I INTRODUCTION

A seismic shift in the regulation of capital market activities in Kuwait took place on 21 February 2010, the date the National Assembly (the Kuwaiti parliament) enacted the Capital Markets Authority Law (the CMA Law).2 The CMA Law created a new and independent body (the Capital Markets Authority (CMA)) and provided the basis of the CMA's establishment, aims and goals, in addition to a new legal framework to fill a lacuna in the law.

The CMA Law is considered by prominent experts and practitioners in the legal community as the most complex law promulgated in the recent history of Kuwait, especially concerning its interpretation, application and enforcement. The primitive infrastructure of capital markets' regulation prior to the CMA,3 coupled with the hasty, unplanned enactment of the law, led to inevitable obstacles preventing a smooth transition into the new regulatory framework and resulted in its rigid impractical application. This was especially the case because the CMA Law interrelates with many public and private laws, such as the Civil Law, the State Audit Bureau Law, the Penal Law, the Companies Law, the Central Bank's Law and their respective by-laws and regulations.

On 10 May 2015, Law No. 22 of 2015 (the CMA Law Amendment) was enacted, which contains amendments to 64 of the 165 articles that make up the CMA Law. The CMA Law Amendment came into force on 10 November 2015. (See Section II.ii for further discussion about this amendment.) On 9 November 2015, the CMA issued its new and improved by-laws, which were a polar shift from their predecessors and include substantial changes to the regulatory regime and processes within the CMA to bring it in line with International Organisation of Securities Commission (IOSCO) standards. In fact, in May 2017, the IOSCO rendered its decision to grant the CMA full member status.

The earlier iteration of the CMA's by-laws, which were introduced on 13 March 2011, and the several fragmented resolutions, instructions, guidance notes and circulars issued pursuant thereto, have been the subject of continued criticism by the market during the aforementioned by-laws five-year tenure. As such, the CMA declared its vision to adopt a different model comprising consolidated, clear and easy-to-navigate regulations in the format of an organised unified code to house its by-laws. The CMA's vision in relation to the new by-laws, became reality, in what was described as the most extensive regulatory exercise in Kuwait's history, through Resolution 72 of 2015 to issue the CMA's newest by-laws and expressly repeal the then-old ones.

i Structure of the law

The CMA Law consists of 13 Chapters. It starts by outlining the organisational structures and regulatory frameworks of the CMA, securities exchanges and clearing agencies. In Chapters 5 to 9, it regulates organised securities activities, licensing of parties engaging in capital market activities, acquisitions and minority rights, collective investment schemes, and the formalities and procedures related thereto. The CMA Law also provides extensive guidance on the conditions and requirements for disclosures and market announcements. The legislation concludes with general and transitional rules.4

ii Structure of the courts

The CMA Law provides language for the creation of 'specialist courts', which have jurisdiction over all matters subject to the CMA Law. Article 108 stipulates that the court of first instance will be 'the Capital Markets Court, the location of which shall be decided by virtue of a decree from the Minister of Justice with the approval of the Supreme Judiciary Council'. The Capital Markets Court comprises two circuits: a penal circuit that has jurisdiction over all penal cases arising from matters subject to the CMA Law, and a circuit that oversees civil, commercial and administrative matters subject to the CMA Law.

In addition, Article 112 of the CMA Law stipulates that penal and non-penal circuits at the courts of appeal will have jurisdiction over appeals arising from the court of first instance. The highest court of appeal with respect to matters subject to the CMA Law is the Court of Appeal, and the Court of Cassation, normally the highest court of appeal, has no jurisdiction. The purpose of this approach is thought to be to streamline the process and reach final judgments expeditiously.

