a method of voting that grants each shareholder a voting ability pro rata to the number of Shares owned, where the shareholder is entitled to vote his Shares in favour of one Nominee to the company’s Board of Directors or to distribute his votes amongst Nominees.

a person licensed by the Authority to carry out the activity of Investment Portfolio Management who is engaged for the purpose of accumulating the Shares of those wishing to participate in an Acquisition

an offer to acquire or a solicitation to procure the acquisition of Shares which would contribute to achieving Effective Control of a Company Listed on an Exchange, or of an unlisted company in the event of Reverse Acquisition, to which the provisions and rules of Module Nine (Mergers and Acquisitions) apply.

persons who, pursuant to an agreement or understanding (whether oral or written), co-operate, directly or indirectly, to obtain 30% or more of the Shares of a Listed Company admitted to trading, or to frustrate an Acquisition Offer for a Listed Company. Without prejudice to the general application of this definition, the following persons will be presumed to be persons Acting in Concert with other persons unless proven otherwise: 1. a Parent Company with members of its Group and Associate Companies and Associate Companies thereof in addition to companies that consider these companies to be their affiliates. 2. a company with any of its directors and their Relatives. 3. a Collective Investment Scheme manager along with the Collection Investment Schemes that it manages on a discretionary basis where the Collective Investment Scheme manager exercises voting rights attached to the shares available in such scheme. 4. an Investment Portfolio manager together with any client of such portfolio if the Investment Portfolio manager exercises voting rights attached to the Shares available in such portfolios

an agreement incorporated in a contract or a standalone agreement agreeing to the referral of a dispute or disputes to an Arbitral Tribunal.

a person who is affiliated with another person(s) or is subject to their control.

Law No. 106 of 2013 regarding Anti-Money Laundering and Combating Financing of Terrorism, and its Executive Bylaws.

a body formed in accordance with the Arbitration Rules, in charge of deciding disputes arising from obligations related to the Law or any other law if the dispute is related to capital markets transactions.

a pleading filed by a party requesting the referral of a dispute to Arbitration which includes the information that must be contained in an initial pleading filed before courts.

the disputed party in the Arbitration.

the amount paid by the Arbitration Plaintiff in accordance with the fees schedule filed with the Authority.

the Party requesting the referral of a dispute to Arbitration

the Capital Markets Authority Arbitration Rules referred to in the Law and Chapter Seven of Module Three (Enforcement of the Law) of these Bylaws.

the amount paid by the parties to the Arbitration Tribunal in accordance with the schedule prepared in this regard and which is filed with the Authority.

the schedule of arbitrators registered with the Authority.

an expression of interest to dispose of a Security listed in the Exchange and through the Exchange for cash consideration.

for the purpose of applying the provisions of Chapter Three of Module Nine (Mergers and Acquisitions), Assets of Significant Value means assets that have a significant effect on a Listed Company. Accounting standards adopted by the Authority shall be applied in determining the definition of transactions of significant effect.

any person who carries out the activity of valuation of assets and Shares in kind provided that it is an audit firm in accordance with Article 11 of the Companies Law.

the structure of Bonds where these are based on various elements including: 1. Bondholders’ right of recourse (directly or indirectly) on the Bonds assets, as the case may be. 2. the Bond Assets are ring-fenced or securitised in a manner which protects them from claims from other creditors. 3. Bondholders’ reliance on the assets of those Bonds as the principal source for servicing periodic distributions and redemption. 4. Bondholders’ bearing the risk of losses in the value of the Bond assets.

the Sukukholders of asset-based Sukuk are able to seek recourse from an Obligor, which recourse shall be dependent on the ability of the Obligor to meet that obligation.

he structure of Asset-backed Sukuk where these are based on various elements including: 1. Sukukholders’ right of recourse (directly or indirectly) on the Sukuk assets, as the case may be; 2. the Sukuk Assets are ring-fenced and securitised in a manner which protects them from claims from other creditors; 3. Sukukholders’ reliance on the assets of those Sukuk as the principal source for servicing periodic distributions and redemption; 4. Sukukholders bearing the risk of losses in the value of the Sukuk assets.

a company is deemed an Associate when another company owns, directly or indirectly, more than 20% and less than 50% of its share capital, or has a Significant Influence over its decisions.

a natural person registered with the Authority in the Auditors’ Register who gives an independent technical opinion on whether the financial statements of a company present a true and fair view of the company’s affairs and are prepared in accordance with the accounting rules and principles adopted and registered with the Authority.

the Capital Markets Authority.

the Authority set up in accordance with the Protection of Competition Law.

an expression of interest to acquire ownership of a Security listed in the Exchange and through the Exchange for cash consideration.

a person appointed by the Board of Directors from amongst the company’s employees to record, register and note all minutes of meetings, and to perform any other duties assigned to him by the Board in this respect.

the Board of Commissioners of the Capital Markets Authority.

the term from the date of issuing the Sukuk or Bonds until expiry due to the occurrence of a specific event or the expiry of the term that leads to the redemption of the Sukuk or Bonds.

any natural or corporate entity whose name is registered in the Bondholder’s register.

an association formed by the Bondholders or Sukukholders for each Bond Issue or Sukuk Issue to protect the mutual interests of its members. It also has a legal representative appointed from its members or a third party.

a financial instrument that represents an indebtedness due from the Issuer to a Bondholder, pursuant to which a Bondholder receives periodic distributions during the Bond’s Term or one payment or more of the redemption or both which when matured leads to the expiry of the Bond.

in the case of Asset-backed Bonds, the assets or a class of assets which are used to determine the value and returns of those Bonds.

a repayment of an amount entirely or partially, as determined in accordance with the Prospectus during or on the expiry of the Term of the Bond.

a corporate entity who purchases and sells Securities for the account of a third party against a commission.

an official business day at the Authority.

the Executive Bylaws to the Law.

a natural person nominated to fill a registered position or job.

the Central Bank of Kuwait.

an entity that interposes itself between counterparties to contracts, becoming the buyer to every seller and the seller to every buyer.

an entity that provides securities accounts, central safekeeping services, and asset services, which may include the administration of corporate actions, and plays an important role in helping to ensure the integrity of securities issues (that is, ensuring that securities are not accidentally or fraudulently created or destroyed or their details changed).

a person appointed by the company’s Board of Directors from amongst the members of the Board or others, who shall be directly under the Board of Directors, who is in charge of managing all executive works relating to the company’s main activities, in accordance with the responsibilities and authorities granted to him. This includes the general manager of a limited liability company.

any entity that conducts settlement and clearing operations of Securities, and one which provides the central custody of Securities, and one which provides other related services.

a Licensed Person with whom a Clearing Agency agrees to interact in the performance of its duties.

a Person who is provided, or purported to be provided, services by a Licensed Person within the scope of the Securities Activities which it is licensed to carry out. A client shall include any potential client, it shall also include the endowment (Waqf) and charity will, in addition to Persons to whom a registered Auditor or a registered External Sharia Auditing Office provides its services.

all non-cash money and Securities and other assets held or received by a Licensed Person for or on behalf of a Client in the course of any Securities Activity.

all cash monies and all funds held or received by any Licensed Person for and on behalf of a Client in the course of any Security Activity. When a Client designates a certain amount for the purpose of covering present or future, actual or contingent or prospective obligations, such money shall not be regarded as Client Funds.

a company where Subscription in its issued Shares is limited to its founders.

a Fund of limited capital. Its units can only be redeemed at the expiry of the term of the Fund. Its capital may be increased or decreased in accordance with its Articles of Association.

the period from opening registration in the Acquisition Manager’s portfolio for participation in the Acquisition until closing the registration in the Acquisition Manager’s portfolio.

an entity that employs investors’ money in various investment instruments.

Decree Law No. 25 of 2012 issuing the Companies Law, and its amendments.

the company’s memorandum of association or memorandum and Articles of Association, if any.

a senior executive officer and employee in charge of ensuring the Licensed Person’s compliance with all laws and legislations issued by the relevant regulatory authorities, and its compliance with the rules specified by the Exchange, Clearing Agencies and clients’ contracts. He is also in charge of preparing and executing plans related to the position of compatibility and compliance to ensure that the regulatory requirements of a Licensed Person are met and its contractual obligations are met, in addition to other legal requirements of relevance. He shall be in charge of executing the requirements of the Anti-Money Laundering and Combating Terrorism Financing Law.

the Capital Markets Court provided for in the Law.

the Minister of Commerce and Industry.

a Voluntary Acquisition Offer for a Competitive Acquisition made by an Offeror which contains a material addition or revision to a condition in the Original Acquisition Offer. The Offeror of a Competitive Acquisition must state its objectives for making the offer, to be submitted before five Business Days from the closing of the Collection Period of the Original Acquisition Offer.

the period from disclosing the Competitive Acquisition Offer until a decision is made in respect thereof by the general assembly of the Offeree Company.

any condition, agreement, shareholding (whether individual holding or through Subsidiaries or Acting in Concert) exceeding 30% of the Traded Shares of a Company Listed on the Exchange.

any person, natural or corporate, who has Control.

a type of Bond that gives its holder the right to convert such Bond into ordinary Shares.

a type of Preferred Share that gives its holder the right to convert such Preferred Shares into ordinary Shares in the share capital of the Issuer.

a type of Sukuk that gives the holder the right to convert such Sukuk into ordinary Shares in the share capital of the Issuer.

enhancing the credit-worthiness of a Bond or Sukuk by adding collateral or guarantees.

a corporate entity licensed to carry out the activity of credit rating or the activity of rating credit information.

a corporate entity licensed by the Authority to hold in custody Clients’ Funds and Clients’ Assets including those constituting a Collective Investment Scheme in accordance with the provisions of the Law and these Executive Bylaws.

care undertaken by a Person of sufficient experience and commitment to perform his duties.

a day on which one can subscribe in, or redeem units of, Investment Fund.

a person’s dealing in securities for his account or on behalf of a third party by sale, purchase, submitting an offer of sale or purchase or Acquisition in respect thereof, issuance, public offer for Subscription, waiver of the right to subscribe, promoting, marketing, undertaking to cover a Subscription, custody, listing, depositing, settling, financing the dealing of, lending, short sale, pledge, waiver of securities, or any other transaction which the Authority deems as dealing in Securities.

mid-term and long-term investment instruments such as convertible and non-convertible Bonds and Sukuk with fixed or variable return, treasury bonds or any other debt instrument approved by the Authority.

an Investment Fund with the main objective of investing in mid-term and long-term debt instruments issued by governments, government or semi-government companies or private institutions and companies or any other body approved by the Authority which is regulated by supervisory authorities and classified by a recognized international Rating Agency or a local Rating Agency licensed by the Authority, ensuring the Fund’s continued performance as provided for in its Articles of Association.

a licensed Custodian to whom rights, obligations and the authority of a Trustee have been assigned under a Trust Deed, who does not have a direct or indirect interest in the Trust.

financial instruments, the value of which is derived from the value of the relevant assets such as Shares, Bonds, commodities and currencies, which are purchasable, sellable and tradable similarly to Shares or other financial assets.

a Bond or Sukuk issue made by the Obligor directly and not through a Special Purpose Vehicle Company.

the Disciplinary Board which is set up at the Capital Markets Authority pursuant to Article 140 of the Law.

the terms and conditions proposed in a draft agreement between companies that are party to a Merger to execute the same in accordance with the procedures set out by the Law.

every condition, agreement or shareholding, no matter what the amount, that leads to controlling the appointment of the majority Members of the Board of Directors, the resolutions issued by it or the general assembly of the relevant company.

a market designated for matching bid and ask offers for Securities which follows specific trading procedures and performs the functions usually performed at securities markets.

the Executive Bylaws to the Companies Law, as amended.

a committee duly appointed to be in charge of managing a Fund which shall consist of two or more of the Fund Manager’s employees who are duly qualified to be its Representatives and one of whom shall be a Senior Executive in accordance with the provisions set out in Article 2-14-1 of Chapter Two of Module Thirteen (Collective Investment Schemes) of these Bylaws.

positions related to the core activities of a Financial or Banking Institution directly subordinate to the Chief Executive Officer in accordance with the organizational structure adopted by the Institution, such as a representative or an assistant to the Chief Executive Officer.

the amount paid by the party requesting the services to the expert appointed by the Arbitration Tribunal.

the schedule of experts registered with the Authority.

an independent institution (individual or corporate license) specialized in auditing the commercial and financial transactions of a Licensed Person to ensure their compatibility with Sharia standards and the Authority’s relevant resolutions. It submits its reports to the general assembly of the Licensed Person. An External Sharia Auditing Office shall also present its annual report to the relevant Fund’s Unitholders’ assembly.

the par value, the face amount or outstanding face amount of any Bond or Sukuk.

a person in charge of supervising accounting and financial procedures at a Licensed Person.

a Licensed Person or a unit subject to the control of the Central Bank, or foreign institute or company licensed by a controlling authority to work in Securities Activities, a bank or a financing company, or a government entity that works in activities relating to the financial or banking sector or supervision thereof, except for any Financial Institution which invests its own capital solely for its own account.

an invitation or an inducement to enter into an agreement, the making or performance of which by either party constitutes a Security Activity, including exercise of a right conferred by a Security to acquire, dispose of, underwrite or convert a Security.

shall have the meaning provided for in Ministerial Resolution No. 38 of 2011 issued by the Ministry of Finance regarding regulating the Central Bank of Kuwait over financing companies.

a corporate entity established abroad that has issued or intends to issue Securities.

a Collective Investment Scheme formed to collect money from investors for the purpose of investing it on their behalf in different fields in accordance with professional management principles of Collective Investment and to be managed by a Fund Manager for a specific fee.

a person licensed by the Authority to set up and manage Collective Investment Schemes.

a Fund with the main objective of investing in other Investment Funds licensed by the Authority or by a foreign supervisory authority in accordance with regulatory standards and conditions no less than those applied by the Authority.

all cash and all other assets other than cash, including real estate, owned by a Fund.

ministries, public authorities and institutions and government departments.

bonds issued by the government, ministries, public authorities or public institutions whether through a direct or an indirect issue or any secured entirely by those authorities.

Sukuk issued by the government, ministries or public authorities and institutes whether through a direct or indirect Issue or secured entirely by those authorities.

a Parent Company that has direct or indirect control of a company, a Subsidiary of a company and a Subsidiary of a Parent Company.

a Bond or Sukuk issue guaranteed by a Guarantor.

a person other than the Obligor who guarantees with his entire net worth the settlement of obligations arising from Sukuk whilst the Obligor remains obliged to settle such obligations.

a person other than the debtor who mortgages a real estate or movable asset to secure the settlement of a debtor’s debt.

a Bond or Sukuk issue made through a Special Purpose Vehicle Company and not directly by the Obligor.

an agreement that contains general principles and initial steps to present a Voluntary Acquisition Offer or enter into a Merger between two companies or more.

any person, in view of his position, has access to information or data of material effect on a Listed Company that is not available to the public.

information and data not announced to the public which if announced would influence the price or trading of a Security.

a direct sale or purchase of Bonds or Sukuk between two parties outside the Exchange.

a Person with an interest amounting to 5% or more in the share capital of a Listed Company, whether directly or indirectly or as a Group or in Alliance with others.

a person in charge of independently evaluating and inspecting a Licensed Person’s internal operational systems, in addition to determining and analysing risks of potential operations in the Licensed Person in accordance with the professional rules and standards of internal audit, and providing recommendations and reports to the senior management and auditing committee or Board of Directors.

an administrative unit, answering to the Audit Committee, specialized in supervising a company’s commercial and financial transactions to ensure their compatibility with the Islamic principles and standards and the Authority’s relevant resolutions.

a corporate entity that provides investment advice relating to Securities for remuneration.

a corporate entity licensed to carry out the activity of controlling and supervising Collective Investment Schemes.

cash, Securities or other assets owned by a Client the ownership of which is recorded in an account opened in favour of the Client by a company licensed to manage Investment Portfolios, in accordance with the requirements set out by the Authority. The Investment Portfolio shall either be a custody portfolio or be managed by a Portfolio Manager or by the Client.

a person who manages discretionary or non-discretionary Investment Portfolios on behalf of Clients or who manages the assets of the Company by whom he is employed.

a person licensed to carry out the activity of a Subscription Agent in accordance with the relevant provisions set out in Module Eleven.

shares in the subscribed capital of a shareholding company, whether fully or partially paid.

a corporate entity entitled to issue Securities.

positions related to the core activities of a Financial or Banking Institution directly subordinate to an Executive Position in accordance with the organizational structure adopted by the Institution.

Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities, and its amendments.

a natural or corporate entity that has a license from the Authority to practice one or more of the Securities Activities provided for in Article 1-2 of Module Five (Securities Activities and Registered Persons) of these Bylaws.

means: a. a shareholding company, the Shares of which are listed on an Exchange. b. an Issuer or Obligor that lists on an Exchange Bonds and Sukuk it has issued or is the Obligor thereof. c. a Fund, the units of which are listed on an Exchange.

a person licensed to carry out the activity of an Investment Advisor in accordance with the provisions set out in Module Twelve.

an application to list Securities on an Exchange.

any Kuwaiti bank, or a branch of a foreign bank, licensed by the Central Bank of Kuwait.

that part of the Secondary Market on which companies that meet the relevant standards specified by the Authority are listed.

any shareholder holding 5% or more of the Shares of a shareholding company in accordance with the provisions of Module Ten (Disclosure and Transparency) of these Bylaws.

an offer to acquire or a solicitation to procure the acquisition of the remaining Shares of the Offeree Company which the Offeror is obliged to make to all of that company’s shareholders as a result of possessing together with its Subsidiaries and any party Acting in Concert 30% or more of the Securities of a Listed shareholding company.

a Person who ensures the availability of supply and demand for one or more Securities according to such controls as may be issued or approved by the Authority.

an account that includes cash or Securities that is specialized in the activity of Market Making.

any information concerning a Listed Company, Listed Fund, Issuer or Obligor, as the case may be, relating to its activity, a person, its financial position or its management which is not available to the public and which relates to its assets, liabilities, financial position or general course of business, which may lead to a change in the price or volume of trading in a relevant Listed Security, or affect the willingness or unwillingness to acquire or divest an interest in such a Security, or may affect the Issuer’s ability to meet its obligations.

a company whose legal entity is wound up following an agreement to transfer its financial liabilities and assets in whole or in part to one or more other companies, or to one or more New Companies founded for the purpose, in accordance with the procedures specified by law.

an agreement that leads to the merger of one company or more into another or into a different legal entity, whether through amalgamation, consolidation, or division and amalgamation.

the liquidation of one company or more (the Merged Company) and transfer of its financial assets and liabilities into an existing company (the Merging Company).

the liquidation of two companies or more (the Merged Companies) and formation of a New Company into which the merged companies’ financial assets and liabilities are transferred.

the division of a company’s financial assets and liabilities into two parts or more and the transfer of each part into an existing company (the Merging Company).

a company that assumes the financial assets and liabilities or part thereof of one or more companies which are then to be wound up in accordance with the procedures specified by law.

a natural or corporate entity elected or appointed to membership of a company’s Board of Directors. This includes a representative of a corporate entity, who shall be a natural person. The fit and proper rules shall apply to each natural person who is a member of a Board of Directors whether directly elected to the Board or appointed to represent a legal entity.

the Ministry of Commerce and Industry.

short term investment instruments such as deposits or its equivalent in Islamic banking, government bonds, Bonds issued by banks or companies, whether in Kuwaiti Dinars or other foreign currency, bank deposit certificates, repurchase agreements, Sukuk or any other monetary instrument approved by the Authority.

a Fund with the main objective of investing in money market instruments as provided for in its Articles of Association.

