Decree-Law for Government Sukuk... Authorizes Issuance in Dinar and Foreign Currencies - Sarmad

Today, Sunday, Decree-Law No. 90 of 2026 concerning Government Sukuk was issued in the Official Gazette, “Kuwait Today.” The decree comprises 35 articles regulating the issuance of Sukuk in Kuwaiti Dinars and foreign currencies, their offering through public or private subscriptions, and their management and trading locally and internationally. It also links the decree to the provisions of Decree-Law No. 60 of 2025 concerning Sovereign Financing.

The decree permits the issuance of Sukuk against specific assets owned by the State, as determined by the Council of Ministers, provided that these assets are not designated for public benefit, nor are they natural resources and their revenues or public utilities. It allows for the full or partial replacement of assets during the Sukuk’s tenure, on condition that the equivalent value of the issued Sukuk is maintained.

The decree stipulates the establishment of a wholly State-owned special purpose vehicle (SPV) responsible for acquiring and managing Sukuk assets, pooling them into equal-value units, issuing Sukuk, and conducting related issuance activities.

The company shall take the form of a single-shareholder company, with its capital funded by the State, represented by the Public Reserve Fund. There is no requirement for the company’s capital to be proportional to the total value of issued Sukuk or the value of its assets.

With the approval of the Minister of Finance, the company may appoint a custodian and an investment manager. It may also delegate one or more entities to carry out the issuance, offering, and management of Sukuk denominated in Kuwaiti Dinars or foreign currencies, either within or outside Kuwait.

Issuances in Dinars and Foreign Currencies

The decree requires prior written approval from the Central Bank of Kuwait for issuing Sukuk within the State if they are denominated in Kuwaiti Dinars. Issuance within the State in foreign currencies requires coordination with the Central Bank and other relevant authorities.

Natural and legal persons are permitted to subscribe to and own Sukuk. Certain issuances may be restricted to Kuwaiti nationals, as specified in the offering circular.

The decree permits the issuance of Sukuk in all types compliant with Islamic Shariah principles, including Sukuk for leased assets ownership, Sukuk for ownership of benefits and operational rights of assets, and Sukuk for Salam, Istisna’a, Musharaka, and Mudaraba. It also allows for the issuance of more than one type within a single offering, subject to the approval of the Shariah Advisory and Supervisory Board.

Sukuk are issued with a single nominal value per offering and are paid in full upon subscription. They may be covered through public or private subscriptions, and the offering size may be increased during the offering period with the Minister’s approval, provided that the offering size does not exceed the value of the underlying Sukuk assets.

Listing and Trading

After the closure of the subscription window, allocation of Sukuk, and commencement of the SPV’s activities, the Minister may approve the listing of Government Sukuk on local capital markets for trading, or their listing on foreign capital markets, subject to the rules applicable in these markets, the conditions of the offering circular, and the rulings of the Shariah Advisory and Supervisory Board.

The Minister of Finance shall appoint a single Shariah Advisory and Supervisory Board for all special purpose vehicles. The board must comprise no fewer than three members who are Shariah jurists specialized in Islamic financial transactions jurisprudence, with at least one member being part of the Supreme Shariah Supervisory Board at the Central Bank of Kuwait.

The board is responsible for adjudicating all Shariah-related aspects concerning Sukuk, in accordance with the controls and provisions set forth in the Executive Regulations.

Exemptions for the Company

The decree exempts the special-purpose company from all taxes and fees of any kind, as well as from fees related to the transfer of sukuk assets to it, provided that such exemptions are for purposes that are complementary, necessary, or linked to its objectives, in accordance with the provisions of the decree-law. It also exempts the company from paying court fees and providing advance deposits and guarantees, as stipulated in the decree.

The decree stipulates that the Public Reserve Fund shall bear the costs of implementing the decree-law, as well as pay the capital of the special-purpose company.

The decree obligates the Council of Ministers, upon the proposal of the Minister of Finance, to issue the executive regulations and necessary decisions to implement its provisions within three months from the date of its publication in the Official Gazette.

It also stipulates that the provisions of Law No. 7 of 2010 concerning the establishment of the Capital Markets Authority and the regulation of securities activities, along with its executive regulations, shall not apply to the issuance, offering, and management of sukuk issued in accordance with the provisions of the decree-law. The decree-law shall take effect from the date of its publication in the Official Gazette.