II THE YEAR IN REVIEW

i Developments affecting debt and equity offerings

The capital markets in Kuwait have suffered in the past few years from economic stagnation. Equity offerings have been on the shy side, except for a few public shareholding companies in which the state is the main investor.5 However, in what is seen as a new development in the market during the past two years and following years of stagnation, we have witnessed one high-profile private sector initial public offering (IPO) in the fast-moving consumer goods sector.6 There was limited activity in 2017 in respect of equity offerings. In the arena of debt capital markets, issuances originating from Kuwaiti entities have witnessed a healthy resurgence, and the debt capital market in Kuwait in 2015, 2016 and 2017 can be described as relatively busy. This is spearheaded by the state of Kuwait's establishment of an unlimited global medium-term note programme and an inaugural dual-tranche, US dollar-denominated international debt capital markets issuance thereunder of US$8 billion of notes in aggregate by the state of Kuwait, acting through the Ministry of Finance and represented by the Kuwait Investment Authority. Further, almost all Kuwaiti banks have embarked on debt capital market programmes and issued Basel III compliant bonds and sukuk7 to strengthen their capital base.

In addition, the foregoing is seen as a direct result of the CMA's efforts to streamline its regulations and internal procedures for debt and equity offerings under the new rules. This is especially topical in the face of challenging market conditions and low oil prices. This year, Kuwait appears to be in tune with (and not, as previously, decoupled from) the GCC-wide trend that witnessed an increase in financing raised in the capital markets through debt issuances (i.e., bonds and sukuk). It is envisaged that more corporate issuers will tap the capital markets for funding, and the mixture would include both publicly traded and private (i.e., closed shareholding) companies.

ii New regulations

In addition to the CMA Law Amendment, the CMA has completely overhauled its executive by-laws through the adoption of a unified code format (often referred to as the CMA Handbook). The CMA Handbook is well organised, logically structured and contains rules, procedural steps and template forms spread over 16 'modules', each tasked with regulating a specific section as follows:

  1. glossary of defined terms;
  2. the Capital Markets Authority;
  3. enforcement of the law;
  4. exchanges and clearing agencies;
  5. capital markets activities and registered persons;
  6. internal policies and procedures for licensed persons;
  7. clients' funds and assets;
  8. conduct of business;
  9. mergers and acquisitions;
  10. disclosures and transparency;
  11. dealing in securities;
  12. listing rules;
  13. collective investment schemes;
  14. market practices;
  15. corporate governance; and
  16. anti-terrorism and anti-money laundering.

The CMA Law Amendment

It appears that the overall aim of amending the CMA Law is to confer greater rule-making powers to the CMA. The CMA Law Amendment delegates several matters that used to be rigidly regulated to the executive by-laws, and grants the CMA the authority to make further rules and exceptions. As publicised, the CMA's regulatory reform aims to implement international standards to obtain membership in the IOSCO and prompt the Kuwaiti market to be classified as an 'emerging market'.8

The CMA Law Amendment has amended many of the definitions in the CMA Law and included new ones. For example, one of the most important definitions that were added was that of 'dealing in securities', which was drafted broadly. Technical errors were also remedied: the definition of 'private placement' used to be limited to 'closed shareholding companies, or in the event of increasing the capital of an existing company'. This limitation has now been omitted.

One of the major changes was exempting the rules of transfer of ownership and dealing in securities from the provisions of Articles 508, 992 and 1053 of the Civil Code and Articles 231, 232, 233 and 237 of the Commercial Code.9 These Articles regulate the procedures related to public policy with respect to the sale and ownership of encumbered assets. In the fast-moving environment of securities markets, the procedures in the aforementioned Articles in the Civil and Commercial Codes, which require, inter alia, the involvement of the courts in granting a sale or ownership order, are outdated and do not provide equitable outcomes.10

The CMA Law Amendment aims to bring the CMA Law in line with the many subsequent piece of legislation that were enacted by the Kuwaiti parliament such as the new Companies Law in 2012, the Promotion of Investment Law in 2014 and the Public Private Partnership Law in 2014. Finally, the CMA Law Amendment creates an express tax exemption in Article 150 on proceeds arising from securities, including, but not limited to, bonds, sukuk and all other similar securities, regardless of the issuer.

Preferred shares

The new by-laws in Module 11 – Chapter 13 of the CMA Handbook contain provisions regulating preferred shares, making Kuwait the first GCC country to regulate preferred shares, which are defined as 'shares that are granted specific privileges with respect to voting, profits, liquidation proceeds or any other rights provided that the shares of the same type shall be equal in terms of the rights, privileges and restrictions'.11 Module 11 – Chapter 13 deals with regulating the issuance, trading, conversion and redemption of preferred shares. In addition, it regulates the rights of the holders of such shares, their ongoing obligations and disclosure requirements.

