On March 3, 2026, Cuba unveiled a groundbreaking regulation in the Official Gazette No. 24 that sets forth the rules for collaborations between state-owned enterprises and private entities, including private micro, small, and medium-sized enterprises (MSMEs) and cooperatives. This landmark Decree-Law 114/2025, endorsed by the Council of State on December 10, 2025, becomes effective 30 days post-publication, indicating early April 2026 as its commencement date. The law introduces four distinct partnership models between the state and private sectors.
The specified avenues include forming mixed Limited Liability Companies (LLCs), state acquisition of shares in existing private LLCs, the takeover of private LLCs by state firms, and economic association contracts without necessitating a new legal entity.
Despite this seemingly progressive move, the state's firm grip remains a cornerstone of the framework. Every transaction requires explicit approval from the Ministry of Economy and Planning (MEP), which orchestrates and oversees policy in this domain, having a 10-day window to respond, as per Article 54.1 of the decree. A commission chaired by a deputy minister and including the General Directorate of Planning and Development evaluates proposals.
These mixed entities will enjoy business autonomy: they can configure their administrative structures, determine employee numbers and salaries, and open stores domestically and internationally. They will also have the capacity for direct exports and imports, free from the constraints of the Economic Plan. Nevertheless, they must report strategic metrics to the state in sectors like energy, investments, foreign currencies, and food.
The decree explicitly bans these collaborations from engaging in health, education, and activities related to the armed institutions — the Revolutionary Armed Forces (FAR) and the Ministry of the Interior (MININT) — except under specified exceptions. For mergers and acquisitions, a certification assessing the value of state-owned tangible and intangible assets to be transferred is also necessary.
Eligible state partners consist of state-owned enterprises, state LLCs, fully Cuban joint-stock companies, and specially treated budgeted units. On the private side, participants can include MSMEs with up to 100 employees and both agricultural and non-agricultural cooperatives.
Decree-Law 114/2025 addresses a legal void present since the legalization of MSMEs in August 2021 via Decree-Law 46. That legislation, which allowed the formation of limited liability corporations with legal personality, explicitly banned mixed enterprises between state and private capital, restricted one enterprise per individual, and prohibited Cuban partners abroad.
Understanding Cuba's New Business Partnership Regulations
What are the new partnership models allowed under the decree?
The decree introduces four models: forming mixed LLCs, state acquisition of shares in private LLCs, state absorption of private LLCs, and economic association contracts without creating new legal entities.
How does the state maintain control in these partnerships?
The state retains control as all transactions require express approval from the Ministry of Economy and Planning, with a designated commission evaluating proposals.
Which sectors are prohibited from forming partnerships under this decree?
Partnerships in the health, education, and activities related to the Revolutionary Armed Forces and Ministry of the Interior are prohibited, except for specified exceptions.