M&A Guide 2026: Kuwait

The most immediate theme shaping the M&A landscape in Kuwait is the geopolitical climate in the Middle East. Tensions have eased somewhat at the time of writing, but the overall environment remains fragile and continues to influence investor sentiment and deal execution. While the geopolitical risk may create near-term headwinds leading to a more cautious approach, a sustained de-escalation could unlock increased cross-border deal activity and give rise to opportunities, particularly in sectors previously impacted.

From a broader perspective, M&A activity in 2025 showed continued growth compared to 2024. While traditionally strong sectors such as healthcare and aviation remained active, there was a notable increase in transactions in the oil and gas, and utilities sectors. This reflects both strategic repositioning by regional players and continued investment in energy transition and infrastructure resilience.

Other hot topics in cross-border transactions continue to include the application of the ultimate beneficial ownership rules issued by the Ministry of Commerce and Industry (MOCI), which are creating ongoing compliance issues and would have to be addressed as part of any M&A activity.

The Competition Protection Authority (CPA) continues to be increasingly active in merger control to ensure compliance with the Competition Law (Law No. 72 of 2020). In this regard, the CPA has recently raised the thresholds that trigger regulation and transaction parties are becoming increasingly aware of competition regulation issues.

Financing considerations continue to impact deal structures, particularly in relation to the provision of security for financing. The authors have also noticed continued attention being paid to material adverse change (MAC) and force majeure clauses, driven by, among others, the geopolitical conflicts in the region.

The Kuwaiti market remains primarily driven by private M&A.

ASAR – Al Ruwayeh & Partners has recently been involved in a transaction where issues regarding break fees and what would amount to a MAC were strongly debated. While the break fee requirement was conceded by the seller, that which would amount to a MAC was strictly defined.

Issues in relation to the extent of warranties to be provided and the role of warranty insurance to plug the gaps are becoming increasingly prominent.

M&A activity in 2024 was strong and robust, but there is no doubt that 2025 saw a further increase in deal flow.

While initial expectations were that 2026 would exceed the deal flow of 2025, the current geopolitical climate has tempered this somewhat. A strong year is nonetheless expected and sentiment remains strong. Business is generally continuing as normal and largely uninterrupted on the ground.

Financing considerations continue to affect deal structuring, particularly in relation to the providing of security for financing. Additionally, foreign ownership restrictions under Kuwait law also impact M&A transactions and have to be catered for accordingly.

While financial and strategic investors have had a limited impact on the M&A market in Kuwait in the past, there has been an uptick in their involvement in recent times.

The regulatory bodies are primarily the MOCI, the Kuwait Capital Markets Authority (CMA), Boursa Kuwait, the CPA, and other sector-specific regulators, as applicable.

The key legislation governing public M&A in Kuwait is Law No. 7 of 2010 as amended (the Capital Markets Law, or CML) and its executive bylaws (together, the CML Rules), particularly Book IX (Mergers and Acquisitions) of the CML bylaws.

The CML Rules apply to M&A transactions where there is an acquisition or consolidation of control of:

• A Kuwait incorporated company listed on Boursa Kuwait (formerly known as the Kuwait Stock Exchange);

• A listed or unlisted company in the event of a reverse acquisition; or

• A listed company by way of a partial purchase offer (resulting in an acquirer holding no less than 30% and no more than 50% of the shares of a listed company).

The CML Rules provide a statutory framework for public M&A in Kuwait, including takeover offers for 100% of the share capital of a company listed on Boursa Kuwait and mandatory takeover offers (MTOs), which must be made to remaining shareholders when the offeror acquires more than 30% of the shares of a listed company, unless an exception applies.

Private M&A is largely governed by the Companies Law (Law No. 1 of 2016).

The Competition Law provides additional regulation in relation to merger control in Kuwait. Under the Competition Law, persons participating in “economic concentrations” are required to apply to the CPA for approval in certain circumstances. The Competition Law considers the following circumstances to be economic concentrations:

• A merger between two persons or more by way of absorption or combination that may lead to “control” or increased control;

• An acquisition of direct or indirect control by one person in all or part of another person or persons, whether by the acquisition of assets, ownership rights, or a beneficiary; the purchase of shares, stock, or liabilities; or any other way; and

• The existence of a partnership between two persons or more that leads to a permanent and independent economic or commercial activity, regardless of the legal form or activity exercised.

A notification is required if the value of the parties’ registered assets or relevant annual sales in Kuwait, according to audited financial statements for the last financial year before economic concentration, exceed thresholds ranging between KWD 1.5 million and KWD 7.5 million.

Other laws/rules that may be of particular significance include:

• The Boursa Kuwait Rulebook, which was also issued under the CML and impacts the sale and acquisition of listed companies, as well as how this is processed;

• The Promotion of Direct Investment Law (No. 116 of 2013) and its regulations, which regulates certain investments from abroad and the possible exemption from local ownership requirements; and

• The Tax Law No. 3 of 1955 and its regulations, which require certain actions to be taken and which would impact on the structures used in such M&A activity, as well as the payment of profits on such transactions.