Module 11 – Chapter 13 also lists the minimum eligibility requirements for issuances and issuers, which require, inter alia, that all subscribed shares of the issuer be fully paid up, and that the aggregate of the issued capital and the value of the new issuance does not exceed the authorised share capital of the issuer. Detailed regulations are included with respect to the offering documents and method of offering. As per Module 11 – Chapter 13, preferred shares may only be issued following the approval of an extraordinary general meeting of the issuer, and this approval must expressly mention the types of rights attached to the preferred shares. Module 11 – Chapter 13 restricts the method offering preferred shares to private placements and only to professional clients (as defined in the CMA by-laws). However, by way of discretionary exceptions, public offerings are permitted provided prior approval of the CMA on the issuance and prospectus is obtained.

Regulation of mergers and acquisitions

The new by-laws dedicate a stand-alone module within the CMA Handbook to regulate mergers and acquisitions. The regulation of mergers and acquisitions was previously spread over various fragmented sources that were often criticised by the market as rigid, not clearly outlined and containing ambiguous procedures. Module 9 introduced a consolidated regulatory framework in an aim to eliminate ambiguity and introduce clear procedures. In fact, Module 9 contains appendices that have clear steps for each type of merger and acquisition contemplated by the by-laws, such as mergers in general, voluntary tender offers, non-cash voluntary tender offers, competitive (interloping) offers and mandatory tender offers. In an interesting and unprecedented regulatory format, Module 9 contains guidance flowcharts to assist investors in calculating their 'indirect shareholding in a publicly listed company'. The foregoing is crucial in the context of events triggering mandatory tender offers that create a rule mandating 'a person who acquires, directly or indirectly, more than 30 per cent of the securities admitted to trading of a listed shareholding company' to 'submit an offer to purchase all the remaining shares traded in the exchange' within 'thirty days from the date of such persons acquisition'.

The new by-laws also tackle criticisms of the previous mergers and acquisitions regulatory framework in that they create exemptions to the aforementioned mandatory tender offer rules. Some of the exemptions are more fluid than others. For example, the CMA has the discretion to exempt an investor from launching a mandatory tender offer citing public policy or public interest reasons. Other exemptions include, inter alia, arriving at a shareholding in excess of 30 per cent owing to debt restructuring, or a capital increase (where other shareholders refrain from participating in a manner commensurate with their existing pre-increase shareholding).

In the same vein, Module 9 has also revamped the rules regarding the allowable trading percentages of parties controlling listed companies (otherwise known in the market as 'creeping rules') by increasing their flexibility. Creeping rules are applicable to persons (natural or otherwise) categorised as 'controlling parties' of publicly traded companies. Therefore, they are applicable to persons who either previously executed an acquisition under the CMA rules, persons who obtained 'control' prior to the promulgation of the CMA Law or persons who are exempt from mandatory tender offers. Module 9, therefore, is applicable to all shareholdings exceeding 30 per cent of voting rights in a publicly traded company. The regulation provides a cap on the permitted purchase and sale of shares. While the previous rules set a 2 per cent limit on the increase or decrease of the annual shareholding of a controlling party in the event of the shareholding being more than 30 per cent but less than 50 per cent, the new rules make the 2 per cent movement limit applicable on a semi-annual rather than an annual basis.

Similarly, Module 9 reinstitutes the rules for shareholdings equal to or greater than 50 per cent held by controlling by allowing a 'creeping' of 5 per cent semi-annually under the new rules rather than annually under the old rules. It is crucial to point out that in the event a controlling party purchases shares in excess of the allowable percentages, it must submit a mandatory tender offer. However, a controlling party who has submitted a mandatory or voluntary tender offer would not be subject to the creeping rules and may increase their shareholding in any percentage.

Corporate governance

The first iteration of the Corporate Governance Rules (CGRs) issued by the CMA by virtue of Resolution No. 25 of 2013 on 27 June 2013 was not received well by the market. This is due in part to the CMA's heavy-handed approach in its efforts to enforce the rules, and the markets' lack of awareness thereof. In response to the aforementioned approach, the market, led principally by the Chamber of Commerce and with the participation of many other market players, such as the Union of Investment Companies, organised a campaign to put pressure on the CMA to adopt a more lenient regulation, taking into consideration the peculiarities of the Kuwaiti market in addition to approaching the regulations from the perspective of an 'enlightened investor model'.

