This is the second part of Capital Markets Bill approved by Kuwait National Assembly in its first reading on Jan 20.
— Editor

Article 26
No person invited to attend meetings related to a concerned area of the authority is allowed to participate in the meeting by providing information, expressing an opinion or voting, and the invitee should declare such an interest, if any, before the meeting, and should leave before that subject is discussed.
Article 27
No member who holds a position at the authority is allowed to head his own business, be an agent or a person recommended for business. He is not allowed to take up any other job in the private or public sector, provide consultation, direct or indirect services, and cannot take up membership of the board of any party that comes under the control and monitoring of the authority or any party that has links with it.
Article 28
Any member of the Board of Trustees must declare any financial papers enlisted in the Kuwait Stock Exchange, along with any papers belonging to his wife or children after taking up his position at the authority. Any changes in the declared financial documents should be informed to the authority in writing.
Article 29
Any member, employee or person who works for the committee at the authority and provides services for payment or non-payment should protect the confidentiality of the documents that reach him along with the documents themselves, and should not give them to anyone except the concerned persons at the authority until and unless a decision from the court allows the handing over of the documents, their information or deeds to other parties.
Article 30
Employees at the authority who have been appointed through a decision by the Minister to look into the documents of the party that has violated regulations of the law, can inspect the documents at the office of the violating company that works at the financial papers sector, the office of the bourse or any other suitable location.
The officials from the violating company, mentioned in the first paragraph, will have to supply all necessary documents and deeds needed by the employees during the investigation.
Section Three
Bourses of the Financial Markets
Article 31
This is the bourse of the financial market specialized to suit the offers of sale and purchase demands in the financial papers, and the trade will follow the specialized procedures and carry out the normal jobs in the trading market.
Article 32
Nobody is allowed to establish, operate or help in a bourse until they obtain the necessary license based on this law and the bylaws approved by the authority, and the authority is the only authorized body that can issue the license for publication in the daily newspapers.
Article 33
It is not allowed to issue a bourse license except for a shareholding company and its capital will be assigned through a decision by the Board of Trustees, and its only activity should be operating the bourse financial papers. The shares of the company should be as follows:
1. The government should possess not less than 60% of the shares.
2. Not more than 40% of the shares can be allotted for public subscription for all citizens equally, and these should be explained to the government.
Article 34
The bylaws and regulations that are defined for the bourse and which it will use during the trade and transfer of ownership of Kuwaiti financial papers that are not enlisted in the bourse should be defined.
Article 35
The membership and continuation of working in this position is conditioned as follows:
1. The member should not have faced a ruling of crime that relates to honor or unfaithfulness.
2. The member has not announced bankruptcy.
3. The member should possess good conduct.
4. The member should have enough experience in financial affairs, economy and legal affairs in accordance with the regulations and restrictions that the authority will issue in a decision.
Article 36
The Board of the bourse will be managed as follows: The Chairman and Deputy Chairman, who will occupy the Chairman’s position in case of his absence, and six members who will be elected from the general assembly after the approval of the board of trustees.
The Chairman of the bourse should submit the names of the candidates for the board of the bourse to the board of trustees at least 30 days prior to the general assembly meeting to elect the board members. The board of trustees reserves the right to reject any candidate by giving reasons 15 days before the election.
The name of a rejected member cannot be submitted to the general assembly meeting. The board of trustees can ask the board of the bourse to drop any member found to violate the regulations of the membership, or if the board of trustees views the termination of the member as a means of protection to the finance and trade of the bourse in general. And if the board fails to execute the termination of the member, the board of trustees has the right to issue a decision to terminate the member, and this will be recorded in the archive of the authority.
Article 37
The Chairman of the Board takes up the job of the Executive Director, by executing decisions of the bourse and supervising all the technical and administrative operations of the bourse. He represents the bourse in the judiciary, according to the legislatives of the bourse.
Article 38
The bourse should do the following:
1. Prove the existence of a financial market that has justice, transparency and capabilities.
2. Make the departments aware to risks that relate to its operation and business.
3. Place public interest as its first priority, if the private interest of the bourse conflicts with the public interests, or the interests of its members, shareholders or administration.
