10,000 Expatriate Partners: A Loophole Unresolved by the Commercial Concealment Law

For years, Kuwaiti regulatory authorities have been dealing with the file of foreign workers holding residence permits under Article 18, who appear in commercial registers as partners or managing partners. The stance of the Public Authority for Manpower on this file has been clear and direct: a person cannot simultaneously hold the status of both “worker” and “employer.” An Article 18 worker is bound by an employment contract with an employer, which implies a subordinate relationship, whereas the status of a partner implies that he is the employer himself or one of the owners. Combining these two statuses, according to this position, constitutes a legal contradiction that cannot stand.

The problem is that this position, despite its clarity, has never been based on an explicit legal provision. It is an administrative and regulatory stance, issued through directives from the Ministry of Commerce and the Public Authority for Manpower, rather than a provision in an enacted law that can be directly referenced in the event of a dispute. According to the Authority’s data, approximately 10,000 expatriates holding Article 18 work residence permits have obtained the status of partner or managing partner, across approximately 45,000 commercial licenses.

Decree-Law No. 78 of 2026 concerning the fight against commercial concealment, issued in August 2026, presented the most suitable opportunity to settle this matter with an explicit text. The law defined commercial concealment broadly: enabling any person to engage in an economic activity prohibited to them, whether on their own behalf or in partnership with others, or circumventing the ownership ratios prescribed by law for foreigners. It prohibited any person from engaging in an economic activity without a license, and prohibited enabling others to do so by using a trade name, license, or commercial register.

However, when we search for a specific provision addressing the case of an Article 18 permit holder who works ostensibly as an employee while being a de facto partner at the same time, we do not find one. The law referenced the Expatriates Residence Law as one of its references in the preamble, meaning its drafters were aware of the residence system. Nevertheless, they did not dedicate an explicit article to this specific case, instead leaving it within a broad, vague definition that might implicitly include it if the intent to “circumvent” is proven, or exclude it if such proof is lacking.

This raises the question: Is this loophole intentional, a mistake, or a legislative failure? If it is intentional, the aim may have been to leave the door open for flexible administrative application without restricting the text to a specific case, or to avoid delving into details pertaining to the Residence Law within a general law on commercial concealment. If it is a mistake, it is an expensive one: a law carrying severe penalties (imprisonment of up to three years, fines of up to 100,000 dinars, confiscation, and deportation) deserved explicit treatment of the most common cases in the market, namely the case of 10,000 expatriates registered as partners. If it is a failure, it stems from relying on a vague definition of “circumventing ownership ratios,” which leaves the interpretation of the text to the discretion of regulatory authorities and the judiciary on a case-by-case basis, rather than providing legal certainty for business owners and investors.

The practical outcome is that a businessman or company dealing with this file finds itself today facing two separate, textually unconnected legal paths: the administrative directives of the Manpower Authority on one hand, and the new Commercial Concealment Law on the other. Between them lies an interpretive gap that has not yet been filled, at a time when the executive regulations for the new law (which does not enter into force until six months after its publication) have not yet been issued.

What is required today is not more scattered administrative directives, but an explicit legal provision—either in the anticipated executive regulations of the Commercial Concealment Law or in a subsequent amendment—that clearly settles whether combining the statuses of worker and partner under an Article 18 residence permit constitutes a form of commercial concealment or not. Legislative clarity here is not a luxury, but a guarantee of equal opportunity and a stable business environment, which the law itself states it aims to protect.