"Commercial Concealment" Reshapes the Market... Correction or Liquidation

Companies and business owners have begun reviewing their legal structures and rectifying the status of their licenses and registered activities, while other entities are considering winding down their operations and moving toward liquidation, as the deadline for the six-month grace period following the publication of the Anti-Commercial Concealment Decree-Law in the Official Gazette nears its end. At the same time, experts told Al-Rai that the law places existing practices based on hiding the beneficial owner or using commercial licenses in a manner that does not reflect the reality of the activity under a new phase of regulation and accountability.

In this context, Mohammed Al-Qattan, Chairman of the Board of Directors of the Kuwait Association for Small and Medium Enterprises, defined commercial concealment as enabling an unlicensed person to conduct business on their own behalf. He explained that one of its most prominent forms is known as “inclusion,” where an individual not registered on the license manages the activity and controls its profits, in exchange for receiving periodic payments from the license holder. He noted that the law does not apply only to individuals; liability extends to legal entities as well, and he anticipated that its implementation would drive many businesses to restructure and regularize their status rather than close down.

For her part, entrepreneur and business consultant Aisha Al-Waili clarified that concealment is not limited to renting out licenses; it also includes obtaining a license to enable another person to conduct business, or having a project managed by another party without disclosure, as well as engaging in activities that differ from those specified in the license. She pointed out that the law covers both natural and legal persons, and includes an incentive for reporting concealment crimes by offering a reward of up to 10 percent of collected fines to anyone who provides substantial evidence leading to a final conviction.

Meanwhile, lawyer Mohammed Al-Marajeh raised the issue of the relationship between the new law and muhasasa (silent partnership) companies permitted under the Companies Law, noting that these are inherently concealed entities. He observed that certain provisions require interpretation to precisely define the boundaries between criminalized concealment and legitimate commercial partnerships.