The Council of Ministers issued Decree-Law No. 78 of 2026 on combating commercial concealment at Al-Seif Palace on Aug. 2, 2026, with publication in the Official Gazette following on Aug. 9. The legislation, which provides businesses a six-month transition window, targets arrangements in which nominal license holders enable others to operate enterprises they could not legally run themselves. It represents the first dedicated statute to criminalize the long-prevalent practice rather than addressing it through ancillary licensing rules, according to multiple legal assessments including those from Wefaq and Alitqan Legal Group.
Commercial concealment is defined in the decree as enabling any natural or legal person to conduct an economic activity prohibited under Kuwaiti law, whether for their own benefit or in partnership, or by bypassing mandated foreign ownership limits that typically cap participation at 49 percent in many ventures. The prohibition explicitly covers the use of another’s trade name, commercial register, license or any other mechanism to facilitate the violation. Both the operator and the facilitator face liability, extending also to managers who knew of the breach or failed in their oversight duties, with companies held jointly responsible where violations occur through their personnel.
Penalties under the law include imprisonment for not less than one year and not more than three years together with a fine ranging from KD10,000 to KD100,000 or the full value of profits obtained if greater, or either sanction alone. Courts must impose confiscation of all proceeds, tools and equipment linked to the offence, alongside mandatory permanent closure of the offending establishment, cancellation of its commercial license, publication of the judgment and deportation of any convicted foreign offender once the prison term ends. Repeat offences within five years of a final conviction carry doubled penalties, a framework designed to deter persistent circumvention of ownership and licensing requirements.
A settlement option remains available before final judgment provided the violator pays at least half the maximum fine, rectifies the legal position and removes the concealment, according to provisions detailed in the decree and its explanatory memorandum. The law further incentivizes whistleblowers by allowing rewards of up to 10 percent of collected fines for credible information that leads to conviction. Legal consultancies such as Deloitte Middle East and GLA & Company have urged companies to audit their ownership structures, management agreements and profit distributions during the remaining transition period before the February 2027 enforcement date.
The measure arrives after years in which commercial concealment has undermined fair competition and regulatory oversight across sectors from retail to services, as noted in analyses from firms tracking Gulf business reforms. By establishing clear criminal consequences and mandatory ancillary orders, the decree seeks to align actual control with registered ownership and reinforce compliance with foreign investment rules. Authorities have signaled that the competent ministry will issue further implementing regulations to guide enforcement once the law activates.
