In the Companies Law No. 1 of 2016 and its executive regulations, the Kuwaiti legislator laid down several cases that govern the partners’ disposal of shares in a joint liability company, namely, the partner’s assignment of his share in the company to the rest of the partners or to non-partners, the waiver of the financial rights related to his share in the company, and the recovery of the partner’s share in cases Withdrawal, dismissal, death, and a partner’s mortgage of his share in the company.

Assignment of shares between partners

The partner has relinquished his share in the joint liability company

The Kuwaiti Companies Law permits a partner in a joint liability company to assign his share in the company to the rest of the partners, and prohibits a partner from assigning his share to non-partners in the company unless the company’s contract stipulates otherwise.

Request for a partner to waive his share to the rest of the partners

The Companies Law Regulations stipulate that a request shall be submitted by the assigning partner or the assignee to the Ministry of Commerce and Industry to amend the company’s contract to the effect of the assignment. The request must include the names of the parties to the assignment and the number of shares ceded, and a letter from the company stating that it is aware of the assignment or an official notification announced to the company by the advertising representative of the Execution Department at the Ministry of Justice must be attached to it.

Amending the company’s contract to assign shares to partners

The general partnership contract shall be amended to the effect of the assignment in an official document signed by the parties to the assignment without the need for the signature of the rest of the partners unless the company contract stipulates otherwise.

The assignment of the partner’s share in the joint liability company shall have no effect in relation to the remaining partners or third parties except from the date of registration in the commercial registry.

Assignment of shares to non-partners Request for a partner to waive his share to non-partners

In the event that the partnership contract stipulates that shares may be assigned to non-partners, the assigning partner or assignee shall submit a request to the Ministry of Commerce and Industry to amend the company’s contract stating the assignment of shares, provided that the request includes the name of the assignee and the number of shares assigned.

Amending the company’s contract to assign shares to non-partners

The company’s contract shall be amended to the effect that the shares are assigned to non-partners in the joint liability company, by an official document signed by the assigning partner, the assignee and the rest of the partners in the company. As the assignment of shares has no effect with respect to the remaining partners or to third parties except from the date of registration in the Commercial Register.

The partner has waived his financial rights related to his share

The Companies Law permits the partner in the General Partnership to waive the financial rights related to his share in the company, and in this case the provisions for transfer of right shall apply to them.

Recovering the partner’s share in cases of withdrawal, dismissal and death Recovering the partner’s share in the event of withdrawal from the joint liability company

The Companies Law Regulations gave the partner who does not agree to amend the company’s contract the right to leave it, In this case, the company evaluates his rights with the agreement of the majority of the rest of the partners. If he does not accept this, his rights are evaluated by one of the auditing offices approved by the Capital Markets Authority, and the company recovers the shares of that partner.

The general partnership contract shall be amended to the effect of the recovery in an official document signed by the withdrawing partner from the company and the rest of the partners, and the recovery shall not be effective against third parties and the company except from the date of registration in the commercial registry.

Reclaiming the partner’s share in the event of separation from the company by a court ruling

In the event of dismissal of the partner by virtue of a court ruling, the company’s contract shall be amended by entry in the Commercial Register. The company’s rights are evaluated with the agreement of the majority of the remaining partners. If he does not accept this, his rights are evaluated by the audit offices approved by the Capital Markets Authority, and the company recovers the share of that partner.

Redeeming the partner’s share in the event of his death, seizure or bankruptcy

The regulations of the Kuwaiti Companies Law stipulate in the event of a partner’s death, seizure, or bankruptcy, and the company’s contract includes what allows it to continue among the rest of the partners. In the event that the deceased partner’s heirs do not express their desire to continue with the company, the company will evaluate the partner’s rights on the day any of these cases are realized, and the partner’s share will be recovered after paying its value to the holder of the right to receive it.

The general partnership contract shall be amended with a statement stating the recovery in an official document signed by the heirs of the deceased partner, or the trustee for the distrainee, or the bankruptcy manager for the bankrupt and the rest of the partners. The amendment of the company’s contract shall not be effective in relation to the company or third parties except from the date of registration in the commercial registry.

Mortgage of partners’ shares The partner pledged his share in the joint liability company

The Kuwaiti Companies Law grants the partner in the General Partnership the right to mortgage his share. This mortgage shall be concluded in writing and shall not be effective against the company and third parties except from the date of its registration in the Commercial Register.

Request to register the mortgage of shares in the commercial register

The current partner and the mortgagee creditor submit an application to the Ministry of Commerce and Industry to register the mortgage in the Commercial Register. The Companies Law Regulations required that the request include the names of the current partner and the mortgagee creditor, the number of mortgaged shares and the amount of the debt secured by the mortgage. It also required attaching a copy of the indebtedness deed to the application and a letter from the company stating that it was aware of the mortgage or an official notification announced to the company by the advertising representative of the Execution Department at the Ministry of Justice that includes these data.

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