- Companies must correct beneficial owner data to avoid penalties
- Ministry introduced the measures to facilitate the auditing of company data and ensure that the information submitted by businesses matches their official records
The Ministry of Commerce and Industry has stepped up efforts to verify company ownership records in Kuwait, introducing new procedures for registering beneficial owners, reviewing company data and correcting discrepancies to ensure compliance with disclosure regulations.
The measures include requiring beneficial ownership details to be registered from the initial stage of company establishment, amending electronic establishment services to make disclosure a mandatory part of the application, and introducing a service through which companies can request the lifting of penalties for failure to disclose beneficial ownership information.
Sources told Al-Jarida that the ministry introduced these measures to facilitate the auditing of company data and ensure that the information submitted by businesses matches their official records.
The move follows the discovery of discrepancies in beneficial ownership information, prompting the ministry to stress the need for companies to immediately update their records and correct any errors.
In a recent notice, the ministry informed a company that its records contained a violation of the rules governing beneficial ownership disclosure. The violation involved a discrepancy between the declared beneficial owner and the company’s registered records, specifically the registration of an individual as the beneficial owner despite that person not being listed among the company’s registered partners.
The ministry called on the company to rectify the discrepancy and update its information immediately to avoid legal action and penalties prescribed under the relevant laws and regulations.
As part of the updated procedures, the ministry has amended its company establishment services to require the beneficial owner to be registered in the establishment application. Beneficial owners can also be approved through application inquiries. The wording of approval notifications for beneficial owners has been revised to include the establishment application number.
Who qualifies as a beneficial owner?
Article 5 of the regulations governing the determination of beneficial ownership defines a beneficial owner as any individual who ultimately owns or controls a legal entity, either directly or indirectly.
This includes anyone holding 25 percent or more of the company’s capital or shares, or possessing at least 25 percent of its voting rights. Ownership may be exercised through a chain of ownership or control, or through other means, including the right to appoint or dismiss a majority of the members of the board of directors.
The definition is intended to identify individuals who ultimately exercise ownership or control over a legal entity, including through indirect ownership arrangements.
Companies required to maintain a special register
In July, the Ministry of Commerce issued a decision updating the procedures for identifying beneficial owners as part of efforts to strengthen transparency and compliance with regulations governing company information.
The decision replaced certain provisions of Articles 8, 9 and 11 of the previous decision and required every legal entity to maintain a special register containing detailed information about each beneficial owner.
Companies must establish this register within a period not exceeding 15 days from the date the decision takes effect or from the date the legal entity is established.
The latest measures form part of the ministry’s efforts to regulate beneficial ownership disclosure, improve the accuracy of company records and ensure that businesses comply with the applicable transparency requirements.
