KUWAIT Law and Practice Contributed by: Ezekiel Tuma, John Cunha and Luis Cunha, ASAR – Al Ruwayeh & Partners
• all public debt instruments that are tradable and issued by the various government entities or public institutions or authorities; • any right, option or derivative relating to securities; • units in a collective investment scheme; and • financial instruments whose value is derived from assets or price references, including the value of shares, bonds, commodities, currencies and interest rates, and which can be bought, sold and traded in a manner similar to shares or any other financial assets. Commercial papers, such as cheques, bills of exchange, promissory notes, letters of credit, cash transfers and instruments traded exclusively by banks amongst each other, insurance policies and rights arising from pension funds are not deemed securities. Note that a “tradable” interest in Kuwait would, for example, be a stock option listed on Boursa Kuwait. In the case of a non-tradable derivatives transac - tion, it could be considered as a private negotiated contract between two or more parties. Non-tradable derivatives should not (in our view) be considered as securities, particularly where the parties entered into the derivatives transaction under the umbrella of an International Swaps and Derivatives Association or other master-type agreement. 4.5 Filing/Reporting Obligations In the context of an acquisition, the notification and disclosure thresholds for the CPA, the CMA and Boursa Kuwait discussed above would all apply if the underlying asset for the derivatives is a tradable security as defined by the CML and the CML Bylaws. 4.6 Transparency A shareholder is required to make known the purpose of their acquisition, the date on which a relevant dis - closure threshold has been reached or crossed, the names of any associated persons and the percentage of the previous percentage shareholding in compari - son to the interest being disclosed. The CMA also requires that an offer document con - tains sufficient detail as to the bidder, sources of financing, the bidder group, and whether the bidder is acting in concert with any entity to gain control of the company. Further, a bidder is expected to disclose
whether following the takeover process, the shares would be transferred to other persons. In addition, the CMA has the discretion to request other information, which could include the bidder’s intentions regarding control of the target entity. Note also that both the bidder and the target entity are required to procure a report that is produced by an independent CMA-approved investment adviser who must provide their opinion on the offer and present it to the shareholders who retained them. Where the CMA approves an offer, the offering document must be published in at least two daily newspapers circu - lating in Kuwait and in accordance with the timeline prescribed by the CMA. The offer (and its details) must be announced on the websites of Boursa Kuwait, the bidder and the target company. The CML Bylaws require the bidder and the target to make a disclosure upon concluding an initial agree - ment. An initial agreement is in turn defined as one containing the general principles and initial steps to present a voluntary acquisition offer or to enter into a merger. It is a question of fact as to whether a non- binding offer meets these requirements and should therefore be disclosed. Additionally, the CML Bylaws require the publicising of any material information as soon as an event trig - gering a disclosure occurs. While there is no specific requirement for the disclosure of a non-binding offer, the CML Bylaws require a listed company to disclose the entering into of a contract with “significant effect”. The approaches taken by parties differ, but it is not unusual for a disclosure to be made when a preliminary agreement is signed with a supplementary disclosure once definitive agreements are entered into. It should be noted that Boursa Kuwait may require a listed com - pany to comment, eg, where there is speculation, or leaks of information and news, or where rumours are circulating, and if it fails to do so, the listing may be temporarily suspended and additional sanctions may 5. Negotiation Phase 5.1 Requirement to Disclose a Deal
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