Friday 23 October 2009
Out dated laws in kuwait
The criminal law of Kuwait was issued in1970 and needs major changes and amendments like:
In adultery cases if a man surprises his wife with her partner in the position adultery and kills the wife, the law in Kuwait will consider his rage as a reason behind his reaction to murder the wife and will give him the punishment of a misdemeanour, which is a maximum of three years imprisonment only.
But if the husband commits adultery with his partner and the wife murders him on spot because of the rage and re-action , even during or after seeing the betray, then the wife will be punished with a felony of murder , where the punishment might be life time imprisonment or even death penalty.
That will mean that there is a major paradox in reasoning and fairness between the two situations in the same law and needs for sure the mentioned change.
The same law still does not follow the internet age, which we are living in, where the mentioned law does not punish all types of internet crimes like hacking , illegal access, illegal interception , data/system interference , fraud, forgery, theft , copy right infringement , terrorism, crimes against reputation and child pornography ...etc.
The only available resource is the general grounds of the law, which some times will help and in many occasions won’t be helpful or effective to protect or recover rights ,unless the crime travelled to other more advanced jurisdictions.
The labour law of Kuwait was issued in 1964, went through some minor amendments.
A new version is still under discussion and actually facing long & un-necessary delays in the parliament.
Hopefully the new law will cover major changes and reforms like, the minimum wage issue; regulate the rights for the working women, the working condition for young workers, the labour unions for nationals and expats, the low paid workers and give final solutions for the residency matters.
The law which regulates the Administrative circuit in the court, which reviews all the administrative and ministerial decisions, was issued in 1981.
The mentioned law does not allow the administrative court to review any administrative decions from the ministry of interior, especially if issued regarding the Kuwaiti nationality and consider it as a sovereign matter.
The mentioned law needs urgent amendments, to help in solving the stateless (Budouns) problem in Kuwait, by the direct intervention from the judicial power, where the mentioned amendments will help to find the justified cases and can be granted the Kuwaiti nationality depending on the proper applications for the Kuwait nationality law...
The Foreign investment law in Kuwait was issued in 1999, it was meant to meet with what many international investors waited for, which owns 100 % of the investment in Kuwait.
Also, they intended to open chances for economical and commercial growth, achieve global expansions in this market and on local levels open new sectors for employment, exchange experience and provide sophisticated training programs for Kuwaitis.
The mentioned law, did not meet expectations, is moving slow and needs real support from the government.
The only remedy is to go with the same rules of the commercial law, where formation of new companies or appointing commercial agents will be the best legal directions...
The law firm of Labeed Abdal
Website:www.lalaw.com.kw
lawyer in kuwait
To find a lawyer or a law firm in Kuwait, to represent an international company or corporate, the matter will require thorough search.
Main tool in our times is the internet, as there are many renowned legal search engines /directories like Hirosgamos.org and others, where law firms are listed depending on specialisation .expertise and experience.
Lawyers in Kuwait (according to the local law which regulates the lawyers profession) are divided in to three catigories, 1) lawyers listed in the list of the court of first instance, 2) lawyers listed in the list of the court of appeal, then the List of the court of cassation and the constitutional court, where the last list include lawyers practiced in advocacy for more than ten years in all levels of court.
One more element is the capability to have international department with English speaking lawyers and legal advisors, capable to follow the international legal needs for companies / corporations in a professional way , as that for sure will prevent any negative results while giving any legal opinions, which might in some cases happen, if the legal work was provided by non English speakers who might depend on translations.
Also, main international law firms are well recognized in the panels of lawyers in the main embassies in the country, as this process happens after full review and monitoring from the internal commercial and trade sections in the diplomatic missions.
Also memberships in international association and organizations are important elements for differentiation between law firms and their general conduct.
For more information, pls. contact the law firm of LabeedAbdal
P.O box 29175,Safat post code 13152
Tel:(965)2433707/1787
Fax:(965)22433757
Website:www.lalaw.com.kw
Main tool in our times is the internet, as there are many renowned legal search engines /directories like Hirosgamos.org and others, where law firms are listed depending on specialisation .expertise and experience.
Lawyers in Kuwait (according to the local law which regulates the lawyers profession) are divided in to three catigories, 1) lawyers listed in the list of the court of first instance, 2) lawyers listed in the list of the court of appeal, then the List of the court of cassation and the constitutional court, where the last list include lawyers practiced in advocacy for more than ten years in all levels of court.
One more element is the capability to have international department with English speaking lawyers and legal advisors, capable to follow the international legal needs for companies / corporations in a professional way , as that for sure will prevent any negative results while giving any legal opinions, which might in some cases happen, if the legal work was provided by non English speakers who might depend on translations.
Also, main international law firms are well recognized in the panels of lawyers in the main embassies in the country, as this process happens after full review and monitoring from the internal commercial and trade sections in the diplomatic missions.
Also memberships in international association and organizations are important elements for differentiation between law firms and their general conduct.
For more information, pls. contact the law firm of LabeedAbdal
P.O box 29175,Safat post code 13152
Tel:(965)2433707/1787
Fax:(965)22433757
Website:www.lalaw.com.kw
Monday 31 August 2009
The Intelectual property law of Kuwait
Intellectual Property is the name used to refer to different types of creations of the mind such as musical, literary and artistic works, inventions, symbols, names, images and designs used in commerce. There are several types of intellectual property rights bundles, such as Patents, trademarks, copyrights and related rights. Under intellectual property law, the creator or otherwise holder of one of these creations has certain exclusive rights to the creative work, commercial symbol or invention by which it is covered.
Patent law:
A patent is set of exclusive rights granted by a state to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an invention.
Patents are governed by Law No.4 of 1962 as amended by Law No.3 0 2001. Once the patent owner is vested with the right to use his patent, he can use it continuously for 20 years from the date of application (Article 12). Also this law facilitates renewal for every four-year period.
Apart from the Kuwaiti Nationals, the following persons are entitled to apply for patents in Kuwait.
1. Foreigners residing in Kuwait or having industrial or commercial establishment therein, foreigners who are nationals of the countries which accord Kuwait reciprocal treatment or who are residents of or have true domicile in such countries,
2. Corporations, societies, firms or associations of industrialists, producers, merchants or workers established in Kuwait or in countries which accord Public services.
3. Kuwait reciprocal treatment, if they enjoy corporate status.
Article 46 of the Patent law provides that for acts amounting to infringement of a Patent the offending party shall be punished by imprisonment for a period not exceeding one year or with fine 5000/- KD or both.
Trademark Law:
A trade mark is a type of intellectual property, and typically a name, word, phrase, logo, symbol, design, image or a combination of these elements.
Article 61 to 85 of the Commercial law of Kuwait 1981 deals with trademarks law and the definition of trademark under this law includes "pictorial elements, color combinations, any signs perceivable by sight, audio signs, and signs related to sense of smell". The list of marks that are not permissible to be registered in Kuwait, (Article 62) has been reduced considerably. It may also be noted that Kuwait has adopted the international classification of goods and services for registration of trademarks.
A trademark registration is valid for 10 years from the date of filing the application (Article 77). The trademark is renewable after every 10 years.
'Actual use' of the trademark in Kuwait is not a pre-requisite for registering a trademark in Kuwait , but non-use for 5 years or more consecutively or if there is no bonafide use of the mark, then the mark is liable to be struck-off (Article 79).
The owner of a registered trademark may commence legal proceedings for trademark infringement to prevent unauthorized use of that trade mark. Such unauthorized uses are offences punishable with imprisonment or a fine not exceeding 600/-KD or both (Article92).
