KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
1. Legal Framework 1.1 Key Laws and Regulations General Rules: Banking and Finance Transactions
Banks are organised in the form of what is known under the Companies Law (defined below) as a shareholding company (KSC). KSCs are practi - cally joint stock companies. Other than state- owned or specialised banks, and branches of foreign banks, the CBK requires banks to pub - licly trade their shares. Because of such list - ing (and the fact that the banks are formed as KSCs), other regulatory frameworks apply. Such frameworks, in addition to banking-specific regulations, regulate listed companies conduct and internal operations (including, for example, the applicable corporate governance rules, dis - closure requirements, insiders, and registered persons within the company). In addition to the foregoing, such regulatory frameworks set out the organising principles (and applicable rules and regulations) on a given bank’s transactions. • Law No 7 of 2010 Regarding the Establish - ment of the Capital Markets Authority and Regulating Securities Activities (as amended) (the “CMA Law”) and its executive by-laws (as amended) (the “CMA By-laws”) (the CMA Law and CMA By-laws, together the “CML Regime”); • The rulebook issued by Boursa Kuwait (the Kuwaiti Stock Exchange) (the “Boursa Rule - book”); • Law No 1 of 2016 (as amended) (the “Compa - These include: • the CBK Law; nies Law”) and its executive by-laws; and • Law No 106 of 2013 Regarding Anti-Money Laundering and Terrorist Financing (the “AML Law”) and its executive by-laws. The CBK Law The CBK Law outlines the CBK’s broad authority to regulate the banking sector. Similar to central banks in other jurisdictions, the main objective of the CBK is to maintain the stability of the coun -
Kuwaiti law of contract and other private law mat - ters which are relevant to banking and finance transactions (such as lending, interest, guaran - tees, securities, and enforcement) are mostly set out under Decree-Law No 67 of 1980 (as amended) (the “Civil Code”), Decree-Law No 68 of 1980 (as amended) (the “Commercial Code”), and Decree-Law No 38 of 1980 (as amended) (the “Civil and Commercial Procedures Law”). Regulatory Regime Introduction Law No 32 of 1968 (as amended) (the “CBK Law”) together with the regulations, instructions and/or circulars issued by the Central Bank of Kuwait from time to time (each as amended) (together with the CBK Law, the “CBK Regu - lations”) defines banking activities as those transactions customarily carried out by banks such as the receipt of deposits, lending, trad - ing in and issuing debt instruments, trading in currencies and metals, extending credit and granting securities. The regulatory entity tasked with overseeing the banking sector is the Central Bank of Kuwait (CBK), and entities subject to its supervision are: • banks (conventional and Islamic); • branches of foreign banks in Kuwait; • financing companies; • investment companies licensed to carry out lending activities; • foreign exchange companies; • credit information companies; and • fintech activities. (the “CBK-Regulated Entities”).
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