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

Article 61
The agency is allowed to contest a decision to cancel its license within 15 days from the date of receiving information about the cancellation in writing or its publication in the official newspaper. The authority has to reply to the complaint within 20 days after its submission.
Article 62
When a verdict has been issued declaring a person’s bankruptcy, clearance or when recruiting a judicial guard on his funds, the procedures of compensation and settlement for the compensation agency should be prioritized over any normal debts or procedures.
Section Five
Activities of the Organized Monetary Papers
Article 63
No one is allowed to practice any of the following activities except after getting a license from the authority:
1. A broker of monetary papers or an agent for him
2. An investment consultant or an agent for him
3. A director of investment portfolio
4. A group investment system
5. A safekeeping of Investment
6. Any person who takes part in any other activity the authority considers as organized monetary papers activity in line with this law.
It is also allowed to issue a license for one or more persons engaged in these activities, according to the executive byelaw which specifies the conditions and regulations for granting these licenses, as well as the criteria for engaging in these activities and regulations of this side.
Article 64
Nobody is allowed to represent another person or claim to represent another unless an approval is obtained from the authority and issuance of the license.
Article 65
The authority has right to demand people licensed to engage in financial papers activities to submit periodical reports on their activities, including the annual audited financial report. The authority will check all these reports and it is allowed to take copies of the documents or demand anyone of them to submit copies of the documents.
Article 66
The person licensed to engage in financial paper management should obey the rules and regulations of the authority, which limits the executive bylaws as follows:
1. Differentiate the commercial dealings in financial papers from other commercial activities.
2. Maintain enough capital.
3. Financial papers or money of the customers should not be transferred for personal use or misappropriated.
4. There should not be high level of guarantees given to customers in order to get more financial papers or to keep it.
5. There should be plausible explanations and reasons within the capacity of customer who has been given the financial papers.
6. There should be no profit guarantees for the customer or lack of loss.
7. There should be strong efforts to get the highest possible profits for the benefit of the customer.
8. There should not be high commission taken or given during dealing.
9. Lack of linking excessive purchase and selling operations to the account of the customer.
10. Customers should receive the bills or statements related to their transactions.
11. There should be organized registers and records on such transactions.
12. One of the managers should be appointed to enforce the legal commitments.
13. He should have a copy of monitoring bylaws and codes that control the operations, including regulations to stop the misuse of internal information and penalties related to money laundering.
Article 67
The authority has right to revoke or suspend a license. It can suspend activities of a person permitted to engage in financial paper management, or any person related to it, providing the following are proven:
1. Committed a major mistake, gave misleading information or submitted incorrect information or failure to present information vital to the authority during the application for a license.
2. Failure of meeting the standards mentioned in the law or any other bylaw.
3. Violated any law, regulation or bylaw issued for this law or that of the financial papers, or the code and regulation of another country.
4. Failure to monitor one of his followers on those related to violations of regulations and articles of this law or executive bylaw.
Section Six
Reviewing Personal Accounts of the Authorized Persons
Article 68
The authorized person should organize and keep the books, records and accounts in a detailed manner to reflect the dealings and transfer of deeds related to him, according to the certified accounting system from the authority. He should maintain the records, books, and accounts for a period of not less then five years from the day of preparation and should be available for review anytime. These documents will go through the auditing system of the authority or party the authority assigns to audit on its behalf.
Article 69
Every authorized person can use the internal control system under the following conditions:
1. He executes the operations after obtaining authorization from the concerned department.
2. He can freely act on the assets according to the public or private authorization from the concerned department.
3. He should compare the asset records within a certain period and take decisions to effect vital changes.
4. He should record operations to enable preparation of financial information according to the standards set by the authority or during the auditing of the company’s assets.
Article 70
Every authorized person should appoint a controller for the accounts approved by the authority within a month from the day of receiving the license, on the condition that the controller should not be the manager, officer, employee, shareholder or partner of the authorized person.
The authority should be informed about the appointment of the controller within seven days from the day of appointment. It should also be notified in case the controller resigns or appointment of a replacement within seven days.
Section Seven
Possession, Operations and Protecting the Rights of the Minority
Article 71
Possession, attempt or demand ownership means:
1. The entire shares of the listed company or shares of specific group/s that are part of the listed company, apart from the shares of the overtaking or offering side, its affiliates or partners and the data of offer to purchase the shares owned by the company.
2. All the remaining shares in the company which received the shares purchase offer, and shares were offered to all shareholders of the company, due to a good offer from the overtaking side that is willing to purchase majority of shares in order to control the board of the company.
The authority shall issue a decision defining the required majority to implement the rules of law in this article.
Article 72
The person submitting an application for possession should present copies of offer documents attached with the basic information to the authority, bourse and source of financial papers about the possession offer. The person submitting the application should obtain approval from the authority before taking any further steps in the possession operations.
The authority should review and revise the documents and application submitted by the person offering the possession within 10 working days from the day of submission. It stops issuing approval under the following circumstances:
1. If the offer does not comply with the codes and regulations of this law and its executive bylaws.
2. If the necessary fees for the offer and application have not been paid.
3. If the applicant fails to submit the necessary documents stipulated the law and its bylaws.
4. If the application has incorrect documents or some documents are missing, which will have an effect on the decision of the shareholders of the company.