Copyright Law:
Copyright is a legal concept, enacted by governments, giving the creator of an original work of authorship exclusive right to it, usually for a limited time, after which the work enters the public domain.
The law No 64 of 1999 governs copyrights and provides copyright protection and penalties for copyright infringement.
Protection of the copyright of the author of a foreign language work, as well as the copyright of the translator who translated that work to another foreign language get terminated with respect to the translation of the work into the Arabic language wherein the author or the translator has failed to exercise the said right within a period of 5 years from the date of the first publication of the original translated work (Article 16).
The term of copyright protection exists till the lapse of 50 years from the death of the author and in case of joint work, the term is calculated from the death of the last surviving co-author (Article 17).
The copyright law is applicable for both the nationals and the foreigners. The said law is applicable for the work of foreign authors
a) Who are published for the first time in Kuwait,
b) Who are nationals of a Member State of International Organization of Intellectual Property Rights Convention (WIPO) that are published for the first time in any of the said countries,
c) Who are nationals of the countries which accord reciprocity rights to the nationals of Kuwait (Article 43).
Part 3 of the Code deals with Procedures and Penalties. Any person who has committed copyright infringement is liable to be punished for either one year or a fine not exceeding KD 500 or both (Article 42). The Minister of information shall appoint officials as may be needed for implementing the provisions and the Public Prosecution authority shall investigate, take action and prosecute all the offences.
The Government is planning to submit a Bill before the parliament to amend some articles of Copyright Law in order to increase fine for copyright infringement from 500/- KD to 1000/- KD and double imprisonment from 1 year to 2 years.
For furtehr information ,please contact the Law Firm of Labeed Abdal
Tel:965-2433707/1787
Fax:965-2433757
Website:www.lalaw.com.kw
Email:info@lalaw.com.kw
Patent law:
A patent is set of exclusive rights granted by a state to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an invention.
Patents are governed by Law No.4 of 1962 as amended by Law No.3 0 2001. Once the patent owner is vested with the right to use his patent, he can use it continuously for 20 years from the date of application (Article 12). Also this law facilitates renewal for every four-year period.
Apart from the Kuwaiti Nationals, the following persons are entitled to apply for patents in Kuwait.
1. Foreigners residing in Kuwait or having industrial or commercial establishment therein, foreigners who are nationals of the countries which accord Kuwait reciprocal treatment or who are residents of or have true domicile in such countries,
2. Corporations, societies, firms or associations of industrialists, producers, merchants or workers established in Kuwait or in countries which accord Public services.
3. Kuwait reciprocal treatment, if they enjoy corporate status.
Article 46 of the Patent law provides that for acts amounting to infringement of a Patent the offending party shall be punished by imprisonment for a period not exceeding one year or with fine 5000/- KD or both.
Trademark Law:
A trade mark is a type of intellectual property, and typically a name, word, phrase, logo, symbol, design, image or a combination of these elements.
Article 61 to 85 of the Commercial law of Kuwait 1981 deals with trademarks law and the definition of trademark under this law includes "pictorial elements, color combinations, any signs perceivable by sight, audio signs, and signs related to sense of smell". The list of marks that are not permissible to be registered in Kuwait, (Article 62) has been reduced considerably. It may also be noted that Kuwait has adopted the international classification of goods and services for registration of trademarks.
A trademark registration is valid for 10 years from the date of filing the application (Article 77). The trademark is renewable after every 10 years.
'Actual use' of the trademark in Kuwait is not a pre-requisite for registering a trademark in Kuwait , but non-use for 5 years or more consecutively or if there is no bonafide use of the mark, then the mark is liable to be struck-off (Article 79).
The owner of a registered trademark may commence legal proceedings for trademark infringement to prevent unauthorized use of that trade mark. Such unauthorized uses are offences punishable with imprisonment or a fine not exceeding 600/-KD or both (Article92).
Copyright Law:
Copyright is a legal concept, enacted by governments, giving the creator of an original work of authorship exclusive right to it, usually for a limited time, after which the work enters the public domain.
The law No 64 of 1999 governs copyrights and provides copyright protection and penalties for copyright infringement.
Protection of the copyright of the author of a foreign language work, as well as the copyright of the translator who translated that work to another foreign language get terminated with respect to the translation of the work into the Arabic language wherein the author or the translator has failed to exercise the said right within a period of 5 years from the date of the first publication of the original translated work (Article 16).
The term of copyright protection exists till the lapse of 50 years from the death of the author and in case of joint work, the term is calculated from the death of the last surviving co-author (Article 17).
The copyright law is applicable for both the nationals and the foreigners. The said law is applicable for the work of foreign authors
a) Who are published for the first time in Kuwait,
b) Who are nationals of a Member State of International Organization of Intellectual Property Rights Convention (WIPO) that are published for the first time in any of the said countries,
c) Who are nationals of the countries which accord reciprocity rights to the nationals of Kuwait (Article 43).
Part 3 of the Code deals with Procedures and Penalties. Any person who has committed copyright infringement is liable to be punished for either one year or a fine not exceeding KD 500 or both (Article 42). The Minister of information shall appoint officials as may be needed for implementing the provisions and the Public Prosecution authority shall investigate, take action and prosecute all the offences.
The Government is planning to submit a Bill before the parliament to amend some articles of Copyright Law in order to increase fine for copyright infringement from 500/- KD to 1000/- KD and double imprisonment from 1 year to 2 years.
For furtehr information ,please contact the Law Firm of Labeed Abdal
Tel:965-2433707/1787
Fax:965-2433757
Website:www.lalaw.com.kw
Email:info@lalaw.com.kw
Wednesday 26 August 2009
The new labor law of Kuwait
THE MAJOR INSIGHTS ON THE NEW LABOR LAW IN PRIVATE SECTOR
(No. 6 of 2010)
The old Private Sector Labor Law has been replaced by the new law with radical changes in the basic provisions, came into force on 21st February 2010.
The major amendments are as follows;
Employment of Juveniles: Section 3 of chapter two of the law (Article 19-21) stipulates the minimum age required for an employment in Kuwait as 15 years. Which allow the employees between the age of 15 and 18 to work in a profession or industry, that are not classified as hazardous or harmful to their health and they should undergone periodic medical examinations. They shall work for maximum of six hours a day, with a break of one hour after continuous four hours of work and without overtime.
Employment of women: Section 4 (Articles 22-26) narrates the provisions regulates the employment of women. It is prohibited to employ women during night from 10.00 PM to 7.00 AM except in hospitals, sanatoriums, private treatment homes, etc., with the prior sanction of the Minister. The employer shall provide them with all security requirements including the transportation means to and from the workplace.
The women are prohibited to be employed in hazardous or arduous works, which are injurious to health and in jobs that violates morals or exploit her femininity. No women shall be compelled to work in any establishment, provides services for men only.
A pregnant employee is entitled to a paid maternity leave for 70 days and eligible for a leave for four months without salary after her delivery.
A working woman is eligible for same remuneration of a man, performing same work.
Employment contracts: Anyone who completed the age of 15 years shall be eligible to enter into an employment contract. The contracts for specific duration shall not exceed five years and not less than one year. Such contracts shall be deemed renewed for a similar period with same conditions, unless both parties agree to renew it under other conditions.
The remuneration shall not be reduced during the validity period and any agreement to the contrary shall be deemed null and void.
Obligations and Penalties: The probation period of a worker shall not exceed 100 working days. Either party may terminate the contract during this period without notice. In case the contract is terminated by the employer, the employee shall be eligible for the end of service benefit proportionate to his period of work.