4. Obey the regulations and bylaws laid by the authority in all its operations.
5. Organize its operations and activities and the conduct of its members according to the codes, policies and procedures that are special to the bourse.
6. Organize the operations and activities of the enlisted companies and their employees according to the regulations and bylaws of the bourse.
7. Provide services that have a hi-tech level and are according to international standards approved by the authority, or ones that will be approved by the authority in future.
8. Protect the confidentiality of the information that is available in the hands of its members or customers except the information that the law instructs should be declared. The bourse can declare such information to the authority after receiving a judicial ruling.
9. Obey the instructions of the authority.
Article 39
The company of the bourse needs to inform the authority immediately about the following issues:
1. If one of its members cannot comply with any of the code of the bourse and its financial standard regulations.
2. Unorganized financial issues or any other issue that indicates a lack of efficiency of the member or the lack of ability of the member to carry out duties.
3. Any disciplinary action taken against a member, worker or affiliate.
Article 40
The board of trustees should ask the bourse to prepare limited rules in its field of operation or amend it within a limited period of time. If the bourse fails to prepare the rules within the defined time, the board of trustees has the right to prepare or amend it on behalf of the bourse, and the cost will be charged.
Article 41
Any amendment, new decision or replacement of code will not be effective until the authority approves it, and the bourse should submit the reasons behind the amendments or changes or introduction of laws, in addition to impacts that such changes will have on the operation. The authority has the right to reject or amend it after reading the reasons of the new laws or changes of the bourse and the authority should inform the bourse.
Article 42
The bourse will form a committee that looks into the violations that its members does, and the committee should sign the following penalties:
1. Warning.
2. Issuing a decision to stop doing such violation.
3. Putting the violator under extensive monitoring.
4. Stopping the violator from working or practicing profession for period not more than one year.
5. Imposing restrictions on the activities or operations of the violator.
6. Cancelling the transactions that relate to the violator according to its impact if possible.
7. Stopping the trade financial papers for a period of time.
Article 43
The management of the bourse should inform the bourse about any disciplinary action against members in detail, the violation committed and the actions that the bourse took against the member along with the penalty.
The authority has the right to decide on its own or based on a complaint submitted against the violated member within 15 days from the day of the arrival of the notice at the authority, transfer the matter to the disciplinary council to look into the penalty that has been enforced, and the disciplinary council has the right to support the decision of the bourse or amend, or cancel it providing the reasons.
Article 44
In case of calamities, crises and disorders, which negatively affect the market; in addition to misleading speculations by the negotiators, the authority has right to issue instructions to ensure justice, transparency and efficiency in the market. It is empowered to take any of the following precautionary measures:
1. Stop negotiation at the bourse or any monetary paper listed for a temporary period
2. Revoke negotiation for a certain time or cancel dealings on a specific share
3. Issue decisions to clear some or all balances or even reduce them
4. Modify the days and hours of negotiation
5. Modify or suspend any of the bourse’s rules
Article 45
In case the bourse does not comply with the decisions or instructions of the authority issued in line with its power as mentioned in the above article, the authority has right to take the appropriate measures to maintain regular negotiation or clear any center related to the monetary papers.
Article 46
The authority, in accordance with a letter for the bourse, is allowed to cancel the license granted to the latter from the date set by the authority’s decision in any of the following cases:
1. If the company failed to meet one of the conditions for obtaining a license
2. If work at the bourse has been suspended for more than five official work days
3. If it is locked
4. If it is not committed to the authority’s instructions in spite of being informed t by the authority
5. If it does not provide the authority with information that the latter asked or if it provides misleading or inaccurate information
6. The authority has to publish the decision of canceling the license and reasons behind it in the official newspaper.
Article 47
The authority is allowed to set a deadline for the company or extend the deadline after the date of revoking the license in case the authority deems it is in the interest of the public or in line with a request from the bourse until the stoppage of its operations or surrender the company’s activities to another licensed bourse.
