the Ministry of Commerce and Industry.

Transition and Compliance

Expatriates under Article 18 must amend their status to Article 19 to continue as partners or investors. Failure to transition will necessitate the sale of their shares. Approximately 10,000 expatriates in this category, affecting 45,000 licenses, must comply with the new rule. The Manpower Authority stressed that non-citizen residents can still be partners or investors, but must hold Article 19 residency to avoid legal conflicts.

Inspections and Legal Violations

Recent inspections revealed that many expatriates holding partner status under Article 18 are not actively engaged in commercial activities, which is a violation of the Labor Law and raises concerns about potential human trafficking. Consequently, expatriates must transition to Article 19 or relinquish their ownership to avoid legal repercussions.

Transition Period and Enforcement

A grace period will be provided for expatriates to transition their residency status to Article 19 or liquidate their shares. This measure aims to protect their legal and financial positions and maintain market stability. The Ministry of Commerce has banned expatriates from owning businesses under Article 18, enforcing that they must comply with Article 19 regulations to continue their business activities.

This regulatory change is designed to ensure compliance with Kuwaiti law, safeguard investment opportunities for citizens, and verify that workers are employed by their registered employers. Expatriates must act promptly to transition to Article 19 to avoid negative impacts on their rights and business operations.

Kuwait’s new residency rules require 10,000 expatriates to transition to Article 19 to maintain their business licenses. The Ministry of Commerce and the Public Authority for Manpower aim to ensure compliance with labor laws and prevent legal violations. Expatriates must act during the grace period to avoid selling their shares and facing legal consequences.