The employer, who employs his workers in Government projects or in remote areas, shall be obliged to provide them free accommodation / accommodation allowance and free transportation facilities.
The employer shall affix a table of violations and the corresponding penalties, which is subject to the review and approval of the Ministry, in a conspicuous place in the work place. No employee shall be punished without giving him a chance to being heard. Deduction of the penalty from his remuneration shall not exceed five days in a month.
The worker may be suspended from the work for a maximum term of ten days during the investigation and in case the employee held not liable for the violation, he shall be paid his remuneration for the period of suspension.
The amounts deducted from the remuneration of the workers shall be kept is a separate fund, which is allocated for the benefit of the social, economic and cultural matters of the workers.
Termination and End of Service Benefit: Section three (Art.41-53) deals with the various provisions regarding termination of work contract and end of service benefits.
The employer may terminate the service of a worker without notice, compensation or benefit in the following events:
If the worker has committed a mistake that resulted in a large loss to the employer.
If it was found that the worker obtained the employment through cheating or fraud.
If the worker disclosed the secrets related to the establishment which caused or would have caused real losses.
An employee can be dismissed in the following grounds provided it shall not deny his end of service benefits:
If he found guilty of a crime that relates to honor, trust or morals.
If he committed an act against the public morals at the workplace.
If he assaulted the colleagues, employer or deputy during work.
If he breached or failed to abide by any of the obligations, imposed on him by the contract and the provisions of this law.
If he is found to have repeatedly violated the instructions of the employer.
The employee shall entitled to challenge such suspensions before the labor department and in case it is found in the final verdict that the employer arbitrarily dismissed him, will be eligible for the end of service benefit and a compensation for material and moral damages.
If an employee is absent from the job for seven consecutive days or any twenty days in a year, he shall be considered as resigned from the service and will be eligible for the benefits accordingly.
In case the worker is imprisoned due to an accusation by the employer and he is detained for a particular period and he shall be considered as suspended for such period. The employer cannot terminate his contract prior to the conviction by the final verdict of the court. The employee is entitled for the salary of such period and a fair compensation as estimated by the court upon acquittal.
The both parties shall have the right to terminate the contract by giving a three months notice to the opposite party in case of workers earning monthly salary and one month notice in case of other workers. The party initiates the termination obliged to pay the compensation equal to the remuneration for the same term in lieu of the notice period to the other party.
In the case of termination by the employer, the worker shall have right to be absent for one day per week to search for another job with salary provided he should notify such absence in advance to the employer at least one day.
The service of an employee shall not terminate without any justification or as a result of his activity in the syndicate or a claim of his legal rights as per the provisions of this law or for a reason of gender, race or religion.
Article 48 reveals that the worker shall have right to terminate the contract without notice and shall be entitled to the end of service benefits in the following cases:
If the employer does not comply with the terms of contract or the provisions of the law.
If the worker was assaulted or provocated by the employer or his deputy.
If continuing work will endanger his/her safety and health pursuant to the decision of the medical arbitration committee.
If the employer or his deputy committed fraud or cheating with regard to work conditions upon signing the contract.
If the employer has accused the worker of committing a punishable act and aquitted by the final verdict.
If the employer or his deputy commits an act, which violates public morals against the worker.
Article 49 says the contract shall be terminated upon the death or the proven incapability of the worker to perform his work supported with the documentary evidence issued by the competent medical board.
Article 50 provides the contract shall be deemed terminated when the establishment is finally declared bankrupt or it is permanently closed. In the event of disposal, merger, transfer of ownership by inheritance or donation, the employment contracts shall remain valid with the same conditions.
End of service benefit: The worker shall be entitled for an end of service benefit as follows:
Ten days remuneration for each of the first five years and 15 days each for remaining years with the limit of an amount not exceeding one year total salary for the workers, paid on hourly, daily, weekly or piece work basis.
Fifteen days remuneration for each of the first five years and one month remuneration each for the rest with the limit of one and a half year salary for the employees who are paid on monthly basis.
The worker shall be entitled for full end of service benefits in the following cases:
If the employer terminates the contract.
If the duration of the contract expired without being renewed.
If the termination is as per the provisions of Articles 48, 49 and 50.
If the female worker terminates her contract within one year of the marriage.
A worker , who terminate the contract with indefinite term shall entitled for half of the indemnity in case of his service is more than three years and less than five years, two third in case of the service more than five years and less than ten years and entire benefit for those having more than ten years service. The worker terminates his service shall be eligible for an end of service certificate from the employer.
The remuneration: The remuneration means the basic pay the worker receives or should receive consideration of his work, which includes the payments made to the worker on periodic basis such as bonus, benefits, allowances, grants, endowments etc. the payment shall not be delayed for more than seven days from the due date. The payment shall be through the employee’s bank account and one copy of the statement to be submitted before the Ministry of Social Affairs and Labor.
No employer shall be allowed to transfer a worker, who is paid on monthly basis to another category without his written consent. No deductions shall be allowed more than ten percent for the loans or debts due to the employer or twenty five percent for the debt of alimony provided the alimony debt shall have priority over the other debts.
The calculation of the workers entitlements shall be made on the basis of the last remuneration received by him and his remuneration may not be reduced for any reason during the period of service.
Working hours: it is forbidden to allow workers to work more than 48 hours a week or 8 hours a day provided he shall not be required to work for more than five consecutive hours without a break for one hour, not included in the working hours. The working hours during the month of Ramadan shall be 36 hours per week.
The workers may be required to work overtime in necessity and the overtime hours shall not exceeds two hours a day and 180 hours a year, three days a week or 90 days a year. The overtime pay shall be 125% of his normal salary.
He shall be entitled for the paid weekend off for 24 continuous hours after every six working days. He shall be eligible for a 50% increase over his normal salary for the overtime hours along with a compensatory day off.
Article 68 provides the worker the official holidays for 13 days per year and he shall be entitled to a double remuneration and an additional day off, in case he required to work those holidays.
Sick leave: A worker shall be entitled for sick leaves per year on the basis of medical reports issued by the doctor, who is appointed by the employer or of the Government medical center as follows:
15 days – full pay 10 days – three fourth of the pay 10 days – half pay 10 days - quarter pay 30 days – without pay
Annual leave: The worker shall be entitled to a 30 days paid annual leave excluding the official holidays and sick leaves. He is eligible for the annual leave after nine months of his service. He shall be paid for his annual leave in advance.
The worker shall be entitled for an encashment for his accumulated annual leaves upon the expiry / termination of the contract.
The employee shall not waive his annual leave with or without compensation. The employer can recover the amount paid to a worker for the annual leave, in case he found the worker had worked for another employer during the leave.
Then employer may grand the worker a paid academic leave to obtain a higher degree in his work field, provided he shall work for the employer for an equal term of the academic leave should not exceed five years. He shall be liable to repay such remuneration in case of violation of this clause.
The worker is entitled for a paid compassionate leave for three days in connection with the death of his first/second degree relative. A Muslim widow is entitled for paid leave for four months and ten days and a non-Muslim for 21days from the death of her husband.
Safety and Occupational Health: Part One of Section Four (Article 80-88) describe the rules of safety and occupational health. The employer is obliged to take all necessary safety measures and precautions to protect his workers, machines, materials, visitors against work risk and the workers from the health damage and occupational diseases.
In case of a worker met with an accident, which took place by cause of or during the work or while travelling to or from the work, the employer shall immediately report the incident to the nearest Police Station, nearest Labor department and Public Institution for Social Security or the relevant Insurance company. The employer shall bear all the cost of treatment of such worker.