Article 73
The authority should enforce the executive bylaws regulating the ownership operation codes on everybody who owns less than three percent and not more than five percent of the shares of any listed company.
Any of those mentioned in the first paragraph have right to oppose decisions of the board of directors and general assembly, if the decision harms the interest of the minority. They can also submit complaints to the board of trustees within 15 days from the date of issuing the decision. It is allowed to forward an appeal to the decision of the authority to the concerned court according to this law and its executive bylaws. If the authority does not reply to the complaint in 20 days, then it is considered rejected.
Article74
The person is required within 30 days from getting ownership directly or indirectly of more than 30 percent of the traded financial papers of the listed shareholding company to submit the purchase offer for all the remaining shares traded in the bourse according to conditions mentioned in the executive bylaws.
Exceptions include if the authority rejects the possession application in the interest of the public and that of the remaining shareholders. The decision shall be written, including reasons behind it.
Article 75
The person, whose papers come under possession, should notify the authority in seven days, in response to his idea and recommendations of the shareholders.
Section Eight
Group Investment System
Article 76
The group investment system means the following:
1. Investment Fund
2. Contracted group investment system related to moving and non-moving assets aimed at activating the role of the participants in the system or getting the profits or ownership or management of these assets.
3. The authority decides which systems should be added to the group investment system.
Article 77
It is not allowed to sell financial papers or units special in the group investment system unless a permit is obtained from the authority according to the law and regulations issued in this regard by the authority and after publication of the periodic reports in the daily newspapers.
Article 78
The group investment system should have a manager, an investment secretary and independent accounts controller licensed for them.
The investment secretary keeps the assets of all group investment system on behalf of the participants and according to the bylaws. The executive bylaws and conditions control the evaluation of the assets for the group investment system, as well as the procedures, exports, imports and investment units.
Article 79
The participants in the system have right to withdraw their units from the group investment system according to the basic regulations.
Article 80
The group investment system is allowed to apply for listing in the group provided the authority approved its establishment. An entity that participates in the system is recognized by the authority and Kuwait to apply for listing in the bourse according to the regulations specified by the bourse.
Article 81
A consultant in the group investment system should comply with the following:
1. He should be licensed to work as investment consultant by the authority.
2. He should work based on the regulations of the group investment system, which aims to protect the interest of owners of the units.
3. He should protect the money in the system in the same way he protects his own money.
4. He should maintain organized records according to the accounting system related to the group investment system. He should submit periodic reports to the authority as needed and according to the regulations.
Article 82
The group investment system should not do the following:
1. Grant trust
2. Purchase any financial papers from the company managing the system or any of the affiliated companies, except those approved by the authority in this regard.
3. Purchase financial papers for a party that the manager of the system also acts as subscription manager or sales agent, except those approved by the authority in this regard.
Article 83
It is not permitted to replace the manager or investment secretary of the system, except after obtaining approval from the authority, which replies to the application within 30 days from the date of submission. Reasons, regulations and procedures should be taken in the process must be clearly defined.
Article 84
Manager of the group investment system should not make any amendments to the basic codes of the system, except after obtaining approval from the authority. In case the amendments touch on the rights of the owners of the units, the authority will ask the manager to demand 50 percent vote from the owners to support the amendments.
Article 85
The authority will cancel the license of any group investment system under the following circumstances:
1. If the authority finds out the system has not fulfilled any of the conditions for getting the license.
2. If the cancellation is in the interest of the participants in the system.
3. If the manager or investment secretary violates any of the laws and regulations, or submits to the authority incorrect or misleading information.
4. If the manager of the system demands cancellation of the license, the authority will reject the demand if it sees the necessity to investigate anything related to the system or interest of the participants in the system.
Article 86
The authority has the right to inform the director of the secretary of investment of the Group investment through a written letter about its intention to cancel the license of the system, mentioning the reasons for doing that. In addition, the director of the Investment’s secretary must forward pledges with 15 days from the date of being informed and the authority must accept them to avoid cancellation of the system’s license.
Article 87
If the authority issues a decision to revoke the license of the Group Investment, it must instruct any authorized person to manage the clearing activities of the system or request the concerned court to do so. Moreover, it must inform, in this case, the director of the Investment’s secretary immediately along with writing down the procedure undertaken.
Article 88
The authority has the right, in line with a demand forwarded to it, to permit marketing a Group Investment System funded outside Kuwait, provided it specifies the executive byelaw, conditions and regulations to be followed in this case.
Article 89
The authority has the right to cancel the permission of marketing for a Group Investment System established outside Kuwait in case of the following:
1. If it is discovered that the conditions for which the permission is granted were not met.
2. If this cancellation will protect the good of the system’s partners.
3. If the director or the Investment’s secretary violates any of the verdicts of the law or the bylaw, or even forwards inaccurate, misleading or false information to the authority.
Article 90
If the authority makes sure that the director of the Investment’s secretary of a Group Investment System is not committed to the verdicts of this law or bylaws issued, it has the right to issue instructions to the system’s director to suspend the operation of importing or participation of both for a temporary period in units of the Group Investment System on the fixed date of these decisions.
Article 91
The harmed party has the right to file a complaint to the authority against decisions issued to carry out the verdicts of this chapter within 15 days from the date of being informed through a written letter. In addition, rules and procedures mentioned in that law and its executive bylaw are applied to that complaint.

To be continued tomorrow