Kuwait

The main structures for mergers as per Companies Law No. 1/2016 are:

• Amalgamation: the dissolution of one or more companies and the transfer of their rights and obligations to an existing company.
• Consolidation: the dissolution of two or more companies and the establishment of a new company to which the financial rights and obligations of the merged companies are transferred.
• Division and Absorption: the division of the rights and obligations of a company into two or more parts and the merger of each part into an existing company.

Main structures for acquisition transactions are Share Purchase Agreement (SPA) and Asset Purchase Agreement (APA).

SPA is considered the most common method for acquiring companies. APA is adopted when the buyer does not wish to acquire the entire legal entity, but only certain specific assets, and therefore assumes only specific liabilities.

Tender offers are mainly used in the acquisition of public listed companies. The process is regulated by the Capital Markets Authority (CMA), whether as a mandatory acquisition offer, a voluntary acquisition offer, or a partial purchase offer. Mandatory tender offers (MTOs) are required if an acquisition exceeds 30% of a listed company’s shares, pursuant to which a person who acquires, directly or indirectly, more than 30% of the shares of a listed shareholding company shall submit an offer to purchase all the remaining shares.

As a general note, foreign ownership and/or foreign investment is not unconditionally permissible in Kuwait. The country still applies a threshold on foreign ownership in companies, which is 49% of the shares of the company. Exceptions are applied to listed companies, Gulf Cooperation Council (GCC)-owned entities, and companies which were given approval by the Kuwait Direct Investment Promotion Authority (KDIPA) to be 100% foreign-owned. However, the 49% ownership limitation is most commonly applicable.

The current M&A market is active, mostly at the level of mid-size companies. We cannot determine the total deal value figures; however, we noticed that 2024–2025 was an active year in M&A. There has been a higher volume of mergers transactions than acquisitions, mainly due to an unclear domestic situation following the dissolution of parliament in May 2024. To have steady, large investments (as needed in acquisitions) requires a stable commercial and business environment, which Kuwait has not yet established. Since early 2025, the government has been preparing the legal and business infrastructure to boost the economy, diversifying it away from the oil and gas sector. The government has enacted many legal reforms to encourage domestic and foreign investments; however, the full effect of these reforms has not yet been fully demonstrated.

The Ministry of Justice is undergoing a comprehensive review to update 25% of existing laws by the end of 2026, to promote efficiency and development across several sectors (including commercial, labour, and financial) to improve the ease of doing business in the country.

The past 12–24 months has seen a higher number of merger transactions in Kuwait. The Competition Protection Authority (CPA) has been increasingly active; a high number of filings and notifications have been published in the Official Gazette.

The CMA is tightly fulfilling its role observing public and listed shareholding companies, seeking to ensure that transparency, control, and required disclosures are respected. It actively applies penalties and fines to violating parties.

Companies, even those structured as a limited liability company (the most common form of company in Kuwait), are seeking to apply the principles of corporate governance, even though this is not compulsory for limited liability companies. Such trends give us an indication that many mid-size companies are seeking to expand and change their legal structure to shareholding companies in the near future, which requires adherence to corporate governance rules.

Kuwait, being a small country, is usually highly affected by macroeconomic factors, notably geopolitical ones. However, during 2024–2026, the domestic market has been more affected by internal uncertainties following the dissolution of the parliament, which are still hindering the attainment of the target growth and expansion of the market.

Over the next 12 months, the M&A market in Kuwait will probably remain similarly active to the previous year, However, a noticeable change is expected to happen in the next 24 months, when parliamentary elections will most likely be held, which will definitely cause a change to the political situation in Kuwait and accordingly a legal and regulatory shift.

In line with Kuwait Vision 2035, expected key sectors in M&A are banking, fintech, energy, industrial sectors, e-commerce, IT, and AI infrastructure.

Key laws and regulations:

• The Companies Law (Law No. 1 of 2016).
• The Capital Markets Law (Law No. 7 of 2010) and Executive Bylaws.
• The Competition Law (Law No. 72 of 2020) in respect of economic concentrations that affect competition within Kuwait.
• The Commercial Law (Decree Law No. 68 of 1980).
• Civil Law (Decree Law No. 67 of 1980).
• Foreign Direct Investment Law (Law No. 116 of 2013) in respect of allowing establishment of 100% foreign-owned companies.
• Tax Law No. 3 of 1955 and Multinational Enterprises Tax Law (No. 157 of 2024).
• Central Bank of Kuwait (CBK) Law (Law No. 32 of 1968) and its regulations, pertaining to M&A involving financial institutions.
• Intellectual Property Laws.

