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Kuwait may delay governance rules MPs SEEK TO AMEND CAPITAL MARKETS AUTHORITY LAW

KUWAIT CITY, March 20: Kuwait’s market watchdog may extend a year-end deadline for listed companies to comply with new corporate governance rules if it finds there are “real obstacles”, the regulator said, after meeting with the commerce minister. The Capital Markets Authority (CMA) issued the regulations in June 2013, giving companies until the end of 2014 to implement them.

The rules include separating the positions of chairman and chief executive, prompt disclosure of information to the market, and the setting up of internal controls and risk management. Some corporate executives and investors have welcomed the effort to stamp out suspicious activities and potential conflicts of interest, and several major listed companies have changed their corporate structures accordingly. Others, however, have complained that the CMA, which began operating in 2011, is leading a heavy-handed crackdown. There are about 200 listed companies in Kuwait.

The CMA said in a statement late on Wednesday that it would review the deadline on March 31, when it is to issue a report on implementation of the rules so far. “The issue of governance is also subject to monitoring and evaluation. The level of application will be considered, and (we will) consider postponing deadlines for those rules after the report is available,” it said. CMA officials discussed the issue with Minister of Commerce and Industry Abdulmohsen Al-Madaj on Wednesday, the statement said. They told him that the regulator was ready for dialogue on the topic and that its “decisions and deadlines for implementation are subject to flexibility.” The CMA said it had already held a meeting with over 260 companies to identify any obstacles and that the regulations aimed simply to “enforce the law and protect the national economy and the interests of investors.”

A Reuters survey of a dozen international fund managers last month found they ranked Kuwait lowest among five big Middle Eastern markets for corporate disclosure and enforcement of regulations against improper or illicit trading. In recent months the CMA has been targeting suspected illicit activity in the market more aggressively, fund managers say, leading to dips in the stock market. Earlier this month, a Kuwaiti court fined the chairman of Al Ahli Bank KD 1.5 million ($5.3 million) over alleged insider trading in the bank’s shares, after the CMA filed a complaint.

He denied any wrongdoing and said he would appeal. Meanwhile, several MPs have presented a request to amend the Capital Markets Authority Law to allow prior censorship. MP Safa Al-Hashim has stressed the need to amend the law, especially since the authority has repeatedly ignored the advice and directive of the minister in charge of it, as well as the request of the State Audit Bureau to exercise its oversight role on the authority. Al-Hashim disclosed the authority, which was established through a decree issued on Feb 28, 2010, has yet to respond to the queries of the bureau. She claimed the authority has committed a number of violations, clarifying that the nature of its job is supervisory; hence, it should not be involved in the collection of money. She pointed out the money allotted for the Kuwait Stock Exchange is going to the authority and this is a clear violation of the law.

Respond On the other hand, Al-Hashim criticized Oil Minister Ali Al-Omair and Chairman of the Public Authority for Agricultural Affairs and Fish Resources (PAAAFR) Jassem Al-Bader for refusing to respond to her questions on allegations that some incumbent and former MPs, as well as ministers, have received farms, animal pens or stables from the government. She said the Fatwa and Legislation Department considers her queries a form of interference in the financial affairs of these people. She also wondered why some departments were transferred from one minister to another, as it happened in the PAAAFR which was shifted from the Municipality to the state minister for cabinet affairs and then the minister of oil. She added she asked the minister of finance about the role of the financial controller appointed to the PAAAFR and the reply came with a copy of decision number 10/2002, which specifies the jurisdiction and affiliations of financial controllers. She asked, “What is new in this decision? What is the role of the financial controller who monitors the distribution of State land areas? Meanwhile, MP Yousef Al-Zalzalah also proposed amendments to the Capital Markets Authority Law; specifically the articles related to revenues and fees. He recommended revision of Article 22 which stipulates referral to the public prosecutor, indicating the panel of commissioners used to directly refer cases to the prosecutor but this is no longer practiced now. He stressed the need to present evidence when one is accused of violating the law. He argued these amendments, once implemented, will rectify errors in the law. He requested for the allocation of two hours of the parliamentary session slated for April 2 to discuss the amendments. He added he had earlier discussed the amendments with Minister of Commerce Dr Abdul-Mohsen Mudej and there has been preliminary approval. He asserted the concerned institutions in the authority; such as Kuwait Chamber of Commerce and Industry, Kuwait Stock Exchange, market traders, investment companies, and the association of accountants have expressed their willingness to contribute to the amendment of the law. Moreover, MP Yakoub Al-Sanei has asked the Cabinet to pay bonuses to 350 officers in the Ministry of Defense, National Guard and Kuwait Fire Service Directorate whose services ended from July 1, 2004 to April 27, 2008. He said the executive authority issued ministerial decision number 1132/2011 on suspending the payment of these bonuses. He asserted that pursuant to the provisions of Article 118 of the National Assembly bylaws and the desire to stabilize the situation in order to guarantee justice; he appealed to the Parliament to look into the proposal directly, instead of referring it to the concerned committee.

 


By: Abubakar A. Ibrahim Arab Times Staff and Agencies

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