Since the issuance of the "Combating Commercial Concealment" decree, questions have arisen about its implications six months after its publication in the Official Gazette. This has prompted some business owners in Kuwait to review their legal structures and rectify the status of their licenses and registered activities to avoid legal repercussions after the law's implementation. Meanwhile, other entities are considering ceasing operations and entering liquidation, particularly those that fail to comply with the requirements, most importantly the disclosure of the beneficial owner.

Economic and legal experts defined commercial concealment to Al-Rai newspaper as enabling an unlicensed individual to conduct economic activity for their own account or to use a commercial license or trade name that does not reflect the true owner or manager of the business. This leads to a discrepancy between official data and the actual nature of the management and control of the project, a phenomenon known as "inclusion," which the law addresses in its provisions.

Experts warned of the dangers of concealing the true beneficiary or allowing the misuse of commercial licenses. They explained that commercial concealment is not limited to the traditional practice of renting out licenses for money, but also includes cases where the business is managed by someone other than the license holder, or where a license is issued in someone's name to enable another person to conduct the business, or where business activities differ from those specified in the commercial license are carried out.

The law includes a mechanism to incentivize the disclosure of commercial concealment crimes. It grants a financial reward of up to 10% of the total value of collected fines to those who contribute to uncovering the crime, provided they present credible evidence leading to a final conviction.

Experts believe this provision will enhance the ability of regulatory bodies to uncover cases where it is difficult to identify the true beneficiary or the person actually managing the business behind the legal facade.

Mohammed Al-Qattan: “Incorporation” is behind some closures, and the market is moving towards correction, not contraction.

In this regard, Mohammed Al-Qattan, Chairman of the Board of Directors of the Kuwaiti Association for Small and Medium Enterprises, told Al-Rai that some existing practices granted the party not registered in the license complete control over the business and its profits, in exchange for the license holder receiving a fixed monthly or annual sum. This constitutes a form of commercial concealment targeted by the law.

Al-Qattan emphasized that responsibility is not limited to individuals, but extends to legal entities. The legal entity bears responsibility, jointly with its employees, if the violation is committed in its name or for its benefit.

He stated that the majority of businesses that announced their temporary closure in recent days are effectively managed either by expatriates operating under the “incorporation” system, even though the commercial license is registered in the name of a citizen, or by individuals who do not hold the license but conduct the business as its de facto owners.

Al-Qattan ruled out the possibility that implementing the law would lead to higher prices for goods and services, explaining that the market is entering a phase of reorganization rather than facing a shortage of supply. He predicted that many businesses would restructure rather than close down permanently.

He pointed out that the phenomenon of commercial concealment was more prevalent in certain sectors that citizens are reluctant to manage directly, such as car repair shops, grocery stores, barbershops, and tailors, anticipating that these sectors would undergo extensive corrections.