Officials at Kuwait’s Ministry of Commerce and Industry are studying a package of structural and regulatory reforms for commercial licenses covering freelance business activities, aimed at modernizing licensing procedures, supporting investors and improving the local business environment.

The proposed changes are also intended to reduce the practice of registering businesses in the names of people who are not the actual beneficiaries, particularly when legal restrictions prevent the real owners from holding licenses themselves.

Freelance activities cover micro-enterprises and specialized businesses that can operate without a commercial establishment. The current list includes 120 activities, ranging from consulting, software and website development to fashion, clothing and jewelry design, event photography and beekeeping.

Freelance licenses are currently issued through a one-person commercial company structure, with restrictions on who can own such entities. The proposed reforms would restructure the ownership and beneficial-owner framework and, most notably, allow Kuwaiti government employees to own freelance business licenses, provided they hold the required license for each activity they undertake.

The proposed change would bring freelance businesses closer to the existing rules for one-person companies, one of the seven legal forms recognized under Kuwait’s Companies Law. Government employees can already own 100 percent of a one-person company when it operates from a commercial headquarters such as an office or shop, subject to the appointment of a suitable manager, including a retired Kuwaiti or private-sector employee.

Under the proposed system, government employees would also be able to own freelance entities without a physical commercial headquarters, while retirees and private-sector employees would remain eligible under the relevant conditions, including the appointment of a Kuwaiti manager.

Another proposed reform would allow the business owner to appoint a manager from outside the ownership structure. This would ease the current requirement under which the founder generally has to serve as the manager and meet conditions including Kuwaiti nationality, full legal capacity and being over 21, or having prior authorization to engage in commercial activity.

The restriction that one-person freelance licenses remain available only to Kuwaiti citizens would continue. For specialized freelance activities, the proposed rules would also link licensing to the applicant’s university or specialized qualification and relevant professional experience, including experience in areas such as consultancy.

The draft improvements would also provide greater flexibility in expanding licensed activities. A license holder could add activities included in the approved list when those activities are complementary, similar, necessary or directly related to the original licensed activity.

Officials believe these changes would increase transparency by allowing genuine business owners to be formally recorded in commercial registers rather than relying on relatives or other nominal owners.

The approach is also consistent with the objectives of Kuwait’s recently approved rules against commercial concealment and efforts to strengthen identification of beneficial owners.

Allowing government employees to own freelance licenses could play an important role in strengthening Kuwait’s compliance with beneficial ownership requirements and FATF recommendations.

The proposed system would reduce the incentive for government employees to register businesses under the names of parents, spouses, relatives or other people who are not the true beneficiaries simply because existing regulations prevent government employees from owning freelance businesses.

By enabling genuine owners to appear legally in ownership records, the reforms could address a significant part of the challenges associated with commercial concealment while improving oversight of who ultimately controls businesses.

The proposed reforms reflect what the Ministry views as a more practical approach to developing Kuwait’s business environment and supporting entrepreneurship within a transparent legal framework.

Recent Ministry statistics show 139,776 active commercial licenses in Kuwait, with limited liability companies accounting for 65,980, or about 47 percent; one-person companies numbering 43,105, or nearly 31 percent; and sole proprietorships totaling 21,045, or about 15 percent.

The remaining licenses include 3,178 partnership companies, 2,768 closed joint-stock companies, 2,642 limited partnership companies and 1,058 public shareholding companies. If approved, the proposed freelance licensing reforms could give more citizens the ability to conduct legitimate business activities while strengthening transparency, compliance and the broader objectives of Kuwait’s economic development plans.