Key government bodies or regulators:

• Ministry of Commerce and Industry (MOCI) (handles company registration and licensing).
• Ministry of Justice.
• Capital Markets Authority (CMA) (supervises public/listed company takeovers and disclosures).
• Boursa Kuwait (acts as the official operator of the Kuwait Stock Exchange, alongside the CMA).
• Competition Protection Agency (CPA) (reviews and approves economic concentrations (mergers, acquisitions, joint ventures)).
• Central Bank of Kuwait (CBK) (regulates M&A involving financial institutions).

Pre-approval, notification, or registration requirements before an M&A transaction can proceed:

• Mandatory pre-closing notification: transactions must be approved by the CPA before closing if they meet any of these thresholds:
  • One party has annual sales in Kuwait larger than KWD 500,000.
  • Combined annual sales in Kuwait larger than KWD 750,000.
  • Combined registered assets in Kuwait larger than KWD 2.5 million.
• Mandatory Takeover Offer (MTO): a person acquiring more than 30% of the voting shares of a listed company must launch an MTO for the remaining shares.
• An offeror or bidder shall obtain approval from CBK before submitting an acquisition offer to any company subject to the supervision of the CBK.
• Some disclosure obligations (as highlighted in Question 10, below).

The forms of consideration commonly used in Kuwait, whether in private or public M&A transactions, are cash, shares, or a mix of both, with cash being the most common form.

However, mandatory takeovers (over 30% of a listed company) require an unconditional cash offer.

For voluntary acquisitions, non-cash consideration (shares) is permissible as regulated by the CMA bylaws.

The typical scope of due diligence covers legal, financial, operational, regulatory compliance and anti-money laundering (AML), countering the financing of terrorism (CFT), and tax (mainly for transaction involving foreign entities).

Environmental due diligence is relevant in sectors like energy, manufacturing, and real estate, which require the assessment of compliance with environmental regulations.

Cybersecurity due diligence is becoming an essential part of the due diligence process across a variety of sectors dealing with sensitive data such as healthcare, banking, fintech, and e-commerce.

It is noticeable that corporate governance has become attractive to Kuwaiti companies, even to limited liability companies which do not have the rigorous requirement to adopt corporate governance principles (since they do not operate with a board of directors). However, well-established companies (especially mid-size companies) are voluntarily seeking to adopt corporate governance principles to enhance transparency, attract investment, and improve operational efficiency.

Regarding any restrictions on access to information during due diligence, the information is made available by the target company through the preparation of a data room shared with the interested company. In Kuwait, public access to information is limited to general information.

To our knowledge, warranty and indemnity (W&I) insurance policies are not common in Kuwait.

Foreign buyers cannot own more than 49% of the shares of a Kuwaiti entity.

Exceptions to this general rule are:

• Listed companies (where foreign ownership percentage can exceed such restriction).
• GCC-owned entities or individuals (treated as nationals by virtue of the GCC Unified Economic Agreement).
• 100% foreign-owned entities established pursuant to obtaining approval from KDIPA, the public authority responsible for promoting foreign investments in the country.

Therefore, foreign buyers (except for GCC citizens) cannot officially register any shares in domestic business outside the authorised threshold (49%).

Additionally, foreign buyers (except for GCC citizens) cannot own real estate in Kuwait outside the need of their business. Therefore, mere ownership of a real estate asset by foreigners is not openly permissible.

The major disclosure or announcement requirements for public M&A transactions in Kuwait as described in the CMA bylaws are as follows:

Disclosure of a merger

Companies involved in a merger shall disclose the following stages of the merger:

• When companies reach an initial agreement regarding the merger.
• When obtaining approval on the draft merger contract by the CMA.
• When general assembly of each of the companies involved in the merger issue their resolutions of accepting the merger.
• When the merger resolution is officially announced for each of the companies involved in the merger.

The said disclosures shall be announced in the Exchange and on the website of each of the companies involved in the merger. The CMA approval of the draft merger contract shall be announced in at least two daily newspapers, in addition to the other means set out herein.

Disclosure of acquisition offers

An acquirer or bidder and the target company shall disclose the following information:

• Whether the parties have concluded an initial agreement with regard to an acquisition offer.
• If a person is obliged to submit a Mandatory Acquisition Offer.
• When the target company is notified of a serious intention to submit an unconditional offer.
• When the CMA approves the publishing of an offer document.
• Any recommendation, when made, of the board of directors of the target company concerning the submitted offer.
• The completion of the collection period, disclosing the percentage of shares collected.
• The completion of all the procedures for the execution of the Acquisition Offer.

An acquisition offeror shall disclose the CMA’s approval of the offer document on an Exchange, and it shall be announced on the website of the offeror and of the target company as well as in a minimum of two daily newspapers.