a company set up to combine the financial liabilities and assets of two companies that have been Merged by Merger by Consolidation in accordance with the procedures specified by law.

an offer to acquire, or a solicitation to procure the acquisition of, Shares of one or more classes of Shares of an Offeree Listed Company other than Shares owned by the Offeror, its Subsidiary or those Acting in Concert with it on the date of Offer Submission, in exchange for shares issued by the Offeror company or for a combination of cash and Shares issued by the Offeror company.

a type of Preferred shares that do not give its holders the right to convert into ordinary Shares in the Issuer’s share capital.

a member of a Board of Directors who is not fully engaged in full-time management of the company and does not receive a salary from it. The remuneration received as a Member of the Board of Directors is not deemed a salary.

a type of Preferred Shares that the Issuer cannot redeem during the term of the company specified in the Company Contract. The value of these Shares shall be paid upon the liquidation of the Issuer.

a corporate entity that benefits from the revenues of the issuance of Bonds or Sukuks who is the main person in charge of paying out regular distributions and redemption pursuant to those Bonds or Sukuks. Further, this is the Issuer in the case of a Direct Issue, and uses a Special Purpose Vehicle Company to become the Issuer in the case of an Indirect Issue.

a person with an interest provided for by the Law. A potential interest shall suffice if the purpose of a request for information is to prevent an imminent harm or to document a right, the evidence of which is feared to disappear upon dispute.

a document that contains details of an Acquisition Offer addressed by the Offeror to the shareholders of the Offeree Company in accordance with the information and guidelines provided for in these Bylaws.

the period from disclosing an Acquisition Offer until announcing the execution of the Acquisition transaction.

any Listed Company on the Exchange in respect of which an Acquisition offer is made. In the event of a Reverse Acquisition, any unlisted Company in respect of which a Reverse Acquisition is offered to its shareholders.

a person, natural or corporate, that submits an Acquisition Offer. In the event of a Reverse Acquisition, any Listed Company that issues new Shares and offers them to the shareholders of an unlisted Company.

any person, natural or corporate, that submits an Acquisition offer to an Offeree Company, before another person offers a Competitive Acquisition Offer.

any party or parties that offer a Competitive Acquisition Offer other than an Original Acquisition Offer.

registration in the Commercial Register or Collective Investment Schemes register and publication in the Official Gazette.

a Clients’ account relating to investments of more than one Client.

a Fund of a variable capital, with a capital that increases with the issuance of new investment units or decreases with the redemption of any of its units during the period specified in its articles.

a contract or agreement that gives a person the right, and not an obligation, to purchase or sell a Security or Securities, but such right does not bear the right to own Securities.

an Acquisition offer submitted to an Offeree by a Person before another Person submits a Competitive Acquisition Offer.

an Offer Document before revision.

a corporate entity that acts, directly or indirectly, in person or through Related Parties to transfer the ownership of assets to the Issuer of Asset-backed Bonds or Sukuk, or who, directly or through Related Parties, is a party to an original agreement which creates an Issuer’s obligations and leads to the creation of the Bonds and Sukuks founded on those assets, or who purchases a third party’s assets for its own account and then disposes of the same in the Issue of Asset-backed Bonds or Sukuks.

that part of the Secondary Market, on which companies, that meet standards lower than those set by the Authority for the Main Market, are listed.

a company is a parent company of another if it owns more than 50% of its share capital or has the right to appoint or dismiss most of the Members of the Board of Directors, or has an influence in directing the company’s decisions in a manner that realizes its interests.

a type of Preferred Shares that grants its holders the right to participate in the surplus profit of the issuer along with holders of ordinary shares following the distribution of dividends at a specified rate have been paid to those shareholders.

an Issuer’s agent in charge of coordinating payment of periodic distributions and redemption due to Bondholders and Sukukholders.

disciplinary penalties issued by the Disciplinary Board specified in Article 146 of the Law and Articles 5-10 and 5-11 of Chapter (Disciplinary Matters) of Module Three (Enforcement of the Law) of these Executive Bylaws.

periodic payments under Bonds or Sukuk to each Bondholder or Sukukholder on one occasion or more or at the end of the relevant Sukuk or Bonds Term.

a natural person or a corporate entity.

a right that grants a security owner priority to subscribe in an Issuer’s share capital increase pro rata to the number of securities he owns in the Issuer’s share capital.

Shares that are granted certain privileges in voting, profits, liquidation proceeds or any other rights provided that Shares of the same type are equal in rights and privileges.

a primary default event occurs for a Licensed Person in the following events: 1. on the administrative and financial failure of a Licensed Person, including the inability to meet its obligations on maturity, the appointment of a liquidator, receiver, administrator or attachment over its assets; 2. when the Authority imposes a limitation on the Licensed Person prohibiting it from holding Clients’ fund.

the market in which Securities Subscriptions or issuances are made.

an invitation addressed to a specific class of person(s) to subscribe in securities.

a Professional Client by Nature or a Qualified Professional Client.

each of the following shall be deemed a Professional Client by Nature: 1. a government, public authority, central bank or international institute (such as the World Bank or the International Monetary Fund); 2. persons licensed by the Authority and other Financial Institutions that are subject to a supervisory authority inside or outside the State of Kuwait; 3. a company with a paid-up capital of at least one million Kuwaiti Dinars or its equivalent.

an employee holding a Professional Qualification in Reviewing and Auditing qualifying him to work as an external Auditor in the country in which he obtained this qualification, provided that he has no less than five years of experience in this line of work.

for the purpose of classifying a Client as a Qualified Professional Client in accordance with the provisions of Article 2-7 of Module Eight (Conduct of Business) of these Bylaws, a Professional Position means a position that requires knowledge of transactions and services provided to it.

qualifications obtained after having passed a professional test in reviewing and auditing.

promotion or marketing of a Public Offer for a Fund licensed by the Authority in the State of Kuwait, whether made by direct communication or by Promotional or Marketing Material.

promotion or marketing made otherwise than by Promotional or Marketing Material, including meeting with a client or a telephone call or a direct interactive offer or dialogue; any such is required to be made in accordance with the guidelines provided for in Article 2-22-4 of Chapter Two (Funds) of Module Thirteen (Collective Investment Schemes) of these Executive Bylaws.

documentation, whether sent in writing or electronically or by any other modern communication means, serving to promote or market a Fund or proposed Fund, which shall be made in accordance with the provisions set out in Article 2-22-5 of Chapter Two (Funds) of Module Thirteen (Collective Investment Schemes) of these Executive Bylaws.

a document that contains information regarding a Security, its Issuer and other information in accordance with the conditions and requirements issued by the Authority.

Law No. 10 of 2007 regarding Protection of Competition.

a company, the issued Shares of which are subscribed to by means of a Public Offer whether at formation or capital increase, or a company that lists its Shares on an Exchange.

an invitation addressed to the public through various means of media to subscribe or purchase Securities.

each of the following shall be deemed a Qualified Professional Client: 1. a Client that has transactions of large sizes with an average not less than KWD 250,000 every quarter for the past two years; 2. the size of money and assets a Client has with one or more Licensed Persons is not less than KWD 100,000; 3. a Client who works or has previously worked in the financial sector for at least one year in a professional position that requires knowledge in dealing and the services to be provided to him.

a standard used to determine the rate of liquidity concerning Securities, which equals the quantity of traded Securities divided by the estimated average number of existing Securities in a specific turnover period.

an investment Fund that aims at investing the Fund’s money for real estate purposes.

a type of Preferred Shares that may be redeemed either at a fixed date or following the passing of a certain period during the term of the Issuer.

1. The Chief Executive Officer; 2. Senior Executives; 3. Finance Manager; 4. Compliance Officer; 5. Risk Management Officer; 6. Internal Auditing Officer; 7. Sharia Audit Officer; 8. Representatives in respect of Securities Activities: a. representative of a Securities Broker registered with an Exchange; b. representative of a Securities Broker not registered with an Exchange; c. representative of an Investment Advisor; d. representative of an Investment Portfolio Manager; e. representative of a Collective Investment Scheme Manager; f. representative of a Custodian; g. representative of an Investment Controller; h. representative of a Subscription Agent;i. representative of a Credit Rating Agency; j. representative of a Market Maker; k. representative of an Asset Valuator. l. representative of a Qualified Securities Broker registered with an Exchange.

any natural or corporate entity registered with the Authority in accordance with Article 3-1-1 of Chapter Three (Registered Persons) of Module Five (Securities Activities and Registered Persons) of these Bylaws, and these are: 1. those occupying positions at the Licensed Person that require registration; 2. auditors registered with the Authority; 3. External Sharia Auditing Offices registered with the Authority.

Members of the Board of Directors of a Licensed Person in addition to Registered Employment Positions.

the date specified by an Issuer for the purpose of determining the eligibility of Preferred Shareholders to benefit from profit payment or distribution or attendance at the Issuer’s general assemblies.

the Authority, Ministry or Central Bank with regards to companies subject to any of them, and other competent authorities inside or outside of the State of Kuwait.

a party is considered related to a company if: 1. the person has direct or indirect control over the company; 2. the party is a Subsidiary company; 3. the party is a member of the same Group in which the company is a party to; 4. the party is a Board Member of the company or member of its executive management; 5. the person is a Relative of a related party referred to in paragraph (1) or (4); 6. is a company under the control or combined control of or material influence of the related parties referred to in paragraph (4) and (5) through their direct or indirect voting power; When determining Related Parties, the provisions of the Law, Bylaws and International Accounting Standard No. 24 and amendments thereto shall be taken into account.

the Fund Manager or any of its Subsidiaries or Associate, Members of the Board of Directors of the Fund Manager or any of its Executive Officers or their Relatives at any of the above parties, the Fund Custodian, Investment Controller, real estate valuator, Fund Auditors, Fund Manager’s Auditors, any unitholder whose holding exceeds 5% of the net assets of a real estate Investment Fund or any person Subsidiary to, or in control of, any of the above.

a person that occupies the office of a Member of a Board of Directors, executive management, supervisory position for a Broker, Investment Advisor, manager or supervisory position for any of the abovementioned entities, or an employee or representative of any of the entities that deal with the public, or has discretion in disposing of Securities or monies as part of his role at an entity licensed to work in Securities.

parents upwards and children downwards in the bloodline (Children, grandchildren, father, grandfather).

this is formed of two elements, the products and geographic scope. Products mean all products that substitute one another and may replace one another to meet the needs of a service or commodity receiver. Geographic scope means the international borders of the State of Kuwait.

a report made by a person for the purpose of bringing attention to the possible occurrence of one of the crimes stated in the Law which meets the conditions and requirements provided for in Article 3-2 of Module Three (Enforcement of the Law) of these Executive Bylaws.

a person or more appointed by the Bondholders Association or SukukholdersAssociation from amongst its members or others to represent the Bondholders and protect their rights.

employees of a Licensed Person who undertake one or more Securities Activities for the benefit of a Licensed Person or its Clients.

a client who is not a Professional Client.

any arrangement pursuant to which a Listed Company issues new Shares and offers them to an unlisted company’s shareholders in exchange for theirs, so as the new Shares represent more than 50% of the Listed Company’s issued Shares following the Acquisition.

an Offer Document that contains a revision for the benefit of the shareholders of an Offeree Company prepared in accordance with the guidelines and conditions provided for in Article 3-3-12 of Module Nine (Mergers and Acquisitions).

a person responsible for determining, evaluating and classifying risks in proportion to a Licensed Person’s strategic goals, in addition to controlling the risk control systems and monitoring the Licensed Person’s ability to face risks, and updating the Licensed Person’s register regularly and consistently.

a secondary default event occurs on the financial and administrative failure of a third party to which Clients’ Funds controlled by the Licensed Person have been transferred, including inability to meet its obligations on maturity, the appointment of a liquidator, receiver, or administrator or the attachment of its assets.

the market or markets in which Securities sale and purchase transactions and transfers of ownership are made pursuant to regulations, regulations and laws governing the same.

the activities provided for in Article 1-2 of Module Five (Securities Activities and Registered Persons) of these Executive Bylaws.

companies and Funds listed on a stock exchange and Brokers.

an entity that enables Securities to be transferred and settled by book entry according to a set of predetermined rules.

The process of transforming non-liquid financial assets such as loans and other non-liquid assets into negotiable securities, which may be based on in-kind and monetary guarantees and which do not solely rely on the payment capability of the debtor.

any instrument – in any legal form - that evidences ownership of a share in a financial transaction and that is negotiable pursuant to a license from the Authority, such as: a. shares issued or proposed to be issued in the capital of a company; b. any instrument that creates or acknowledges a debt issued or to be issued by a company; c. loans, Bonds, Sukuks and other instruments that can be converted shares in a the capital of a company; d. all public Debt Instruments that are tradable and issued by the various government entities or public institutions or authorities; e. any right, option or derivatives relating to Securities; f. Units in a Collective Investment Scheme; g. any paper or instrument considered by the Authority as a Security for the purposes of implementing this Law and the Bylaws. Not to be considered as Securities are commercial papers such as cheques, promissory notes, bills of lading, letters of credit, cash transfers and instruments negotiated by banks exclusively between each other, insurance policies and rights arising from retirement funds established for the benefit of the beneficiaries therefrom.

persons occupying executive positions and performing important and essential work relating to Securities Activities carried out by the Licensed Person.

a person approved by the Authority that assumes the role of a manager or person in charge of the assets of Bonds or Sukuk of Asset-backed Bonds and Sukuk.

the period of time between the transaction date of selling a security in the Exchange and the date of registering the security in the name of the buyer in the Securities holders Register by the Clearing Agency.

a document signed by the Offeror of an Acquisition Offer, Exchange and Clearing Company, pursuant to which the title of Shares acquired from shareholders wishing to sell is transferred to the acquirer as an exception to the trading system applicable in the Exchange.

shares issued or to be issued in a company’s share capital.

a person qualified in Fiqh transactions, who assumes the duties of Sharia auditing of a Licensed Person.

a person in charge of supervision of the business and finances of a Licensed Person to ensure its compatibility with the provisions of Islamic Sharia and related resolutions and standards issued by the Authority.

standards of financial and commercial transactions in accordance with the provisions of Islamic Sharia.

information on a transaction, contract or action taken into account when a prudent investor makes an investment decision regarding the sale or purchase of Securities, which if announced to the public, may lead to an abnormal change in the price or trading of such Securities.

when a company owns directly or indirectly 20% or more in another company, it is considered to have Significant Influence unless it proves that it has no influence. Such influence is established in one of the following ways: a. representation on the company’s Board of Directors; b. participation in setting out regulations, including resolutions related to the distribution of profits and any other distributions; c. any important transactions between the two companies; d. exchange of administrative employees;e. provision of basic technical information.

a company set up for a special purpose such as to issue a Sukuk or to undertake other securitization transactions. The company is subject to the rules and conditions provided for in the Law and these Bylaws.

every Person of Interest with the company such as employees, creditors, suppliers, clients, agents and service provides thereto.

a person who offers or sells Securities for the benefit of an Issuer or Ally, or obtains Securities from an Issuer or Ally for the purpose of re-marketing the same or managing their issuance.

a company is deemed a Subsidiary when a person owns more than 50% of its share capital or has Effective Control over it.

instruments each of equal value representing a common share in the ownership of real estate plots, utilities or services or the assets of a specific project or investment activity.

a repayment of an amount determined wholly or partially by reference to the value of, or income generated, by the Sukuk assets by relying on the value or the revenue from the Sukuk assets during or on the expiry of the related Sukuk Term.

the assets or class of assets owned by an Issuer, or are subject of an agreement with an Issuer, for the purpose of realizing revenues, directly or indirectly, for the benefit of the Bondholders or Sukukholders.

a person appointed to safe keep Sukuk assets for the benefit of Sukukholderspursuant to a financial trust(s).

any natural or corporate entity whose name is registered in the Sukukholders’ register.

risks that may lead to the instability of a Market, Exchange or Clearing Agency or in a manner that may lead to repeated irregular functioning in the course of business of the Market, Exchange or Clearing Agency.

the Term of Preferred Shares that commences as of the date of their issue until the date of their redemption or conversion to normal Shares.

Shares issued by a shareholding company listed on the Exchange.

a person that trades in the purchase and sale of Securities for his own account.

the sale and purchase of Securities through trading channels provided by the Exchange.

a company’s shares which the issuing company repurchases or buys back or otherwise makes use of.

contractual arrangements concluded to protect the Bonds or Sukuk Assets for the benefit of the holders of such Bonds or Sukuk.

a document establishing a Trust.

an investment unit is an indivisible Security that represents a share in a Fund’s Assets directly vesting its holders with all rights resulting therefrom.If one unit is owned by more than one owner, they must choose one person amongst them to represent them before the Fund.

1. Kuwaiti banks and branches of foreign banks licensed by the Central Bank to do business in the State of Kuwait; 2. financing companies, excluding commercial companies subject to the supervision of the Ministry of Commerce and Industry which grant credit facilities through sale of commodities through instalments or the provision of services payable in instalments or any kind of deferred sales, or investment companies exercising, in addition to a financing activity, Securities Activities licensed by the Authority; 3. exchange companies that are subject to the supervision of the Central Bank in accordance with Ministerial Order dated 19/3/1984 subjecting Exchange Companies to the Supervision of the Central Bank of Kuwait.

the day on which the net asset value of a Fund is calculated.

The process and mechanisms undertaken to determine the value of a companies’ assets and Shares in the following cases: 1. value of in-kind Shares constituting the company’s share capital whether upon incorporation or upon increase of its capital; 2. value of the net assets of companies which are parties to a Merger, conversion or division, or when making an Acquisition Offer; 3. value of the share of a partner who does not wish to remain a partner in accordance with Article 16 of the Companies Law; 4. value of the share of a joint partner in accordance with Articles 43 and 298 of the Companies Law; 5. value of the share of a partner’s who refuses to amend a partnership company contract in accordance with Article 52 of the Companies Law; 6. value of the Shares of a removed partner in accordance with Article 55 of the Companies Law; 7. value of the share of a deceased partner in a professional company in accordance with Article 52 and 59 of the Executive Bylaws to the Companies Law; 8. value of any attached Shares in accordance with Articles 62 and 69 of the Executive Bylaws to the Companies Law; 9. any other events provided for in the Companies Law, its Executive Bylaws or these Bylaws.

every act in violation of the provisions of the Law, and any Bylaw, regulation, resolution or instruction issued by the Authority.With regards to the provisions of the Violations Committee of an Exchange, a Violation means every act in breach of the rules and regulations applicable at the Exchange.

every natural or corporate entity that commits an act that constitutes a breach of to the provisions of the Law, any Bylaw, regulation, resolution or instructions issued by the Authority. With regards to the Violations Committee of an Exchange, a Violator is every member of the Exchange that commits an act that constitutes a breach of the Exchange’s applicable rules and regulations.

an offer to acquire, or a solicitation to secure the acquisition of, Shares of one or more classes of Shares of a Listed Company other than those owned by the Offeror, its Subsidiaries or those Acting in Concert with it as of the date of submitting the offer.

a person that submits a report who shall enjoy the protection provided for in Articles 3-7 to 3-12 of Module Three (Enforcement of the Law) of these Executive Bylaws.

Article 1-1 The Authority’s Corporate PersonalityThe Authority is a corporate entity and it is independent financially and administratively. It is supervised by the Competent Minister. The Authority has the right to litigate, conclude contracts, own real estate and movable assets and to conduct all legal acts in order to achieve its objectives.

