Navigating Agency and Distribution Laws in Kuwait

Updated September 2026. This version replaces the guide first published in 2024.

A foreign supplier that wants to sell in Kuwait has three lawful ways to be present here and one dominant way to reach customers. The three ways to be present are a Kuwaiti company with a local partner holding at least 51 per cent of the capital (Article 23 of the Commercial Code issued by Decree-Law No. 68 of 1980); a wholly foreign-owned company or branch licensed by the Kuwait Direct Investment Promotion Authority (KDIPA) under Law No. 116 of 2013; and, since Law No. 1 of 2024 amended Article 24 of the Commercial Code with effect from 21 January 2024, a branch registered with the Ministry of Commerce and Industry (MOCI) without a local agent. The dominant way to reach customers remains an agency or distribution contract with a Kuwaiti agent under Law No. 13 of 2016 on the Regulation of Commercial Agencies. This guide explains how the four fit together and what has changed.

Why this matters

The rules many suppliers still have in mind date from before 2016. Exclusivity is no longer protected by law, a local agent is no longer compulsory for a branch, and from February 2027 lending a Kuwaiti name, licence or commercial register entry to a business that someone else actually runs is a crime under Decree-Law No. 78 of 2026 on combating commercial concealment. Arrangements that were common practice a decade ago can now be void, unenforceable or criminal.

Ways to be present in Kuwait

The traditional route is a Kuwaiti company. Article 23 of the Commercial Code bars a non-Kuwaiti from trading in Kuwait without Kuwaiti partners holding at least 51 per cent of the capital, so the foreign supplier takes up to 49 per cent of a limited liability or shareholding company formed under the Companies Law (Law No. 1 of 2016). The partner must be real: a Kuwaiti shareholder who lends a name and takes no part in the business is exactly what Decree-Law No. 78 of 2026 targets.

The second route is a KDIPA investment licence under Law No. 116 of 2013, which allows a company, branch or representative office to be up to 100 per cent foreign-owned in the sectors KDIPA admits, with tax and customs incentives, including income tax exemption for up to ten years, available on application. Our full guide to KDIPA licensing is linked below.

The third route is new. Law No. 1 of 2024, published on 21 January 2024, amended Article 24 of the Commercial Code so that a foreign company may open a branch and start business in Kuwait without a local agent, and amended Article 31 of the Public Tenders Law (Law No. 49 of 2016) so that foreign companies can bid for public tenders directly. MOCI's registration procedure for these branches has been introduced gradually; ask us for the current position before relying on this route.

Appointing an agent or distributor

Law No. 13 of 2016, in force since 13 March 2016, replaced the 1964 agency law. Under Article 2 the agent or distributor must be a Kuwaiti national or a company with at least 51 per cent Kuwaiti ownership, registered in the commercial register, licensed for the activity and contracted directly with the principal. Article 3 requires the contract to state the goods or services, each side's rights and duties, the territory, the term and its renewal, and how the agency ends. Under Article 6 an unregistered agency is not recognised and no claim on it will be heard, so registration in the Commercial Agencies Register at MOCI is the first step; MOCI must decide within 30 days, silence counts as refusal, and a refusal can be challenged in court within 60 days (Articles 7 and 8).

Two features surprise suppliers used to the old regime. First, exclusivity is gone. Article 4 provides that the import or supply of any goods is not confined to the agent or distributor, even if the contract calls the agency exclusive and includes the right to use the trademark, provided the third party meets the law's conditions and the goods meet the standards and warranty terms adopted in Kuwait. A principal may appoint more than one agent (Article 2), and under Article 5 the registered agent must service parallel-imported goods of the same type where the manufacturer has agreed to warrant them. Second, the Competition Law (Law No. 72 of 2020) polices attempts to rebuild exclusivity through territorial bans, customer allocation or resale price control: Article 7 prohibits agreements between a supplier and its distributor that restrict competition. Our companion blog on exclusive distribution, linked below, covers this in detail.

Ending an agency

Here the law still protects the agent. Under Article 9 of Law No. 13 of 2016 a principal may not terminate the contract without a breach by the agent; otherwise it must compensate the agent, and any contrary agreement is void. The register moves to a new agent only where the previous agency ended by agreement, by an enforceable judgment or by expiry of its term. The Commercial Code adds Article 281 (compensation for termination without cause) and Article 282 (fair compensation set by the court where a fixed-term contract is not renewed, unless the agent was at fault); Article 286 extends those rules to a sole distributor. After the agency ends, the agent's supply and service obligations run for six months or until a new agent is appointed (Article 10), and the agent must apply to strike the registration within three months (Article 14). Kuwaiti courts have jurisdiction, but the parties may agree to arbitration (Article 20).

Compliance points

Goods imported under an agency, or in parallel, must meet the international and GCC standards adopted in Kuwait, and the agent must honour the producer's guarantees under the Consumer Protection Law (Law No. 39 of 2014). The compliance point that now matters most is Decree-Law No. 78 of 2026, published in Kuwait Al-Youm Issue 1803 on 9 August 2026 and in force six months later. It punishes both the person who runs a business behind another's licence and the person who lends the licence: prison of one to three years, a fine of KD 10,000 to KD 100,000 or the profits made, closure, licence cancellation and deportation of a foreign offender. Any partnership in which the Kuwaiti partner is a name on paper should be restructured before February 2027.

How WEFAQ helps

WEFAQ Law Firm advises foreign suppliers and Kuwaiti agents on choosing the right route into the market, forming companies with Kuwaiti partners, KDIPA licensing, Article 24 branch registration, drafting and registering agency and distribution contracts, and disputes over termination and compensation. Wefaq Holdings, the firm's corporate services arm, supports foreign businesses with company formation, business consultancy, administrative support and financial management, structured to comply with the ownership rules and with Decree-Law No. 78 of 2026.

WEFAQ's view: choose the route first and the contract second. A supplier that wants control of its brand in Kuwait should look at a KDIPA entity or an Article 24 branch rather than an "exclusive" agency, because exclusivity can no longer be bought by contract. A supplier that wants a local partner's network should appoint an agent under Law No. 13 of 2016 with measurable performance terms, because the compensation rules on exit, not the word "exclusive", decide most disputes.

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Source: Commercial Code issued by Decree-Law No. 68 of 1980 (Articles 23, 24 as amended by Law No. 1 of 2024, and 271 to 286); Law No. 13 of 2016 on the Regulation of Commercial Agencies (Articles 2 to 10, 14 and 20); Law No. 116 of 2013 on the Promotion of Direct Investment; Law No. 72 of 2020 on the Protection of Competition (Article 7); Law No. 39 of 2014 on Consumer Protection; Decree-Law No. 78 of 2026 on combating commercial concealment, Kuwait Al-Youm Issue 1803, 9 August 2026.

This article is provided for general information only and does not constitute legal advice. For advice specific to your circumstances, please contact WEFAQ Law Firm.