Responding to the market's backlash, the CMA decided to put back the enforcement of the CGRs from 31 December 2014 to 30 June 2016.12 At that time, the CMA had already publicly declared its intention to overhaul its regulatory framework. As such, on 30 June 2015, Resolution No. 25 of 2013 was expressly repealed by the new CGRs issued by Resolution No. 48 of 2015. When the new by-laws were issued in November 2015, the new CGRs were included as part of the CMA Handbook, housed in the stand-alone Module 15.

The new CGRs came into force on 30 June 2016. With the exception of some mandatory rules, the new CGRs adopt substantially 'comply or explain' regulatory principles. To make compliance easier, the CMA has introduced an online portal to streamline the reporting obligations of entities subject to the CGRs.

Dealing in securities

In comparison with the old framework, the new by-laws consolidate substantially all the rules related to the issuance, offering and subscription of securities in Module 9 of the CMA Handbook. The basic premise of the rules in Module 9 revolves around outlining the internal and external approvals required from an issuer of securities together with the standards required in offering documents. One of the highlights of Module 9 is the introduction of a chapter on the establishment of special-purpose companies to act as issuers, in addition to the introduction of the concept of financial trusts for the purpose of the structuring of sukuk.

As a general rule under the CMA by-laws, all securities issuances, whether on a public or private placement basis, require the following from the CMA as a condition precedent: an issuance approval and a prospectus approval.

In contrast with other regional securities frameworks, there are very few exemptions13 under the CMA by-laws, and the CMA appears to adopt an active regulatory approach. The CMA appears to aim to regulate 'foreign'14 and 'guaranteed' issuances insofar as the obligor or issuer is in Kuwait by introducing the same regulatory burdens on 'direct' and 'indirect' issuances by a Kuwaiti obligor.

iii Cases and dispute settlement

Kuwait does not adhere to the doctrine of binding precedents, and the CMA Law, being only seven years old, has yet to establish accepted legal principles as are the case with more developed areas of the law. Kuwait does not report the majority of its cases, and there is no publicly available database that can be consulted to ascertain the latest decisions in a given area of the law.15

For the purpose of expeditious resolution and settlements of disputes, the CMA, as mandated by the CMA Law, has formed the Complaints and Grievances Committee (CGC), which is concerned with receiving and processing complaints against persons subject to the CMA Law, and grievances appealing decisions by the CMA. The CGC has the right to decide, reserve the matters it reviews or refer them to the Disciplinary Council within the CMA.16

The Disciplinary Council, which is presided over by a member of the judiciary, has the objective of hearing grievances referred from the CGC and has the power, inter alia, to reverse those decisions. Further, the CMA by-laws allow the CMA to amicably settle cases for which the courts have yet to issue a ruling.

iv Relevant tax and insolvency law

Taxation

Kuwait has a very simple and clear tax regime, which is not as convoluted as those in many other jurisdictions that are more dependent on the taxpayer for purposes such as funding national programmes and balancing budgets. Kuwait has a tax department at the Ministry of Finance called the Department of Income Tax, which oversees all matters relating to taxation. As a general rule, taxation in Kuwait is always imposed on net profits (e.g., there is no tax imposed on capital gains or inheritance). However, the Kuwaiti tax regulators have been criticised in their inconsistent application of the tax laws and regulations. Further, while Kuwait has a wide network of double taxation treaties, the implementation of those treaties by the Kuwaiti courts require more development.

Income tax

The most substantial applicable tax is corporate income tax, regulated by Decree No. 3 of 1955 (as amended by Law No. 2 of 2008) (the Income Tax Law). The Income Tax Law stipulates that all corporate bodies, notwithstanding their form (whether shareholding (KSC) or with limited liability (WLL) compared with other tax laws mentioned below), operating in Kuwait, are subject to a 15 per cent net income tax. Income tax is applied on earnings arising from activities such as profits realised on any contract partially or fully executed in Kuwait, commissions from commercial representation or intermediary agreements, provision of services, or commercial or industrial activities. Income tax is calculated after deducting certain expenses, such as depreciation, wages, salaries, employees' end-of-service indemnities and head office expenses, in accordance with the specifications of the applicable regulations.

