KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
CPA requirements • Economic concentration: Parties involved in agreements subject to CPA Resolution No 26 of 2021 on Economic Concentration must submit a request to the CPA. This applies when: (i) one party has annual sales exceed - ing KWD500,000 based on audited financial statements from the previous fiscal year; (ii) the combined sales of the parties to the transaction exceed KWD750,000; or (iii) their total registered assets exceed KWD2.5 mil - lion, as reflected in audited records. • CPA assessment: The CPA, as mandated by Article 12 of Law No 72 of 2020 (the “Com - petition Protection Law”), examines whether proposed acquisitions might result in unfair market dominance or impede competition. If it detects potential risks, such as monopolis - tic behaviour or an undue competitive advan - tage, the CPA can take action by setting conditions or prohibiting the acquisition. Milestones and Approval Process Regulatory approval is required before the acquisition can proceed. The process includes the following filings: • CBK filings: The acquirer must file an applica - tion with the CBK that includes a memoran - dum of understanding, the feasibility study, and other relevant documentation outlining the proposed ownership structure. These filings allow the CBK to evaluate the potential impact of the acquisition on governance and financial stability. • CMA filings: The acquirer must submit detailed disclosure filings under the CML Regime. These filings must ensure that share - holders and market participants are properly informed about the financial evaluation of the transaction. They often include swap ratios,
valuation processes and shareholder approval details. • CPA filings: The involved parties must file company records, management information, an asset valuation report from a CMA-accred - ited auditor, and audited financial statements from the past two years. Additional filings include key agreements, a report on the eco - nomic impact of the acquisition, and financial assessments. A filing fee must be paid by certified check, calculated as the lesser of (i) 0.1% of the paid-up capital or (i) the total value of the parties’ assets in Kuwait, with a cap of KWD100,000. • Boursa Kuwait filings: If Boursa Kuwait approval is required, the parties must file an application along with supporting docu - ments, such as transfer forms, settlement agreements, court decisions, or privatisation orders. Ongoing Reporting Requirements Following a merger or acquisition, the acquirer is subject to several ongoing regulatory obliga - tions, including: • CBK reporting: The bank must regularly provide reports to the CBK about its financial condition, management practices, and risk controls. This helps the CBK track the bank’s stability after the acquisition and ensure its operations meet regulatory expectations. • Stress testing: The CBK may require the bank to conduct periodic stress tests. These tests assess the bank’s ability to withstand economic fluctuations and financial stress, focusing on key metrics like capital adequacy, asset quality and profitability.
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