The worker suffers a work injury or occupational disease shall be entitled for a full remuneration throughout the period of his treatment as recommended by the doctor. In case the treatment exceeds six months, he shall be entitled for half salary until complete recovery or proven disabled or dead. The worker or hid dependants shall have right to claim for compensation for such injury or diseases.
Collective Work Relation: Chapter Five of the deals with the Collective work relations. Section one of this chapter provides the Kuwaiti workers, the right to organize syndicates or unions to protect their interests, improve their financial and social conditions and to represent them.
Sections two and three regulate the provisions for collective work contracts and disputes respectively.
Work Inspection and Penalties: Chapter Six of the law deals with the periodic inspections to be conducted by the concerned authorities in the relevant work places to ensure the implementation of this law and provisions of penalties stipulated for various violations.
Final Provisions: Chapter Seven (Article 143-150) describe the procedures to be followed in the institution of lawsuits against the disputes or differences as per the provisions of this law and further the procedure to be adopted by the Minister to ensure the effective implementation and enforceability of the law.
The lawsuits filed by the worker after the expiry of one year from the date of termination of the contract shall not be entertained. The law suits filed under this law will be exempted from the court fees.
Prior to the lawsuit, the worker shall submit an application before the Ministry of Social Affairs and Labor, in order to settle the matter they shall summon the opposite party and in case the Ministry is unable to settle the matter amicably, refer the case to the Court of First Instance for settlement. The labor matters shall be heard in summary manner.
For further details please contact:
The Law Firm of Labeed Abdal, Kuwait. Web: www.lalaw.com.kw//html. Email: info@lalaw.com.kw Blog: thelawfirmoflabeedabdal.blogspot.com
(No. 6 of 2010)
The old Private Sector Labor Law has been replaced by the new law with radical changes in the basic provisions, came into force on 21st February 2010.
The major amendments are as follows;
Employment of Juveniles: Section 3 of chapter two of the law (Article 19-21) stipulates the minimum age required for an employment in Kuwait as 15 years. Which allow the employees between the age of 15 and 18 to work in a profession or industry, that are not classified as hazardous or harmful to their health and they should undergone periodic medical examinations. They shall work for maximum of six hours a day, with a break of one hour after continuous four hours of work and without overtime.
Employment of women: Section 4 (Articles 22-26) narrates the provisions regulates the employment of women. It is prohibited to employ women during night from 10.00 PM to 7.00 AM except in hospitals, sanatoriums, private treatment homes, etc., with the prior sanction of the Minister. The employer shall provide them with all security requirements including the transportation means to and from the workplace.
The women are prohibited to be employed in hazardous or arduous works, which are injurious to health and in jobs that violates morals or exploit her femininity. No women shall be compelled to work in any establishment, provides services for men only.
A pregnant employee is entitled to a paid maternity leave for 70 days and eligible for a leave for four months without salary after her delivery.
A working woman is eligible for same remuneration of a man, performing same work.
Employment contracts: Anyone who completed the age of 15 years shall be eligible to enter into an employment contract. The contracts for specific duration shall not exceed five years and not less than one year. Such contracts shall be deemed renewed for a similar period with same conditions, unless both parties agree to renew it under other conditions.
The remuneration shall not be reduced during the validity period and any agreement to the contrary shall be deemed null and void.
Obligations and Penalties: The probation period of a worker shall not exceed 100 working days. Either party may terminate the contract during this period without notice. In case the contract is terminated by the employer, the employee shall be eligible for the end of service benefit proportionate to his period of work.
The employer, who employs his workers in Government projects or in remote areas, shall be obliged to provide them free accommodation / accommodation allowance and free transportation facilities.
The employer shall affix a table of violations and the corresponding penalties, which is subject to the review and approval of the Ministry, in a conspicuous place in the work place. No employee shall be punished without giving him a chance to being heard. Deduction of the penalty from his remuneration shall not exceed five days in a month.
The worker may be suspended from the work for a maximum term of ten days during the investigation and in case the employee held not liable for the violation, he shall be paid his remuneration for the period of suspension.
The amounts deducted from the remuneration of the workers shall be kept is a separate fund, which is allocated for the benefit of the social, economic and cultural matters of the workers.
Termination and End of Service Benefit: Section three (Art.41-53) deals with the various provisions regarding termination of work contract and end of service benefits.
The employer may terminate the service of a worker without notice, compensation or benefit in the following events:
If the worker has committed a mistake that resulted in a large loss to the employer.
If it was found that the worker obtained the employment through cheating or fraud.
If the worker disclosed the secrets related to the establishment which caused or would have caused real losses.
An employee can be dismissed in the following grounds provided it shall not deny his end of service benefits:
If he found guilty of a crime that relates to honor, trust or morals.
If he committed an act against the public morals at the workplace.
If he assaulted the colleagues, employer or deputy during work.
If he breached or failed to abide by any of the obligations, imposed on him by the contract and the provisions of this law.
If he is found to have repeatedly violated the instructions of the employer.
The employee shall entitled to challenge such suspensions before the labor department and in case it is found in the final verdict that the employer arbitrarily dismissed him, will be eligible for the end of service benefit and a compensation for material and moral damages.
If an employee is absent from the job for seven consecutive days or any twenty days in a year, he shall be considered as resigned from the service and will be eligible for the benefits accordingly.
In case the worker is imprisoned due to an accusation by the employer and he is detained for a particular period and he shall be considered as suspended for such period. The employer cannot terminate his contract prior to the conviction by the final verdict of the court. The employee is entitled for the salary of such period and a fair compensation as estimated by the court upon acquittal.
The both parties shall have the right to terminate the contract by giving a three months notice to the opposite party in case of workers earning monthly salary and one month notice in case of other workers. The party initiates the termination obliged to pay the compensation equal to the remuneration for the same term in lieu of the notice period to the other party.
In the case of termination by the employer, the worker shall have right to be absent for one day per week to search for another job with salary provided he should notify such absence in advance to the employer at least one day.
The service of an employee shall not terminate without any justification or as a result of his activity in the syndicate or a claim of his legal rights as per the provisions of this law or for a reason of gender, race or religion.
Article 48 reveals that the worker shall have right to terminate the contract without notice and shall be entitled to the end of service benefits in the following cases:
If the employer does not comply with the terms of contract or the provisions of the law.
If the worker was assaulted or provocated by the employer or his deputy.
If continuing work will endanger his/her safety and health pursuant to the decision of the medical arbitration committee.
If the employer or his deputy committed fraud or cheating with regard to work conditions upon signing the contract.
If the employer has accused the worker of committing a punishable act and aquitted by the final verdict.
If the employer or his deputy commits an act, which violates public morals against the worker.
Article 49 says the contract shall be terminated upon the death or the proven incapability of the worker to perform his work supported with the documentary evidence issued by the competent medical board.
Article 50 provides the contract shall be deemed terminated when the establishment is finally declared bankrupt or it is permanently closed. In the event of disposal, merger, transfer of ownership by inheritance or donation, the employment contracts shall remain valid with the same conditions.
End of service benefit: The worker shall be entitled for an end of service benefit as follows:
Ten days remuneration for each of the first five years and 15 days each for remaining years with the limit of an amount not exceeding one year total salary for the workers, paid on hourly, daily, weekly or piece work basis.
Fifteen days remuneration for each of the first five years and one month remuneration each for the rest with the limit of one and a half year salary for the employees who are paid on monthly basis.
The worker shall be entitled for full end of service benefits in the following cases:
If the employer terminates the contract.
If the duration of the contract expired without being renewed.
If the termination is as per the provisions of Articles 48, 49 and 50.
