Kuwait’s listed companies poised for major real estate privileges

• Ibrahim Al-Awadi said the proposed amendment would permit the transfer of real estate to Kuwaiti companies listed on multiple financial markets, including the Kuwait Stock Exchange, and to funds and real estate portfolios that allow real estate transactions in their constitutions.

• The proposed amendments would permit property transfers to joint-stock companies, even with non-Kuwaiti shareholders, regardless of their primary purposes.

• 143 out of 154 companies listed on the Kuwait Stock Exchange are effectively prohibited from purchasing property due to the presence of foreign shareholders in their ownership structure.

Ibrahim Al-Awadi, the President of the Union of Real Estate, anticipated a forthcoming benefit for listed companies, enabling the registration and transfer of their real estate assets, including transactions involving non-Kuwaiti shareholders, according to Al Rai newspaper.

Al-Awadi pointed out in a statement to the newspaper that the Ministry of Justice is preparing a draft project to amend certain articles of Law 74/1979, which currently halts the registration of real estate under the name of real estate companies listed on the Kuwait Stock Exchange unless it is proven that no non-Kuwaitis own shares in the company.

He noted that recent discussions, including a meeting between the Union of Real Estate and the Minister of Justice Nasser Al-Sumait, indicate progress toward resolving this issue.

Al-Sumait demonstrated unprecedented cooperation, understanding of the challenges faced by real estate companies, and responsiveness to proposed solutions.

The proposed amendments would allow the Department of Registration and Real Estate Documentation at the Ministry of Justice to transfer property to public or closed joint-stock companies, regardless of whether real estate transactions are among their primary purposes. This would apply even if the companies have non-Kuwaiti shareholders.

It would also permit the transfer of real estate to Kuwaiti companies listed on multiple financial markets, including the Kuwait Stock Exchange, and to funds and real estate portfolios that allow real estate transactions in their constitutions.

Al-Awadi also highlighted that the draft law includes a provision addressing the children of Kuwaiti women who inherit property from their mothers. The current law requires these heirs to dispose of such properties within a year or face a forced public auction.

The proposed amendments aim to address this legislatively, taking into account the heirs’ circumstances, especially in cases where the mother passes away while the children are minors. This reflects the government’s serious intent to close gaps in the existing law and serve the needs of all segments of society, including individuals and companies.

He added that during the meeting with minister Al-Sumait, they discussed proposed amendments submitted by his predecessor, minister Faleh Al-Naq, particularly the crucial issue of allowing listed real estate companies to transfer and register properties even if their shareholders include foreigners.

Al-Sumait introduced additional amendments to enhance the law’s flexibility, extending these provisions to companies listed on multiple markets, funds, and real estate portfolios, while also addressing the ownership rights of Kuwaiti women’s children to their mothers’ properties.

Forty years after the approval of Law No. 74 of 1979, which regulates the ownership of real estate by non-Kuwaitis, the Real Estate Registration Department, at the end of 2019, ceased registering real estate under the names of companies listed on the Kuwait Stock Exchange. This was in compliance with Article 8 of the Decree-Law, which prohibits commercial companies with non-Kuwaiti partners from owning real estate.

The law also mandates that such companies ensure no foreign shareholders are included in their shareholder lists. Banks, however, were exempted from this application.

Al-Awadi highlighted that, since the implementation of this law, listed real estate companies have faced significant confusion. It is challenging to guarantee the absence of non-Kuwaiti shareholders among their shareholder lists, especially since the trading system permits non-Kuwaitis to buy and sell shares. This makes it possible for foreign shareholders to acquire ownership in any company, consequently barring that company from registering property within Kuwait.

He further noted that, as a result of this application, 143 out of 154 companies listed on the Kuwait Stock Exchange are effectively prohibited from purchasing property due to the presence of foreign shareholders in their ownership structure.

Damages of banning real estate registration in the names of companies with foreign ownership

Al-Awadi emphasized that prohibiting the registration of real estate in the names of companies with foreign shareholders has caused extensive damage to joint stock companies, the business sector, and the Kuwaiti economy as a whole. He noted that this measure contradicts the state’s plans and the Capital Markets Authority’s efforts to increase foreign participation in the stock market.

He highlighted that one of the negative repercussions of this policy is its adverse impact on the strategy to attract foreign capital, thereby undermining broader efforts to transform Kuwait into a financial and commercial hub.

Al-Awadi warned that this application jeopardizes the rights of real estate companies and affects their financial stability, especially since real estate ownership is legally recognized only through proper registration.