KUWAIT CITY, Jan 20: A number of financial, accounting, and legal experts called for the quick implementation of all necessary measures by regulatory bodies in cases of suspected irregularities involving companies listed on the Boursa Kuwait, before their delisting, to protect small shareholders from losing their investments. Dr. Sadiq Al-Bassam, Head of the Accounting Department at Kuwait University and an economic expert, emphasized the importance of protecting small shareholders, who are the most affected by the delisting of companies due to administrative violations.
He explained that many small shareholders borrowed from banks to purchase shares or invested all their savings, which could ultimately result in severe consequences for some such as imprisonment. On the other hand, large investors have mechanisms to manage their losses and absorb risks. Such situations discourage small shareholders from participating in trading altogether. Dr. Al-Bassam stressed the importance of following the practices of the Ministry of Social Affairs, which replaces the boards of directors in consumer cooperative societies when manipulation or fraud is proven, referring the convicted parties to the Public Prosecution, and allowing the cooperative societies to continue operating until a new board is elected.
He advised small shareholders to review a company’s record and history before purchasing shares, emphasizing the importance of avoiding the temptation to buy shares priced at 40, 50, or 100 fils simply because of their low value, and recommended investing in companies with a solid market reputation. Meanwhile, Lawyer Ali Al-Attar, who specializes in financial and money laundering cases, stated that many small shareholders have suffered losses due to placing excessive trust in some company boards of directors without proper scrutiny. He stressed that small shareholders often lack the experience and awareness to detect fraudulent practices employed by certain boards, and called for stronger oversight of listed companies through strict enforcement of relevant laws.
Lawyer Al-Attar emphasized the importance of continuous monitoring to ensure companies comply with their articles of incorporation. He highlighted the need to audit company capital to verify it is used for the purposes stipulated in the articles, noting that some companies have deviated from their stated objectives by investing in unauthorized entities or registering company assets in the names of foreign parties. Lawyer Al-Attar also stressed the importance of taking legal action against companies suspected of wrongdoing before their boards resolve violations illegally through reshuffling or appointing other executives, thereby avoiding accountability for those involved in the violations.
In addition, financial analyst and gold expert Salah Al-Jumaz emphasized the need to amend stock market regulations to prevent small shareholders from bearing losses caused by the delisting of companies that violate the law. He highlighted the importance of implementing smart regulations to monitor illegal practices, which not only harm company assets and lead to delisting but also result in losses for small shareholders. Al-Jumaz explained that some companies are managed arbitrarily, without adherence to regulations.
When an executive commits violations that could result in delisting of the company, some shareholders or partners offer friendly advice instead of holding the executive accountable. This approach is wrong, as laws must be enforced immediately in cases of suspicion to protect both assets and small shareholders. The most effective way to safeguard assets and shareholders’ rights is to establish a precise internal control system within the company to detect manipulation or financial and administrative violations by senior executives at an early stage.
By Najeh Bilal Al-Seyassah/Arab Times Staff
