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

Article 130
The stock exchange market court can descend to the minimum level of prison term for stated crimes without restriction to paragraph 2 of article 82 of the criminal code, whatever the penalty is.
Article 131
The Stock Market Authority can recommend conciliation or the accepting of conciliation with any suspect who has committed any of the stated crimes in this law at any phase of the penalty case’s phases until a final decision is issued. This can be done for an amount of money that is not less than the determined fine and not more than its maximum limit. The conciliation in case of crimes that are stated in Articles 124, 126 and 127 should return the value of any benefits or losses, in addition to the payment of the previously mentioned fine. The authority determines the grade by which the suspect should implement the conditions of the conciliation according to the rules. When the conciliation is completed, the penalty case ends.
Article 132
A decision by the Attorney General can stop an employee from work or stop him from practicing a profession temporarily, if needed for the sake of investigation. This applies when the prosecution intends to investigate the crimes stated in this law. Anyone who is referred to penalty court must be prevented from resuming work according to the law. However, the court can issue an order during the processing of the case to implement the contrary based on the job owner or the court itself.
Article 133
The Attorney General is allowed to issue a travel ban, handle and manage the money of a criminal or take all precautionary procedures regarding those criminals who have committed criminal actions according to this law, which the Attorney General has enough evidence about. The Attorney General can undertake the same procedures with the money of the criminal’s children or his wife. Yet, it is allowed to complain about the decision of the concerned court within twenty days of the date of issuing of the decision.
Article 134
The Attorney General should take a decision regarding the request of the authority that is mentioned in the previous article within 24 hours from the time the decision is submitted. In case the request is rejected, the rejection should be based on reasons. The authority can appeal within 15 days from the date of the Attorney General’s decision in front of the concerned court. The court should take an immediate decision regarding the appeal.
Article 135
The amount of reserved money should be more than the maximum financial penalty that can be imposed on the suspect. The Attorney General or the coordinating court at the authority can determine the benefit that the suspect has received.
Article 136
The Attorney General or the court - based on the demand of the authority or any intended person - can remove the precautionary procedures if the suspect has submitted enough guarantees that are accepted by the authority or the court.
Article 137
When the suspect is prevented from managing his money, the Attorney General should appoint a manager to manage the money according to nominations by the authority. The nominations are determined through a statement by the authority that clarifies the duties and competencies of the manager, as well as his work standards.
Clause 3: Violations and Disciplines
Article 138
To make a report and to start investigations by the Public Prosecution, as well as processing a penalty case, does not prevent the authority from implementing disciplinary action. The disciplinary council is allowed to postpone implementing the disciplinary action until the penalty case is finalized. In all cases, the penalty judgment is compulsory for all.
Article 139
Any act that does not abide by the rules, regulations, decisions or instructions that are issued by the authority is considered a violation.
Article 140
One or more disciplinary councils are established in the authority, constituted by three members and a judge. The judge is seconded by the Judiciary Higher Council. The other two members must be experts in financial, legal and economic affairs. The duration of the membership in the disciplinary council is three years and is renewable. The council handles the following issues:
1. Taking decisions in discipline-related cases that were referred to it and that are raised by the authority for violation of the regulations of the law.
2. Taking decisions regarding the appeals of the stock market’s decisions and its concerned committee. The disciplinary council is considered an appealing authority, when reviewing the appeals of the committee’s decisions. Its decision in this case is final.
The executive regulations determine the system and the basis of the work procedures of the disciplinary council as well as the means of issuing decisions and declarations to concerned persons.
Article 141
Members of the disciplinary council must not have any direct or indirect benefit with any part controlled by the regulations of this law.
Article 142
The authority’s legal administration is responsible for the administrative investigations in violations that are stated in this law and that are referred to it by the authority. The following authorities are given to the investigator for the purpose of conducting the investigation and doing his duty:
1. The right to ask for any data and documents from any government organization or any organization that is related to the authority.
2. The right to listen to the testimonies of the witnesses.
3. The right to ask whoever he thinks is important to hear his testimony during the investigation.
4. The right to move among organization and the right to review any record or information at any government sector or related organization to the authority.
Article 143
If the investigations resulted in some evidence of the violation, the authority is allowed to refer the violator to the disciplinary council according to the rules and procedures that are determined by the executive list of regulations. The authority is allowed to alert the violator to stop committing violations, in addition to having him undertake an oath not to repeat them in the future.
Article 144
Any person who was investigated or who stands in front of the disciplinary council has full right to defend himself or can get a lawyer to defend him.
Article 145
It is necessary to inform the defendant about complaints filed against him and the pleas in these complaints. The date set for investigating him should be at least seven days from the date of notification, and the exact time should be specified. However, the executive bylaw is to specify the mode and dates of announcement and its procedures.
Article 146
The disciplinary council has the right, after confirming the violation, to issue any of the following penalties:
1. A warning to the violator to stop committing the violation.
2. A warning.
3. Submitting the violator for further surveillance.
4. Obligating the violator to retake the qualification examinations.
5. Suspending the violator from work or practicing the profession for a maximum of one year.
6. Ceasing his work or profession practice completely.
7. Suspending his license for six months.
8. Revoking the license.
9. Imposing restrictions on the activity or activities of the violator; however, these restrictions are specified by the executive bylaw.