The Authority aims to achieve the following: 1. Regulate Securities Activities in a fair, transparent and efficient manner. 2. Grow the capital markets, and diversify and develop investment instruments thereof in accordance with best international practice. 3. Enhance investor protection. 4. Reduce Systemic Risks Arising from Securities Activities. 5. Impose requirements of full disclosure in order to achieve fairness and transparency, and to prevent conflicts of interests and the use of Inside Information. 6. Ensure compliance with the rules and regulations related to Securities Activities. 7. Enhance public awareness of Securities Activities and of the benefits, risks and obligations arising from investments in Securities and encourage their development.

The Authority is competent to undertake all the necessary works to achieve its objectives set out in Article (1-2) of this Module. The said competences are not limited by the competences stated in the Law or these Bylaws. The Authority shall practice its competences in order to realize and enhance those objectives.

The Authority’s functions are: 1. Preparing rules, regulations and issuing instructions to execute the Law. Moreover, it works to issue recommendations and studies necessary to develop laws to help achieve its objectives. 2. Giving guidance by virtue of these Bylaws. 3. Determining the general policy and principles by reference to which it performs functions under these Bylaws.

In discharging its functions stated in the Law, the Authority must have regard to the following principles: 1. The need to use the resources of the Authority in an optimal way. 2. Achieving growth in the capital markets in particular, and sustainable growth in the economy in general. 3. The investors shall be responsible for their decisions. 4. The principle that a burden or a restriction should be proportionate to the benefits, which are expected to result from the imposition of that restriction. 5. The Authority should exercise its functions transparently.

The Authority shall take all precautionary measures in order to prevent crimes and Violations that may take place in the capital markets or when practicing Securities Activities.

The Authority shall work for the orderly operation of the capital markets, the Securities Activities and other activities related to achieving its objectives.

The Authority shall secure appropriate protection for investors in Securities, Persons who are provided with services from Licensed Persons or Registered Persons and who have relevant rights in relation to Securities, or Securities Activities.

The Authority shall take all necessary procedures to enhance the integrity of the capital markets in order to maintain their stability, strength, flexibility and the continuity of orderly operation to ensure transparency of the price formation process in the markets, and to limit illegitimate practices.

The Authority’s rules may include regulation of the relationship among the Licensed Persons and those who deal with them or others.

The Authority shall carry out all the work necessary to achieve its objectives, and in particular the following: 1. File civil, commercial and administrative lawsuits related to the application of the provisions of Law, regulations, instructions and rules issued by virtue of the Law, or others relevant to the Authority 2. Receive complaints on Violations and crimes, and perform administrative investigation of them and refer them to the Disciplinary Board if so it deems. 3. Carry out all the procedures that may lead to uncovering crimes and refer criminal complaints to public prosecution in case of any incident which is suspected to be an offense under the purview of the Authority or in respect of those who are engaged in Securities Activities. 4. Conduct inspections and supervise Dealing in Securities and the activities of the Licensed Persons. 5. Purchase, acquire and dispose of any kind of property, and initiate all forms of legal action. 6. Print and publish materials related to Securities Activities. 7. Impose fees corresponding to the services provided, and collect fines within the framework of the Authority’s Law. The Authority shall perform all the necessary procedures which enable it to perform its duties and achieve its objectives as set out in the Law. 8. Set up rules to regulate Dealing in Securities and the transfer of ownership. Such dealings shall not be subject to the provisions of Articles (508), (992) and (1053) of the Civil Law and Articles (231), (232), (233) and (237) of the Commerce Law. The Authority shall also set up rules to regulate the settlement of Securities, without being limited to the provisions provided for in Section Three of the Law of Pleadings and the Executive Bylaws of the Companies Law. 9. Issue rules to regulate Special Purpose Vehicle Companies that issue Securities without being limited to the provisions provided for in the Companies Law. 10. If it so decides, to establish or contribute to establishing an educational or training institution related to the field of securities markets, such a body being a corporate entity which is subject to the Authority’s sole supervision, and which shall be regulated in accordance with rules and bylaws issued by the Authority.

The Authority may regulate the activities of the Licensed Persons, Registered Persons and traders in Securities and other activities so as to achieve the Authority’s objectives.

The Authority may issue guidance including information or instructions regarding the following: 1. Applying the Law and these Bylaws or any rules or instructions issued by the Authority. 2. Procedures of the Authority’s work and the way of practicing its competences and functions. 3. Any other issues as deemed necessary by the Authority

The Board shall: 1. Issue necessary bylaws and instructions to execute the Law. It shall also work on issuing recommendations and the necessary studies needed to develop the regulations which assist in achieving its objectives. 2. With consideration to the provisions of Article (33) of the Law, the Board shall issue licenses to Securities Exchanges and for related activities, and shall supervise their activities. 3. Issue licenses to Clearing Agencies and for related activities, and shall supervise their activities. 4. Approve the rules and controls set by an Exchange or a Clearing Agency to conduct their work and endorse the same. 5. Terminate, amend or cancel the decisions and works issued by an Exchange and a Clearing Agency. 6. Issue licenses for Securities Exchanges’ membership, and licenses to their employees and anyone who works in the management of Securities Activities, including asset management and investment Funds companies, brokerage companies, Securities custody companies, advisory services institutions, etc. 7. Renew, amend, suspend, restrict or revoke licenses. 8. Issue the approval by the Authority of Registered Persons as well as issuing the rules and conditions of their registration. 9. Regulate the promotion of investment Funds and other Collective Investment Schemes. 10. Regulate Public Subscriptions or Initial Public Offerings (IPOs) and Private Placements for Kuwaiti and non-Kuwaiti Securities and supervise them. 11. Regulate the processes of Mergers and Acquisition Offers and supervise them. 12. Set up rules of supervision and for any self-regulatory organization in Securities activities. 13. Approve the rules and regulations proposed by an Exchange management prior to commencement of its business. 14. Set up rules for compliance with professional ethics, for competence and integrity of Licensed Persons, and approve the same. 15. Provide appropriate systems to protect traders and work towards minimizing improper and unfair practices in the Securities Activities. 16. Cooperate with supervisory authorities and foreign counterpart institutions with regards to organizing, coordinating and participating in joint activities. 17. Carry out all duties and authorities entrusted to it in the Law or any other law with regard to reducing market instability. 18. Issue all necessary decisions which fall within the Authority’s competences and are deemed necessary to implement the Law and these Bylaws. It may delegate some of these authorities. 19. Set up special rules, regulations and procedures needed by the Licensed Persons who work in accordance with Islamic Sharia. 20. Issue rules for Market Makers. 21. Take all necessary measures to manage market risks including ceasing the trading in the markets or of one or more Securities or suspending one or more Traders as well as coordinating with other Regulatory Bodies. 22. Issue a decision of cancelling the listing of a Security. 23. Set measures to supervise and monitor Licensed Persons. 24. Set governance rules of Licensed Persons and Listed Companies in the Exchange. 25. Issue rules that set out the duties and liabilities of Listed Companies, their Members of the Boards of Directors, executive management and their Insiders. 26. Approve accounting standards, performance evaluation criteria and internal audit obligations of Licensed Persons and to determine the criteria and conditions required in Auditors and External Sharia Auditing Offices that are registered at the Authority. 27. Approve lists of fees, commissions and charges paid to Licensed Persons in return to the services offered to their Clients. 28. Determine fees to be received by the Authority in return for issuing or renewing licenses or Dealing in Securities and other fees.

The Authority shall coordinate and cooperate with all local Regulatory Bodies, particularly the Central Bank and the Ministry. It may sign memoranda of understanding that illustrate the scope, mechanisms and determinants of that coordination and cooperation.

Within the framework of cooperation and coordination between the Authority and similar Regulatory Bodies and foreign counterpart institutions, the Authority may sign memoranda of understanding with those entities that illustrate the scope, mechanisms and determinants of that coordination and cooperation. Those memoranda of understanding may stipulate that each party may request from each other to conduct an investigation into a certain matter or take precautionary measures to prevent crimes or Violations or to avoid their effects.

The Authority may not respond to a request made by the entities mentioned in Article (2-2) of this Module with regard to cooperation, coordination and exchange of information in the following cases: 1. If attending to the request would offend the sovereignty of the State of Kuwait, or contradict laws, regulations or rules applicable in the State of Kuwait. 2. If attending to the request would harm bona fide investors or Traders, or adversely impact the market’s operation or Securities Activities. 3. If the request relates to a matter that is subject to existing judicial procedures.

The Authority may join or participate in relevant international or regional organizations whether those organizations are governmental or non-governmental.

The Authority may hold meetings or conferences or issue studies, and undertake and issue research and work papers in relation to its work.

The Authority may publish draft decisions and instructions for consultation in accordance with the rules set by the Authority provided that they shall include an explanation of the purpose of the proposed rules as well as the timeframe for submitting comments and suggestions.

Consultation on draft decisions and regulations issued by the Authority shall be conducted in accordance with the mechanism approved by the Authority including meetings and mutual correspondence with concerned entities.

In selecting a sample for a consultation, multiple entities shall be considered so there shall not be less than three. Moreover, diversity of size, specialization and activities shall be taken into consideration. The expertise of the entities in the subject matter of the consultation shall also be taken into consideration

The Authority shall consider submitted comments and suggestions and determine what can be taken into consideration to issue the final rules. Those comments and suggestions are not binding on the Authority.

Submission and approval of the draft of any final decision and instructions shall be made in accordance with the procedures approved by the Authority.

The Authority is run by a board named the Board of Commissioners of the Capital Markets Authority. It consists of five full time commissioners named by an Amiri decree based by the nomination of the Competent Minister. The decree shall determine the name of the chairman and his deputy among the members.

The Board is pre-eminent within the authority and shall be responsible for all of the Authority’s decisions.

The commissioner shall be a Kuwaiti natural individual of integrity, with experience or being specialized in fields related to the functions of the Authority. He shall not have been the subject of a final judgment of bankruptcy or penalized with restriction of freedom in a felony or in a crime of breach of honor or trust.

The term of membership is four years, renewable for one term only, except for the first board members, where only three of them can be renewed for a third term. A commissioner’s position becomes vacant by death, disability or resignation. Furthermore, a commissioner shall lose his capacity and the seat thereof become vacant and a decree shall be issued to end his membership in the following cases: 1. If a final judgment of his bankruptcy is issued. 2. If he is charged with a definitive crime related to breach of honor or trust or with a freedom restricting penalty in a crime. 3. If within one year he does not attend three consecutive meeting or six non-consecutive meetings without good reason acceptable to the Board of Commissioners. 4. If he violates the provisions of Article (27) or Article (29) of the Law. 5. If he deliberately violates the code of ethics set by the Board of Directors by virtue of which it set the rules, conducts and ethics of commissioners.

The chairman represents the Authority before third parties and the court. He assumes the position of the managing director and executes the decisions of the Board. He supervises all the technical and administrative bodies affiliated to the Authority. He exercises his authorities in accordance with the laws, regulations, and decisions acknowledged by the Board as set in the structure of authorities approved by the Board. He shall also be responsible, along with other commissioners, for the management of the Authority. He may delegate one of the commissioners with some of his administrative authorities or to an administrative unit in the Authority.

In the absence of the chairman or where the chairman’s seat becomes vacant, all his competences, including chairmanship of the meetings of the Board, shall devolve to the vice-chairman.

If the chairman is absent or his seat is vacant, and his deputy is unable to undertake the chairman’s tasks for any reason whatsoever, the Board shall convene within two weeks to designate a person to carry out the functions of the chairman in the capacity of an acting chairman.

A decree shall set the salaries and remunerations of the chairman, his deputy and the rest of the commissioners, as well as any allowances or privileges paid from the Authority’s funds, upon a proposal by the Competent Minister and the consent of the Council of Ministers.

The Board shall convene at least eight times a year upon an invitation from the chairman or a request filed in writing by at least two commissioners determining the subject and date of the meeting. The meeting shall be held on the set date to discuss only the subject matter of the invitation.

An invitation for a meeting shall include the date and place of the meeting. The invitation may be delivered by hand, via email or fax and shall be despatched at least twenty-four hours before the date. The invitation shall include the agenda and all related documents and papers for the items of the agenda.

A meeting of the Board shall be valid if the majority of the commissioners are present, including the chairman or his deputy, except the meeting stipulated in Article (9) of the Law. Decisions shall be made by a majority vote of the Board’s members. The Board may accept members’ attendance via modern communication means/media.

Each meeting shall start when in quorum. If it is known prior to the meeting date that a quorum will not eventuate, the chairman shall postpone the commencement of the meeting for half an hour and if a quorum is not then completed the meeting shall be postponed to another date. It is necessary that a quorum be maintained throughout each meeting.

During its meeting, the Board shall consider the following subjects:1. Approving the agenda and any suggested amendments.2. Previous minutes of meetings to be approved by the Board. 3. Subject matters submitted by the party who called the meeting.

The Board may call any person to participate in the discussions and deliberations of the Board without having the right to participate in voting over the decisions.

The Board shall have a secretariat for the administrative arrangement of the meetings and for providing members with documents and papers related to the agenda’s topics.

The secretariat shall keep the disclosures of the Authority’s commissioners referred to in the Law.

The secretariat shall take the minutes of the meetings and send these to the members of the Board to receive their amendments before minutes may be approved, provided that the minutes shall include the summary of the deliberations and discussions which took place in the meeting and the resulting decisions.

In emergencies, the chairman may obtain the approval of commissioners on a decision of urgent nature via fax, email or any other communication means approved by the Authority which can record written evidence of the commissioner’s approval. The said decision shall be valid and enforceable upon the approval of all the Board’s members. Such decisions shall be submitted to the Board in the first following meeting for ratification.

The Board is the only entity authorised to set and approve the organizational structure of the Authority and the arrangements of financial and administrative competences. It may make necessary amendments when necessary.

The Board may delegate some of its competences to the chairman, or one of its members, a committee in the Authority or the managing director. The managing director may authorize one of the heads of the sectors or departments some of his competences.

An entity with delegated responsibilities in accordance with Article (4-20) may authorize a lower entity to bear those responsibilities if the delegating entity permits it

Delegation shall be issued and cancelled by the delegating entity and the delegated entity shall be notified accordingly. A delegating entity which has delegated some of its competences to another entity in accordance to Articles (4-20) and (4-21) may not practice them while the delegation is in effect.

The chairman may delegate signing authority to one of the commissioners. The managing director may delegate signing authority to heads of sectors or departments.

The Board may establish permanent or temporary advisory committees and entrust them with studying a certain topic falling within its authorities as stated in the Law. The Board may appoint experts from outside the Authority to accomplish the committees’ tasks.

Advisory Committees shall set a plan for its work and submit their reports to the Board. Those committees shall meet by an invitation of its chairman or at least two of its members.

All data and information related to the work of the Authority are confidential. They may not be disclosed without the consent of the Authority or pursuant to a court order. Memoranda of understanding concluded by the Authority with local Regulatory Bodies and foreign authorities may include agreement upon exchanging information and data related to the Authority’s work with conditions to ensure its confidentiality and for its use to be solely for regulatory purposes.

All data and information related to the Licensed Persons and persons who deal in the markets shall enjoy the protection extended to personal and confidential information and may not be disclosed except in the following conditions. 1. Exchanging information and documents related to violations concerning Securities between the Authority and corresponding entities and authorities in other countries, as the Authority may deem appropriate in each case individually, in light of the public interest subject to applying the principle of reciprocity by virtue of memoranda of understanding or any other mechanism. 2. By virtue of court order. 3. In other cases permitted by the Law.

Commissioners or any employee or person working in or with the Authority's committees with or without remuneration shall maintain the confidentiality of the information received by him by virtue of his position as well as keeping documents unrevealed except to authorized persons at the Authority.

Disclosure of information in accordance to the terms and conditions stipulated in Articles (5-1) and (5-2) of this Module is not considered as violation of the confidentiality obligation stipulated in Articles (5-2) and (5-3).

No commissioner or employee in the Authority invited to attend a meeting in the area of the Authority’s competence and who has a direct or indirect interest in the topic submitted for deliberation shall be allowed to participate in its discussion, or express an opinion or vote thereon. Such commissioner or employee must disclose this interest, if any, at the beginning of the meeting, and shall leave the meeting prior to commencing the discussion of the topic. If the person of interest has voting capacity concerning any decision that shall be taken in respect of the said topic, that person shall not be included within the quorum for making decisions. Each person invited to a meeting on any area of the Authority’s competence and who has a direct or indirect interest in a topic submitted for deliberation must disclose such interest, if any, at the beginning of the meeting and before participating in the discussion or expressing opinion.In all cases, the chairman of the meeting must notify the attendants of the importance of the disclosure indicated in the two previous paragraphs.

No commissioner or employee, holding a position at the Authority, may conduct any commercial transaction for himself or as an agent, guardian or custodian. Moreover, they may not engage in any other profession, occupation or job in public or private sector, or provide any direct or indirect services or advice, and shall not be a Member of a Board of Directors of any entity that is subject to the Authority’s supervision, or any party related thereto.

Each member of the Board and the employees shall declare in writing to the Authority, upon commencement of their duties, their ownership of any Securities listed on Kuwait Stock Exchange owned by them or minors who are under their guardianship, and shall also disclose, in writing, any updates on any changes thereof as per the procedures laid down by the Board. Members of the Board are prohibited from dealing in the shares of companies which are subject to the Authority’s supervision throughout their period of membership of the Board.

Commissioners of the Authority and the employees shall adhere to the code of ethics set by the Authority.

6-1 Disciplinary Board

One or more Disciplinary Boards shall be established within the Authority, composed of three members headed by a judge delegated by the Supreme Judiciary Council and two members who are experienced in financial, economic, and legal affairs. The term of membership of the Disciplinary Board shall be three years and may be renewed. The Disciplinary Board shall address the following matters: 1. Deciding on the disciplinary matters referred and submitted by the Authority concerning the violation of the provisions of the Law or these Bylaws or any other decisions or instructions issued in connection therewith 2. Deciding on the appeals filed against Exchange decisions and the decisions taken by the Violations Committee thereat. The Disciplinary Board, when hearing these appeals, shall be deemed to act as an appellate body and its rulings with regard thereto shall be final. 3. Considering the disciplinary procedures taken by an Exchange towards any of its members referred to the Disciplinary Board from the Authority.

A member of the Disciplinary Board is prohibited from having any direct or indirect interest in any entity subject to the Law, nor may he be Ally with such entity during the time of his said work.

6-2 Complaints and Grievances Committee

A Complaints and Grievances Committee shall be formed by virtue of a decision from the Board. The committee shall be composed of at least three members who are experts in financial, economic and legal affairs, among which shall be appointed the chairman and the vice chairman of the committee for two years. The committee shall receive complaints from any person with interest about any wrongful act committed by a Licensed Person. Moreover, it shall receive grievances concerning decisions issued by the Authority. The committee’s deliberations shall be confidential and its decisions shall be issued in majority.

It is forbidden for any member of the Complaints and Grievances Committee to have any direct or indirect interest nor may he be Ally with any entity subject to the provisions of the Law during the time of his said work

6-3 Advisory Board of the Capital Markets Authority

By a decision of the Board, an Advisory Board shall be formed and named Advisory Board of the Capital Markets Authority; it shall be considered as an advisory committee and shall report to the Board.

The advisory board is formed at least of five members. Members are appointed by a decision of the Board for two renewable years.

For membership of the advisory board, the following requirements shall be fulfilled: 1. Members shall have sufficient expertise in the field of capital markets as specialists and local and international academics of expertise and experience. 2. To be aware of the latest regulations in capital markets around the world. 3. To have an awareness of future trends that may affect the capital markets. 4. To be able to communicate with international entities to transfer their best practices to the Authority.5. They shall be of good reputation, and have not received any final sentence of bankruptcy or have been convicted of a crime or felony involving a breach of honor or trust.