Section Four
Compensation Agency
Article 48
Compensation agency means any entity that provides utility charges with the process of settlement or compensation between the negotiators of monetary papers, concerning payment, delivery or both. It also provides special services in this regard, such as depositing monetary papers according to a central system to keep and convey the possession.
Article 49
No one is allowed to establish a compensation agency or run it or even assist in establishing or running it or announce its establishment, except after obtaining a license from the authority in accordance with conditions and restrictions stated in the executive byelaw and the law. The announcement should be published in the official newspaper.
Article 50
License of a compensation agency should be given to a joint company whose capital is specified by the council of agents. In addition, its activity should be specialized in running operations of compensations, settlement, and central deposit of monetary papers, and preserve them, as well as other related matters. Moreover, the authority stipulates the conditions to grant the license and its procedures in line with the executive byelaws.
Article 51
The compensation agency should do the following:
1. Take the necessary precautionary measures concerning compensation and fair settlement related to any commercial transaction in monetary papers
2. Manage risks related to its activities and operations efficiently
3. Prioritize public good and that of those who deal with it over the company’s interests
4. Manage its services according to laws approved by the authority in this domain
5. Maintain confidentiality of information and data it possesses, except those demanded by the authority or the judiciary
6. Provide services using the most advanced technology and automatic systems in line with the international criteria approved by the authority or its decisions
Article 52
The compensation agency must inform the authority immediately of the following:
1. If one of those who deal with does not abided by the rules approved for operations of compensation, settlement or deposit
2. If it assesses the financial position of any entity that deals with it and their ability to meet their obligations, and then finds out this indicates imminent disorder or they will not be able to meet their obligations efficiently
Article 53
The authority has right to ask the compensation agency to prepare rules and byelaws related to the operations of compensation, settlement and registration of monetary papers and other activities concerning the agency’s businesses or it has to modify them within a certain period. However, if the compensation agency does not comply with what is mentioned within the time limit, the authority is allowed to prepare, on behalf of it, these rules or modify them, but the agency has to bear the expenditures.
Article 54
Rules issued by the agency or modifications are not valid unless the authority approves them. In addition, the agency has to provide the authority with the reasons and targets which prompted it to propose the rules or modifications. It should also clarify the desired results.
The authority has right to decide - approval, disapproval or modifications. It has to inform the agency, in writing, about its decision within one week from the date of issuance.
Article 55
The compensation agency has right, in case any of those dealing with it fails to comply with its rules, to let them shoulder the fees as a result of violating these rules.
Article 56
The authority has to issue instructions for the compensation agency to guarantee fair and organized settlement, which should also be appropriate to transactions in the monetary papers to ensure honesty and safety in managing comprehensive risks in the stock market. It has right to issue instructions concerning the settlement of contracts of monetary papers, as well as the obligations that may come from other contracts of monetary papers or other issues.
Article 57
In case of calamities, crises and disorders, which can harm the market, the authority has right to issue instructions to modify or suspend implementation of the rules of the compensation agency.
Article 58
In case the compensation agency does not comply with the authority’s decisions and instructions issued in line with its power, the authority is allowed to take the necessary procedures to maintain fair settlement and activate the commercial transactions in the monetary papers or any other group.
Article 59
Through a written circular, the authority has right to cancel the license of the compensation agency in line with the rules of this law, starting from the date set by the authority’s decision in case of the following:
1. When the agency fails to fulfill any of the conditions to obtain a license
2. If the agency stops perform its tasks or licensed for its administration
3. Clearing the agency
4. Failure to implement any obligation imposed by law
5. Delay in providing information requested by the authority or when forwarding false, misleading or inaccurate information
6. When the agency modifies any item of the contract of its establishment or its basic system without obtaining approval from the authority
7. If the agency asks for the cancellation of its license
8. The authority has to publish its decision to cancel the license and its reasons in the official newspaper.
Article 60
The authority has right to set a deadline for the compensation agency or extend it after the date of canceling the license, if the authority deems it good for the pubic, or in accordance with the request of the agency to suspend its operations or deliver its activities to other agency licensed for this purpose.

To be continued tomorrow