If the female worker terminates her contract within one year of the marriage.
A worker , who terminate the contract with indefinite term shall entitled for half of the indemnity in case of his service is more than three years and less than five years, two third in case of the service more than five years and less than ten years and entire benefit for those having more than ten years service. The worker terminates his service shall be eligible for an end of service certificate from the employer.
The remuneration: The remuneration means the basic pay the worker receives or should receive consideration of his work, which includes the payments made to the worker on periodic basis such as bonus, benefits, allowances, grants, endowments etc. the payment shall not be delayed for more than seven days from the due date. The payment shall be through the employee’s bank account and one copy of the statement to be submitted before the Ministry of Social Affairs and Labor.
No employer shall be allowed to transfer a worker, who is paid on monthly basis to another category without his written consent. No deductions shall be allowed more than ten percent for the loans or debts due to the employer or twenty five percent for the debt of alimony provided the alimony debt shall have priority over the other debts.
The calculation of the workers entitlements shall be made on the basis of the last remuneration received by him and his remuneration may not be reduced for any reason during the period of service.
Working hours: it is forbidden to allow workers to work more than 48 hours a week or 8 hours a day provided he shall not be required to work for more than five consecutive hours without a break for one hour, not included in the working hours. The working hours during the month of Ramadan shall be 36 hours per week.
The workers may be required to work overtime in necessity and the overtime hours shall not exceeds two hours a day and 180 hours a year, three days a week or 90 days a year. The overtime pay shall be 125% of his normal salary.
He shall be entitled for the paid weekend off for 24 continuous hours after every six working days. He shall be eligible for a 50% increase over his normal salary for the overtime hours along with a compensatory day off.
Article 68 provides the worker the official holidays for 13 days per year and he shall be entitled to a double remuneration and an additional day off, in case he required to work those holidays.
Sick leave: A worker shall be entitled for sick leaves per year on the basis of medical reports issued by the doctor, who is appointed by the employer or of the Government medical center as follows:
15 days – full pay 10 days – three fourth of the pay 10 days – half pay 10 days - quarter pay 30 days – without pay
Annual leave: The worker shall be entitled to a 30 days paid annual leave excluding the official holidays and sick leaves. He is eligible for the annual leave after nine months of his service. He shall be paid for his annual leave in advance.
The worker shall be entitled for an encashment for his accumulated annual leaves upon the expiry / termination of the contract.
The employee shall not waive his annual leave with or without compensation. The employer can recover the amount paid to a worker for the annual leave, in case he found the worker had worked for another employer during the leave.
Then employer may grand the worker a paid academic leave to obtain a higher degree in his work field, provided he shall work for the employer for an equal term of the academic leave should not exceed five years. He shall be liable to repay such remuneration in case of violation of this clause.
The worker is entitled for a paid compassionate leave for three days in connection with the death of his first/second degree relative. A Muslim widow is entitled for paid leave for four months and ten days and a non-Muslim for 21days from the death of her husband.
Safety and Occupational Health: Part One of Section Four (Article 80-88) describe the rules of safety and occupational health. The employer is obliged to take all necessary safety measures and precautions to protect his workers, machines, materials, visitors against work risk and the workers from the health damage and occupational diseases.
In case of a worker met with an accident, which took place by cause of or during the work or while travelling to or from the work, the employer shall immediately report the incident to the nearest Police Station, nearest Labor department and Public Institution for Social Security or the relevant Insurance company. The employer shall bear all the cost of treatment of such worker.
The worker suffers a work injury or occupational disease shall be entitled for a full remuneration throughout the period of his treatment as recommended by the doctor. In case the treatment exceeds six months, he shall be entitled for half salary until complete recovery or proven disabled or dead. The worker or hid dependants shall have right to claim for compensation for such injury or diseases.
Collective Work Relation: Chapter Five of the deals with the Collective work relations. Section one of this chapter provides the Kuwaiti workers, the right to organize syndicates or unions to protect their interests, improve their financial and social conditions and to represent them.
Sections two and three regulate the provisions for collective work contracts and disputes respectively.
Work Inspection and Penalties: Chapter Six of the law deals with the periodic inspections to be conducted by the concerned authorities in the relevant work places to ensure the implementation of this law and provisions of penalties stipulated for various violations.
Final Provisions: Chapter Seven (Article 143-150) describe the procedures to be followed in the institution of lawsuits against the disputes or differences as per the provisions of this law and further the procedure to be adopted by the Minister to ensure the effective implementation and enforceability of the law.
The lawsuits filed by the worker after the expiry of one year from the date of termination of the contract shall not be entertained. The law suits filed under this law will be exempted from the court fees.
Prior to the lawsuit, the worker shall submit an application before the Ministry of Social Affairs and Labor, in order to settle the matter they shall summon the opposite party and in case the Ministry is unable to settle the matter amicably, refer the case to the Court of First Instance for settlement. The labor matters shall be heard in summary manner.
For further details please contact:
The Law Firm of Labeed Abdal, Kuwait. Web: www.lalaw.com.kw//html. Email: info@lalaw.com.kw Blog: thelawfirmoflabeedabdal.blogspot.com
Monday 24 August 2009
The Law decree Number 2 of 2009 to enhance the state economical steablity in Kuwait
In order to safeguard the state economy from the adverse effects of global recession, the State of Kuwait has taken some effectual steps by passing Law decree No.2/2009 on enhancing the state economic stability on 2nd April 2009 in line with the Central Bank of Kuwait’s recommendations.
The beneficiaries of the Law are the Kuwaiti banks and the investment companies up to the prescribed extent. The executive regulations define the procedures to be followed in the implementation of this enactment.
Article 2 obliged the banks to take all necessary measures to ensure the collection of dues and obtaining the securities related to the credit facilities and financing portfolio, that the State will guarantee the amount of deficit and to reduce the size of the deficit proportionally.
The State may guarantee the deficit in the credit facilities portfolio, financial investment and real estate investment portfolios, outstanding with banks as of 31st December 2008, for fifteen years. The banks shall comply with terms and controls imposed by CBK regarding the disposal of the components of the above portfolios, covered by such guarantee.
CBK, on behalf of the State, shall issue a guarantee policy for each bank and such banks shall take effective measures to treat their deficit in order to reduce the value of guarantee annually at the rate of 8% p.a, with effect from 31st December 2011. The banks shall pay an annual guarantee issuance commission at the rate of 1% p.a at the end of each year. This will be credited to the State Public Reserve.
In case any bank is unable to mobilize capital to meet its financial requirements, Investment Public Authority (IPA), may purchase bonds issued by bank bound to be converted into shares or subscribe to preferred shares or any other financial instrument as per Islamic Shari’a in order to support the rights of shareholders.
Article 8 stipulated The state shall guarantee 50% of new finance provided by local banks to productive local business sectors, to be used locally, up to a limit of KD.4 Billion for both 2009 and 2010 subject to certain conditions.
Article 9 stated that in case of debtor’s default in repayment of new finance, the State guarantee amount shall not exceeding 50 % of the net amount. The Ministry of Finance may, on behalf of the State, issue bonds and sukuk covering the value of such guarantee, valid less than five years.
The Investment Companies shall be classified as per their financial situation. CBK may nominate one or more experts to ascertain the company’s financial condition and to report the recommendations and remedies on company’s expense. Such assessment shall be considered as the company’s real financial situation for the purpose of this law.
CBK shall prescribe the proper actions for such needy and qualified companies as follows:
1. The State guarantee 50% of new finance extended by the local banks for 2009 and 2010, to be utilized for the purpose of:
· Settlement of its outstanding liabilities as of 31st December 2008 to all local parties except local banks.