As touched on above, in what is perhaps one of the most significant developments of the past decade regarding foreign parties doing business in Kuwait, the Amendment Law (Law No. 1 of 2024) was issued during 2024. Under the Amendment Law, a foreign entity may establish a branch in Kuwait.

The Amendment Law represents an exception to the restrictions in Article 23 of the Commercial Law, where it is provided that a foreigner may not do business in Kuwait save with a Kuwaiti partner that has a 51% interest in such business. In this regard, the Amendment Law amends Article 24 of the Commercial Law and Article 31 of the Tenders Law (Law No. 49 of 2016) to essentially provide as follows:

• Amended Article 24 of the Commercial Law – a foreign party may now establish a Kuwaiti branch without the appointment of a Kuwaiti agent; and

• Amended Article 31 of the Tenders Law – a foreign party that is appropriately registered as a service provider/contractor may participate in government tenders directly and without a Kuwaiti agent/partner (under the amended Article 31 of the Tenders Law).

While foreign parties should now generally be able to establish a branch in Kuwait under the Amendment Law through which they can conduct their business affairs, the MOCI is not currently applying these changes and will only begin to do so once new implementing regulations have been issued that give effect to these amendments. At the time of writing, these implementing regulations remain outstanding.

There have also been developments regarding the ownership of land. Decree Law No. 7 of 2025 (which amended Decree Law No. 74 of 1979) allows listed companies with non-Kuwaiti shareholders, as well as Kuwait-licensed real estate funds and investment portfolios, to own real estate. The amendments also permit companies licensed by the Kuwait Direct Investment Promotion Authority (which could include companies wholly owned by foreigners) to own real estate properties required for the management of their operations or the housing of their staff.

Prior to these amendments, only companies wholly owned by Kuwait or Gulf Cooperation Council nationals could legally own real estate. These amendments pave the way for foreigners to make indirect investments in Kuwait real estate, which marks a significant and potentially positive shift in the regulation of real estate ownership in Kuwait.

Kuwait is also in the process of reforming its tax laws. As an initial step, the Law of Taxation on Multinational Entities (No. 157 of 2024, or the MNE Tax Law) was issued on December 30 2024 pursuant to the global base erosion and profit shifting (BEPS) initiatives and the OECD pillar two model rules. This was followed by the relevant implementing regulations on June 29 2025.

Under the MNE Tax Law and its regulations, and subject to certain exemptions/qualifications, multinational entities operating in Kuwait that form part of a group that generates annual revenues of €750 million or more are subject to a tax of 15% on their Kuwaiti profits. It is noteworthy that this is not in addition to the existing income tax obligations imposed on foreign parties; rather, the MNE Tax Law seeks to ensure that such multinational groups pay tax on their Kuwaiti income at an effective rate of 15%.

Also of significance, while the Kuwait Corporate Income Tax Law of 1955, as amended, and its regulations require persons to apply a 5% retention from payments being made to other parties, the Kuwaiti Ministry of Finance has clarified on March 29 2026, in its executive rules for implementing the state’s budget for 2026–27, that this would not apply to payments made by the government to entities taxed under the MNE Tax Law.

The CMA recently passed Resolution No. 108 of 2026 Regarding the Launch of the Regulatory Environment for the Emerging Companies Market in the Exchange. The initiative introduces a new market segment aimed at supporting the capital-raising needs of smaller and emerging businesses. This development seeks to address fundraising difficulties that were being experienced by smaller and emerging companies (including startups) and sets up a tailored platform that would enable such businesses to raise capital under a regulatory framework designed to balance flexibility with investor protection.

In what marks a significant step to formalising Kuwait’s online marketplace, Kuwait has approved a new Digital Commerce Law on March 1 2026. The law will enter into force one month after the publication of its executive regulations, which are to be issued within one year from the publication date of the law.

The Digital Commerce Law introduces a comprehensive framework governing commercial activities conducted through websites, digital platforms, applications, and social media channels, impacting online sellers, digital platforms, and social media merchants. The provisions include registration, licensing, management, and ongoing reporting requirements. The law also seeks to implement measures that would, among other things, impact revenue stability and valuation; for example, mandatory payment and cooling-off periods are provided for, as well as strict return and refund policies being imposed, creating possible volatility in reported and future earnings.

The introduction of the Digital Commerce Law may necessitate a shift in the scope of legal due diligence and valuation modelling for transactions involving targets with a digital footprint.

Certain additional reforms are being mooted to the Kuwait tax rules that may impact matters.

There has also been a steady drive to relax Kuwait’s rules on foreign parties doing business in the country. Most recently, the Kuwaiti Commercial Law No. 68 of 1980 was amended (i.e., under Law No. 1 of 2024) to allow foreign companies to establish a Kuwaiti branch of their activities. However, as regulations to implement these reforms remain outstanding, the MOCI is yet to permit the establishment of such a branch. While this change is not currently being implemented, along with the other recent reforms (including that noted above on the ownership of land), it is indicative of a paradigm shift.