10. Cancelling transactions related to the violator and impacts resulting from them without harming other parties’ rights and with a good intention.
11. Revoking any vote from its owner or authorization or empowerment obtained through violating verdicts of the law.
12. Asking to suspend or cancel any request of possession or bargains of purchase outside the range of possession offer for violating the verdicts of the seventh chapter of this law or any text related to it in the executive bylaw.
13. Banning the right to vote for a maximum of three years for a shareholder who refrained from forwarding any statement or who forwarded an incomplete or false statement; this for violating the verdicts of the law or bylaws issued in line with it.
14. To issue an order for any person or group in possession of over 30% of the value of the monetary papers negotiated for a listed company, to oblige them to forward a purchase offer to buy all remaining negotiated shares, in addition to referring them to the concerned court in case they do not comply.
15. To suspend the validity of a valid pamphlet in accordance with this law.
16. To stop the negotiation of a monetary paper for a certain period or suspend or cancel a decision to list a monetary paper before it comes into effect.
17. To fire the director of the Investment’s Secretary of a Group Investment System for failing to carry out responsibilities issued in this law or bylaw.
Article 147
All those who have received a penalty of the stated penalties in this law can appeal in writing to the authority within 15 days from the date of informing him about the decision. The authority’s decision to reject the appeal is final. It is possible to contest in front of the concerned court. If no response regarding the contestation is received within a month of its submission date, it is considered a refusal by itself.
Clause 4: Settlements of disputes by arbitrage
Article 148
It is allowed to settle disputes that resulted due to the imposed commitments of this law or any other law, if the disputes were related to dealings of the stock market through arbitrary system. This is done according to the specialized system of arbitrary that is put by the authority.
Section 12
General Rules
Article 149
The authority can exchange information and documents hat are related to violations in stocks, with partner authorities in other countries. This is done according to the decision of the authority in each case separately, considering the public benefit under a condition, which is to implement just treatment for all cases.
Article 150
All information and data are confidentially processed. They cannot be revealed unless the authority authorizes it based on the judge’s order.
Information and data of the employees in the authority that are authorized to access confidential information are protected. In addition, information about those who work in the stock market is secured as personal and confidential information. It is not allowed to uncover this information, except in cases whereby the law allows it with the judge’s order.
Article 151
A decree to name members of the Council of Commissioners shall be issued within three months of pronouncement of this law.
Article 152
The authority should issue the executive bylaws for this law within six months after pronouncement of decree to name members of the Council of Commissioners and publication in the official gazette.
Article 153
Apart from provisions of Article 164, stipulations of ministerial decision number 2/1984 concerning formulation of arbitration panel, as well as rules and procedures thereof shall be valid for arbitration on implementation of this law until the authority issues the arbitration system.
Article 154
Based on provisions of this law, the current Kuwait Stock Exchange Market shall be known as an authorized stock bourse. It shall conduct its affairs in line with provisions of this law and its executive bylaws, especially in relation to conditions and criteria for authorization within a year of publishing the bylaws in the official gazette.  All internal decisions, directives and systems of Kuwait Stock Exchange Market shall be valid until cancellation or amendment by the authority, in line with provisions of this law and its bylaws.
Article 155
The recommended monitoring duties in this law shall be transferred to the authority within six months of publishing the executive bylaws. This shall signify end of monitoring activities of the Kuwait Stock Exchange Market Committee, while the bourse that replaces KSE or the market committee should not embark on duties recommended for the authority in this law as from this date.
Article 156
All material and immaterial assets of Kuwait Stock Exchange Market shall be transferred to the authority upon pronouncement of this law, while the market committee shall continue to manage it until the authority takes over. The authority, within the first year of this law, shall assign the consultative committee to evaluate material and artificial assets of the Kuwait Stock Exchange Market, specify those transferred to the authority and what remains with the bourse. The authority should mandate the bourse and market committee to manage the assets, carry out administrative and financial responsibilities through which the bourse operates within the transfer period.
Article 157
The authority shall restructure and regulate condition of employees at Kuwait Stock Exchange Market in line with provisions of this law and its bylaws.
Article 158
Based on the provisions of this law, Kuwait Clearinghouse Company shall be regarded as an authorized clearing agency, while the company should reinvigorate its situation in line with this law and its bylaws within a year after publishing the bylaws.
Article 159
Based on the provisions of this law, an authorized financial broker at Kuwait Stock Exchange Market shall serve as the authorized financial broker in the bourse. The broker shall organize its condition in line with provisions of this law and its bylaws within six months of publishing the bylaws.
Article 160
Based on provisions of this law, all listed stocks in Kuwait Stock Exchange Market shall be regarded as listed in the bourse.
Article 161
The investment portfolios authorized by law number 31/1990 shall be regarded as authorized under provisions of this law and its bylaws, while it should reposition itself in line with provisions of this law and its bylaws within six months of publishing the bylaws.