· Rescheduling its debts to foreign banks and financial institutions, upon the condition that cash settlement shall not exceed 25% of total debt, the rest to be rescheduled for suitable duration and terms.
2. Providing proper support to the company from its shareholders or through Investment Public Authority (IPA) by facilitating subordinated loans or finance or issuance of convertible or non-convertible bonds or preferred shares or other financial instruments as per Islamic Shari’a.
CBK shall assign the manager bank to conduct rescheduling the debts of companies, whose situation treatment approach requires so. The manager bank shall coordinate and negotiate with the creditor banks, financial institutions and other creditors to determine the financial requirement and the collaterals it shall submit in order to reschedule the debts.
The company shall obtain the prior approval of the concerned general assembly to implement the treatment measures and actions to improve its financial situation such as redeploying national work force, provided the strength of national manpower shall not be less than 50%, reduction of expenses including allocations for top management, remuneration, bonuses etc., change in technical and administrative structure, merger with other company / companies etc.
Chapter II deals with the judicial procedures as per the Law. A special circuit shall be established at the Court of appeal with exclusive jurisdiction to hear the restructuring requests in summary manner. CBK or the company, facing difficulties shall put up the request for restructure before the Circuit. The Circuit may stay all the civil and commercial proceedings and execution measures relating to company’s liabilities, until its merits are adjudicated by the circuit of competent jurisdiction.
Upon receipt of notice regarding stay any party, having interest on it shall submit their reasonable and causative grievance before circuit of competent jurisdiction within fifteen days. The circuit shall render its judgment on the grievance, cancelling or continuing the stay, which shall be final and unchallengeable.
Upon the acceptance of the request of restructuring as per Article 17 of the law, the circuit shall study the financial situation of the company. CBK shall submit a report, based on the opinion of the experts, appointed by CBK to the circuit within 4 months. The circuit shall have a session to hear the merits of the request.
The judgment shall be pronounced on the merits of the request, ratifying the restructuring plan; continue staying all the judicial and executive actions until the elapse of the period specified for execution of the restructuring plan. The judgment shall be considered as final and unchallengeable with an objective to end the disputes at once without prolong the matter due to unwanted formalities.
CBK shall supervise and monitor the execution of company’s restructuring plan. If the company fails to comply with the plan, CBK shall refer the subject to the circuit, in order to render a judgment declaring the plan as null and void, including cancellation of the stay order. Each party having interest shall take necessary actions, which they deemed just and appropriate.
With an objective to protect the public fund, the Law decree provides strict penalties and punishments for the unscrupulous people who willfully misuse the provisions of this law. Without prejudice to any penalties stipulated by any other laws, anybody hiding the truth or making up a debt or document, or any disposal, with malicious intention to benefiting the provisions of this Law decree, shall be punished with imprisonment for a term not exceeding five years and with a fine not exceeding KD.5000.
Anyone misleading the Judiciary or any competent authority, fabricating any wrong information with malicious intention to benefiting the provisions of this Law decree or anyone disclosing or exploiting any information, that came to his knowledge regarding the application of the provisions of this Law decree, shall be punished with imprisonment for a term not exceeding one year or with a fine not exceeding KD.3000 or with both. The convict shall be liable to be expelled from the service, if he/she is a public servant.
The general and final provisions (Chapter 5) provided that a specific purpose company shall be established for issuing the sukuk as per the procedures stated in the executive regulations. The maximum amount to be used for the purpose of applying the provisions of Law decree shall be KD.1.5 billion and all necessary expenses, provided from the State’s public reserve.
Beneficiary parties shall submit a declaration as per Article 30 of the Law decree, to the Ministry of Commerce and Industry, within three months.
The Government shall submit half yearly / yearly detailed reports to National Assembly and State Audit Bureau on the matter.
For More Information ,Yoy can contact :
The Law Firm Of Labeed Abdal
WEBSITE: WWW.LALAW.COM.KW
EMAIL: INFO@LALAW.COM.KW
The beneficiaries of the Law are the Kuwaiti banks and the investment companies up to the prescribed extent. The executive regulations define the procedures to be followed in the implementation of this enactment.
Article 2 obliged the banks to take all necessary measures to ensure the collection of dues and obtaining the securities related to the credit facilities and financing portfolio, that the State will guarantee the amount of deficit and to reduce the size of the deficit proportionally.
The State may guarantee the deficit in the credit facilities portfolio, financial investment and real estate investment portfolios, outstanding with banks as of 31st December 2008, for fifteen years. The banks shall comply with terms and controls imposed by CBK regarding the disposal of the components of the above portfolios, covered by such guarantee.
CBK, on behalf of the State, shall issue a guarantee policy for each bank and such banks shall take effective measures to treat their deficit in order to reduce the value of guarantee annually at the rate of 8% p.a, with effect from 31st December 2011. The banks shall pay an annual guarantee issuance commission at the rate of 1% p.a at the end of each year. This will be credited to the State Public Reserve.
In case any bank is unable to mobilize capital to meet its financial requirements, Investment Public Authority (IPA), may purchase bonds issued by bank bound to be converted into shares or subscribe to preferred shares or any other financial instrument as per Islamic Shari’a in order to support the rights of shareholders.
Article 8 stipulated The state shall guarantee 50% of new finance provided by local banks to productive local business sectors, to be used locally, up to a limit of KD.4 Billion for both 2009 and 2010 subject to certain conditions.
Article 9 stated that in case of debtor’s default in repayment of new finance, the State guarantee amount shall not exceeding 50 % of the net amount. The Ministry of Finance may, on behalf of the State, issue bonds and sukuk covering the value of such guarantee, valid less than five years.
The Investment Companies shall be classified as per their financial situation. CBK may nominate one or more experts to ascertain the company’s financial condition and to report the recommendations and remedies on company’s expense. Such assessment shall be considered as the company’s real financial situation for the purpose of this law.
CBK shall prescribe the proper actions for such needy and qualified companies as follows:
1. The State guarantee 50% of new finance extended by the local banks for 2009 and 2010, to be utilized for the purpose of:
· Settlement of its outstanding liabilities as of 31st December 2008 to all local parties except local banks.
· Rescheduling its debts to foreign banks and financial institutions, upon the condition that cash settlement shall not exceed 25% of total debt, the rest to be rescheduled for suitable duration and terms.
2. Providing proper support to the company from its shareholders or through Investment Public Authority (IPA) by facilitating subordinated loans or finance or issuance of convertible or non-convertible bonds or preferred shares or other financial instruments as per Islamic Shari’a.
CBK shall assign the manager bank to conduct rescheduling the debts of companies, whose situation treatment approach requires so. The manager bank shall coordinate and negotiate with the creditor banks, financial institutions and other creditors to determine the financial requirement and the collaterals it shall submit in order to reschedule the debts.
The company shall obtain the prior approval of the concerned general assembly to implement the treatment measures and actions to improve its financial situation such as redeploying national work force, provided the strength of national manpower shall not be less than 50%, reduction of expenses including allocations for top management, remuneration, bonuses etc., change in technical and administrative structure, merger with other company / companies etc.
Chapter II deals with the judicial procedures as per the Law. A special circuit shall be established at the Court of appeal with exclusive jurisdiction to hear the restructuring requests in summary manner. CBK or the company, facing difficulties shall put up the request for restructure before the Circuit. The Circuit may stay all the civil and commercial proceedings and execution measures relating to company’s liabilities, until its merits are adjudicated by the circuit of competent jurisdiction.