Further reforms are also expected in relation to tax obligations, although these would be more focused on clarifying existing compliance requirements, several of which would be triggered by M&A activity.

Some of the misconceptions about the Kuwaiti market include that there are no tax obligations or competition/antitrust elements in relation to Kuwait target companies and that the country does not require competition approvals for transactions. Foreign entities seeking to acquire Kuwait assets are often also not aware of the restrictions on foreign parties doing business in the state, but these points are typically addressed pre-transaction as part of deal structuring.

Furthermore, a common mistake made by practitioners is to import legal structures and documentation developed in other jurisdictions without a proper adaptation to the peculiarities of the Kuwait legal system. This can lead to complications in the execution phase of the transaction and in the enforcement of rights arising under M&A transaction documentation.

An area that is often overlooked and/or paid less attention to is due diligence. In particular, appropriate translation of due diligence findings into contractual protections – whether by means of pre-closing remedial actions, associated variation of commercial terms, special indemnities, or other methods – is deficient. This often arises because the legal practitioners that carry out the due diligence do not always lead the negotiation of transaction documentation.

Parties involved in an M&A transaction also often overlook certain aspects of the Kuwait competition regulations.

Furthermore, providing M&A/investment advisory services with respect to securities onshore of Kuwait is a regulated securities activity under the CML Rules. As such, foreign service providers should be aware of the restrictions applicable in connection with the rendering of such services onshore of Kuwait.

Technology is playing an ever more significant role in the M&A dealmaking process. It is also key in identifying the latest trends, benchmarking, and further enhancing the knowledge system databases of M&A practitioners. The great advances made in cognitive technology – such as AI software – also enable the rapid identification and extraction of key provisions through the review of thousands of transaction documents within a relatively short space of time.

The general conditions for a public M&A transaction have been outlined above, but there are some key factors that specifically concern takeovers. In such cases, parties must obtain all the relevant regulatory consents from the applicable regulatory body, such as the CMA for licensed companies and/or (as applicable) the Central Bank of Kuwait (CBK) vis-à-vis financial institutions that are subject to supervision by the CBK. Disclosure of the transaction is also required, as per the CML Rules.

Parties must also abide by the laws and regulations of each sector. For example, pursuant to the CML Rules, for companies listed on the exchange of Boursa Kuwait, an MTO must be launched by the bidder once the bidder has come into possession of more than 30% of the voting shares of a target company listed on the exchange, unless an exception applies.

Hostile bids are not common in Kuwait, although the law currently provides for competitive bids during the MTO process. In addition, during a block trade, there is a public auction during which a person could instigate a hostile bid. Hostile bids would be treated as takeover bids, and therefore there are no special conditions that would attach to one.

Off-market trades are also now provided for under the Boursa Kuwait Rulebook, facilitating transfers of listed shares between parties (although certain qualifications apply, including in relation to the minimum value of the trade, and offering the added benefit that contracting parties are not exposed to the risk of competing bids).

An MTO must not be subject to conditions that can only be satisfied at the discretion, and in the subjective judgement, of the bidder or the target company, or where their satisfaction is within the control of the bidder or the target company. Only voluntary takeover offers (VTOs) may be subject to conditions required by the bidder. However, in the case of an MTO, no conditions may be imposed by the bidder.

There are no specific rules in Kuwait dealing with break fees, and parties are free to agree specific arrangements to this effect. Break fees are now starting to be seen more frequently.

There has been significant use of locked-box mechanisms recently, although completion accounts are also becoming increasingly popular, particularly as the periods between signing and closing lengthen (whether due to the requirements for regulatory approval compliance or the global nature of a transaction). While still limited during 2025, there has been increased interest in taking up warranty insurance.

As with public M&A, an MTO must not be subject to conditions that can only be satisfied at the discretion, and in the subjective judgement, of the bidder or the target company, or where their satisfaction is within the control of the bidder or the target company. Only VTOs may be subject to conditions required by the bidder. However, in the case of an MTO, no conditions may be imposed by the bidder.

The use of foreign governing law and/or jurisdiction (for example, English law and English courts/arbitration in London or Dubai) is more common in the case of mid- to upper-tier M&A transactions involving at least one foreign party, and less so in relatively small or purely local M&A transactions.

Exits in the market are usually structured as share sales. Given licensing and transfer issues, trade sales are becoming less attractive but remain relevant when corporate divisions are being sold (as opposed to the whole of a seller’s enterprise).

Despite the geopolitical climate, the market is still positive as a number of legislative reforms make their way into operation and public projects come online.

Increased attention to force majeure conditions and purchase price provisions can be expected, with creative price adjustment solutions being created.

The use of hitherto popular United Arab Emirates-incorporated holding vehicles for Kuwaiti businesses may start to decline due to the enactment of new corporate tax legislation in the region, which may, in certain cases, increase tax exposure and limit possible tax benefits that were previously available.