Citizenship revocations force companies to navigate through legal vacuum
. . . as Kuwait studies bold legal fixes
- When a partner loses citizenship: How 49% shareholders are fighting to save their companies
- Forged nationality, frozen shares: Kuwait moves to solve corporate chaos after revocations
The unfolding reality of citizenship revocation cases — particularly those involving forged nationality — has exposed a complex web of legal and procedural challenges for companies where revoked individuals hold significant ownership stakes.
As these cases increase, the Ministry of Commerce and Industry is working closely with the Ministry of Justice and other relevant authorities to craft a practical legal framework that protects the rights of remaining shareholders and shields their companies from operational paralysis.
According to informed sources, the Ministry of Commerce has recently been inundated with inquiries from owners of unlisted companies whose partners — now stripped of Kuwaiti citizenship for forgery — hold strategic stakes. These owners are urgently seeking solutions that allow them to renew commercial licenses, maintain proper cash flows, and prevent disruptions that could cripple company operations.
In several active cases under investigation, non-Kuwaiti shareholders hold roughly 49 percent of the company, while the remaining 51 percent belongs to partners whose nationality has been revoked.
Despite holding general powers of attorney and managing the daily operations of their firms, the 49-percent shareholders find themselves unable to renew commercial licenses or initiate the process of replacing the disqualified partner — procedures that normally require Ministry of Justice approval.
The obstacle lies in the blacklist status of the revoked partner, which freezes all financial and legal actions tied to that individual, including share transfers, asset disposal, and representation. Officials stress that such restrictions, while necessary, inadvertently trap the remaining shareholders in a legal deadlock.
A Maze of Documentation and Authority Gaps
The situation is further complicated by the Ministry of Justice’s refusal to recognize powers of attorney issued by individuals whose nationality has been withdrawn.
This means that even routine procedures — such as removing the partner from company records or restructuring the ownership —become legally impossible. Without the ability to replace the 51-percent shareholding Kuwaiti partner, the company fails to meet the legal ownership threshold required for renewing its license.
As a result, companies risk severe operational setbacks, including frozen accounts, halted transactions, and exposure to financial liabilities—problems that directly threaten the stability of the business and its workforce.
Searching for a Legal Path Forward
Officials at the Ministry of Commerce are currently evaluating a range of legal remedies, acknowledging that the Companies Law does not cover such unprecedented situations.
Given that similar cases are emerging with increasing frequency, authorities recognize the urgent need for a standardized procedural mechanism that protects both public and private interests.
Among the proposals under the following:
Freezing the revoked partner’s status — A procedural suspension that allows remaining partners—now effectively the majority—to continue running the business while assuming full responsibility for operations and compliance.
Introducing a court-appointed guardian –– A legal custodian could temporarily oversee the revoked partner’s shares until a final Cabinet-approved mechanism is issued—whether liquidation, freezing, or transfer.
Maintaining controlled financial flows — Establishing clear protocols for the movement of funds into and out of company accounts to avoid cash dealings, payment defaults, or suspicious financial activity.
Auctioning Shares: A Scenario Under Study
One of the initial proposals would allow state authorities to publicly auction the shares of individuals whose nationality was revoked for forgery.
The proceeds would go directly to the state treasury. Supporters argue that this would preserve the state’s rights while preventing financial harm to the remaining shareholders who depend on the continued stability of their companies.
All proposals remain preliminary. Any final decision must be approved by the Cabinet, the sole body authorized to define mechanisms for handling citizenship revocation cases. Once approved, their execution would fall under the jurisdiction of the Ministries of Commerce and Justice.