Upon receipt of notice regarding stay any party, having interest on it shall submit their reasonable and causative grievance before circuit of competent jurisdiction within fifteen days. The circuit shall render its judgment on the grievance, cancelling or continuing the stay, which shall be final and unchallengeable.
Upon the acceptance of the request of restructuring as per Article 17 of the law, the circuit shall study the financial situation of the company. CBK shall submit a report, based on the opinion of the experts, appointed by CBK to the circuit within 4 months. The circuit shall have a session to hear the merits of the request.
The judgment shall be pronounced on the merits of the request, ratifying the restructuring plan; continue staying all the judicial and executive actions until the elapse of the period specified for execution of the restructuring plan. The judgment shall be considered as final and unchallengeable with an objective to end the disputes at once without prolong the matter due to unwanted formalities.
CBK shall supervise and monitor the execution of company’s restructuring plan. If the company fails to comply with the plan, CBK shall refer the subject to the circuit, in order to render a judgment declaring the plan as null and void, including cancellation of the stay order. Each party having interest shall take necessary actions, which they deemed just and appropriate.
With an objective to protect the public fund, the Law decree provides strict penalties and punishments for the unscrupulous people who willfully misuse the provisions of this law. Without prejudice to any penalties stipulated by any other laws, anybody hiding the truth or making up a debt or document, or any disposal, with malicious intention to benefiting the provisions of this Law decree, shall be punished with imprisonment for a term not exceeding five years and with a fine not exceeding KD.5000.
Anyone misleading the Judiciary or any competent authority, fabricating any wrong information with malicious intention to benefiting the provisions of this Law decree or anyone disclosing or exploiting any information, that came to his knowledge regarding the application of the provisions of this Law decree, shall be punished with imprisonment for a term not exceeding one year or with a fine not exceeding KD.3000 or with both. The convict shall be liable to be expelled from the service, if he/she is a public servant.
The general and final provisions (Chapter 5) provided that a specific purpose company shall be established for issuing the sukuk as per the procedures stated in the executive regulations. The maximum amount to be used for the purpose of applying the provisions of Law decree shall be KD.1.5 billion and all necessary expenses, provided from the State’s public reserve.
Beneficiary parties shall submit a declaration as per Article 30 of the Law decree, to the Ministry of Commerce and Industry, within three months.
The Government shall submit half yearly / yearly detailed reports to National Assembly and State Audit Bureau on the matter.
For More Information ,Yoy can contact :
The Law Firm Of Labeed Abdal
WEBSITE: WWW.LALAW.COM.KW
EMAIL: INFO@LALAW.COM.KW
The Commercial Agency law in Kuwait
The basic premise for carrying out business in Kuwait is identified in the Articles 23 and 24 of the Kuwaiti Commercial Code. Article 23 provides that non-Kuwaitis can not engage in the commercial activities in Kuwait without having a Kuwaiti partner whose equity holding is at least 51%. Article 24 provides that a foreign company can not establish a branch in Kuwait and it may not engage in business activities in Kuwait except through a Kuwaiti agent.
The following ways define how a foreign individual or entity may enter the market and carry out business in Kuwait:• Establishing a company • Concluding a joint venture agreement • Appointing a Kuwaiti commercial agent • Appointing a commercial representative
For all Commercial activities, business licenses are issued by the Ministry of Commerce & Industry (MCI) to Kuwaiti nationals only, Kuwaiti Companies and in some cases to GCC nationals and Companies. All licenses require periodical renewal, normally every two years.
Commercial Agency:
Only Kuwaiti individuals or firms are eligible to functioning as commercial agents in Kuwait, while foreign individuals or firms, other than GCC nationals, are not allowed to carry on commercial activities in the country except through an agent. All arrangements between a foreign entity and its local agent are governed by Articles 260 to296 of the Commercial Code.
A commercial agent can not engage in a non-commercial activity without a specific agreement, even he is an absolute agent of the principal. The consideration of an agency agreement shall be remuneration, payable only at the conclusion of the transaction. The agent is liable for any damage, incurred to the principal by the contravention of his instructions. The agent shall be held responsible for the damage caused to the things he keeps on principal’s behalf, unless the reason for damage is beyond his control such as natural calamity, vise major etc. At the same time the agent is not liable to insure such things without the specific instruction of the principal. In case he observes any damage to the things in transit, he shall take appropriate actions to protect and dispose such things to minimize loss to the principal. The agent shall furnish the periodical report on the progress of the agency performance with relevant statement of accounts to the principal. In case any false information or statements were found, the principal may reject such transactions and the agent will not be entitled for remuneration for the same. The agent shall have privilege over the goods/things consigned, delivered or deposited with him by the principal and remain in his possession, to secure his remuneration and other amounts due to him, except the legal expenses and the Government dues. The address of the agent shall be treated as the principal’s for the purpose of serving notices of official affairs and legal actions.
The code defines the general rules governing different types of commercial agencies.
1. Contract Agency: A contract agency is a contract, by which a person undertakes to continuously encourage and negotiate the conclusion of transaction in a specific territory independently and on his own cost, for the benefit of principal for remuneration. Principal can appoint more than one agency in a territory with same activity but the agent cannot be an agent of different companies with same activity in the territory.
The agency contract must be written and it shall specify the details of the agency limit, the remuneration, term, the territory, and relevant trademarks. If the agent should establish showrooms, workshops, or warehouse facilities, the contract must be valid for a period not less than five years.
The contract agent shall be eligible for remuneration for the transactions duly concluded by him or the principal himself too. The agent shall undertake to preserve the right of the principal at any cost.
The principal may not terminate / abstain from renew the agency contract without a fault from the part of agent; otherwise he shall be liable to pay compensation to the agent. Any agreement contradictory to this provision will be void-ab-intio. Likewise the principal shall be eligible to be compensated in case an agent abandons the contract during the term without reasonable cause.
Moreover in case the principal substitutes the contract agent with a new agent, the new agent shall jointly be held responsible with principal to compensate the former agent.
2. Distributorship Agency: A local agent may act as the distributor of the principal’s product in a defined territory and in return for a percentage of the profit as per Article (286) of the Kuwaiti Commercial Code. If the Agent is the sole distributor in the whole country, distributorships are governed by the same general rules as contracts agencies.
3. Commission Agency: The commission agent shall undertake to carry out the business activity in his own name on behalf of the principal in consideration of remuneration, which is not subject to the estimation of the judge. The agent shall not disclose the principal’s name without authorization.
If the commission agent sells the goods for a price less than the purchase price or the price fixed by the principal, the principal can reject the transaction by giving immediate notification of rejection to the agent.
In case the agent, for selling, grant a respite for payment or allow payment by installments without authorization, the principal can claim the immediate full payment from the agent, unless the situation and usage require so. Likewise the agent sells for immediate payment against the principal’s instruction to sell for a term; the principal cannot require the agent for immediate payment, provided the agent shall pay the price on the basis of sale of a term.
The commission agent may not institute himself as a second party in a transaction without prior authorization; otherwise he will not be eligible for remuneration for the same transaction. The agent shall be directly liable to the third party with whom he concludes a contract and vise versa.
If the commission agent for selling is declared bankrupt before the realization of payment from the buyer, the principal may request the buyer to pay him directly and in case of a commission agent for buying is declared bankrupt before the delivery of the things purchased, the principal may request the seller to deliver the things directly to him.
A commission agent instituting himself as a guarantor shall be eligible for a special remuneration.