However, returns realised as a result of deals on the Boursa Kuwait either directly, indirectly, through portfolios or investment funds, are exempt from income tax. In fact, in a recent development and pursuant to the CMA Law Amendment, this exemption was further expanded to returns arising from any securities.17 Pursuant to the Income Tax Law, all ministries, authorities, public bodies, companies, societies, individual firms, any natural person and others as specified by the executive rules and regulations may retain 5 per cent of the contract price or each payment made to parties with whom they entered into contracts, agreements or transactions. Non-adherence to such an obligation by the parties concerned will render them liable to a penalty of bearing the tax not paid by the company subject to the tax law. Finally, although the Income Tax Law does not differentiate between foreign and local persons with regard to its applicability, its current method of enforcement only applies to foreign corporate persons and equities in Kuwaiti companies. The former application does not does not consider GCC nationals as foreign.

National labour support tax

Law No. 19 of 2000 concerning the support and encouragement of Kuwaitis to work in the private sector creates a national labour support tax (NLST). The NLST is applied on companies listed on the Kuwait Stock Exchange (KSE) and imposes a 2.5 per cent tax on their annual net profits. The purpose of this tax is to fund national programmes to support the part of the Kuwaiti workforce that opts to work for the private sector.

Zakat tax

The zakat tax imposes an obligation to pay 1 per cent of the annual net profit generated by any Kuwaiti shareholding company, whether public, closed, listed, non-listed (i.e., WLLs are not subject to zakat tax).18 The Zakat Tax Law exempts certain shareholding companies from paying the zakat tax, such as companies wholly owned by the state and companies that are subject to the Income Tax Law.

Contribution to the Kuwait Foundation for the Advancement of Science

Kuwaiti shareholding companies (closed or publicly traded) contribute 1 per cent of their annual net profits to the Kuwait Foundation for the Advancement of Science (KFAS). This contribution is the main source of funding of the KFAS. It is debatable whether this contribution constitutes a tax duly levied by Kuwait, but in practice most companies comply and make their contributions.19

Insolvency laws

The Kuwait insolvency and bankruptcy regime is mainly housed in Decree Law No. 68 of 1980 issuing the Commercial Code. It deals with the topic as a whole and has a few special rules dealing with the bankruptcy of companies (in Articles 670 to 684); however, given the current commercial climate, the law has been subject to severe criticism, and is considered to hamper progress as it is still based on the old Egyptian Commercial Code and has not been updated. Therefore, Kuwait has seldom declared bankruptcies with respect to big companies, and the law in its current form overlaps very little with capital market activities.

However, in response to the financial crisis, Kuwait promulgated Decree Law No. 2 of 2009 (the Financial Stability Law). This Law lists the conditions under which, if satisfied, the state will guarantee the decline in the 'balances of the financial investments portfolio and the balances of the real estate investment portfolio, outstanding in the banks records as at 31 December 2008'.20 The Financial Stability Law has also created a new circuit at the court of appeal to oversee requests for the restructuring of companies and provides language that these requests must be met urgently. If a company makes a request pursuant to the Law and the judge who presides over the circuit has registered his or her approval thereon, the company will be temporarily protected from all judicial and enforcement proceedings in respect of its obligations.

This temporary period is valid until the court approves the restructuring plan of the company or rejects the request for restructuring. Some companies have made requests without merit just to be covered by the legal protection period (which, due to the slow nature of the judiciary, lasted longer than was intended according to the provisions of the law);21 however, very few companies genuinely in this situation have chosen to benefit from this law as a result of market-specific characteristics and unfavourable local attitudes towards the notion of bankruptcy.

