On March 13th, Kuwait’s Capital Market Authority (CMA) bylaws were published in Alkuwait Alyoum official government newspaper. This action constituted the official declaration that the CMA bylaws are now in effect. Further, the CMA reminded of this in a statement posted on the Kuwait Stock Exchange (KSE) website today. Although most laws are in effect as of last Sunday, the law provides a time frame of between 6 – 12 months for the KSE, brokerages companies, and investment companies to fully comply. For example, according to the bylaws of the CMA, the KSE will have to transform into a private company equally owned by listed companies through an auction and Kuwaiti citizens through a free public offering. This process must be completed in the next 12 months.
All other laws, such as those pertaining to takeovers, are currently fully in effect. This deals a major blow to Zain, which can’t see its deal going thru anymore as new regulations force an acquirer of a stake of more than 35% to extend its offer to all other shareholders. The first takeover transaction compliant with CMA laws could be Injazat Real Estate’s takeover of Aqar Real Estate. The disclosures and other requirements for this deal will provide us with a valuable insight into the effectiveness of the CMA.
Congratulations to all Kuwaitis on this massive step that will hopefully instill more confidence in the KSE. We finally have an authority that will safeguard our stock market from major manipulations and the lack of transparency. According to Al-Qabas daily newspaper, investment companies committed 544 breaches to Central Bank regulations from 2004 to 2010. Most of those breaches faced minimal punishments. We hope this step will usher a new era of fairness, ethics, accountability, and transparency in Kuwait’s financial community.
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