By Legal Counsel Suha Alsahli
Emtithal Law Firm
A Kuwaiti company may accurately disclose its registered shareholders and still fail to identify the individual who ultimately owns or controls it. This possibility is specifically addressed in Kuwait’s guidance on beneficial ownership dated August 2026, particularly where a Kuwaiti company is partly owned by a foreign legal entity.
Under Kuwait’s AML/CFT framework, a beneficial owner must ultimately be a natural person. The first test identifies individuals who directly or indirectly own or control 25 percent or more of a company’s capital or voting rights. Where ownership passes through another company, however, identifying the registered shareholder may be only the beginning of the inquiry.
When the shareholder is only a name
One of the more interesting scenarios rightfully addressed in the new guidance concerns nominee shareholder arrangements. A nominee arrangement, legal in many jurisdictions, is an agreement where one party (the nominee) holds legal title, assets, shares, or directorships on behalf of another party (the nominator).
Consequently, the person appearing in a company’s shareholder register may differ from the individual who ultimately owns or controls those shares. Kuwait’s guidance draws an important legal distinction. Although nominee shareholder arrangements are not recognised or regulated under Kuwaiti law, they may exist within foreign entities forming part of a Kuwaiti company’s ownership structure, where the relevant foreign jurisdiction permits them.
This distinction has important implications for customer due diligence. Where a Kuwaiti company has a corporate shareholder incorporated in a jurisdiction that permits nominee arrangements, the possibility of such arrangements should be examined when identifying its beneficial owners. Consider a Kuwaiti company owned by two corporate shareholders: a Kuwaiti entity holding 51% and a foreign entity holding 49%.
Suppose no individual behind the Kuwaiti entity meets the 25% beneficial ownership threshold. The foreign entity is incorporated in a jurisdiction permitting nominee arrangements. Further examination reveals that an individual (nominator) concealed behind a nominee ultimately owns 60% of the foreign entity, giving them an indirect 29.4% share in the Kuwaiti company.
That individual therefore qualifies as a beneficial owner, despite their name appearing nowhere in the company’s shareholder register. The same would be true even if an individual behind the Kuwaiti entity also met the threshold, since a company may have more than one beneficial owner.
A shareholder register may not be enough
This is where many Kuwaiti companies with foreign shareholders may be most exposed. A company can list every registered shareholder correctly and still fail to identify the true beneficial owner.
The 2026 Guidance makes clear that Kuwaiti companies are expected to hold accurate, up-to-date information on their beneficial owners and have procedures to obtain that information from shareholders, directors and nominees.
Furthermore, where one of a company‘s shareholders is a foreign company, that obligation extends beyond the shareholder‘s name. The company needs to know where that shareholder is incorporated and whether that jurisdiction permits nominee arrangements to correctly identify and disclose who stands behind any nominee in its ownership chain.
The cost of missing the invisible nominator
Financial institutions and designated non-financial businesses and professions that fail to identify, verify or monitor beneficial ownership information face sanctions ranging from warnings and fines to suspension or revocation of their licences.
The concealment itself is also sanctionable: the guidance lists failure to disclose nominee status among the conduct subject to sanction, alongside providing false or misleading beneficial ownership information.
Any natural person who deliberately provides such information may face a fine of between KD 1,000 and KD 10,000 from the Ministry of Commerce and Industry, without prejudice to referral to law enforcement where a crime is suspected. Following a report of inaccurate beneficial ownership information, the Ministry may also suspend the company’s commercial registration until the violation is corrected.
The post The Invisible Shareholder: Can Foreign Nominee Arrangements Conceal the Beneficial Owner of a Kuwaiti Company? appeared first on Times Kuwait.