- The law also permits sukuk to be offered to citizens, residents and foreign investors, while allowing the government to reserve selected issues for Kuwaitis.
- It establishes a wholly state-owned company to manage sukuk assets and a unified Sharia Supervisory Board, while authorizing a range of Islamic instruments linked to leased assets, usufructs and operating rights.
Kuwait has entered a new phase in regulating sovereign Islamic financing with the issuance of Decree-Law No. 90 of 2026 on Government Sukuk, establishing a 35-article framework governing the issuance, offering, management and trading of sukuk in both Kuwaiti dinars and foreign currencies.
The law covers sukuk issued domestically or internationally and links their overall value, allocation and use of proceeds to the financing and liquidity limits set under Decree-Law No. 60 of 2025.
Under the new framework, the government can establish a wholly state-owned special purpose company (SPV) to own and manage the underlying sukuk assets, protect investors’ rights, collect returns and distribute profits to sukuk holders. The company will operate as a single-person entity with its capital funded by the State through the General Reserve Fund.
The law allows individuals and companies to subscribe to and own government sukuk, while individual issues may be restricted to Kuwaiti citizens if specified in the prospectus. Sukuk can be offered through public or private subscription and may be denominated in dinars or foreign currencies.
A wide range of Sharia-compliant instruments is permitted, including sukuk based on leased assets, usufruct and operating rights, Salam, Istisna’, Musharakah and Mudarabah structures. More than one type may be included in a single issuance with approval from the Sharia Supervisory Board.
Leased-asset sukuk give investors an ownership interest linked to an asset that is leased, with returns potentially generated from the income earned through the lease.
Usufruct sukuk are linked to the right to use or benefit from an asset, without necessarily involving ownership of the asset itself. Operating-rights sukuk, meanwhile, are tied to rights to operate an asset or generate income from its use.
Salam sukuk are based on a Sharia-compliant structure in which payment is made in advance for specified goods or assets that are delivered at a later date. Istisna’ sukuk are generally used to finance the construction or manufacture of specified assets, with payments structured around the production or construction process.
Musharakah sukuk are based on a partnership arrangement in which investors participate in financing or ownership of a venture and share its returns according to agreed terms. Mudarabah sukuk involve investors providing capital while another party manages the investment, with profits shared according to an agreed arrangement.
The legislation also establishes a single Sharia Supervisory Board for all SPVs. The board must have at least three members with expertise in Islamic financial transactions, including at least one member of the Central Bank of Kuwait’s Supreme Sharia Supervisory Board.
Government sukuk may be listed and traded on local or international financial markets with the approval of the Minister of Finance, subject to applicable market rules, the issue prospectus and Sharia requirements.
The framework also provides for investor protections, including disclosure of information that could materially affect the value of sukuk, auditing of SPV accounts and sukuk assets, and liability for investment managers in cases of negligence, abuse of authority or violations of the law or issuance terms.
The Capital Markets Authority Law and its implementing regulations will not apply to the issuance, offering and management of sukuk governed by the new decree-law. The Cabinet is required to issue the implementing regulations within three months of publication in the Official Gazette. The decree-law takes effect from the date of its publication.
According to the explanatory memorandum, the legislation is intended to develop Kuwait’s Islamic capital markets, create new investment opportunities for citizens, residents and foreigners, broaden investment instruments and provide a mechanism for refinancing existing debt in line with the government’s financing plan.
