The Ministry of Commerce and Industry in Kuwait is evaluating a legal proposal to automatically cancel commercial licenses that have been expired for over a year or inactive for six consecutive months. This initiative comes amid growing concerns over dormant business licenses and an influx of visitors seeking assistance with beneficial ownership registration.

Legal Debate on License Cancellation

Conservative View: Legal and Financial Concerns

A segment of legal experts argues that the ministry lacks the legal authority to unilaterally revoke commercial licenses. They emphasize the potential financial and legal repercussions, particularly in cases involving businesses tied to commercial centers or long-overdue financial statements. This group insists that license cancellations must follow a procedural approach, requiring the approval of the license holder.

Supportive View: Aligning with Companies Law

Conversely, another legal opinion supports the ministry's authority to cancel inactive or expired licenses under the Companies Law and Commercial Licensing Law. This perspective asserts that businesses that fail to renew their licenses within a year or remain inactive for six months can be lawfully deregistered. Advocates of this approach reference Article 11/3 of Law No. 111 of 2013, which grants regulatory bodies the right to enforce licensing regulations. They also highlight the administrative relief this measure would bring by reducing the backlog of beneficial owner registrations.

Addressing Dormant Licenses and Compliance

The ministry has identified a substantial number of inactive licenses, some of which have never operated or submitted financial reports. Complicating the issue further, the recent implementation of beneficial ownership registration has introduced penalties for non-compliance, ranging from 1,000 to 10,000 Kuwaiti dinars, with severe violations subject to fines up to 500,000 dinars under the Anti-Money Laundering and Terrorism Financing Law.

Ministry officials are carefully evaluating both legal interpretations before making a final decision. Any resolution is expected to adhere to the Companies Law and relevant ministerial regulations.

Progress on Beneficial Owner Registration

In parallel with license cancellations, the Ministry of Commerce is making strides in beneficial owner registration. Currently, approximately 60% of the 226,938 registered commercial entities have completed their disclosure. The ministry aims to achieve 90% compliance by June, aligning with recommendations from the Financial Action Task Force (FATF) to bolster Kuwait’s anti-money laundering framework.

To simplify the registration process, the ministry has introduced the "Actual Beneficiary Owner" service via the "Sahl Business" platform. This digital solution streamlines the disclosure process, ensuring ease of compliance for businesses. A recent report by Al-Rai highlighted that 31,700 companies successfully registered within four days of the initiative’s launch.

Under Ministerial Resolution No. 16 of 2025, all registered entities—including sole proprietorships and companies—must disclose their beneficial owners, except for firms listed on the Kuwait Stock Exchange, foreign stock markets, or government-owned corporations.

Key Takeaways

• Legal Debate: Conflicting opinions exist regarding the ministry’s authority to revoke expired or inactive licenses.
• Administrative Challenges: The ministry faces an increasing workload due to beneficial ownership compliance.
• Regulatory Compliance: Over half of eligible businesses have registered their beneficial owners, with a goal of 90% compliance by June.
• Digital Solutions: The "Sahl Business" platform facilitates seamless registration.

As Kuwait enhances its regulatory framework, the resolution of this legal debate will significantly impact commercial operations and anti-financial crime efforts in the country.