This, in addition to the gap between local and international standards, has prompted the World Bank to take part in a new project launched in March 2014 to work directly with the Kuwaiti government. The project aims to ameliorate the main issues concerning Kuwait's insolvency law and the frameworks regarding debtors and creditor matters. The result of this collaboration would be to provide support on a new legal framework for enterprise bankruptcy and streamlining judicial approvals for 'distressed debt workout plans' in addition to the creation of a specialised commercial court run by a commercially shrewd and trained judiciary, which is something the country lacks.22 One collaboration has already been announced, and the Ministry of Commerce and Industry has published in various newspapers a draft of the new Insolvency Law, which contains provisions on restructuring companies, appointment of receivers and suspension of insolvency procedures. However, the draft Insolvency Law, as at the time of writing this chapter, has yet to be debated in the Kuwaiti parliament in order to become law.

v Role of exchanges, central counterparties and rating agencies

Prior to the enactment of the CMA Law, the Boursa Kuwait, by virtue of the Amiri Decree issued on 14 August 1983, was created and granted an independent legal personality. It was also entrusted with regulatory securities activities through the KSE Executive Committee (KSEC). The KSEC issued all the rules and regulations regulating securities' activities, but following the enactment of the CMA Law, the Boursa Kuwait came under the CMA's oversight, rolling back its authority to regulate.

On 27 April 2014,23 and in accordance with the CMA Law, a public shareholding company, the Stock Exchange Company, was established in an effort to privatise the stock exchange. Pursuant to Article 33 of the CMA Law, 50 per cent of the Stock Exchange Company's shares will be offered to the public, and the right to purchase the remaining 50 per cent will be divided into 5 per cent segments and offered for sale through an auction in which only listed companies are allowed to participate.

In terms of central counterparties, according to the CMA Law, the establishing, licensing, managing and operating of clearing houses is subject to the CMA's approval and continuous oversight. The law confers to the CMA substantial authority to regulate licensed clearing houses to the extent that no rule, policy or amendments shall be considered valid unless approved by the CMA.24 The Kuwait Clearing Company is the most prominent clearing house in Kuwait. It provides several services, among which are:

  1. clearing and settlement services;
  2. derivatives markets clearing and risk management;
  3. materialisation and rematerialisation of securities;
  4. pledging and mortgage accounts;
  5. trustee services; and
  6. subscription management services of IPOs.25

III OUTLOOK AND CONCLUSIONS

The CMA, as a relatively new regulator, has been increasingly busy in the past few years organising its internal structures and phasing in its regulatory activities to become effective and to bridge the gap between accepted local practices and international standards. What has been the subject of increasing criticism during its short lifespan has been the attitude it has adopted, characterised by the rigid application of the law and often slow response times when it comes to granting the required licences for persons to carry out their business. The responses from the regulators must be better outlined, explained and substantiated. However, in particular during 2016 and 2017, the CMA has been seen to streamline its internal processes and take a risk-based approach to its rules particularly in the sphere of new and repeat debt and equity issuances. Professionals can now see an established, although not clearly codified, practice to obtaining the requisite approvals from the CMA in order to issue securities from Kuwaiti entities and market securities onshore in Kuwait.

It has also been recommended that clear and easily accessible practical guides and databases be created for such practices and administrative decisions. This is consistent with the CMA's published goals of increasing the awareness of stakeholders from the investment and legal perspectives, in addition to the CMA's mandate of improving the authority's performance in all its departments and raising its levels of efficiency and effectiveness. This must also be done in collaboration with other governmental and private sector entities.

On the positive side, many developments have taken place in 2016–2017. The most publicised of these has been the implementation of the complete overhaul of the CMA's regulatory framework after the introduction of the CMA Handbook. The CMA has taken the unprecedented step of issuing an exposure draft seeking public commentary prior to the adoption of the rules. It appears that the regulation of capital markets in Kuwait has been the subject of several reforms, and the attitude of the regulator in 2016–2017 has shifted to a more collaborative, consultative and transparent approach.

We believe that the CMA should review the effectiveness of the new CMA by-laws in achieving their intended objectives, and listen to the market in respect of the emerging criticisms in the applicability thereof. Further, it is critical for the regulators in Kuwait to streamline their processes and not create double-burden rules, for example the interplay between the rules of the CMA and the Central Bank of Kuwait in relation to the regulation of entities subject to the latter's oversight, which essentially regulates the same matters, must be addressed to reduce unnecessary regulatory burdens.

