KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
try’s financial system and to regulate all aspects pertaining to the flow of capital into, within, and out of the State of Kuwait (“Kuwait”). This includes overseeing CBK-Regulated Entities in relation to: • lending/financing activities (including tight regulations concerning the extension of con - sumer and residential real estate facilities); • investment activities with respect to banks’ own investment portfolios or investments managed on behalf of clients; • risk systems, liquidity, and capital adequacy requirements; • interest rate ceilings and discount rates; • corporate governance and internal controls; • anti-money laundering (AML) and combatting terrorist financing (CFT); and • acquisition and change of control of shares in CBK-Regulated Entities; The CML Regime The CML Law established the Capital Markets Authority (CMA) which oversees Kuwait’s capital markets and financial services. It complements the CBK’s role in ensuring Kuwait’s overall eco - nomic and financial stability, the soundness and agility of its capital markets, as well as protecting investors’ best interests. The CML Regime is applicable to CBK-Regu - lated Entities in the context of banks being: (i) KSCs in their corporate form; and/or (ii) carrying out any “securities activities” such as investment management, investment advisory, custodian, subscription agent, or brokerage services (activi - ties that require a license by the CMA). Many CBK-Regulated Entities undertake such securi - ties activities as standard offerings. Therefore, such entities find themselves under the over - sight of the CMA.
The CML Regime is a comprehensive regulato - ry landscape which regulates various activities conducted by CBK-Regulated Entities in addi - tion to setting certain minimum standards. These include the following: • securities activities and financial services; • fiduciary duties in favour of clients; • ethics and conduct of business; • corporate governance; • internal controls and risk management sys - tems; • mergers and acquisitions; • transparency and disclosure of material infor - mation; • dealing in securities (eg, issuance of shares/ rights, bonds, sukuk and other structured instruments); • listing rules; and • AML and CFT. Boursa Kuwait Rulebook Boursa Kuwait is the only stock exchange oper - ating in the country. The CML Regime regulates the establishment and licensing of securities’ exchanges. Securities exchanges are then required to set their own rules and regulations (and administrative standards) for securities list - ed on their exchange. Such rules and regulations require the prior approval of the CMA before tak - ing effect. As at the date of this writing, Bour - sa Kuwait solely permits the public trading of equity instruments (eg, shares in listed entities) and units in investment funds. However, Boursa Kuwait, the CMA, and the Kuwait Clearing com - pany are embarking on a multi-phase market modernisation project to extend the offerings of other tradable securities such as sukuk, bonds, and derivatives.
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