The Board shall set the charter of the advisory board and it shall set its remunerations.

The Advisory Board shall: 1. Review the Authority’s long – term strategy and its accomplishments and assist in planning them. 2. Study the Authority’s practices and keep up with the developments and trends in the regulation of the global capital markets. 3. Submit recommendations and studies related to developing the Authority’s works in order to increase its efficiency in accordance with best international practice. 4. Conduct specialized studies and researches on any subject that the Board may require in order to develop the infrastructure of the Kuwaiti capital markets. 5. Provide the necessary technical advice.

6-4 Advisory Council for Sharia Supervision

By a resolution of the Board, an Advisory Council for Sharia Supervision shall be established and it shall report to the Board. The Council shall be the reference in all matters related to the Authority’s resolutions in the Sharia compliant activities.

The Advisory Council for Sharia Supervision shall be composed of at least of five experts specialized in the jurisprudence of Islamic financial transactions, law, economics and administrative sciences. The majority of the council members shall be specialists in Sharia. The Board shall issue a resolution of their appointment for two renewable years.

The Advisory Council for Sharia Supervision may refer to external experts after obtaining the approval of the managing director.

The Board shall set the charter of the advisory council for Sharia supervision and the Board shall set its remunerations.

The Advisory Council for Sharia Supervision shall: 1. Express the Sharia opinion with regard to matters pertaining to the Authority’s business with respect to Licensed Persons who operate in accordance with the Islamic Sharia provisions. 2. Express the Sharia opinion in creating new Islamic financial products and instruments launched in the capital markets by the Authority or approved by the Authority. 3. Express the Sharia opinion on matters referred to it by the Board. 4. Express the Sharia opinion on complaints submitted by Traders against Licensed Persons with regard to non-compliance with Islamic Sharia provisions. 5. Express the Sharia opinion in applying Sharia standards, decisions, regulations stipulated to organize the Licensed Persons’ business. 6. Propose the bylaws, and regulations regarding the Sharia supervisory regulations of Licensed Persons who operate in accordance with the provisions of the Islamic Sharia. 7. Propose bylaws, regulations and policies regulating the profession of internal and external Sharia revision and audit for Licensed Persons. 8. Propose bylaws and regulations pertaining to the conditions which shall be met by the executive officials of the Licensed Persons operating in accordance with the provisions of the Islamic Sharia, and their obligations and responsibilities. 9. Propose the rules for supervision and the controls for the Sharia compliant securities markets with regard to all instructions and decisions which shall be issued by the Authority with regard to organization and monitoring of business of the Licensed Persons operating in accordance with the Islamic Sharia provisions. 10. Propose the necessary criteria to apply any investment index for Listed Companies and the Collective Investment Schemes that operate in accordance with the provisions of the Islamic Sharia issued by the Authority or any of the licensed Securities Exchanges. 11. Express the Sharia opinion on the activities of Sharia compliant Licensed Persons. 12. Propose plans and methodologies which may develop the capital market in accordance with Islamic Sharia provisions in the State of Kuwait. 13. Propose research and studies which may contribute to developing the components of the capital market in accordance with the Islamic Sharia provisions. 14. Propose templates of contracts and financial instruments approved by the Authority to operate in accordance with the provisions of the Islamic Sharia.

The Authority’s Board shall set the administrative and financial bylaws for its employees without abiding by the provisions set for civilian employees in the Civil Service Law and its system, provided that the latter law and its system shall be applied if there are no provisions otherwise in this regard. The chairman of the Authority’s Board of Commissioners shall have the competences of the Minister and the Civil Service Commission (CSC) on what pertains to the Authority’s employees.

The Authority shall form a permanent committee called “Benefits and Personnel Affairs Committee”. It shall be formed by a Board’s resolution. It shall consist of three members of the Board, provided that the Board chairman is not one of them. The rest of the Board’s members may attend the committee’s meetings without voting on any of its decisions.

the Benefits and Personnel Affairs Committee shall be responsible for reviewing and amending administrative bylaws and incentives of the employees of the Authority. It shall submit its recommendations in that concern to the Board. The committee shall prepare its internal bylaws and submit these to the Board to be approved.

The Authority shall have an independent budget promulgated by a law, to be prepared in accordance with the rules to be set out in these Bylaws taking into account the provisions of Decree-Law No. (31) of 1978 on the Rules for Preparing Public Budgets, Monitoring their Execution and Closing Account.

Board’s chairman shall have the competences of the Minister of Finance pursuant to Decree-Law No. (31) of 1978 on the Rules for Preparing Public Budgets, Monitoring their Execution and Closing Account.

The financial year of the Authority shall commence on April 1st and conclude on March 31st every year.

The Authority’s budget shall be prepared in accordance with commercial principles to be suitable for the nature of the Authority’s activity and the requirements of executing its strategic plan and the latest developments in that area.

By a resolution of the Board’s chairman, a committee shall be formed to prepare the annual budget. It shall include representatives of the main organizational units and the organizational units concerned with the preparation of the budget. The resolution shall define the competences, duties and dates of accomplishing of the committee’s work. The committee shall complete the budget and submit it to the Board’s chairman. The financial regulations of the Authority shall regulate the detailed procedures of preparing the budget and dates for its completion.

The financial regulations of the Authority shall define the systems, forms and procedures for preparing the annual budget of the Authority.

The Board’s chairman shall submit the annual budget and its appendices to the Board for approval. It shall then be submitted to the Council of Ministers to be approved and shall be submitted to the legislative authority at least two months before the end of the financial year.

The annual budget shall include a statement of the financial projections for its revenues and expenditures for the following financial year. The projections shall include the total revenues and expenditures allocated to the various items in accordance with the regulating rules in this concern in the financial regulations of the Authority and the relevant approved decisions. The budget shall be accompanied by a statement which includes a general presentation of the bases of the budget and the goals to be achieved in execution of it.

If the approving law of the Authority’s annual budget was not issued before the beginning of the financial year, the previous budget shall be enforced until it is issued. A circular shall be issued by the Board’s chairman. If some items of the new budget were approved by the legislative authority, those items shall be enforced.

The financial resources of the Authority consist of the following: 1. Fees and charges collected for the Authority by virtue of laws and regulations or organizational decisions issued by it. 2. All allocations to the Authority from the State’s budget. 3. Revenues earned from the investment of the financial reserves of the Authority. 4. Fines imposed by the Law by virtue of judicial rulings or decisions of the Disciplinary Board of the Authority. 5. Funds from the settlement of criminal lawsuits filed regarding capital markets crimes. 6. Any other revenues stipulated by laws or bylaws.

The Authority shall have financial reserves to ensure financial stability in the long term in order to face the Systemic Risk Expected to Occur in the Securities Activities. The amount and means of creating such reserves shall be determined by a decision issued by the Council of Ministers upon the Board’s proposal. The Authority shall manage such reserves, and if these reserves reach the determined amount, the surplus shall be transferred to the Public Treasury of the State. If at any time the reserves become less than the determined amount, then the Government shall supplement and pay the lacking amount.The Authority shall also have a pre-determined operational capital of KD 40,000,000, from which the expenses of all the Authority activities shall be paid. Expenses shall be paid and covered directly from the Authority’s cash reserves, in accordance with the rules of the Bylaws. The Authority’s capital may be increased through a decree.

Within two months of the issuance of these Bylaws, the Board shall submit a proposal to the Council of Ministers of the amount and means of creating the cash reserves referred to in Article (21) of the Law.

The Authority may use the cash reserves in order to: 1. Pay and cover the operational capital of the Authority stipulated in Article (21) of the Law. 2. Cover any deficiency of the capital. 3. Pay and cover any necessary liabilities in the occurrence of any risks that may lead to a cessation of business continuity and due operations of the market, an Exchange or a Clearing Agency in accordance with the regulations and conditions prescribed by the Board when taking its decision to pay and cover those liabilities.

The Authority shall transfer any surplus of the operational capital (after deducting the total expenditures) and its operational revenues to the cash reserves at the end of each financial year.

Any surplus shall be transferred to cash reserves if it be more than the amount defined by a decision of the Council of Ministers to the State’s Treasury.

If at any time the reserves become less than the determined amount, then the Government shall supplement and pay the lacking amount pursuant to a decision of the Council of Ministers.

The allocations of the annual budget of the Authority shall be used to fulfil the financial liabilities legally due on the Authority without prejudice to sums which may become due by Authority in cases of advanced payment of its legal or contractual liabilities.

The financial allocations in the balance sheet shall be used during the financial year. Only amounts of money which were actually collected during that year shall be entered to the revenues and expenditures of the financial year. Amounts the Authority is due to pay for supplies, works, or services that were actually provided but for which the procedures for paying them were not completed prior to the end of the financial year shall be considered expenditures for that year.

The financial regulations of the Authority shall regulate the procedures related to financial contracts, agreements and engagements that the Authority enters into to manage its requirements for supplies, or services or others in accordance to the special nature of its activities. The legal department of the Authority shall be consulted regarding those contracts, agreements and engagements. The Authority is not subject to the provisions of Public Tenders Law No. 37 of 1964 as amended.

The financial regulations of the Authority shall define the rules records and forms necessary for the accounting entries and the procedures of collection and payment as well as other financial and accounting procedures and rules. Moreover, it shall regulate the methods of auditing and types of reports.

The Authority shall establish a financial control office which reports directly to the Chairman of the Board/the Managing Director, along with the proper number of financial controllers and administrative assistants which report to the office director. The office director and the financial controllers shall be appointed by the Chairman of the Board/the Managing Director, the financial controller shall have the following competences: 1. Review the disbursement vouchers or payment vouchers to ensure the validity of procedures and compliance with laws, bylaws and financial regulations as well as the validity of the accounting treatment. In addition to that, he shall sign them before disbursement or payment. 2. Supervise the revenues and expenditures of the budget as well as the assets and the liabilities in accordance with the applicable laws, bylaws and approved systems as well as the adopted accounting standards. 3.Verify the validity of accounting reconciliations and their compliance with the applicable financial rules and recognized accounting principles. 4.Verify the collection and payment of the Authority’s revenues in accordance with the financial laws, bylaws and regulations. 5. Review the records, books and accounting systems to ensure the accuracy of information therein. 6. Prepare periodical reports regarding the results of his work and submit the same to the Chairman of the Board/the Managing Director. 7. Follow up the execution of the directions or recommendations issued by the Chairman of the Board/the Managing Director regarding the financial aspects, and follow up the execution of the recommendations of the State Audit Bureau and the procedures to be taken to meet any observations they may make concerning the financial transactions of the Authority. 8. All other competences assigned to him by virtue of the relevant financial regulations, decisions or circulars.

The Authority shall have a permanent committee called “Internal Audit Committee” to be formed by a Board’s resolution. It shall consist of three members of the Board provided that the Board’s chairman shall not be one of them. The committee shall ensure an effective system of financial and accounting control and of risk management in the Authority. Moreover, it shall review the internal audit systems set by the executive management and shall review the internal and external auditing. All recommendations or decisions shall be submitted to the Board. The internal audit committee shall have the following competences: 1. Review the internal audit system in order to judge its efficiency and sufficiency and submit the necessary recommendations in that concern to the Board. 2. Review the periodical and annual financial statements and give opinions on them before submitting the same to the Board. 3. Submit proposals and recommendations regarding all regulations related to the financial affairs department, purchasing rules, tenders, contracts, and treasury matters; and request the preparation of necessary reports. 4. Recommend the appointment and dismissal of the Authority’s Auditors and define their fees. 5. Approve the annual internal audit plan. 6. Provide coordination between the executive management, the Auditor and the Internal Audit Office. 7. Verify the independency of the Authority’s Auditor. 8. Follow up the annual report of the observations of the State Audit Bureau related to the Authority’s operations, and the procedures followed by the executive management. 9. Participate in considering the reasons behind incidents such as thefts, embezzlement or fires and suggest necessary systems to avoid them; follow up the settlement of the potential damages and claim compensations from any who are liable. The Committee shall prepare its internal bylaws and submit these to the Board to be approved.

The Authority shall have one or more independent Auditors to be chosen from the Auditors registered with the Authority by a Board’s resolution upon the recommendation of the Audit Committee. The Auditors shall have the right to review documents, information and data necessary to perform their tasks whilst maintaining the confidentiality of the Authority’s information.

Without prejudice to the State Audit Bureau’s subsequent supervision of the Authority, the Authority is not subject to prior supervision by the State Audit Bureau nor to the provisions of Public Tenders Law No. 37 of 1964 as amended.

The Authority shall submit to the Competent Minister an annual report for submission to the Council of Ministers within 120 days at the end of each financial year regarding its activities, work and accomplishments in developing and growing the market within the lapsed year. The report shall include the Authority’s accounts and the Auditor’s report.

Any amounts of money due to the Authority from third parties are public funds and shall be treated as debts due to the State’s Treasury. They shall be collected in accordance to the procedures followed in collecting debts to the State’s Treasury.

Without prejudice to the provision of the Law, the Authority shall not engage in any commercial transaction. It may not lend monies, issue Securities or invest therein.

Taking into consideration its objectives, the Authority may request information and documents related to securities activities or dealing in securities from any person as well as any regulatory and governmental entities, and to determine the required time for the receipt of such.

The Authority may appoint, or require a Licensed Person to appoint, an Auditor from among the Authority’s registered Auditors, in order to prepare a special report on a particular subject related to one of Licensed Person’s activity. Such an Auditor shall provide the Authority with a copy of their report. The relevant Licensed Person shall pay such auditor’s fees and expenses as well as providing all required documents, information and assistance to the auditor.

All Licensed Persons and Registered Persons shall be subject to supervision and inspection by the Authority and to its instructions in this regard. Moreover, Dealings in Securities shall be subject to supervision and inspection by the Authority no matter which Person is undertaking them.

The Authority shall perform periodical inspection after prior notice to ensure compliance with provisions of the Law and these Bylaws, and applicable policies and procedures. It may inspect without prior notice in order to achieve its objectives stated in the Law and these Bylaws or to investigate complaints and reports submitted to it.

After performing an inspection, the Authority may perform the following procedures:1. Collect all initial observations by the Authority after completing an inspection and discussing them with the Person who was inspected.2. Prepare an initial report on the results of the on-site inspection and submit it to the Person who was inspected, in order for it to respond and comment on what was observed by the inspection team within ten Business Days from the date of receiving the report. 3. After reviewing the inspected person’s response and comment, the Authority will review all observations in the initial report with the Person who was inspected, in order to correct the observations within a period of time set by the Authority. 4. Prepare a final report on the results of the inspection including all the observations. The Authority may take appropriate disciplinary procedures on any Violations reported in the report.

Employees appointed on the recommendation of the Board of Commissioners by a decision made by the Competent Minister shall have the capacity of judicial power to verify the evidence of crimes committed in violation of the Law and the decisions made for its enforcement.

Those granted the capacity of judicial power shall have the following powers: 1. Receive notices and complaints, either written or verbal, from individuals and companies and to verify them as well as investigating acts to determine crimes committed in violation of the Law. 2. Visit the relevant premises and carry out an inspection to investigate and discover whether a crime has been committed or not, whether in response to a report from a known or an anonymous source and to collect evidence and any proof of a crime as well as reviewing any license concerned. 3. Practice the powers of the judicial police in the event a crime is observed when performing periodical inspection. 4. Request all information they deem necessary for their work as well as review all records, books, documents and statements. They have the right to call witnesses to hear their testimonies, and to record their personal information. They also may call experts for their technical opinions on technical aspects. 5. Hold documents and papers that they consider as evidence that the inspected entity has committed a crime Officials in the entities relevant to the previous paragraph shall provide the employees of the Authority vested with judicial powers with the statements and document they request in that regard.

Judicial officers shall open an official report to document all procedures they undertook in visiting the concerned location, examining documents, investigating the Violators, calling witnesses, hearing their testimonies and documenting any non-compliance or incidents of non-cooperation. In the report they shall write down the day, date, hour, place of issuing the report, name of the report’s executor, signature as well as the witnesses’ signatures and the summary of the relevant facts of a crime. This report shall be submitted to the competent authority in the Authority to take the necessary actions.

No Person is allowed to refuse to provide documents or information required by judicial officers on the basis of the confidentiality of such information or documents, or on the basis of their superior’s instructions not to disclose them.

No Person is allowed to prevent, nor to induce or assist any other person to prevent, judicial officers from undertaking their competency, either by damaging any document, refusing to provide such or giving false or misleading information or refusing to provide any help that they are able to provide to judicial officers.

In the event of the occurrence of any act that prevents the judicial officers from undertaking their duties, they shall document that in an official report and record the identity of the person who obstructs their work. A report of the said incident shall be submitted to the public prosecutor summarizing it in accordance with the provisions of Article (127) of the Law.

It is a condition that a Report of a crime or Violation stipulated in the Law shall be based on credible evidence which justifies a Whistleblower’s reasonable belief of the reported incident. A Report shall not be considered if it is without documentary or other evidence in justification.

A Report to be submitted to the managing director of the Authority shall fulfil the following conditions: 1. To be written and signed by the Whistleblower, stating his capacity and the date of submission as well as his address, contact details and phone numbers. The Whistleblower may attend in person to the Authority and report verbally provided that the competent officer shall execute a Report. 2. A report shall include a sufficient explanation of the facts of the reported crimes and Violations; their time, location and source as well as how they occurred and how the Whistleblower discovered the incident and the names of the reported Person or Persons and their capacities, in addition to any supporting information or evidence. 3. Attached to the Report shall be the supporting documents and papers. 4. The Whistleblower shall explain his relationship to the reported Person or Persons and state whether he has previously submitted any complaint against such a Person to any other entity and what was the result.

If the Report does not fulfil the previous conditions, the legal department of the Authority shall suggest leaving the case on file in accordance with the mechanism adopted by the Board or the Report may be referred to another competent entity, as the case may be. However, if the Report includes sufficient evidence or information that the department considers important and significant it shall follow the procedures to be taken for Reports which do fulfil the conditions above.

A special record shall be prepared in the Authority to register Reports submitted to the managing director who refers them to the competent officer, which latter person shall register each such Report, a summary of the Report and its registration date in the record. In the record, the competent officer shall record the actions taken for each such Report, such as dismissal, collecting evidence or reference to another entity.

The legal department of the Authority shall investigate each Report and give instructions concerning their investigation, the collection of information and supporting documents and their opinion to dismissal, conduct an initial investigation, refer to another entity or submission to the managing director of the Authority.

When necessary, it is permitted that Whistleblowers and witnesses may testify using communication technology, video and other means and applications that secure their confidentiality and reliability.

Witnesses and those who were harmed by any crime or Violation shall be considered as Whistleblowers if they testify concerning the relevant incidents.

The Authority may provide protection to the Whistleblower through hiding their identity and identifying them only with special codes. The Authority shall prepare confidential records including the original data of one whose identity is decided to be hidden or is being protected. Records shall be maintained as confidential and shall be revealed only by a decision by the Authority or the Competent Court. The Authority may adopt any other measures or procedures it considers necessary to provide protection to a Whistleblower or witness.

It is not permissible to take any action against a Whistleblower in his work place that may alter his legal or administrative position, or reduce his rights, or deprive him, or defame him or cause any other measure that may harm him because of his part in revealing an alleged crime or Violation stipulated in the Law.

Any person that takes any action stated in Article 3-9 against a Whistleblower because of their reporting of an alleged crime stipulated in the Law shall be subject to disciplinary investigation.

It is not permitted to charge a Whistleblower with criminal, civil or disciplinary charges as long as the Whistleblower thought in good faith that the incident he reported was appropriate to be reported in this context regardless of the result of the Report.

A Whistleblower shall not be exempt from criminal, civil or disciplinary charges if he submits a Report in contravention of the Law or any other law.

