Issuance of a Law Decree on Combating Commercial Concealment
Kuwait, Aug 2 (KUNA) -- A law decree (No. 78 of 2026) on combating commercial concealment was issued today, Sunday, aiming to address the phenomenon of conducting economic activities without obtaining the necessary licenses and to regulate the economic activity environment in a manner that ensures transparency, fairness, equal opportunity, and strengthens the state’s capacity for oversight, regulation, and revenue collection.
The explanatory memorandum for the aforementioned law decree, which comprises 14 articles, stated that economic activities are among the fundamental pillars of the state’s progress and stability, and must be conducted within an organized framework that adheres to the provisions of the law and relevant legislation, thereby achieving sustainable economic development and protecting public order and the public interest.
The memorandum noted that in recent years, some individuals prohibited from conducting economic activities without the necessary licenses have done so, leading to chaos and instability in the market and its system, which has negatively impacted the core principles underpinning the business environment.
Article One of the law decree defined the key terms it contains. Article Two prohibited any natural or legal person from conducting any economic activity within the country on their own behalf or in partnership with others, unless they hold the necessary license from the competent authority or do not exceed the scope of the granted license, particularly when such activity is conducted through a person who enables them to practice that activity. This was to affirm the principle of market regulation and prevent arbitrariness in conducting economic activities.
The same article also prohibited commercial concealment by forbidding any person from enabling another to conduct any economic activity in violation of the provisions of this law decree, whether directly or indirectly, or by any means whatsoever, including allowing the use of a trade name, license, or other means that enable the person to conduct the economic activity in violation of the law decree.
Articles Three and Four stipulated the penalties for violating the provisions of this law decree. Article Three stated that, without prejudice to any harsher penalty prescribed by the Penal Code or any other law, anyone who violates the prohibition stipulated in Article Two shall be punished with imprisonment for a term not less than one year and not exceeding three years, and a fine not less than 10,000 dinars and not exceeding 100,000 dinars, or the equivalent value of the total profits obtained, whichever is greater, or with one of these two penalties. Fines shall be multiplied according to the number of violating persons or violating activities.
Article Four stipulated that, without prejudice to any harsher penalty prescribed by the Penal Code or any other law, anyone who violates the prohibition stipulated in Article Eleven shall be punished with imprisonment for a term not exceeding six months and a fine not exceeding 10,000 dinars, or with one of these two penalties. Fines shall be multiplied according to the number of violating persons or violating activities.
Article Five affirmed the punishment of the person responsible for the actual management of the establishment if their knowledge of the violation is proven, or if the violation occurred due to their failure to fulfill the duties imposed by their management, applying the principle of actual responsibility and ensuring that those who direct and supervise the activity in question are not immune from punishment. The same article also established the liability of legal persons jointly with their employees whenever the violation is committed in the name of the legal person or for its benefit, affirming the principle of institutional accountability and ensuring that legal entities are not exploited as a legal cover for unlawful acts.
Article Six stipulated that the court must, in the event of a conviction for any of the crimes stipulated in this law decree, order the confiscation of funds and profits obtained from the crime of commercial concealment to deprive the offender of the fruits of their illegal activities, given their direct impact on achieving general and specific deterrence. The provision ensured respect for the rights of bona fide third parties and prevented any abuse in application, affirming that confiscation is limited to the proceeds of the crime, its instruments, and the equipment and means used in the illegal activity, along with the closure of the establishment, cancellation of the license, and deportation of foreigners.
Article Seven affirmed the aggravation of the penalty in cases of recidivism, stating that the prescribed penalty shall be doubled if the offender commits the crime of commercial concealment again within five years from the date the final conviction judgment becomes final, thereby reinforcing the principle of specific deterrence and increasing accountability for those who persist in repeating violations despite previous punishment.
Article Eight adopted the settlement system as a legislative option available for resolving certain violations according to specific controls and conditions, without resorting to imprisonment except in cases that necessitate it. The article authorized the relevant minister or their delegate to settle the crimes stipulated in this law decree before initiating legal proceedings before the competent court, or before dismissing the case or issuing a final judgment, in exchange for paying an amount not less than half of the maximum prescribed fine. The same article specified that acceptance of settlement requires the removal of the violation and the regularization of the legal status, and that settlement results in the extinction of the criminal case. It also affirmed that this does not prevent taking administrative deportation measures if national interest so dictates, and that settlement cannot be accepted in cases of recidivism.
Article Nine allowed anyone who contributes to discovering any of the crimes of commercial concealment stipulated in this law – other than the perpetrators – to receive a financial reward determined by a decision of the relevant minister, not exceeding 10 percent of the total value of collected fines, provided that serious evidence is submitted that can be relied upon in discovering the crime and a final conviction judgment is issued. The article also decided that the reward shall be distributed equally in case of multiple informants regarding the mentioned crimes.
Article Ten granted employees responsible for implementing the provisions of this law decree, whose designation is issued by a decision of the relevant minister or their delegate, the status of judicial police officers to enable them to perform their duties effectively.
Article Eleven affirmed the prohibition of obstructing or preventing competent employees from performing their duties under this law decree, whether by preventing them from carrying out their supervisory or inspection duties, refusing to provide required information or documents, or providing false or misleading data and information, thereby enhancing the role of regulatory authorities in enforcing the provisions of this law decree and ensuring its effectiveness.
Article Twelve stipulated that the relevant minister shall issue the necessary decisions to implement the provisions of this law decree, and Article Thirteen repealed all provisions conflicting with its provisions.
Article Fourteen stated: “The Prime Minister and the ministers, each within their respective jurisdiction, shall implement this law decree, which shall come into force six months after its publication in the Official Gazette.” (End) J.Y. / A.M.H.