Finally, the regulatory reforms can be seen as directly responsible for the membership of the CMA in the IOSCO, and more recently the classification of Kuwait, by FTSE Russell, as a secondary emerging market.26 The classification of the country as a secondary emerging market is seen as a positive step to welcoming international investors into the country, which creates a pressing need for the continuation of regulatory reform in the Kuwaiti regulatory frameworks.


Footnotes

1 Abdullah Alharoun is an associate at the International Counsel Bureau (ICB). This chapter was prepared with the help of Abdullah Alkharafi and other ICB lawyers and staff.

The content of this chapter is correct as at November 2017.

2 Law No. 7 of 2010 on Establishing the Capital Markets Authority and Regulating Securities Activities.

3 A few fragmented laws, such as Law No. 31 of 1990 and the Kuwait Stock Exchange regulations.

4 For example, Article 155 of the CMA Law stipulates that: 'the supervisory and control role referred to under this Law shall be transferred to the CMA within six months from the date of publishing the CMA Law executive by-laws. Thus the supervisory and control role of the Executive Committee of the Kuwait Stock Exchange shall be brought to an end.'

5 An example of the aforementioned initial public offerings (IPOs) is the recently established Kuwait Health Assurance Company, which has a 24 per cent government ownership and capital of 230 million dinars.

7 For example, National Bank of Kuwait issued 10-year Subordinated Tier 2 bonds worth 125 million dinars, in July 2016 Burgan Bank established a euro medium-term note programme with a limit of US$1.5 billion, Gulf Bank issued Tier 2 bond notes worth 100 million dinars and Boubyan Bank US$250 million.

8 CMA Chairman of the Board of Commissioner's Message: www.cma.gov.kw/En_Chairman_Message.cms. Retrieved 1 September 2015.

9 Law No. 67 of 1980 (as amended) and Law No. 68 of 1980 (as amended).

10 The amendments in this regard are modelled on French Law No. 364 of 2006 and Egyptian Law No. 88 of 2003 (in particular, Article 105).

11 Reiterating the definition of preferred shares in the Companies Law.

13 The current CMA by-laws do not recognise issuances under a programme (i.e., in the context of debt capital market issuance). The only exemption to obtain CMA approval to issue securities is the issuance of shares (that is, ordinary and not preferred shares).

14 If the issuer is a special purpose vehicle outside Kuwait but guaranteed by an obligor Kuwaiti entity, then, prima facie, CMA approval to issue would be required.

15 With the exception of the 'Collection of legal principles issued by the Court of Cassation', published by the Ministry of Justice, which often lags behind by about a year.

16 The Disciplinary Council was established pursuant to Article 140 of the CMA Law. In 2013, the Complaints and Grievances Committee had a total of 77 complaints and grievances, 58 of which were concluded in 2013.

17 This new exemption has yet to be tested by the Kuwaiti courts, the provision in the law stipulates 'Without prejudice to the tax exemptions from the prescribed tax on profits arising from disposal of Securities issued by companies listed in the Exchange, returns in respect of Securities, bonds, financial Sukuk and all other similar Securities, regardless of the issuer, shall be exempted from taxes'. It is also not clear from a plane reading of the provision whether it extends to all securities or only those from companies listed on the Boursa Kuwait.

18 Law No. 46 of 2006, Concerning Payment of Zakat Tax.

19 Kuwait Government Online (2013), 'Introduction to doing business in Kuwait': www.e.gov.kw/sites/kgoenglish/portal/pages/visitors/DoingBusinessInKuwait/GoverningBody_OverView.aspx.

20 Article 4 of Law No. 2 of 2009.

21 The court's company restructuring circuit decided on 24 July 2014 to remove the Investment Dar (once the country's flagship financial institution) from the protection given under the Financial Stability Law soon after its enactment.

22 The World Bank (2013), press release: 'World Bank supports strengthening of Kuwait's insolvency and creditor/debtor regime': www.worldbank.org/en/news/press-release/2013/06/03/world-bank-supports-
strengthening-of-kuwait-insolvency-and-creditor-debtor-regime.

23 The date the notice of the company's establishment was published in the Official Gazette.

24 As per Article 54 of the CMA Law.

25 Kuwait Clearing Co, KSC (2014), services, www.maqasa.com/index_e.htm.