Discussion forum about “capital markets authority : the code &the application”

 

Lately , a discussion forum ,that is considered to be  one of the most largest discussion forum  until now  since the  issuance of the capital markets authority law, was held in cooperation with our strategic partners DLA Piper Kuwait and AlAman Investment .

As usual we invited  the Union of Investment Companies to participate in the discussion .This is part of our effort to spread awareness and legal culture among all investment companies concerning  the new law. Also, we invited Real-estate and Financial companies in the insurance sector and other Listed companies in Kuwait Stock Exchange. Through the activities of the discussion Mr/Nader Al-Awadhhi, founding partner of (NEN) Al Wagayan, Al-Awadhhi  & Al Saif, said that the main aims that the lawmaker intend to achieve through the Capital Markets Authority Law  is to provide equivalence , equality and equal opportunities. This is what make us inquire about  the interests that the law protect? Are they achieved? He also stated that Article 112 of the law somehow contradicts the principles of the constitution  and that there is a violation to Banking secrecy law Articles (142-164).One defect of the law that may form a violation of the constitution is the violation of  the principle of  equal opportunities and the right to resort to the judiciary that is granted by the constitution ,if persons have equal legal situations .In addition, he said that Article 112 contradicts Articles 7,8,129 and 166.The composition of board of directors of the Authority violates articles 6-151-7 since three months of its establishment  .In article 107 of the law ,there are many procedures intended to achieve the aims of the lawmaker such as disclosure ,inculpation of actions, aggravating punishments of these actions, creation of a special prosecution for  Capital Markets Authority ,and creation of a special tribunal tasked with handling legal disputes, and stipulates strict jail terms and hefty fines for violators. The difference between what is applied in Kuwait Stock Exchange and Capital Markets Authority Law is that there was no special prosecution  in the past while in the new law we have that prosecution.

 

In addition, Mr. Abdul Aziz A.Al-Yaqout, Regional  Manager partner DLA Piper, Middle East  said that the formation of  Capital markets authority  law is similar to that one of KSA. In this discussion ,we are  supported by our the legal and judicial experts of  international  attorneys in DLA Piper Group. He also expressed his feeling of  pleasure for the issuance of the new law that will insure the stability of the national economy and  following the latest changes in Gulf, Arab and international markets 

 

 

A turning Point: 

Mr. Amer Al-amro, Legal Manager partner DLA Piper, Riyadh said that  Capital Markets Authority Law is considered to be a turning point for Kuwait. He also assured that we can benefited from the KSA experience in the process of establishing Capital Markets Authority in Kuwait . Also, he draws attention to the importance of establishing  Capital Markets Authority. More than that he said that  Capital Markets Authority in KSA obliged 96% of companies to disclose its results in spite of fears regarding  the role of the  Capital Markets Authority and its effect on the market  and the negative reactions about the declaration of the law for the first time. Soon ,all matters  were settled .The role of the authority became well known. It  protects investors, traders,  promote transparency  and reduces risks. 

 

Mr. Andreas Erm- senior legal Associate-DLA Piper, Frankfurt ,also participate in the discussion. He compared the European experience with  Capital Markets Authority law in Kuwait. He talked about:

Key Directives 

Collective investments

Markets in Financial Instruments Directive(MIFID)

Undertaking s for Collective Investment in Transferable Securities Directive (UCITS)

Alternative Investment Fund Manager Directive

Banking Directive  

Key aspects of MIFID  that provides harmonized regulation for investment services across 30 EU member states:

Authorization ,regulation and passporting.

Client categorization

Client order handling

Pre-trading transparency

Post-trading transparency

Best execution rules

The aim is to allow Collective Investment Schemes to operate freely throughout the EU on the basis of a single authorization from one member state.

    More than that, Mr. Mohamed Al-Qahtani , Executive Manager of AlAman Investment company, participated in the discussion. He said that we all know that Kuwait Stock Exchange   is considered to be the second largest Stock Exchange in the Arab World. It contains more than 200 of local and foreign  listed companies .Also, he stated that Kuwait is last state in the Arab Gulf countries that established  an independent authority for Stock Exchange. He Added that although the law delayed for 20 years, the presence of the authority is a positive progress that has a great effect on providing a suitable environment for transactions in Kuwait Stock Exchange .Its presence is a necessity for transactions. It creates right and correct procedure that promote transparency. It limits conflicts of interests and bad practices in the market. The issuance of this law is a step on the right way. It is the right way to cure the degraded situation of Stock Exchange and to deal with losses of companies as it is the supervisory authority that has full responsibility  to oversight  all listed companies, Brokerage firms, clearing houses and to keep records of investors. We are in need of Capital markets authority to oversight, regulate investments and Stoke Exchange  so as to achieve stability of the market which in return will lead to the stability of the local economy .The construction of the authority is a large step  that will open gates for local investments( capitals of  Kuwaiti citizens)  and foreign ones. Its establishment will make of Kuwait a financial center .Kuwait will return back to its previous position as the Pearl of the Gulf.  

      Mr. Mohamed Al-Qahtani , Executive Manager of AlAman Investment thanked (NEN) Al Wagayan, Al-Awadhhi  & Al Saif team work and DLA Piper Group, Kuwait who welcomed the idea of making  a discussion forum about the provisions of the law that issued in February 2010 .He thanked them for inviting legal experts from the offices of the group in KSA and UK. He also thanked Union of Investment Companies for accepting the invitation and  for participating in this discussion that is considered to be one of the largest discussions about the Capital Markets Authority Law  since its declaration.

      Mr. Waleed Al-Houti ,the Executive vice president  of AlAman Investment, Local &Arab Asset Management  ,said that the challenges that face Kuwait Stock Exchange are too much. There are many challenges  that face the legation that brings the decisions of the authority into effect so as to fulfill its work properly. One of these challenges is the harmony among authorized members in thinking  and conduct which is very important in the stage of construction. This may be the reason for delaying the declaration of authorized members’ names . Also there must be harmony between authorized members and their executive and administrative systems. Also, there must be harmony between Capital Markets Authority Law  and other laws such as the Law of Commercial Companies , Foreign Investment Law and  Transparency law .The presence of the new authority ,as an independent one responsible for the activities of the listed companies in Kuwait Stoke Exchange, represents three different institutions that handled such activities in the past namely: (Ministry of Commerce, Stoke Market, and Central Bank of Kuwait ). So it is important to differentiate  between the responsibilities of these institutions in the stage of construction so as to provide the authority the chance to succeed  and to do its work properly .There is no doubt that the relationship between the Authority and officials of the listed companies, especially in this hard time of the local economy, is one of the most important challenges where the matters of transparency, rights of minority, mergers  or liquidation or listing them need more cooperation between the Authority and officials of these institutions.   



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