To open a branch in Kuwait, a foreign entity must enter as Principal in an agency agreement with a Kuwaiti agent. Under such an arrangement, the agent is merely the foreign entity’s legal representative in the country and does little more than take care of licensing formalities, obtain visas for the principal’s executives and employees, and represent the principal officially. The agent will expect a fee for his sponsorship and the use of his licenses.
Registration Procedures:
An agency agreement is not enforceable under Kuwaiti law unless it has been registered in the Commercial Agencies Register at the Ministry of Commerce and Industry (MCI). Application for registration must be made within two months of the agency being created. Before applying to the MCI, the agreement must be registered with the Kuwait Chamber of Commerce and Industry (KCCI).
The application for registration can only be made by the Kuwaiti agent. It must be made in two original copies of the official MCI form and must be accompanied by
- An original copy of the agency agreement
- A translation of the agreement into Arabic
- A copy of the agent’s commercial licenses
- A copy of the agent’s nationality document or registration in the
Commercial registry
- A certificate of registration from the KCCI
If the agency agreement was executed overseas, the original must be attested at the principal’s location by an official authority and the Kuwaiti consulate. Where it was executed in Kuwait, it must be notarized by a Kuwaiti Notary Public.
Upon registration, the MCI gives the agent a signed and stamped copy of the application, and advertises the registration in the official gazette. Amendments to the agreement must also be registered and when an agency terminates it must be removed from the register. The register may be searched by the names of agents, the names of principals and the trade names of goods.
Review and comments by the Law Firm of Labeed Abdal.
Please feel to contact us for further queries and clarifications.
The Law Firm of Labeed Abdal,Kuwait.
Website: http://www.lalaw.com.kw/
E-mail: info@lalaw.com.kw
Scope of services our law firm can be offered;
For an entrepreneur seeks an agent in Kuwait.
Drafting and finalization of agency agreements.
Assistance in registration of agency agreements.
Periodic audit and advice on legal requirements.
Negotiation with third party in legal issues.
Represent Principal in relevant offices of Ministries and other authorities as required.
Assistance in arbitration/litigation in case of necessity.
Overall legal supervision, support and assistance on business activities to ensure the absolute protection of client’s interest in Kuwait.
THE INCOME TAX SYSTEM IN KUWAIT
There is no personal income tax system prevail in Kuwait either on salaries or on income from business activities. More over there are no other taxes of any consequence, such as sales or value added taxes, property taxes etc. which means the individuals (Kuwaiti or expatriates) and Kuwaiti companies are not subject to income tax. The Kuwaiti companies with non-Kuwaiti partners or shareholders are not coming within the purview of Income tax law, unless those shareholders or partners are foreign companies, in which case the tax is imposed on the foreign company's share of earnings only. A foreign company engaged in commercial activities in Kuwait, directly or indirectly is liable to pay income tax. Corporate income tax is not levied on the income of companies incorporated in the Gulf Co-operation Council (GCC) countries, wholly-owned by GCC nationals from their operations in Kuwait. However, GCC companies with foreign ownership would be subject to taxation to the extent of the foreign ownership.
The taxation on income in Kuwait governs by the following two enactments, Kuwait Income Tax Rules (Decree no. 3 of 1955) and Law no. 23 of 1961, which regulates the income of companies in the designated area.
The Kuwait National Assembly passed a law on 26 December 2007, that amends several provisions of Income Tax Decree No. 3 of 1955 .Which is a major amendment to Kuwait's tax regulations affecting foreign companies, doing business in Kuwait, became law upon the publication in the official Gazette on February 3, 2008.
The most important change is a substantial reduction in the income tax rate on net profits of foreign entities doing business in Kuwait. The new tax law stipulate a flat rate of 15% instead of the current rate, a range of 5% to 55%, depends on the earnings above KD.5,250/-. The 15% tax will be levied on the income of any entity carrying on a trade or business in Kuwait, regardless of where the company is incorporated. The new flat tax rate will result in a significant decrease in the tax liability of such foreign entities.
Besides changing the tax rate structure, the new enactment adds more specific provisions as to what are the taxable heads of income. Earnings from any of the following activities are subject to the tax:
Profits derived from a contract executed partially or fully in Kuwait;
Income derived from the sale, lease or granting franchise to use or exploit any trademark, patent or copyright;
Commissions due or received from representations or trade brokerage;
Profits derived from industrial and commercial activities;
Gains derived from the disposal of assets;
Profits derived from the purchase and sale of goods or property or rights thereto and from the opening of a permanent office in Kuwait where contracts of sale and purchase are executed;
Profits from the leasing of property; and
Profits derived from the provision of services.
Further, the amendment clarifies that income derived by foreign entities from the sale of shares on the Kuwait Stock Exchange will be exempted from income tax in Kuwait, irrespective of whether it is directly made or via investment portfolios or funds.
The new legislation includes clear guidance for foreign entities to assessing the sources of taxable income. The amendment further clarifies that taxable income is determined after deducting all expenses and costs incurred, including the following;
Salaries, wages, bonuses and end-of-service indemnity, etc.;
Taxes and fees, except for income tax due under the law;
Depreciation of assets in accordance with the rates specified in the executive regulation;
Grants, donations and subsidies paid to public or licensed private Kuwaiti entities according to the rates specified in the executive regulation; and
Head office expenses as specified in the executive regulation.
The following are non-deductible expenses:
Personal and private expenses and any charges not related to the taxable activities or not for the purpose of generating profits;
Penal fines; and
Reimbursed losses.
The law also imposes a limit on a company's ability to carry forward the losses, which are hereby limited to three years, provided the compulsory suspension periods from practicing business will be exempted. Under the previous tax law, companies were able to carry forward the losses for an unlimited period of time.
The enactment creates the provision for the limitation of this tax after the elapse of five years from the date of submission of tax returns by the entity or from the date when the tax authorities become aware of the facts, not disclosed or hidden by the entity to evade their tax obligation. Further, the period of limitation will expire upon advising the incorporated entity of payment of tax or of the resolution of Tax Objections Committee by registered mail indication the tax amount.The Georgian calendar year is used for taxation purposes. An eighteen month accounting period is allowed initially, thereafter twelve-month accounting periods are required. The deadline for filing tax declarations is the fifteenth day of the fourth month following the end of the taxable period. Tax is payable in four equal installments on the fifteenth day of the fourth, sixth, ninth and twelfth months following the end of the taxable period. When filing audited accounts an extension of a maximum of 75 days may be granted. No tax payment can be made until the accounts are filed. This applies particularly when and extension has been granted. However, if the payment has been left to the last moment it must be in lump sum, no installments will be allowed. The method of payment will be cash or a certified cheque drawn on a Kuwaiti bank.
Article 9 of the Tax Decree provides that the income tax statement shall be certified by the firms of auditors which are approved by the Director of Taxes in this regard. The income tax declaration and supporting financial statements must be in Arabic and are to be certified by an accountant, registered with the Ministry of Commerce and Industry.
The tax authorities shall have powers to require any foreign entity to review the entries in the tax returns and to compel to provide supporting documents. The authorities have discretion to approve, adjust or disregard the expenses.
The law further clarifies that the profits of Kuwaiti commercial agents are not subject to taxation under the law and that only commissions paid to foreign companies as a result of an agency agreement are subject to tax. A Kuwaiti commercial agent's earnings are not taxed as long as the profits arise from the sale of goods for the agent's own account.
The law provides a period of six months from the date of publication for the Ministry of Finance to issue the executive regulations for implementation.Review and comments by The Law Firm of Labeed Abdal, Kuwait.
For further queries and clarifications, please feel free to contact:
The Law Firm of Labeed Abdal,
Website: http://www.lalaw.com.kw
E-mail: info@lalaw.com.kw
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