KUWAIT Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled Al Makhezeem and Liana Rashid, GLA & Company
being appraised. In the authors’ experience, clients have provided the value of assets on the basis of the audited financial statements submitted to the Kuwait CPA. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds Based on the authors’ experience, the Kuwait CPA primarily requires audited financial statements of the entities involved in a transaction to ensure the accu - racy of the amounts provided. As a result, the authors recommend that their clients provide precise audited financial statements, as the Kuwait CPA has zero tol - erance for misleading or false information and will impose penalties. 2.8 Foreign-to-Foreign Transactions In short, foreign-to-foreign transactions are subject to merger control and other measures. The Kuwait Competition Law applies to acts committed inside or outside the State of Kuwait whenever the acts pre - vent, restrict or distort free competition in the State of Kuwait. 2.9 Market Share Jurisdictional Threshold The Kuwait Competition Law does not specify a mar - ket share jurisdictional threshold. However, disclosure of estimated market share is part of the notice appli - cation to the Kuwait CPA. 2.10 Joint Ventures Joint ventures are subject to merger control. A joint venture of two or more persons that, on a lasting basis, performs an autonomous economic or commercial activity, regardless of its legal form or the activity to be practised, is considered an economic concentra - tion. There are no other special rules provided for in the Kuwait Competition Law in terms of joint ventures. 2.11 Power of Authorities to Investigate a Transaction The Kuwait Competition Law confers the capacity of law enforcement officers upon the employees of the Kuwait CPA. These officers are entitled to enter indi - vidual premises and workplaces to investigate viola - tions of the Kuwait Competition Law. They are also entitled to access records, books and documents as
well as to obtain information, data, documents and access to physical or electronic files held by a govern - ment or non-governmental body. In addition, they may seek the assistance of police officers when necessary. 2.12 Requirement for Clearance Before Implementation Implementation of a transaction may not lawfully pro - ceed before an approval is issued by the Kuwait CPA. 2.13 Penalties for the Implementation of a Transaction Before Clearance The Kuwait CPA is entitled to take corrective action for violations of the Kuwait Competition Law. Unfor - tunately, specific consequences for implementing a concentration before approval from the Kuwait CPA, where an application is required, are not stated in the Kuwait Competition Law. The Kuwait CPA may order the unwinding of a transaction for failing to comply with the procedures stipulated in the Kuwait Competi - tion Law. The authors witnessed a situation in which a company that should have filed an application nonetheless ful - filled the completion obligations outlined in the trans - action agreement, specifically regarding the transfer of shares, without filing with the Kuwait CPA. The Kuwait CPA became aware of this and, as a consequence, that company is likely to be fined between 1% to 10% of its annual turnover. The matter is being referred to the disciplinary board of the Kuwait CPA for their deliberation. 2.14 Exceptions to Suspensive Effect Unfortunately, there are no reliable sources of publicly available information on this issue. 2.15 Circumstances Where Implementation Before Clearance Is Permitted While possible, the circumstances under which the authorities will permit closing before clearance are not specifically laid out in the Kuwait Competition Law.
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