New resolutions issued by MOCI for all the Kuwait Shareholding Companies
On August 17, 2023, the Ministry of Commerce and Industry (“MOCI“) issued two significant resolutions pertaining to the deduction of 1% from the total annual revenues of the Kuwait Shareholding Companies (“KSCs“) for the Kuwait Foundation for the Advancement of Sciences (“KFAS“). The details outlined in these resolutions are as stated below:
The first resolution is addressed to the auditors of KSCs. It mandates that the balance sheets of the KSCs must incorporate a clause stipulating the deduction of 1% from the company’s annual revenues for the benefit of KFAS. This requirement is in accordance with the provisions of the Amiri Decree dated December 12, 1976, which acknowledges the legal existence of KFAS. Furthermore, the auditors are required to include a clear statement regarding the payment made to KFAS, amounting to 1% of the KSCs’ annual revenues, within their audit reports. Failure to include this statement in the audit report will be deemed a violation of Law No. 103 of 2019 for Practicing the Profession of Auditor.
Second, a resolution addressed to all the KSCs as they are obliged to amend their articles of associations to add an article where 1% from the total annual revenues of the company shall be deducted for KFAS, in the nearest extraordinary general assembly meeting (EGM”). Knowing that no approvals will be obtained to the KSCs to convene EGMs unless this article is reflected in the company’s AoA. Also, the KFCs will be obliged to provide a financial clearance certificate issued by KFAS providing that the company paid its determined deduction amount.
The second resolution is addressed to all KSCs, obligating them to amend their articles of association (“AoA”) to incorporate a new article outlining the deduction of 1% from the company’s total annual revenues for KFAS. This amendment must be approved during the nearest Extraordinary General Assembly Meeting (EGM). It’s important to note that KSCs will not be granted permission to convene EGMs unless this specific article is included in the company’s agenda items. Additionally, KSCs are mandated to provide a financial clearance certificate issued by KFAS, serving as evidence of the company’s compliance with the prescribed deduction, in order to prove that the required payment has been made.
Finally, while these resolutions have not yet been formally published in the Official Gazette, it is important to note that they have been officially published on the platforms of MOCI. As such, it is an official directive that auditors and companies should duly consider and adhere to.
GLA & Co will promptly announce the official issuance of these resolutions as soon as they are released on our page.