At least seven Business Days before the date set for an investigation to begin, the Authority shall notify the Person to be investigated requiring them to appear before the Authority on the date set for commencement.

The investigated person may be notified by facsimile or email through the Authority’s system including any electronic system made for that purpose in accordance with the approved mechanisms.

A notice prepared by the Authority shall include the following data at minimum:1. Date, including hour, day, month and year.2. Full name of the notified person, his profession or occupation, residency and place of work. If his residency or place of work be unknown at the time of sending the notice, the last known residency or place of work in Kuwait shall be used. 3. Names of concerned parties.4. Subject of the notice, summary of the violation and its basis in law.5. Number of the violation, date and place of the session to be held.

A notice shall be given during the official Business Days from 7 am to 7 pm.

The Authority has the right to obtain data related to phone number, facsimile number, email account and address of the notified party from any entity or person which holds them. A submitter of any complaint, a litigant or its representative shall exert all due efforts to complete the service of notice.

Notice through email shall be considered complete and legally effective as of the date of sending such through the electronic information system of the Authority and receiving a report of transmittal.

Notice through facsimile shall be considered complete and legally effective as of the date and time the facsimile device prints a report confirming completion of transmission attached to a copy of the notice.

The time and date of receipt of a judicial notice transmitted by email shall be defined as the time of its transmission from the electronic information system of the Authority, whereas the time and date of receiving the judicial notice through facsimile shall be considered as the date and time of the report of the device after completion of the transmission. The place to which the notice shall be sent shall be the residence of the notified party or their chosen domicile as the case may be.

The Authority shall keep notices transmitted through facsimile and email in the same format as in a paper or electronic record.

The Authority’s legal department shall undertake the administrative investigation of the Violations covered by the Law and these Bylaws and which are referred to it by the Authority. The investigator, for the purposes of performing this work shall have the following powers: 1. The right to request any data, documents or papers from any government organization or any organization related to the Authority. 2. The right to hear the testimonies of any witnesses. 3. The right to call on whomever it may deem necessary to testify during the investigation. 4. The right to visit the premises of, and inspect any register or information at, any government body or any entity of relevance to the activities of the Authority.

All persons shall provide the Authority with the data and information required for completing the investigation in a timely manner without any delay.

Any Person who is subject to investigation shall have the full right to defend himself and to appoint an attorney to defend him.

If an investigation shows evidence of Violation, the Authority may refer the Violator to the Disciplinary Board in accordance with the following rules and procedures: 1. The managing director of the Authority shall issue the decision to refer the violation to the Disciplinary Board with documentary evidence and relevant investigation reports. 2. The Disciplinary Board shall issue its decision about the referred Violation. 3. The Board and relevant parties shall be notified about the decision within seven Business Days from the date of issuance of the decision of the Disciplinary Board. The Authority may warn a Violator to cease committing the Violation and require him to undertake not to repeat it in the future as well as subjecting him to additional supervision.

In the event an investigation is deemed not justified, the investigated person shall be notified with the decision thereof and may obtain a certificate of this from the Authority.

The reporting and the initiation of an investigation by the Public Prosecution and the filing of the criminal case shall not extinguish the right of the Authority to take disciplinary action. The Disciplinary Board may defer the taking of disciplinary action pending the rendering of a final ruling in the matter of a criminal case. In all events, the penal court judgment shall be binding on all.

A Violation is any act that violates the provisions of the Law, these Bylaws or any law, or decision or instructions issued by the Authority.

The secretary of the Disciplinary Board shall receive the Violations referred to the Disciplinary Board and grievances from the decisions of an Exchange, and the Volations Committee of the Exchange from the relevant persons and submit them to the chairman of the Board as well as notify the parties concerned of the dates of the sessions to be held and any other matters assigned to him by the chairman.

The secretary of the Disciplinary Board shall notify a person referred to the Disciplinary Board of the date set by the Disciplinary Board to consider the Violation and its content. A grievant shall be notified of the date of the consideration of their grievance. Notification shall be at least three Business Days prior to the session, in accordance with the mechanism stipulated in Articles from (4-1) through (4-9) of this Module.

A grievant shall submit his grievance concerning a disciplinary procedure taken by an Exchange to the Disciplinary Board within fifteen days from the date of notification to the party concerned of the decision in accordance with the form prepared for that purpose by the Authority. The form is included in Appendix 4 of this Module. The Disciplinary Board may decide to support, modify or cancel the decision and shall set out the reasons therefor.

The secretary of the Disciplinary Board shall enable the person referred to the Disciplinary Board or his representative to view all the documents related to the alleged Violation and provide him with a copy of any such document after he has paid the applicable fees.

The Disciplinary Board shall explain the alleged Violation to the referred person and present him with the evidence so that he may be able to defend himself in person by a representative.

The Disciplinary Board may, at its own discretion or in response to a demand by the referred person or his representative, hear whosever testimony it wants or is required to hear or from those whose assistance it seeks due to their relevant expertise.

The absence of a person referred to the Disciplinary Board, if it be established that the person was duly notified of the date of the session, shall not prevent the Disciplinary Board from considering the Violation or grievance and deciding upon it.

The Disciplinary Board may, being satisfied that a Violation has been committed, issue any of the following penalties: 1. Cautioning the Violator to discontinue the Violation. 2. Issuing a warning. 3. Requiring the Violator to re-pass the pre-qualification tests. 4. Suspending his or its activities for a period not exceeding one year. 5. Suspending him from practicing his work or profession permanently. 6. Suspending a license for a period not exceeding six months. 7. Revoking a license. 8. Imposing restrictions on the Activity or the Activities of the Violator in accordance with the provisions of Article (5-12). 9. Cancelling the voting, proxy or authority obtained by the Violation under the provisions of the Law. 10. Suspending or cancelling any acquisition offer or purchase transaction outside the scope of the acquisition offer if in Violation of the provisions of Chapter Seven of the Law or Bylaws. 11. Prohibiting the exercise of voting rights for a period not exceeding three years for a shareholder who failed to submit any statement or who submitted an incomplete statement or one contrary to the truth or in violation with the Law or these Bylaws. 12. Suspending the validity of an applicable prospectus according to the provisions of the Law. 13. Ceasing the trading of a Security temporarily, suspending, or cancelling a decision to list a Security before the effective date thereof. 14. Dismissing a Member of the Board of Directors, or a manager of one of the Licensed Companies, or Listed Companies or an Investment Controller or a Custodian of a Collective Investment Scheme who failed to perform his duties as provided in the Law and Bylaws. 15. Imposing financial penalties in accordance with the nature of the Violation, not exceeding fifty thousand Kuwaiti Dinars.

The Disciplinary Board may cancel all transactions related to a Violation and the entailed effects or require the Violator to pay amounts equal to the benefit he acquired or the value of the loss he has avoided as a result of the Violation. The amount may be increased in the event of repeated Violations.

The Disciplinary Board may impose one or more conditions on the activity(s) of the Violator from among the following:1. Preventing the Licensed or Registered Person from entering into certain types of transactions.2. Preventing the Licensed or Registered Person from practicing certain activities for a limited period of time.3. Suspending the licensed Activity for a period of time. 4. Preventing the Registered Person from practicing certain businesses, or suspending, amending or cancelling their registration for the business(es) for which they are registered. 5. Suspending any Person from dealing on a Security(ies) or trading on an Exchange for a limited period of time.

The secretary of the Disciplinary Board shall notify in writing the Board of Commissioners and the parties concerned with all decisions issued by the Disciplinary Board within three Business Days of the issuance date.

Decisions taken by the Disciplinary Board shall be enforced immediately after issuance unless the decision sets a date for execution. The Authority shall enforce the decision of the Disciplinary Board.

In the event that a decision of the Disciplinary Board includes imposing financial penalties on a Violator, the financial penalties shall be fulfilled promptly within the period of time set in the decision of the Disciplinary Board. The Authority shall collect these directly.

The Authority may take the necessary legal procedures in order to execute the decisions of the Disciplinary Board. In the event of noncompliance, the Authority may submit a notice to the Capital Markets Prosecution in accordance with the provisions of Article (127) of the Law demanding taking precautionary procedures stipulated in the Law or any other laws.

Any person against whom a penalty as set out under the Law has been decided upon, may submit a grievance in writing before the Authority within fifteen days of the date on which he is notified of the decision in writing. The Authority’s decision to reject a grievance shall be final, but may be challenged before the Competent Court. A lack of response to a grievance within thirty days of the date of submittal thereof shall be deemed to establish that that the grievance has been declined.

In the event that the Authority has evidence of the committing of one of the crimes stipulated in the Law, the Authority shall issue a decision of referral to the Capital Markets Prosecution. The Authority shall prepare a report to be submitted to the Capital Markets Prosecution setting out the relevant incidents, articles violated and the name of any Person that the Authority believes to have committed the crime or participated in it.

The Attorney General may, at his own discretion or at the request of the Authority or the employer, if the interests of an investigation so requires, order work, employment or a profession by a person to be suspended temporarily if that person is to be investigated in respect of a crime as stipulated in the Law; and anyone who has been referred to the Penal Court shall be suspended from work by the force of Law. However, the court may during the course of the proceedings order otherwise at its own discretion or upon the request of a person of interest.

The Attorney General may, if he has adequate evidence with regard to one person or a group of persons that such a person has committed any of the crimes under the Law, or pursuant to a request from the Authority or a person authorized by it so to do, order that such person or persons be banned from travel and from disposing and managing their money as well as take any other precautionary measures in this regard in respect of the funds that are under the hands of the accused or others, in whole or in part, and without prejudice to the right of the Authority or interested party to take any prudential lawful action. The Attorney General may take the same actions over the money of the minor children or spouse of the accused. It is permissible to submit a grievance concerning this decision to the Competent Court within twenty days of the date of issuance.

The Attorney General shall take a decision regarding a request of the Authority as stipulated in Article (6-3) within twenty-four hours of the time of submission. In the event that the request is rejected, the cause of such rejection shall be stated. The Authority may submit a grievance within fifteen days of the Attorney General’s decision to the Competent Court. The court shall take a prompt decision on this grievance.

Funds reserved under custody may not exceed the maximum financial punishment that may be imposed upon the accused. The Attorney General or the court may seek the assistance of the Authority in estimating the benefit obtained by the accused.

The Attorney General or the court may, at the request of the Authority or a person of interest, lift a precautious measure if the accused has submitted sufficient security acceptable to the Authority or the court.

In the event that an accused is prevented from managing his money, the Attorney General shall appoint a manager to manage the money held. This management shall be performed in accordance with written instructions issued by the Authority setting out the duties, powers and controls governing the work of such manager.

The Authority may, at any stage of criminal court proceedings prior to a conclusive judgment being determined, offer reconciliation with or accept such from any person who committed any of the crimes provided for in the Law, in consideration for an amount which is not less than the minimum amount of the prescribed fine and not more than the maximum amount of that fine. It shall be a condition for reconciliation in the crimes provided for in Articles 122, 124, 126 and 127 of the Law, in addition to paying the amounts referred to, that the amount of any benefit achieved or losses avoided be refunded, provided that the perpetrator is not a recidivist. The Authority shall determine the time period during which the accused shall fulfil the reconciliation conditions according to the aforesaid rules. In the event where reconciliation is achieved, the criminal case shall be terminated.

An application for a settlement may be submitted to the Authority by the accused or his legal representative. The Authority shall consider the application and estimate a reconciliation amount. In the event that there are multiple parties to a settlement (as a Licensed Person(s) or individuals) and a third party is a stakeholder or has a right in settlement, all the parties shall approve the settlement agreement for it to be effective.

In the event that the Authority approves a settlement application, the terms and conditions of the settlement shall be prepared in writing provided that the Authority shall set a specific period of time for the fulfilment of the conditions. The competent judicial entity shall be informed of the completion of the settlement and the decision shall be published on the Authority’s website.

Any person can submit a complaint to the Complaints and Grievances Committee either against a Licensed Person or against any other person regarding Violations and crimes stipulated in the Law and these Bylaws.

A complaint shall be submitted in writing in accordance with the form specially prepared for that purpose by the Authority and as included in Appendix (2) of this Module to the secretary of the Complaints and Grievances Committee. It shall include the following information: 1. The complainer’s name, capacity, profession, address and the civil number or identification, phone number, facsimile and email account. 2. The complaint and any supporting documents 3. Signature of the complainer and the date of submitting the complaint. 4. The name of the defendant and their full address including the phone number, facsimile and email account. 5. A statement of whether the complaint has been submitted to any other entity, named accordingly, and whether any legal action was taken thereon or not.

Examining the Complaint The secretary of the Complaints and Grievances Committee shall examine the complaint submitted by the complainer to ensure meeting the following: 1. Data required in the Complaint Form are complete. 2. The complainer did not file the subject of the complaint in front of court or general prosecution, and that these two entities did not look into such complaint. 3. The complaint filed by the complainer is based on the articles of the Law or these Bylaws, or any of the resolutions and regulations issued by the Authority within the framework of the Law. 4. The complainer did not previously submit the same subject of the complaint to the Complaints and Grievances Committee, unless it includes new incidents The complainer shall pay the fee specified for the complaint, if he meets all the conditions mentioned in this Article.

The secretary of the Complaints and Grievances Committee shall keep a special record to document the complaints that meet all the requirements submitted by concerned persons. Complaints shall be registered in this record under a serial number basis according to the day of submission, and the complainer shall receive a copy of their complaint with the registration number and date stated thereon.

As soon as a complaint is registered, the secretary of the Complaints and Grievances Committee shall refer it to the chairman of the Complaints and Grievances Committee. The secretary shall then notify the managing director of the Authority of the complaint within two Business Days.

The Complaints and Grievances Committee shall conduct an administrative investigation in the complaint, pursuant to the procedures and competences stipulated in Chapter Four of this Module, except for articles (4-13) to (4-14).

The Complaints and Grievances Committee, after completing the investigation procedures, may recommend the Board not to process the complaint, or refer it to the Disciplinary Board or general prosecution or take any other legal measures.

The Complaints and Grievances Committee shall decide on each complaint within thirty days of the date of submission. Before issuing its decision, the Committee may hear the testimony of whomever it sees as necessary or to overcome any shortage or to complete any document. The Committee may extend a deadline if justified.

The Complaints and Grievances Committee shall notify the managing director of the Authority and the parties to a complaint of its decision within five Business Days of the day of issuance.

The Complaints and Grievances Committee shall receive the grievances from concerned parties against the decisions issued by the Authority in accordance with the Law, these Bylaws and decisions issued to execute both of them. A grievance shall be submitted to the Committee within fifteen days from the date of notification of the concerned party with the decision, being published in the Official Gazette or on the website of the Authority or their affirmed knowledge of it. All of the above shall be undertaken without violating the rights of the parties concerned to object to decisions issued by the Authority before the competent court within sixty days from being notified of the decision or the publishing of the decision in the Official Gazette or the website of the Authority or their affirmed knowledge of it.

Grievances shall be submitted in writing in accordance with the form specially prepared for that purpose by the Authority, included in Appendix 3 of this Module. The following data shall be included:1. Name of the grievant, his capacity, address including the civil identification number or identification, phone number, facsimile and email account, name of his legal representative (if any) together with number of any power of attorney and their address including the civil identification number or identification, phone number, facsimile and email account. 2. The number of the decision in respect of which the grievance is submitted, date of issuance and date of notifying the grievant or their coming to know of it.3. The subject of the grievance and its reasons, with supporting documents attached.

The Authority shall keep a special record to document the grievances submitted by the parties concerned. Grievances shall be registered in this record under a serial number. On the day of submission, the grievant shall receive a copy of their grievance with its registration number and the date.

Grievances shall be submitted to the chairman of the Complaints and Grievances Committee as soon as it is received in order to set a date for its consideration. The grievant shall be notified of the date for him to attend before the Committee by himself, through an attorney or a representative. The Committee may Demand from parties concerned whatever explanations and documents it requires. The secretary of the Committee shall notify the managing director of the Authority concerning each grievance when submitted. The Committee may require one of the Authority’s departments to write a memorandum of its opinion concerning the grievance.

The Complaints and Grievances Committee shall decide on the grievance, whether to accept it or refuse it, within sixty days from submission. Not responding to the grievance within sixty days from submission shall be deemed a refusal, without violating the extension of that date in the event that the Committee is considering a possible acceptance of the grievance.

If the Complaints and Grievances Committee decides to refuse the grievance, the grievant may object to the Authority’s decision before the Competent Court within sixty days from the date of being notified of the refusal of the grievance, publishing the refusal decision on the website of the Authority or their affirmed knowledge of it. If the Committee recommends accepting the grievance, it shall refer that recommendation to the managing director of the Authority to submit it to the Board to take the final decision of accepting or refusing the grievance.

Both the concerned party and the Authority’s managing director shall be notified of the decision of the Complaints and Grievances Committee regarding the grievance as well as its reasons if the decision was a refusal.

Judicial papers and any writ of summons issued by the investigation officers or by the court to the accused shall be served through the competent process servers of the Authority in accordance with the rules set out in Chapter Two of the first part of the Law of Penal Procedures and Trials. The accused may be served with notice at his place of work by delivering a copy thereof to the person who states that he is in charge of administrating the place or the person who works therefor.Those papers and writ of summons may be served upon the persons other than the accused by facsimile or email.

As an exception to the rules related to process for service of judicial papers as set forth in the Law of Civil and Commercial Pleadings, judicial papers related to civil, commercial and administrative disputes provided for in the Law may be served by facsimile or email. The Minister of Justice, in coordination with the Ministry of Communications and the Authority, shall issue a decision setting forth the terms and conditions for regulating the process for service of judicial papers and the type of hardware and software to be used in effecting such service, the forms and formats of the writ of summons, and notifications and the responses thereto as well as the method of paying the prescribed court fees thereto. Violating the provisions of this article shall invalidate the process.

If the Complaints and Grievances Committee or the Disciplinary Board, during consideration of a complaint or a violation, considers it is necessary to seek the help of technical expertise, it may hire one or more person(s) registered in the Authority or of the Licensed Persons, provided that it shall set out in its decision of hiring such an expert the task of that expert as well as a date to deliver their report and another date to hold a session to discuss the report. Also, it shall set the amount of money to be deposited to cover the expert’s fees, the party to deposit the money and the date set for the deposit.

12-1 General Principles

Disputes arising from the obligations set forth in the Law or any other law may be resolved by arbitration according to arbitration rules referred to in this Module, if in respect of capital market transactions.

Agreement to Arbitrate shall be considered valid unless there is no other evidence. The Arbitral Tribunal has the power to decide on the defences related to its non-jurisdiction including defences related to the existence of an Agreement to Arbitrate, its validity or that it does not include the subject of dispute. The Arbitral Tribunal may decide to examine any of those defences before deciding on the subject matter as a primary matter or it may include it with the subject and to decide on both of them together. The defences referred to in the previous paragraph shall be dealt with before dealing with the subject of the dispute. In all cases the Arbitral Tribunal shall accept the late defences referred to in this Article if it deemed delay is justified. The Arbitral Tribunal shall consider the validity of the Agreement to Arbitrate even if it was not within the demands of both arbitration parties.

It is considered an assignment of the right to object if any party knows there was a violation of an Agreement to Arbitrate of one of the previsions of this Module or of a provision of the applicable Law which may be agreed to be violated and they did not object to that violation within ten Business Days before the Authority or the Arbitral Tribunal when formed.