Merger control (CPA)

As previously mentioned, transactions reaching “economic concentration” thresholds must be notified to the CPA. The transaction cannot be completed until CPA approval is obtained.

Disclosure of interests

Any person reaching 5% or more ownership of a listed company is an interested person and must disclose this to the CMA, Boursa Kuwait, and the target company within five business days. In addition, each interested person shall disclose any change occurring to his or her interest that exceeds 0.5% of the listed company’s capital, within no more than 10 business days as of the date of the change; such notification shall remain mandatory when the change results in a decline of interest below 5% of the listed company’s capital.

Disclosure of material information

Any information likely to affect the stock price or trading volume must be disclosed by a listed company. If information becomes available during working hours of the CMA or the Exchange, disclosure shall be made immediately upon availability, taking all the necessary precautions to prevent leakage of information before disclosure. If the information becomes available outside working hours of the CMA or the Exchange, disclosure shall be made 15 minutes before the start of the next trading session after the availability of the material information.

Handling of competing bids

In Kuwait, competing bids in public takeovers are handled through competitive acquisition offers, regulated by Module 9 of the CMA Executive Bylaws.

A competitive acquisition offer can be submitted by any party or parties other than the original acquisition offer.

An offeror of a competitive acquisition may submit its offer after an original offer document has been published and five business days before the end of the collection period of the original acquisition offer.

Proceedings of the original acquisition offer shall be suspended for 10 business days following competitive acquisition offer submission, during which the CMA shall issue a resolution on the competitive acquisition offer. In the event that the CMA approves the competitive acquisition offer, document proceedings of the original acquisition offer shall continue to be suspended until the ordinary general assembly of the target company issues its resolution choosing between the offers.

If the ordinary general assembly of a target company does not issue a resolution choosing one of the competitive offers and the acquisition offer period exceeds 180 days, the Exchange shall hold an auction within the following 10 business days among the offerors, where the auction shall be awarded to the highest cash price; provided that the highest price of submitted acquisition offers is the auction’s basic price.

All acquisition offers shall be annulled if one of either the original acquisition offer or the competitive acquisition offer includes a non-cash voluntary acquisition offer.

The Board of Directors of the target company shall deal neutrally with both the original acquisition offer and competitive acquisition offer, and the Board of Directors of the target company shall make the same information available for both the offeror of an original acquisition and offeror of a competitive acquisition. Also, the board of the target company must remain neutral, cannot take measures to deny shareholders the opportunity to choose, and must recommend the best offer.

Deal protection measures

There are no specific, restrictive rules in Kuwait regarding deal protection measures like break fees or exclusivity or no-shop clauses. These clauses are subject to the freedom of contract as stipulated by the Civil Law, enabling parties to negotiate freely similar terms.

Rights of minority shareholders

Any shareholder, or number of shareholders, whose ownership percentage of shares of a listed company is not less than 5% and not more than 30%, may submit to the CMA individually or jointly an objection (grievance) to the resolutions of an ordinary or extraordinary general assembly, stating how it amounts to an abuse of minority rights.

If the CMA disapproved the grievance, the CMA’s resolution may be challenged before the competent court. The competent court may confirm, annul, or modify the general assembly’s resolutions.

Minority shareholders in Kuwait are protected during mergers and takeovers through mandatory bid rules, fair valuation rights, equal treatment and information, independent opinion by an investment advisor, and the right to object as mentioned above.

M&A disputes between local parties are commonly resolved through litigation, having recourse to Kuwait courts. Applicable domestic laws apply.

M&A disputes involving foreign parties (whether regional or international) are commonly resolved through arbitration. Noting that Kuwait is not well-recognised as an international venue for arbitration, parties usually choose arbitration under the International Chamber of Commerce (ICC) or under United Arab Emirates (UAE) arbitration centres such as the Dubai International Arbitration Centre (DIAC). Common governing law agreed on in contracts is English law. However, it is essential to note that certain disputes pertaining to dissenting shareholders, creditors, and procedural matters remain subject to domestic laws.

Kuwait has launched its National AI Strategy (2025–2028) focusing on building robust AI infrastructure, improving data management, and training national talent to lead in regional digital innovation.

This national strategy creates key opportunities under the M&A markets, mainly in the banking sector, retail and e-commerce and technology, media, and telecommunications (TMT) involving cloud computing, AI, cybersecurity, and fintech. Also, M&A in Kuwait will increasingly rely on technology to enhance operational efficiency for valuation and strategic growth.

Key challenges pertain to adapting the legal framework and regulatory environment to be able to ensure highest standards of data security and counter cyber threats.

We believe that the above covers major details about the M&A market in Kuwait.