Transparency Within Kuwait New Capital Markets Bill Aims To Regulate Securities Activities In Kuwait

Kuwait's National Assembly unanimously passed on January 20th, 2010 a groundbreaking bill that will regulate the country's stock market for the first time. The Capital Markets Bill (the "Bill"), once passed in a second reading in the weeks to come,will provide for greater transparency of security activities within Kuwait.

The Bill revolutionises the previously unregulated Kuwaiti securities market by implementing regulations and licensing requirements for entities such as stock exchanges, clearing companies, and investment funds to make such activities equitable and competitive with foreign securities markets. The Bill also states that stock exchanges (i.e., the Kuwait Stock Exchange ("KSE") and any other future stock exchanges) shall be converted to shareholding companies of which the government must own at least 60%. The remaining 40% are allotted for sale to Kuwaiti citizens in an initial public offering. While certain provisions of the Bill might change during its second reading, such amendments will likely be minimal.

The Bill establishes an independent body called the Capital Market Authority (the "Authority"). The purpose of the Authority is to:

Regulate securities activities to ensure that they are equitable, efficient, competitive and transparent; Raise public awareness of securities activities as well as the benefits, risks, and liabilities associated with investing in securities; Apply a policy of full disclosure to prevent conflicts of interest and insider trading; and Ensure compliance with laws and regulations related to securities activities. In achieving the objectives stated above, the Authority is charged with the following duties:

Filing civil and commercial litigation related to various provisions of the Bill and the regulations issued under the same; Receiving criminal complaints about violations of the Bill and making administrative investigations regarding the same and forwarding the results to the Authority's Disciplinary Board. Detecting crimes as stipulated in the Bill and referring criminal complaints to the public prosecutor, whether the suspected crime is against the Authority or dealers in securities activities; Inspecting and monitoring the activities of persons licensed under the Bill; Buying, holding, and disposing of property and taking all legal actions relating to the same; Printing and disseminating material related to securities activity; and Imposing fees and fines within the limits of application of...