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Rules ease for ‘joint-stock’ listings BIGGEST BANK IN CHINA GETS NOD FOR KUWAIT BRANCH

KUWAIT CITY, May 18, (RTRS): Kuwait has eased capital rules for joint-stock companies to list on the stock exchange to encourage firms to raise funds and broaden their shareholder base, the Gulf state’s financial regulator said. The new regulations are part of a series of rulings this year from the Capital Markets Authority (CMA), which is trying to boost activity on the sluggish market as well as clamp down on any suspicious dealings.

Under the new rules for listing on the main market, joint-stock companies need annual profits of 5 percent of their capital, instead of the previous 7.5 percent, the CMA said. Shareholders’ equity needs to be 110 percent of the capital instead of 115 percent, the CMA said in a statement on Saturday. Companies also need to have operating income equal to 75 percent of total revenues, it added.

The new regulations will help companies list on the exchange and raise capital for expansion, the CMA said. “These amendments will also broaden the shareholder base and create an effective trading environment,” it added. Kuwait had its last stock listing in September with Islamic lender Warba Bank, a sale which was initiated by the government. It has not had any company-driven IPOs since before the 2008 global financial crisis. The CMA will also give greater flexibility to companies that cut their capital, by giving them a deadline to make necessary changes, the statement said, without elaborating. The same rules also included a section on companies that wish to withdraw from the stock market.

If the board wants the company to exit, it will now be able to make an offer to buy the stock of smaller shareholders. Withdrawals from the stock market have been a problem for small shareholders who had found themselves unable to sell their stakes when companies exited the bourse.

Meanwhile, China’s biggest bank, Industrial and Commercial Bank of China, got final approval on Sunday to open a branch in Kuwait, which wants to free up its banking sector. In March, Kuwait said it would allow foreign banks to open multiple branches to spur growth. Analysts said it was unlikely that many banks would take advantage of the offer unless the government accelerated long-postponed infrastructure projects.

Allowing foreign banks to expand in Kuwait will encourage competition and the development of banking products and services, governor Mohammad Al-Hashel said in a statement on the central bank website. He said the central bank had put ICBC in the official register of foreign banks after it got approval from the Finance Ministry to open a branch. ICBC got approvals last year from Kuwait’s central bank and cabinet. It will be the bank’s fourth branch in the Gulf Arab region after Doha, Abu Dhabi and Dubai. ICBC’s chairman said earlier this year his bank could be a “liaison” between Chinese companies and Kuwait, according to a report on Kuwait’s state news agency KUNA.

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