The “Market Authority” closes the door to manipulation through … “Related Parties”

The Capital Markets Authority implemented a package of recommendations issued by the World Bank regarding the protection of minority rights and the regulation of transactions with related parties, so as to guarantee the neutrality and rights of the owners of all the classes.
The recommendations required some amendments to the provisions of Book Ten (Disclosure and Transparency), Eleventh (Securities Trading) and Fifteenth (Corporate Governance) of the executive regulations of the Law Establishing the “Market Authority”, to ensure that the requirements disclosures fully increase related party transactions, Protecting the rights of minority investors by supporting them with specific doses of disclosures.
According to sources, the amendments that have taken place, including those related to Chapter Four of Book Ten (Disclosure Transparency), which relates to the disclosure of material information and others, will be positively reflected in Kuwait’s ranking in the index. for the protection of minority investor rights contained in the Doing Business report which is issued annually by the World Bank.
And the fact that the related party item was rubbery and served as a back door for asset manipulation and smuggling, according to the vulnerability of the global financial crisis in 2008, due to the fragility of regulatory controls. Therefore, the “Market Authority” was interested in providing a state of regulatory balance in all transactions between the parent company and related parties, AND according to the amendments, the agreements were arranged between the listed company, the company parent, subsidiary or associate, or any related party, or an agreement by which both parties celebrate a project or asset or provide financing, and has an influential reflection or represents a value of 5 percent or Most of the assets of the Publicly listed company includes disclosure H. A description of the agreement or arrangement, its value and conditions, the nature of the interest and the relationship between the parties to the agreement or arrangement, should be included in the annual report.
The sources emphasized that the World Bank’s recommendations included a proposal to amend Article 7-7 of Book XV (corporate governance) of the executive regulation by entering a legal text that obligates independent experts and holds them accountable for providing impartial reports on transactions with related parties, in order to further protect the rights of investors. Minority by increasing transparency about interactions with related parties and independent experts.
In light of the World Bank recommendation, a mandatory clause was included in Book XV (Corporate Governance), specifically Article (9-9) Clause 4, which confirms that large transactions involving the purchase or disposal of assets represent 50 percent (or more) Of the total assets of the company requires the prior approval or authorization of the general meeting of shareholders and, consequently, point 4 was reformulated to clarify even more, regarding the promotion of the Professional behavior and ethical values, as it became necessary for the company to assign an independent expert, such as an asset appraiser or investment consultant, to provide a report to the general meeting or to the board of directors, as the case may be, on any agreement between the company and any method Related to it, or any agreement by which both parties celebrate a project or asset or provide financing ment, provided that the value of the agreement or agreement is equivalent to 10 percent or more of the total assets of the company, provided that this report is submitted before the approval of the agreement or The agreement mentioned in this article, while the Designated expert must comply with impartiality and fairness in preparing the report required for this article.
To regulate the public rights of shareholders, the “Market Authority” added a new clause in “Governance”: the eighth rule, entitled “Respect for the rights of shareholders”, which includes a commitment to previously approve any sale, purchase or disposition of any aspect of the company’s assets, if this process equals 50 percent or more of the total value of the company’s assets.

KFH: postponement of acquisition
Ali Al-Moutahid sponsored a study
Crown risks

Kuwait Finance House (KFH) stated that its decision issued on April 12 to postpone the acquisition procedures for Ahli United Bank in Bahrain, in which it considered the need to study the potential risks of the Corona pandemic and its impact on assets of the two banks.
In a statement to the Stock Exchange, the bank confirmed that the acquisition of the Bahraini bank was postponed until next December due to the Corona pandemic and trade delays.
He explained that the decision to postpone also took into account the update of previous studies regarding the acquisition of the Bahrain bank, if necessary.
KFH stated that the bank’s board of directors is interested in the interests of shareholders and investors by taking the utmost caution.
The banks, Kuwait and Bahrain, confirmed late last month that there was no news regarding the upcoming acquisition.
In two separate statements at the time, the two banks indicated that all feasibility studies and research that had been conducted in connection with the acquisition had been previously approved by the Board of Directors and public assemblies.
For its part, “Al-Ahly United” explained in a disclosure to the Stock Exchange that the various technical studies related to the acquisition will be updated, if necessary, before resuming the acquisition procedures, due to the long period of deferment and the economic repercussions of the Corona pandemic, out of concern for the interests of its shareholders.