Article 162
Investment companies registered at the Central Bank of Kuwait, which manages wealth of others and authorized to manage investment portfolios, shall be authorized to manage joint investment systems based on the provisions of this law and its bylaws, while it shall reinvigorate its condition according to the provisions of this law and its bylaws within a year of publishing the bylaws.
Article 163
After the period of transfer stated in this law, the following laws and decrees shall be considered nullified:
1. A decree issued on August 14, 1983 to regulate Kuwait Stock Exchange Market
2. A decree issued to liquidate stock transaction and clearing room in Kuwait Stock Exchange Market dated Dec 27, 1986.
3. Law number 12/1998 concerning authorization of establishing investment and leasing company.
4. Articles 1 & 2, as well as Articles 6 & 13 of law number 31/1990 concerning regulation of stock transaction, establishment of investment funds and amendment of Articles 3 & 5. In this case, responsibilities of the Ministry of Commerce and Industry concerning these articles shall be transferred to the authority.
5. Law number 2/1999 concerning declaration of interests in shareholding companies.
Article 164
This law and its provisions are private. Any contradicting public or private laws shall be cancelled.
Article 165
The prime minister and ministers shall implement the law after its publication in the official gazette.
Explanatory Memorandum to Kuwait Capital Markets Bill
Many laws and decrees have been issued on the establishment of the Kuwaiti stock market, organizing trading of financial papers, establishment of an investment fund, and clarification of trading of financial papers and clearinghouse.
These laws have laid down the foundation for the establishment of Kuwait Stock Exchange and this has greatly contributed in boosting the economy. The Kuwaiti bourse has established itself as one of the leading stock markets in the region and the focal point of investors in developing markets over the last few years.

In line with the latest developments in the international markets of capitals, starting from the collapse of limitations that used to impede the movement of capital between different parts of the world and creation of a new international system to encourage more competition and free trade comes the completion of a legal and organizational framework under the umbrella of International Trade Organization, as well as international commercial treaties and agreements.
Furthermore, the developments that Kuwait Stock Exchange witnessed over the last years, including the success of completed operations like the government’s decision to sell a large part of its shares in the private sector, which gave many investors a chance to own more shares at the Kuwait Stock Exchange, led to the creation of companies that operate in financial papers.
In light of enforcing regulations and decrees against some drawbacks in the stock market, particularly in the monitoring section, this is aimed at ensuring smooth flow of operations and legal protection for investors at the Kuwait Stock Exchange, especially the small investors, to protect them from those engaged in dangerous games in a bid to gain more profits illegally.
All of these came through the amendments of the legal system at Kuwait Stock Exchange, mainly by laying down good laws that match the international and local developments to bridge the gaps in legislation, as well as the preparation of a new set of legislation to replace the existing laws.
Using existing legislation in many Arab and foreign countries as guide, it is then appropriate to establish a public authority for the stock market in the State of Kuwait. It is important to lay down a pillar of codes for the stock market, but there should be a central point that balances the pillars of the stock markets. This point will be given monitoring powers to protect the stock market. However, the stock market in the State of Kuwait is missing the central pillar as there is no entity playing the role of the public authority for stock markets, and sometimes the Ministry of Commerce played this role. Many of the studies conducted to reform the stock market in Kuwait recommended the formation of a public authority for the market, including international organizations like the World Bank.

The importance of establishing the public authority for stock markets lies in the following:
a. Job description of the authority does not include monitoring and controlling the stock market in the country, but to supervise and monitor operations, such as licensing, establishment, practices and clarification of companies operating in the market.
b. Although the number of companies operating at Kuwait Stock Exchange is less than that of its international counterparts, if the capital operated in the stock market is relatively huge compared to its counterparts, then the capital in the stock market increases with high margins from one year to another.
c. The percentage of companies listed on the stock market had increased sharply over the last years, including many international entities and family companies that have been transformed into shareholding companies, increasing the number of companies that offer transportation services, contracting, health care, education and other fields, despite the expected expansion of several companies as a result of the execution of the industrial development program, particularly in the field of petrochemicals, in addition to the emergence of tens of companies in business of middle production.
According to the comprehensiveness of the role of the public authority for stock markets, and the bourse heading towards larger scales as mentioned above, it is necessary to establish the public authority for stock markets and change the existing legislation at the bourse that rules the capitals in Kuwait.

It is good to prepare a draft bill that will be applied on all stock markets in Kuwait, instead of frequent changes in the legislation in the stock markets and this can be achieved through the following:
a. Cancellation of legislation that rules the market of capitals
b. Creation of Public Authority for Stock Markets
c. Insertion in the project laws that considers all the necessary procedures to organize the markets of capitals, after considering the international and regional developments, and avoiding drawbacks during the enforcement of the current legislation.
d. Insertion of the project laws that organize the penalties at its natural position instead of inclusion in the Commercial Company Law.
e. Creation of a judiciary apparatus to focus on cases related to the financial markets’ activities, which will enable quick and smooth operation to solve the conflicts that might arise during the implementation of this law.
Any law that contradicts the paragraphs of this law, regardless of its position and subject, shall be nullified. Considered as the special law for the stock markets, it is therefore necessary to implement this law.