The ruling of the Arbitral Tribunal shall be issued within six months from the date of the first valid session with which both parties are notified. The Arbitral Tribunal may extend the date by two months. Extension of a term shall be made only by a decision of the Authority based upon an application, setting out the reasons from the Arbitral Tribunal with a maximum limit of one month after deliberation with parties. Parties may put a condition to shorten the Agreement to Arbitrate. If the litigation is stopped or terminated before the Arbitral Tribunal, the term shall be stopped. It shall be resumed from the date the Authority becomes aware of the end of the cause of the stop or the termination.

An arbitrator shall accept his appointment in writing. When accepting, he shall disclose to the Authority any circumstances or reasons that may raise doubts on his independence or neutrality. The Arbitrator is required from his appointment and throughout the arbitration procedures, to disclose within five Business Days from the date of any occurrence of those circumstances or reasons. The Authority shall notify arbitration parties with the arbitrator’s disclosure in order for them to take appropriate measures within the following five Business Days of the notification.

12-2 Forming the Arbitral Tribunal

Each of the arbitration parties, even if many, may choose an arbitrator among those registered in the Arbitrators’ Register in the Authority, or among others, within seven Business Days from the date of being notified by the Authority. In the event that none of the parties make such a selection, the Authority shall appoint the arbitrator next in the line among the arbitrators registered at the Authority in accordance with the nature if the dispute, and it shall estimate their fees and submit this estimate to the other party so that in the event that they wish to continue the arbitration procedures they are to deposit those fees in the Authority within the period set by the Authority. In all cases, the Authority shall appoint the third arbitrator next in the line in the Arbitrators’ Register in the Authority within three Business Days with notification of the names of arbitrators to the two parties. It shall estimate the division of the fees to be borne by each party. In the event that one of the parties refuses to pay their share in the fees, notification shall be given to the other party to pay it in the event that they wish to continue procedures and to make such a response within the period set by the Authority.In all cases, if the period set for any of the parties to deposit the fees of the court or the fees of the other party’s arbitrator elapses without them being paid, the Authority shall decide to leave the case on arbitration file.

The arbitrator’s fees shall be set by the Authority in accordance with the fees schedule approved by the Authority. Those fees shall be paid by the party assigned to pay them to the Authority. The fees shall be paid to the arbitrator as soon as the issuance of the ruling ending the dispute and it being delivered to the Authority.

The arbitrator shall not resign after accepting the task unless there are serious reasons therefor as decided on by the Authority based upon an application submitted by the arbitrator. Otherwise, parties may resort to the courts for compensation. It is not permitted to dismiss the arbitrator without the approval of all the parties. If the arbitrator is unable to execute his task, or does not perform it or has stopped performing it in a way that may lead to unjustified delay in the arbitration procedures, the Authority may terminate his appointment in response to an application submitted by one of the parties to the arbitration setting out the reasons.

In the event that an arbitrator is recused, has resigned, been dismissed or their appointment is terminated, a replacement shall be appointed in accordance with the same procedures followed in the original appointment.

12-3 Arbitration Procedures

Arbitration applications shall be submitted in writing to the Authority including the following: 1. Arbitration applicant’s name, capacity, nationality and address. 2. Defendant’s name, capacity, nationality and address. 3. Subject of dispute, its incidents, documents, evidence, supporting documents and demands. 4. A copy of the Agreement to Arbitrate. 5. A copy of receipt of paying the due Charges for the Arbitration Application.

The Authority shall notify the Defendant of the Arbitration Application with its documents and papers as well as the name of the arbitrator chosen by the Applicant and their disclosure by certified mail or any other modern means within five Business Days from the date of receiving the Arbitration Application.

Taking into consideration Article (12-2-1) regarding the period of choosing the arbitrator, a Defendant shall submit within seven Business Days a defence memorandum including their responses and defences to the application against them as well as their demands. Defendant may demand from the Authority an additional grace period not exceeding five Business Days to submit a response memorandum to the Arbitration Application.

A Defendant who desires to submit a counterclaim after being notified or during the arbitration hearings, provided that it shall be relevant to the dispute and within the Agreement to Arbitrate, may submit such a counterclaim to the Authority or to the Arbitral Tribunal as the case may be and the counterclaim shall be included within the arbitration file after paying the stipulated fees, if any.

The Authority shall refer the dispute file to the Arbitral Tribunal within three Business Days from the day of its creation. The Arbitral Tribunal shall proceed with the due processes within ten Business Days from the day of being notified.

Taking into consideration Article (12-3-5), the chairman of the Arbitral Tribunal shall set a hearing to consider the dispute and shall notify the members of the Arbitral Tribunal and parties to it through certified mail or through any method agreed upon by the parties to the arbitration.

The seat of arbitration shall be the premises of the Authority. The Authority or the Arbitral Tribunal may hold the arbitration hearings in any other place it deems appropriate.

The approved arbitration language before the Arbitral Tribunals stipulated in this Module is the Arabic language. Parties to the Arbitration may accept another language provided that they obtain the approval of all the members of the Arbitral Tribunal. The Arbitral Tribunal may, in accordance with the circumstances and conditions of the dispute, seek the assistance of translators specialized in the language of the defendant, provided that the translators’ fees shall be borne by the latter. The Authority shall provide translators in accordance with what is stipulated in that concern. Moreover, the Arbitral Tribunal may accept memorandums and documents submitted by both parties in a language other than Arabic language provided that attached thereto are official certified translations into Arabic.

The Arbitral Tribunal shall respect all the principles of litigation specially the right of defence, confrontation and judicial equality between parties. Arbitration procedures shall be in accordance with the provisions of this Module. The arbitration shall be subject to the procedural rules in the Civil and Commercial Procedures Law regarding any matter not set out in this Module.

The Arbitral Tribunal shall decide on a dispute in accordance with the laws of the State of Kuwait unless the disputing parties agreed to apply another law but in no circumstances so as to violate the rules relating to public order in Kuwait.

During an arbitration hearing the Arbitral Tribunal may seek legal assistance from the Competent Court in the following cases: 1. Ruling to apply the legally stipulated penalty on a witness who does not attend or who refuses to answer. 2. Ruling to require a third party to reveal a document in their possession that is necessary to issue the arbitration ruling. 3. Ordering judicial representation.

The Arbitral Tribunal may seek the assistance of one or more experts, where the number of the experts shall not be an even number, in order to provide a written or verbal report to be documented in the hearing’s minutes regarding one or two matters set by the Arbitral Tribunal. The Arbitral Tribunal shall notify each of the disputing parties with its decision regarding the assistance of experts and defining the task assigned to the experts. Both disputing parties shall provide the expert with all information related to the dispute. Each of them shall enable such expert to examine or inspect all documents, goods, financial records or other items related to the dispute. The Arbitral Tribunal shall decide on any dispute that may arise between an expert and any of the original disputing parties in that regard. Before commencing his appointment each expert shall submit to the Authority a disclosure of any reasons or information that may lead to doubts concerning his neutrality or independence. Arbitration parties may object to the choice of an expert, within two Business Days from the date of notification of the above disclosure. The Arbitral Tribunal shall decide on that objection and its reasons.

The Arbitral Tribunal may consider any urgent matters related to a dispute, unless parties agree otherwise.

Parties shall appear before the Tribunal in person or through an attorney or representative. Arbitration sessions shall be confidential.

The Arbitral Tribunal shall open a minutes book for the hearings to register the presence and absence of the disputing parties and whether the absence was for a reason or not. Moreover, the minutes shall register all documents, memorandums, papers submitted by both parties, names of witnesses if any with their testimonies and to record the signatures of the Arbitral Tribunal and of both parties. The Arbitral Tribunal shall seek the assistance of a secretary to write the minutes provided that he shall be an employee of the Authority.

If the Plaintiff or the Defendant or both of them misses the Arbitral Tribunal hearings without a due excuse, the Arbitral Tribunal may continue procedures up to the point of issuing its ruling unless the case was ready to issue a ruling, in which case the Arbitral Tribunal shall leave the case on file.

Arbitration proceedings shall be terminated for the reasons stipulated in Article (92) of the Civil and Commercial Procedures Law and shall be resumed in accordance with Article (93) of the same law.

The Arbitral Tribunal may stop the arbitration procedures while deciding on another legal or arbitrated dispute related to the same proceedings provided that the other judicial or arbitrated procedures commenced before the arbitration and have continued since then. Moreover, the Arbitral Tribunal may stop the arbitration procedures if one of the cases in Article (12-3-11) of this Module concerning the request of legal assistance is met.

The Arbitral Tribunal may accept any new demand from a litigant in an arbitration if it is related to the subject of the dispute and is subject to the Agreement to Arbitrate provided that such demand is made prior to the closing pleadings.

Both disputing parties may authorize the Arbitral Tribunal to reconcile between them if the members of the Arbitral Tribunal are appointed by name in the Agreement to Arbitrate. Moreover, at any stage, they may demand a record be made of what they agreed upon in reconciliation or settlement. The Arbitral Tribunal will issue its ruling accordingly.

Controlling and managing the hearing are assigned to the chairman of the Arbitral Tribunal. The chairman shall be the one who poses questions to arbitration parties and witnesses and shall receive memoranda and documents. Any of the other two members of the Arbitral Tribunal may pose questions at their discretion.

During the procedures, the Arbitral Tribunal may allow the arbitration parties to submit documents, memoranda or any new evidence. When the Arbitral Tribunal is ready to issue a ruling, it may allow the submission of further documents or closing memoranda on dates it sets. Submitting those documents or memoranda shall be through the Authority.

Except in cases where the Arbitral Tribunal as deemed and mentioned in the hearing’s minutes, hearings shall not be postponed for more than five Business Days in each time or to be postponed for more than one time for one reason due to arbitration parties.

12-4 Arbitration Award

Before issuing a ruling, the Arbitral Tribunal shall meet to deliberate upon the ruling. Deliberation shall be confidential. Only arbitrators who participate in hearing the pleadings are allowed to participate in deliberation, otherwise pleading of the case shall be heard again and the date of adjudication shall be reset.

During deliberation, the Arbitral Tribunal may not hear any of the parties, unless it decides to open the pleading upon justification for reasons submitted by one of the arbitration parties, provided that the other party shall be notified of the date of the session set by the Arbitral Tribunal for pleading.

An arbitration award shall be issued in accordance with a majority opinion and it shall be announced by the Arbitral Tribunal in open court. The names of the parties, the date and place of issuing the ruling, arbitration case circumstances, litigants’ demands, summaries of their pleadings and responses shall be mentioned. The announcement of an award shall state the reasons and include the names and signatures of the arbitrators as well as defining the party that shall bear the arbitration fees. An award shall be deemed valid if the majority of the arbitrators sign it, even if one or more of them has resigned after announcing the case is in adjudication and after the start of deliberation. In any event, the award shall be in the Arabic language even if the arbitration language was another language, provided that it shall be accompanied with official translation in the arbitration language from the Arbitral Tribunal.

The original version of the ruling shall be delivered to the Authority with the case file attached thereto for it to be deposited and filed. The Authority shall order a true and certified copy of the ruling to both arbitration parties through registered mail or by any other method within three Business Days from the date of issuing the ruling.

Arbitration rulings shall be binding and final. They shall be executable only after obtaining the writ of execution in accordance with the legal procedures stipulated in chapter twelve of the Civil and Commercial Procedures Law.

Each of the arbitration parties may apply for correction or interpretation of an arbitration ruling or apply for a decision on undecided demands. Application shall be submitted to the Authority which shall invite the Arbitral Tribunal to consider such demands. Rulings shall be issued within one month from the date at which the consideration of such a demand has commenced. A ruling concerning such demands shall complement the arbitration ruling and be subject to its provisions. In the event that the Arbitral Tribunal which issues a ruling is unable to consider the demands referred to in the previous paragraph, a new Arbitral Tribunal shall be formed in accordance with the same procedures stipulated in this Module. The ruling shall be issued within two months from the date at which the consideration of such demand has commenced.

Cancellation, Suspension or Restriction of the License by the Authority The Authority may decline, suspend, revoke, or restrict the activity of any Licensed Person in respect of any Securities Activity, or any Related Party, after being given evidence that the Person has fallen within any of the following provisions: 1. Commits a major fault, gives misleading information, or omits to mention a material fact when applying for a license, or omits to mention any other information that should be submitted to the Authority. 2. Fails to meet the standards applicable under Module 5 (Securities Activities and Registered Persons) of these Bylaws or any rules issued accordingly. 3. Violates any provision, rule, regulation or bylaws issued under this law, or under any law related to its activity, or a securities law, or a rule or bylaws of another country. 4. Is negligent in monitoring one of his affiliates (subordinates) by failing to prevent him from acting in a way which might be a violation of the provisions of this Law or Bylaws.

The Authority may cancel the registration of any Registered Person or restrict their activity in the event of it not fulfilling or it violating any conditions or provisions related to their work. It may re-register such persons when all conditions and provisions are fulfilled.

The provisions of this Chapter apply to Exchanges which are licensed by the Authority.

1-2 Establishing and Licensing an Exchange

An Exchange runs a trading system designated to match Bid and Ask Offers for Securities that are listed on the Exchange. This system follows the procedures and rules set by the Exchange and approved by the Authority. Securities that are listed in the Exchange shall not be traded outside this system unless in exceptional cases which are set out by the Exchange in the trading rules.

No Person may establish, operate, nor assist in the establishment or operation of an Exchange unless obtaining a license under the Law and these Bylaws in accordance with the systems and regulations approved by the Authority. The Authority shall be solely authorized to issue a license to the Exchange, which shall be published in the Official Gazette.

Licensing of an Exchange shall be in accordance with the following: 1. An application shall be submitted for an Exchange license in accordance with the application form specified by the Authority for that purpose. The application shall have attached to it all the documents and information specified in these Bylaws, and together with the fees specified by the Authority. 2. Following receipt of an Exchange license application that fulfils the requirement in clause (1) of this Article, the Authority may request additional information or documents as it considers necessary to determine the application. 3. If the applicant fails to submit documents and information within the notification period that is specified by the Authority, the application shall be deemed to have been withdrawn. 4. The Authority shall determine an Exchange license application after it receives the application accompanied by all information and documents specified in clauses (1) and (2) of this Article. To obtain an Exchange license, the applicant shall fulfil all the requirements and obligations stipulated in this Module and any other requirements set by the Authority. 5. The Authority shall inform the applicant of its determination regarding its application to obtain an Exchange’s license. The Authority may reject granting the license for public interest reasons. In the event of a rejection of an application, the determination shall be justified.

1-3 Exchange Management

The conditions that are related to fit and proper rules shall be fulfilled by each Member of the Board of Directors of the Exchange during his tenure as a member.

The Exchange shall be managed by a Board of Directors formed of a Chairman and a Vice Chairman, who shall replace the Chairman in case of the Chairman’s absence, and six members who shall be elected and chosen by the general assembly of the company subject to the approval of the Board. The Chairman of the Exchange’s Board of Directors, or his authorized deputy, shall inform the Board of the names of candidates for the membership of the Exchange’s Board of Directors at least thirty days prior to the date of the company’s general assembly meeting for election of the Members of the Board of Directors. Within fifteen days of being notified of such a nomination, the Board may object by a reasoned decision to any of such candidates for not fulfilling the required conditions. Such objection shall exclude the candidate from eligibility for membership of the Board of Directors. No candidate shall be nominated to the general assembly of the company if the Board has not been notified of that nominee, nor where an objection has been raised against that candidate as per the provisions of this Article. The Board may request the Exchange’s Board of Directors to displace any member who, during the tenure of his position, no longer meets any condition of those set out under the previous Article, or if such action is deemed appropriate to maintain the safety of investors’ assets or is in the Exchange’s interest. In case of failure to displace this member, the Board may issue a reasoned decision to terminate any of the members from their position, and notate that order in the Authority’s records.

The Chairman of the Board of the Exchange shall represent the Exchange before others and the courts, in addition to other competences stated in the Memorandum and Articles of Association, and shall also execute the Board of Directors’ decisions. The Exchange shall have a Chief Executive Officer or more appointed by the Board of Directors after the Authority’s approval and pursuant to the controls it may specify. The Chief Executive Officer is entitled to manage the Exchange, and the Board of Directors shall specify his remuneration and authorities. It is prohibited to conjoin the position of the Chairman of the Board of Directors with the position of the Chief Executive Officer.

The Exchange shall prepare appropriate policies and procedures, to prevent Members of the Board of Directors from gaining access to the information of the clients and members of the Exchange, and to prevent any conflicts of interest amongst Members of the Board of Directors of the Exchange and those clients and members. The aforesaid policies and procedures shall be submitted to the Authority for approval

Employees of the Exchange are prohibited from participating as a Member of the Board of Directors or from accepting any position in a Listed Company or any related party.

Each employee and every Member of the Board of Directors of the Exchange, is obliged to disclose, as soon as being appointed, to the Compliance Officer of the Exchange the details of all Shares they own in the Listed Companies in the Exchange, including the ownership of their minor children under their custody, and any change that may occur to that ownership. The Exchange shall submit an annual report including the details of these disclosures to the Authority.

Each employee in the Exchange and every Member of the Board of Directors of the Exchange is obliged to keep the confidentiality of the data and inside information that they gain sight of, by virtue of their position or through their professional or personal relations, and they are not allowed to reveal such, or give advice on the basis thereof to another non-insider. They shall not sell, purchase or subscribe in listed securities or those securities that applied for a listing unless under circumstance and conditions stipulated in Article (1-3-8) of this Module.

Without violating the provisions of Article (1-3-7) of this Module, employees of the Exchange and their minor children under their custody are not allowed to purchase or sell listed Securities or those Securities that under a Listing Application, unless in the following cases: 1. Inheritance and will. 2. Execution of a court judgment. 3. Public Offering in companies allocated by the State, or offered from public entities and authorities, and subscribing to the Pre-emptive Right in increasing the companies’ capital in which they own shares. 4. Obtaining prior permission from the Authority, direct manger and Compliance Officer of the Exchange to sell or purchase the listed Securities. In the event of approval, selling or purchasing shall be completed within two business days. Any Shares purchased after such an approval may not be sold before six months after taking possession. The Exchange shall prepare a code of professional conduct for the Members of the Board of Directors of the Exchange which shall regulate the trading of the Exchange’s Member of the Board of Directors in listed Securities and those Securities that are under a Listing Application in the Exchange.

1-4 Regulatory Requirements

The Exchange shall abide by the following obligations: 1. Set policies and procedures to ensure the fairness, transparency and efficiency in trading in listed Securities. 2. Ensure that management maintains proper awareness of the risks associated with its business and operations. 3. Set policies and procedures to determine and manage any conflicts of interest between the Exchange and its members or among shareholders or management. 4. Provide and operate its services in accordance with applicable laws and regulations. 5. Organize its operations, standards of practice and its members’ behaviour in accordance with the rules, policies and procedures of the Exchange. 6. Set preventive measures to ensure the sound management of the technical operation of its systems, including the establishment of effective contingency arrangements to cope with the risks of system disruptions. 7. Provide its services in accordance with the most advanced techniques and applications and automated systems in line with the international standards approved and set by the Authority. 8. Maintain sufficient financial resources to facilitate the performance of its business in a regulated form. 9. Maintain the confidentiality of all information under its custody with respect to its members, Issuers and clients. It is not permissible to disclose such information except to the Authority, or by its order or by a judicial order. It shall set policies and procedures to protect the information systems. 10. Follow the Authority’s instructions

After obtaining the approval of the Authority, the Exchange shall prepare, and ensure adherence to, policies and procedures to preserve the confidentiality of the information and data related to trading in Securities or related to the Members of the Exchange or the Issuers. Moreover, Members of the Board of Directors of the Exchange and any unauthorized employee are not allowed to review such data unless to do so is within the limits of those policies and procedures.

