KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
the law (after the substantive analysis by the CBK). • Additional regulatory framework: Recently, the CBK has been proactive in setting addi - tional guidelines with respect to regulating acquisitions or mergers. These guidelines are to a large extent bespoke and structured on a case-by-case basis. For example, in the recent merger of Kuwait Finance House and Ahli United Bank of Kuwait, the CBK devised tailored guidelines to control the merger pro - cess and milestones given the transaction’s size and the systemic impact on the local banking system. CMA requirements Mergers and acquisitions involving CMA-Reg - ulated Entities require prior approval and must comply with transparency and disclosure obliga - tions outlined in Module 9 of the CMA By-laws. While both mergers and acquisitions involve changes in ownership and control, they differ in structure and purpose. Acquisitions typically involve one entity purchas - ing a controlling interest in another. They vary based on key factors such as whether the offer is mandatory or voluntary, competitive or non- competitive, and whether the consideration is in cash or non-cash form. Some acquisitions, such as reverse acquisitions, introduce addition - al procedural requirements due to their complex structure. In contrast, mergers focus on the unification of companies into a single entity. In Kuwait, bank mergers take several forms, each governed by the Companies Law and the CML Regime: (i) amalgamation, where one company absorbs another, assuming all its assets and liabilities; (ii) combination, where two or more companies merge to create a new entity, dissolving the origi -
nals; and (iii) division and amalgamation, where a company’s assets and liabilities are split and transferred to existing entities. Acquisitions Under CMA Compliance Requirements Mandatory offers and creeping rules CMA By-laws introduce rules governing the incremental acquisition of shares in publicly listed companies, also known as “creeping rules”. These rules delineate the thresholds that, when surpassed, trigger mandatory takeover obligations requiring a person surpassing such threshold (save for limited exceptions) to make a mandatory tender offer to acquire the entire shareholding of the listed company (MTO). An investor may acquire up to 30% of a company’s voting shares without having to launch an MTO. Notably, for ownership levels between 30% and 50%, investors are permitted to acquire or dis - pose of shares within a limit of plus or minus 2% semi-annually without having to launch an MTO. Similarly, for ownership levels between 50% and 100%, the limit is set at plus or minus 5% semi- annually. Investors who have previously made offers to acquire the entire shareholding of a cer - tain listed company (whether by way of an MTO or otherwise) are exempt from the aforemen - tioned creeping rules’ limits and may increase their shareholding in such listed company with - out restrictions. In addition to disclosure rules applicable to persons with significant interest in listed entities, any investor is required to notify both the CMA and Boursa Kuwait when their interest (whether directly or indirectly) triggers an MTO obligation. Competitive acquisitions In scenarios where multiple bidders compete for the same target, competitive acquisitions apply. Any competing offer must be distinct from the original bid and disclosed to the CMA and share -
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