The Exchange shall not enter into any outsourcing agreement relating to the delegation of any of its functions to another person without obtaining the Authority’s approval.

Where an Exchange, because of the occurrence of any event or circumstances, is unable to operate any of its facilities or to provide any of its services within its regular working hours, it must immediately notify the Authority of that inability and provide further information as the Authority may require in that concern.

An Exchange company shall inform the Authority immediately on the occurrence of any of the following matters: 1. If it is found that one of its members cannot comply with any of the Exchange’s rules or its financial resources’ regulations. 2. If it deemed there is a financial irregularity or any other situation that may indicate inappropriateness of a member or his incapacity to fulfil his obligations. 3. Any disciplinary action is taken against any member, operator, or his subordinates.

An Exchange shall provide the Authority with any reports, data or information that may be required by the Authority.

An Exchange shall make public the prices, volume and time of the transactions executed in respect of listed Securities. The related information shall be available to the public at an appropriate financial charge.

An Exchange shall not suspend, cancel or amend any sale or purchase transaction in a Security except in accordance with the rules and instructions set by the Authority.

1-5 Rules and Regulations of an Exchange.

No rule issued by an Exchange, or any amendment thereof through withdrawal, replacement or change thereof or addition thereto, shall be valid unless approved by the Authority. The Exchange shall submit the reasons and objectives for proposing such a rule or amendment thereof and set out its impact; thereupon, the Authority may give its approval, disapproval or amendment and shall notify the Exchange of its decision within a period not exceeding three months of the date of notification of the proposal

An Exchange shall prepare policies and procedures necessary to perform its activities after obtaining the Authority’s approval. Those policies and procedures shall in particular cover the following: 1. Agreements concluded between the Exchange and Members of the Exchange or the Clearing Agency, Market Maker or Issuers of Securities admitted to trading in the Exchange including the acknowledgement of contractors with the Exchange and their adherence to the rules and procedures of the Exchange. 2. Announcement of disclosures and the publishing of such information. 3. Risk management. 4. Complaints. 5. Monitoring System. 6. Disciplinary actions. 7. Charges and fees. 8. Code of professional conduct applicable to Members of the Board of Directors of the Exchange and its employees.

An Exchange shall prepare rules for trading in Securities that are listed in the Exchange in order to ensure the trading takes place in a fair, orderly and efficient manner, after obtaining the Authority’s approval thereof. The Exchange must have effective arrangements to verify that Issuers with Securities admitted to trading on the Exchange comply with their disclosure obligations under the Law and applicable regulations. An Exchange is obliged, periodically, to ensure that the Securities admitted to trading are in compliance with the Exchange’s requirements.

An Exchange must notify the Authority with any material violations of its rules or regulations by Members of the Exchange or Traders. The Exchange must provide the Authority with any information required in this respect.

The Authority may request from an Exchange to prepare policies and procedures or specific rules or regulations within its scope of activities, or to amend it within a certain period. If the Exchange fails to abide by or to meet such a request within the specified period, the Authority may undertake such preparation or amendment on behalf of the Exchange at the expense of the latter.

Issuers of the Securities that are listed in the Exchange and Members of the Exchange shall adhere to the Exchange’s rules and regulations.

1-6 Violations Committee

An Exchange shall form a committee consisting of at least three members experienced in financial, economic and legal affairs and other specialisms related to the work of the Exchange. The committee’s secretariat shall be an employee of the Exchange or otherwise. All committee member shall be chosen by the Exchange’s Board of Directors after the Authority’s approval. Membership term shall be two renewable years.

Each member of the violations committee is prohibited from having a direct or indirect interest, during his tenure, in or with any of the Exchange’s Members.

The secretariat of the violations committee shall be responsible for receiving the notifications concerning the Violations referred from the executive chairman of the Exchange and shall submit them to the committee’s chairman as well as notifying the stakeholders with the dates of the sessions and undertaking such other tasks as the committee chairman shall assign to the secretariat.

The violations committee chairman may order an investigation to be conducted before submitting the Violation to the committee. Investigations shall be conducted by the legal department of the Exchange or by a committee formed by the committee chairman for that purpose. The investigating entity shall submit its opinion to the committee chairman by submitting a memorandum including a detailed statement of the investigation procedures, summary of incidents of the Violation, proofs, evidences and recommendations. The committee may decide to dismiss the investigation.

The secretariat of the violations committee shall notify the Violator with the date set by the committee to consider the alleged Violation and its content. Notification shall be at least three Business Days before the specified date. Notice procedures stipulated in Chapter Four of Module Three (Enforcement of the Law) of these Bylaws shall be followed. Service of notice shall be through one of the Exchange’s employees assigned to that purpose.

The secretariat of the violations committee shall enable the person referred to the committee or their attorney to review all papers related to the Violation and shall provide them with a copy of the papers after the payment of the stipulated fees.

The committee shall place before the person referred to the committee the alleged Violation and the relevant evidence in order to enable the alleged violator to defend himself in person or by appointed attorney.

The committee, by a decision or based upon a request from the person referred to the committee or his agent, shall hear the testimony of any person that the alleged violator desires the committee to hear or whose expertise it wished the committee to consider.

The absence of the Violator, after it was affirmed that he was informed with the date, shall not prevent the committee from considering the Violation and issuing a decision accordingly.

The committee is empowered to consider all Violations alleged to have been committed by any of the Exchange Members. The committee may impose the following penalties: 1 - Caution the Violator to discontinue committing the Violation. 2 - Issue a warning. 3 - Subject the Violator to further supervision. 4 - Suspend the Violator from working or practicing the profession for a period not exceeding one year. 5 - Impose restrictions on the Violator’s activity or activities. 6 - Suspend the trading of a Security for a specific period in the interest of the market. In all cases, the committee may cancel transactions related to the Violation and the consequences there

The secretariat of the violations committee shall notify the secretary of the Disciplinary Board about each Violation that is referred to the committee, setting out the parties and the nature and reason of the Violation.

The management of the Exchange shall inform the Authority of any disciplinary action taken against any of its Members, the details of the Violation that is committed, and the procedures taken and the penalty imposed. The Authority shall be provided with all documents related to the subject within three Business Days.The Authority may, by virtue of a decision it issues or based on a grievance filed by a complainant within fifteen days of his receipt in writing of the notification of the decision, refer the subject to the Disciplinary Board to review the disciplinary action in accordance with its accredited review system. The Disciplinary Board may uphold the Exchange’s decision, or amend, or cancel the same by a reasoned decision.

1-7 Crisis Intervention by the Authority

In the event of any disaster, crisis and disturbance, which may result in a serious impact on the market, and in the event where several traders give misleading intimations or indications, the Authority shall have the widest powers to issue instructions that aim to regain fairness, transparency and efficiency of the market. The Authority may take any of the following actions: 1 - Suspend trading at an Exchange or the trading of any listed Security for a limited period. 2 - Cancel trading for a specific period or cancel transactions on certain shares. 3 - Issue decisions to dissolve all or part of an account balance or reduction thereof. 4 - Amend the trading days and hours. 5 - Amend or suspend any of the Exchange’s rule

In the event of non-compliance by an Exchange with the decisions or instructions issued by the Authority stipulated under the preceding Article, the Authority may take appropriate measures to achieve regular trading or liquidate any position related to the Securities.

1-8 Accounts and Reporting of the Exchange

An Exchange shall appoint one or more external Auditor from the Auditors registered in the Authority.

An Exchange shall apply comprehensive systems and controls of risk management enabling it to identify, assess, classify, manage and address the risk associated with its activities. The Exchange shall submit a risk report to the Authority every six months.

An Exchange shall maintain an internal audit system in accordance with the international standards approved by the Authority.

The Authority may appoint, by means of a written notice, an Auditor, who is registered in the Authority’s registry, to an Exchange at the expense of the Exchange to examine and audit the accounts, data and records of the Exchange, as well as to prepare a general or a special report regarding a specific matter, if the Authority deems it would be in the public interest.

An Exchange shall submit to the Authority an annual report within ninety days from the end of its financial year that shall particularly include the following:1. A report that describes the activities that are performed by the Exchange throughout the previous year with regard to financial, intellectual and human resources of the Exchange.2. Audited financial statements including the report of the external Auditor.3. Any other reports that the Authority may specify.

1-9 Cancellation of an Exchange’s License

By virtue of a written notification to the Exchange, the Authority may cancel the Exchange license as of the date specified in the Authority’s resolution in the following cases:1 - If the company is no longer able to meet any of the conditions by which the company was qualified to obtain a license.2 - If operations in the Exchange have been suspended for more than five working days.3 - In the event of the closure of the Exchange.4 - If the Exchange does not abide by the Authority’s instructions despite being notified accordingly by the Authority.5 - If the Exchange does not provide the Authority with the information requested by the latter or if it provides misleading or inaccurate information. The Authority shall publish the decision of license cancellation and reasons thereof in the Official Gazette.

The Authority on its own accord, may grant an Exchange company a specific time extension or may extend a given period after the date of license cancellation in case the Authority deems it to be in the interest of the public, or pursuant to a request by the Exchange until the closure of its operations or to handover its activities to another licensed Exchange. Moreover, the Authority may appoint a temporary supervisor, and define his duties, jurisdictions and specialities, to manage or to follow up on the Exchange’s activity.

An Exchange license cancellation by the Authority shall not affect the Authority’s ability to commence or take any disciplinary action against the person concerned in relation to any action or failure of that person prior to the license cancellation.

The provisions of this Chapter apply to Clearing Agencies which are licensed by the Authority.

2-2 Establishing and Licensing a Clearing Agency

No person may incorporate a Clearing Agency, or manage, or assist in incorporating or assist in managing a Clearing Agency, or thereafter announce thereof unless obtaining a license from the Authority in accordance with the conditions and restrictions set forth in the Law and these Bylaws and the license shall be published in the Official Gazette.

The Authority may license a Clearing Agency to undertake one or more of the following activities or services:1. Providing one or all of the services related to settlements or clearing of Securities with respect to payment, delivery or both.2. Safekeeping of Securities within a Central Securities Depository for keeping and transferring ownership or registry of the transactions related thereto including selling, purchasing, transferring ownership, pledge, dividends distribution and other transactions. 3. Any other services set by the Authority.

In the event that a Clearing Agency is licensed for more than one of the activities set out in Article (2-2-2) of this Module, such a Clearing Agency shall practice the activities, related to safekeeping of Securities within a Central Securities Depository, Security settlement system or Central Counter Party, through companies with independent financial liability that each are licensed by the Authority.

Licensing of a Clearing Agency shall be in accordance with the following: 1. An application shall be submitted for a Clearing Agency license in accordance with the application form specified by the Authority for that purpose. The application shall have attached to it all the documents and information specified in these Bylaws, together with the payment of the fees specified by the Authority. 2. Following receipt of a Clearing Agency license application that fulfils the requirement in clause (1) of this Article, the Authority may request additional information or documents as it considers necessary to determine the application. 3. If the applicant fails to submit documents and information within the notification period that is specified by the Authority, the application shall be deemed to have been withdrawn. 4. The Authority shall determine the Clearing Agency license application after it receives the application accompanied by all information and documents specified in clauses (1) and (2) of this Article. To obtain a Clearing Agency license, the applicant shall fulfil all the requirements and obligations stipulated in this Module and any other requirement set by the Authority.5. The Authority shall inform the applicant of the determination regarding its application to obtain a Clearing Agency license. The Authority may reject granting the license for public interest reasons. In the event of a rejection of an application, the determination shall be justified.

A Clearing Agency license may be granted only after the fulfilment of the following conditions: 1. The company shall be a shareholding company with the capital set out in Appendix No. (1) of Module Five. 2. Provision of guarantees set by the Authority. 3. Intention to provide one or more of the services referred to in Article (2-2-2). 4. Any other conditions set by the Authority.

2-3 Clearing Agency Management Requirements

The conditions that are related to fit and proper rules shall be fulfilled by each Member of the Board of Directors of the Clearing Agency during his tenure as a member.

A Clearing Agency shall prepare appropriate policies and procedures to prevent the Members of the Board of Directors from gaining access to information of the clients and the members of the Clearing Agency, and to prevent conflicts of interest amongst the Members of the Board of Directors of the Clearing Agency and those Clients and members. The aforesaid policies and procedures shall be submitted to the Authority for approval.

Employees of a Clearing Agency are prohibited from participating as Member of the Board of Directors or from accepting any position in a Listed Company or any related party.

Each employee and every Member of the Board of Directors of a Clearing Agency, is obliged to disclose, as soon as being appointed, to the Compliance Officer of the Clearing Agency the details of all Shares they own in the Listed Companies in the Clearing Agency, including the ownerships of their minor children under their custody and any change that may occur to that ownership. A Clearing Agency shall submit an annual report including the details of these disclosures to the Authority.

Each employee in a Clearing Agency and every Member of the Board of Directors of a Clearing Agency is obliged to keep the confidentiality of the data and inside information that they gain sight of by virtue of their position or through their professional or personal relations, and they are not allowed to reveal such, or give advice on the basis thereof to another non-insider. They shall not sell, purchase or subscribe in listed Securities or those Securities that are under a Listing Application unless under the circumstance and conditions stipulated in Article (2-3-6) of this Module.

Without violating the provisions of Article (2-3-5) of this Module, employees of a Clearing Agency and their minor children under their custody are not allowed to purchase or sell listed Securities or those Securities that are under a Listing Application, except in the following cases: 1. Inheritance and will. 2. Execution of a court judgment. 3. Public Offering in companies allocated by the State, or offered from public entities and authorities, and subscribing to the Pre-emptive Right in increasing the companies’ capital in which they own shares. 4. Obtaining a prior permission from the Authority, direct manger and Compliance Officer of the Clearing Agency to sell or purchase the listed Securities. In the event of approval, selling or purchasing shall be completed within two Business Days. Any Shares purchased after such an approval may not be sold before six months after taking possession. The Clearing Agency shall prepare a code of professional conduct for the Members of the Board of Directors of the Clearing Agency which shall regulate the trading of the Clearing Agency’s Member of the Board of Directors in listed Securities and those Securities that applied for a Listing in the Exchange.

2-4 Regulatory Requirements

A Clearing Agency shall abide by the following obligations: 1. Arrange for fair and effective clearing and settlement in relation to any commercial transactions in Securities. 2. Manage risks associated with its activity and operate at the highest levels of professionalism. 3. Prioritize the public interest and that of those who deal with the company above the company’s own interests. 4. Manage its services according to the related rules approved by the Authority. 5. Maintain confidentiality of all information and data under its possession, except what is required by the Authority or the judicial authorities. 6. Provide its services with the most advanced technology and automated systems in line with the international standards adopted by the Authority or as requested or decided by the Authority.

A Clearing Agency shall not disclose information of a confidential nature which it receives in the course of carrying out its services except to:1. The account holder in respect of his account or any person authorized with a power of attorney from the account holder to review such account.2. The Authority.3. Judicial authorities of the State of Kuwait, or to any person based upon a judicial order.4. Governmental authorities and departments concerned in enforcing the laws and systems of anti-money laundering and combating terrorism financing or anti-corruption. 5. An Exchange or another Clearing Agency in order to fulfil its obligations pursuant to agreements concluded with such an Exchange or Clearing Agency subject to the Authority’s approval.6. If the disclosure of this information is necessary to comply with the applicable laws and regulations.

A Clearing Agency shall not enter into any outsourcing agreement relating to the delegation of any of its functions to another person without obtaining the Authority’s approval.

Where a Clearing Agency, because of the occurrence of any event or circumstances, is unable to operate any of its facilities or to provide any of its services within its regular working hours, it must immediately notify the Authority of that inability and to provide further information as the Authority may require in that concern.

The Authority may issue instructions to a Clearing Agency to ensure settlement of Securities transactions and to maintain the integrity of risk management in Securities Exchanges. The Authority may, in particular, issue instructions concerning the settlement of Securities contracts, and make amendments to the contractual obligations that may arise from the Securities contract or any other matters deemed necessary by the Authority to implement the provisions of the Law.

A Clearing Agency shall inform the Authority at the earliest of the following:1. If it is found that any of its counterparties became unable to abide by any of the rules applicable to operations of clearing, settlement and depository.2. If it is deemed that the financial position of any counterparty and its ability to fulfil its obligations has given signs of instability, or his ability to fulfil his obligation has already become unstable.Notification shall include a statement of the case setting out, where relevant, the name of the counterparty, trading number, civil identification number, a statement of the due net amount of money or that there is no due balance, a statement of the name and number of the purchased or sold Securities as well as the procedure held in that concern. In addition, both the Exchange and the concerned entity shall be provided with a copy of that notification.

A Clearing Agency shall provide the Authority with any reports, data or information that may be required by the Authority.

A Clearing Agency shall prepare policies and procedures necessary to perform its activities after obtaining the Authority’s approval. Those policies and procedures shall in particular cover the following: 1. Providing services of clearing and settlement related to Securities or any other related service. 2. Becoming a member of a Clearing Agency and the obligations of its members. 3. Specifications of the rights and obligations of parties to a Securities transaction in respect of clearing and settlement and any related services. 4. Determination of the time at which the rights of the creditors of parties to a Securities transaction arise, including the rights pertaining to the cash return or its equivalent and the relevant Securities as a result of sales, purchases or title transfer operation. 5. Rules and procedures to be followed in the event that any person dealing with a Clearing Agency fails to deliver Securities or funds for the purposes of settling a transaction or other obligations within the clearing system. 6. Information, data and records which are considered confidential and the authorisation of persons to access the same due to the nature of their work. 7. Information, data and records that the Clearing Agency must disclose, and those to which the public may have access and obtain copies thereof. 8. Complaints. 9. Monitoring system. 10. Charges and fees. 11. Code of professional conduct applicable to the Clearing Agency’s Members of the Board of Directors and its employees. The Authority may waive some of those requirements according to the nature of the activity licensed to the Clearing Agency.

2-5 Rules and Regulations of a Clearing Agency

The Authority shall require a Clearing Agency to prepare the policies and procedures or rules and regulations related to the operations of clearing, settlement and registration of Securities and other activities that relate to the Clearing Agency’s business, or to amend the same within a certain period. If the Clearing Agency does not comply with the requirements within the specific period, the Authority may prepare or amend the said rules on behalf of the Clearing Agency and its expenses shall be reimbursed by the Clearing Agency.

No rule issued by a Clearing Agency nor amendments thereof, either by withdrawal, replacement or change, or addition thereof, shall be valid and effective unless accredited by the Authority. The Clearing Agency shall submit the reasons and objectives for proposing such a rule or amendment and set out its impact; thereupon, the Authority may give its approval, disapproval or amendment thereof and shall notify the Clearing Agency in writing of its decision within at latest one week of date of its decision.

All, Issuers with Securities that were admitted to trading on an Exchange and Clearing Agency members shall comply with the Clearing Agency’s rules once they are approved by the Authority and have come into effect.

A Clearing Agency shall have adequate resources for effective monitoring and enforcement of compliance with its rules.

In case of non-compliance by any dealer with the clearing rules, the Clearing Agency may bind that dealer to pay the charges resulting from his non-compliance. The Clearing Agency should prepare a table setting out the stipulated fees regarding non-compliance to the rules. The Authority shall approve the table or any amendment to it before it may be enforced. A Clearing Agency shall notify the Authority immediately upon the imposition of any fees under this Article, in addition to notifying the Authority about the non-compliance incident related to those fees.

2-6 Crisis Intervention by the Authority

In the event of any disaster, crisis and disturbance which may result in a serious impact on the market, the Authority may issue instructions to amend or suspend any of the Clearing Agency’s rules.

If a Clearing Agency fails to comply with the Authority’s resolutions or instructions issued under its powers specified in the preceding Article, the Authority may take any procedure deemed necessary to maintain the fair settlement and efficiency of the commercial transactions of Securities or any category thereof.

2-7 Accounts and Reporting of a Clearing Agency

A Clearing Agency shall appoint one or more external Auditor from the Auditors registered in the Authority.

A Clearing Agency shall apply comprehensive risk management systems and controls, enabling it to identify, assess, classify, manage and address the risk associated with its activities. The Clearing Agency shall submit a risk report to the Authority every six months.

A Clearing Agency shall maintain an internal audit system in accordance with the international standards approved by the Authority.

The Authority may appoint, by means of a written notice, an Auditor, who is registered in the Authority’s registry, to a Clearing Agency at the expense of the Clearing Agency to examine and audit the accounts, data and records of the Clearing Agency, as well to prepare a general or a special report regarding a specific matter while notifying the Clearing Agency of the same, if the Authority deems it would be in the public interest.

A Clearing Agency shall submit to the Authority an annual report within ninety days from the end of its financial year that shall specifically include the following:1. A report that describes the activities that are performed by the Clearing Agency throughout the previous year with regard to financial, intellectual and human resources made available to the Clearing Agency.2. Audited financial statements including the report of the external Auditor.3. Any other reports that the Authority may specify.

If a person is subject to insolvency, bankruptcy, liquidation or appointment of a receiver on his properties, the clearing and settlement procedures of a Clearing Agency shall have priority over any procedures or ordinary debts.

2-8 Cancellation of a Clearing Agency License

By virtue of a written notification to the Clearing Agency, the Authority may cancel a Clearing Agency’s license according to the provisions of the Law, as of the date specified in the Authority’s resolution in the following cases: 1. If the clearing agency is no longer able to meet any of the conditions by which it was qualified to obtain a license. 2. If the Clearing Agency ceases to undertake the duties to which the clearing agency is assigned or licensed. 3. Liquidation of the clearing agency. 4. Failure to fulfil any obligation required under this Law. 5. Failure to provide the information requested by the Authority or providing incorrect or misleading information. 6. If the Clearing Agency makes any amendments to its objectives in its Memorandum or Articles of Association without obtaining prior approval from the Authority. 7. If the Agency requests the cancellation of its license. The Authority shall publish the decision of license cancellation and reasons thereof in the Official Gazette.

The Authority may grant the Clearing Agency a specific time extension, or may extend the period after the date of license cancellation, if the Authority deems it necessary for the public interest, or pursuant to the request of the Agency to suspend its operations or handover its activities to another licensed Agency. Moreover, the Authority may appoint a temporary supervisor, and define their duties, jurisdictions and specialities, to manage or follow up the Clearing Agency’s activity.

A Clearing Agency’s license cancellation by the Authority shall not affect the Authority’s ability to commence or take any disciplinary action against the Person concerned in relation to any action or failure of that person prior to the license cancellation.

2-9 Detailed Requirements for Central Securities Depositories

Each Issuer shall have a special register kept with a Clearing Agency. The register shall contain the names, nationality, domicile, and number of Securities owned by each holder, the type and the capital paid in for each Securities. The register shall be updated by any changes required to be registered and which are received from the Issuer or the Clearing Agency. Any party with a relevant interest may request the Issuer or the Clearing Agency to provide them with such information from the register.

After obtaining the approval of the Authority, the Clearing Agency shall prepare policies and procedures as follows: 1. The procedures of verification of proxies or the powers of attorneys for attendance of shareholders and holders of other Securities in the general assemblies and the authorities of the holders of those securities in order to ensure the legal and fair representation in the attendance, and to apply any legal or contractual restrictions concerning the voting rights. 2. Reports to be provided to the Authority, including the data on the attendance at the general assemblies, the authorities of the Securities’ holders and the percentages of voting on each of the agenda items. 3. The mechanism used to facilitate the process of the counting of the votes in the general assemblies and the authorities of the Securities’ holders. 4. The mechanism used to verify the percentages of ownership of Kuwaiti companies which are listed on foreign Exchanges as well as Exchanges in Kuwait. The percentage of listed Securities in those Exchanges shall not exceed the percentages set out in Module Twelve (Listing Rules).

Listed Securities shall be registered and settled through a Clearing Agency. It is not permissible to deal on those Securities or to obtain any consequential rights except through registration in the registers of the Clearing Agency.

The owners of Securities, whose holdings are registered at a Clearing Agency may request the Clearing Agency to issue a statement of holding, showing their names and number of owned shares.

The statement of holding issued by a Clearing Agency is a prima facie evidence of title at the time of issuance of the Securities holder’s shareholding if it conforms to the registers in the Clearing Agency.

Rights and obligations arise for all persons who traded listed securities by selling or purchasing by executing transactions through the Exchange’s trading system with settlement pursuant to the rules adopted by the Clearing Agency. The title of the Securities that are listed in an Exchange shall only be transferred by virtue of completing the entries in the designated registers at the Clearing Agency, unless such transfers are in violation of the law or rules upon which the securities were issued.

Securities that have been permanently cancelled from trading shall be excluded from the central depository system, whatever was the reason of the cancellation.

The Clearing Agency shall provide the Issuers of the Securities that are deposited in the Clearing Agency with the requested reports in accordance with the Clearing Agency’s rules which are approved by the Authority.

Any pledge, attachment, redeeming a pledge, cancellation of attachment, transfer of title or any other action concerning a Security shall be recorded in the Clearing Agency’s registers concerning that security.

If the Securities are registered in the Clearing Agency under the name of a bank or a company that manages portfolios of a third party or a qualified Securities Broker registered with an Exchange, then that registration must state that the title belongs to the company or to the bank or to third party’s account.

Issuers of Securities that are listed in an Exchange shall submit to the Clearing Agency a copy of their shareholders registrar, that includes the names of the holders of those Securities, information about their identities, nationality and addresses, as soon as the Securities are issued.

The Securities’ register shall be subject to the supervision and control of the Authority. The Clearing Agency may refuse to record any event in its registers if there was a violation of laws or regulations that are applicable to the Clearing Agency or to the Exchange.

2-10 Additional Requirements for Central Securities Depositories and Securities Settlement Systems or Central Counterparty.

The Authority may set additional requirements that it deems appropriate in relation to any Central Securities Depository, Securities Settlement Systems or Central Counterparty.

Without violating the provisions in Module Four (Securities Exchange and Clearing Agencies) of these Bylaws, the provisions of this Chapter shall apply to all Licensed Persons.

The following are included within the realm of Securities Activities: 1. Security Exchange. 2. Clearing Agency. 3. Investment Portfolio manager. 4. Collective Investment Scheme manager. 5. Investment Advisor. 6. Subscription Agent. 7. Custodian. 8. Market Maker. 9. Securities Broker registered in the Securities Exchange. 10. Securities Broker not registered in the Securities Exchange. 11. Investment Controller. 12. Credit Rating Agency. 13. Valuation of Assets. 14. Qualified Securities Broker registered with an Exchange. 15. Any other activities which the Authority may specify.

No Person may carry on any Securities Activity in the State of Kuwait without obtaining a license in relation to that securities activity from the Authority. Taking into consideration the provisions prescribed in Module Eight (Conduct of Business) of these Bylaws, a corporate entity may obtain a license to operate one or more Securities Activities, except where the Authority may prohibit jointly practicing certain activities. In all cases, each Licensed Person shall separate the operations of different licensed activities, except for activities related to managing Investment Portfolios by the Licensed Person and managing Collective Investment Schemes.

A license application shall be submitted by each person who wishes to carry on any Securities Activity or by his legal representatives or one of the founders of a company in the process of incorporation in accordance with the license application form set out in Appendix 5 of this Module.

A license application shall include the following information and documents, as the case may be: 1. Name and address and either the identity number or the commercial register number of the license applicant (depending on whether the license applicant is a natural individual or a corporate entity). 2. Regulatory business plan containing such details as are set out in Appendix 5 (license application form) of this Module. 3. Statement of the Securities Activity or Activities to which the license application relates. 4. Information about the issued and paid up capital of the company to which the license application relates. 5. A statement of the shareholders whose ownership reaches 5% or more of the company to which the license application relates. 6. A copy of the Company Contract to which the license application relates and any amendments to the same. 7. Nomination for applicants for Registered Positions and Employment Positions in accordance with the Fit and Proper Rules in Appendix 5 of this Module. 8. Sufficient information of any Effective Control over the company to which the license application relates. 9. Any agreements or undertakings with external entities. 10. The audited financial statements for the last three years prior to the date of application, in addition to forecasts of its expected financial position for three years after business commencement. 11. Approval of the Central Bank should the applicant be one of the Units Subject to the Supervision of the Central Bank. 12. A legal opinion from an external legal advisor of the company on any lawsuits of material influence on the legal position of the company, whether the said lawsuits were filed by the company or against it and its Subsidiary Companies as well as the amounts of those lawsuits, if possible. 13. Declarations signed by the founders of the company to the effect that no verdict of bankruptcy, penalty on a crime of breach of honor or trust, or being convicted of a crime/ felony involving a breach of honor or trust or a freedom restricting penalty in any of the crimes stipulated in the law of the Authority or any other law over the five year period preceding the license application unless he or they have been discharged. 14. A declaration by the license applicant stating that the information contained in the application and enclosed documents is accurate and complete in addition to any other declarations required by the Authority. 15. Proof of payment of fees for the processing of the application. 16. Any request by the applicant for the dis-application of legal or regulatory requirements and the justification for such a request. 17. Any other information or documents that may be specified by the Authority.

The Authority may waive some requirements or it may impose additional requirement depending on the type of activity.

The Authority will review each license application and if applicable may notify the applicant with the necessity to submit additional information or documentation to demonstrate the following: 1. The ability and capability required to practice the activity. 2. Sufficiency of resources to practice the activity. 3. The administrative experience, technical resources, and systems and operational procedures sufficient to practice the activity. 4. Persons in Registered Positions and Employment Positions have the necessary qualifications, skills and experience as stipulated in Chapter Three of this Module. If the applicant fails to submit the required information and documents within the period stipulated in writing by the Authority without an excuse acceptable to the Authority, the application shall be deemed to have been withdrawn.

The Authority shall set the minimum paid up capital of the Licensed Person in accordance with each of the Securities Activities. Also, it shall set the legal form of the company that shall practice the activity, in accordance with the table stated in Appendix 1 of this Module.

The Authority shall determine a license application within three months from the date of receipt of all required information and documents in accordance with Article (1-5) and Article (1-7) of this Module, and Article (2-1) of Module Six (Policies and Procedures of Licensed Person) of these Bylaws.

The Authority may take any of the following decisions regarding the license application: 1. Grant the application for a license to all or some of the Securities Activities for which the applicant is seeking a licence. 2. Issue an initial conditional approval subject to the completion of certain procedures or the fulfilment of specific criteria within a period of time set by the Authority. The Authority may extend the term as it deems necessary. 3. Reject the license application.

The Authority shall inform the applicant of its determination of the application to obtain a license. In the event of a rejection of the application, the determination shall be justified.

A license to carry on Securities Activities remains valid for a term of three years from the date on which it is granted. A Licensed Person intending to renew its license for another three years shall apply for a license renewal as follows: 1. A license renewal application shall be submitted to the Authority three months prior to the license expiration date in accordance with the form of License Renewal for Securities Activities as set out in Appendix 6 of this Module. An application shall have appended to it. All required documents and information shall be attached to the application including evidence of payment of the fees specified by the Authority. 2. Following receipt of a license renewal application, the Authority may require the licensed person to provide it with such further information or documents as it considers necessary to enable it to determine the application. If the applicant fails to submit the required documents and information within the period of time set by the Authority without an excuse acceptable to the Authority, the application shall be deemed to have been withdrawn. 3. The Authority shall determine a license renewal within two months from the date of receipt of a complete application with all required information and documents. 4. The Authority may reject a license renewal if the Licensed Person does not fulfil the main conditions stipulated in Article (1-7) of this Module. 5. The Authority shall inform the Licensed Person of its determination of the license renewal application. In the event of a rejection, the determination shall be justified.

The Authority may decline, suspend, revoke, or restrict the activity of any Licensed Person in any Securities Activity, or any Related Party, if it be given evidence of any of the following: 1. He has committed a major fault, given misleading information, or omitted to mention a material fact when applying for a license, or omitted to mention any other information that should be submitted to the Authority. 2. He has failed to meet the standards applied under the Law or any other subsequent system or Bylaws issued accordingly. 3. He has violated any provision, rule, regulation or Bylaws issued under this Law, or under any law related to its activity, or a Securities law, or rule or bylaws of another country. 4. He has been negligent in monitoring one of his affiliates (subordinates) by failing to prevent him from acting in a way which might be a violation of the provisions of this Law or Bylaws.

The Authority shall issue justified decision for the suspension, cancellation or restriction of the activities of a Licensed Person. The decision shall be effective from the date of its publication or notification to the Licensed Person.

The Authority’s cancellation, suspension or restriction of a license shall not prevent the Authority from exercising its right to undertake an investigation or to take any procedures against the Licensed Person or any other person related to any Violation taking place before the date of the Authority’s decision of cancellation and suspending the license or restricting the activity.

A Licensed Person may apply for a termination of its license, whether for all or some of the licensed Securities Activities, as follow: 1. A Licensed Person shall use the license termination application in accordance with the form set out in Appendix 7 of this Module. The application shall have appended to it all required documents and information by the Authority. It shall also include evidence of the notification sent to the Central Bank with regard to units subject to its supervision, and pay the fees specified by the Authority. 2. Following receipt of a license termination application, the Authority may require the applicant to provide it with such further information or documents as it considers necessary to enable it to determine the application. If the applicant fails to submit the required documents and information within the period of time set by the Authority without an approved excuse by the Authority, the application shall be deemed to have been withdrawn. 3. The Authority shall determine a license renewal within two months from the date of receipt of an application completed with all required information and documents, subject to amending the Company Contract by deleting reference to any Licensed Activity related to the termination request from the list of objectives set out in the Company Contract. 4. The Authority may impose any requirement on the Licensed Person that are required to ensure that the license termination does not adversely affect the interests of the Licensed Person’s Clients or the integrity of the financial system. The Authority shall inform the applicant of its determination of the license termination application. In the event of rejection, the determination shall be justified.

A Licensed Person who intends to temporarily suspend his Securities Activities shall notify the Authority with the intended date of suspension and reasons behind the same at least three months before the actual date of suspension. The Licensed Person shall ensure the accomplishment of any work intended to be suspended or shall transfer the same to another Licensed Person and shall notify its Clients within an appropriate period prior to his suspension. The Authority may require the Licensed Person to take certain measures and procedures to protect its Clients or any other Persons.

A Licensed Person shall: 1. Notify the Authority at least thirty days prior to the date of any change of address of its headquarters or the chosen domicile to which notices or documents should be addressed. 2. Notify the Authority within five Business Days as of incorporation, ownership, sale or dissolution of a Subsidiary Company, or in the event of any change in the information submitted to the Authority with regard to the branch offices through which the Licensed Person practices Securities Activities either inside or outside Kuwait. 3. Notify the Authority within five Business Days from the date of the appointment, resignation, or replacement of its Auditor. 4. Notify the Authority immediately upon the occurrence of any development pertaining to the insolvency or liquidation of the Licensed Person, any Controller company controlling the same or a member in their Group, or if any regulatory authority conducts an investigation, imposes disciplinary measures or punishments on the Licensed Person in relation to its Securities Activities or in the event that issuance of a judgment that has a material influence on the financial position of the Licensed Person or in the event of any Violation of the provisions stipulated in the Law or these Bylaws, without prejudice to Article (3-3) of Module Seven (Client Funds and Assets) of these Bylaws. 5. Notify the Authority with any decision or procedure issued by a foreign regulatory authority to grant or cancel any licenses to practice Securities Activities of the Licensed Person. 6. Notify the Authority upon admission or refusal of the Licensed Persons’ membership at a Securities Exchange or a Clearing Agency. 7. Hold its annual ordinary general assembly following the end of the financial year within two months from the date of providing the Authority with its annual audited financial statements. 8. Notify the Authority of the agenda and place of the ordinary and extra ordinary general assembly’s meeting -along with all documents relevant to the items listed on the agenda- at least ten Business Days prior to the commencement of the meeting. 9. Providing the Authority with a copy of the minutes of the ordinary and extraordinary meeting -whatever the case may be- authenticated, in addition to a certificate of noting the amendment of the Company Contract in the commercial register within a maximum of two weeks from the date of the commencement of the meeting. 10. Obtaining the Authority’s prior approval on any amendment of the Company Contract.

Anyone who desires to enter into arrangements or agreements that lead to Effective Control of a Licensed Person shall obtain the approval of the Authority before completion of such control. The Authority shall agree to these arrangements or agreements after fulfilling any information or documents required by the Authority in order to ensure that any Effective Control on the Licensed Person shall not affect controlling and supervising them or their compliance to the Law and Bylaws. Obtaining the prior approval of the Central Bank for the units subject to its supervision shall be taken into account.

A Licensed Person, prior to filing settlement against bankruptcy, shall inform the Authority at least ten Business Days prior to presenting the same, and provide any documents required by the Authority and coordinate with the latter before initiating the procedures. This provision is not applicable for Units Subject to the Supervision of the Central Bank.

A Licensed Person is prohibited from the date of commencement of a settlement against bankruptcy case until the end of the same without the prior approval of the Authority from: 1. Accepting money or assets from new Clients. 2. Acting in respect of Clients’ money or assets unless upon written instructions from the Client. 3. Concluding any settlement, mortgage or executing any transfer of property not required in the ordinary course of business. This provision is not applicable to Units Subject to the Supervision of the Central Bank.

No appointment of a liquidator to a Licensed Person shall be made without obtaining the Authority’s approval, except in appointment by a judicial judgment. The Authority may instruct a liquidator to take certain procedures or measures to maintain the assets and cash reserves of the Clients of the Licensed Person whether those monies are under custody of the Licensed Person or another person. This provision does not apply on Units Subject to the Supervision of the Central Bank.

Special Provisions for Certain Activities

An Investment Portfolio manager undertakes to manage the Investment Portfolio of a Client, which may include cash, Securities or other assets owned by the Client, in accordance with the rules set by the Authority. An Investment Portfolio is either a custody portfolio, or is one managed by an Investment Portfolio manager (non-discretionary portfolio) or by the Client (discretionary portfolio).

An Investment Portfolio manager shall comply with all rules set out in Module Seven (Clients’ Funds and Assets) of these Bylaws.

A Collective Investment Scheme Manager undertakes to manage entities which specialize in the field of investing investors’ money in various financial instruments.

A Collective Investment Scheme Manager shall comply with the rules set out in Module Thirteen (Collective Investment Schemes) of these Bylaws. It shall: 1. Be licensed by the Authority to carry on Collective Investment Scheme Manager’s activity. 2. Manage the Collective Investment Scheme by achieving its investment goals in accordance with the articles of association or contract. 3. Apply adequate policies and procedures to prevent unfair practices that may impact the stability and integrity of the market. 4. Not expose any Collective Investment Scheme to any unnecessary investment risks and shall act in accordance with the purposes of the scheme and its investment policy. 5. Notify the Authority immediately of any developments in the Collective Investment Scheme that may adversely affect the interests of the Unit holders.

The duties of the Investment Advisor include, but are not limited to, the following: 1. Evaluating Securities. 2. Providing consultation, issuing reports and analyses for others or through the media and means of communication in relation to one or more activities that include but not limited to the following: a. Invest, purchase or sale of Securities and investment products. b. Subscribe, offer, issue or list Securities. c. Practice any right attached to the possession of Securities. In addition to providing any consultation or advice that may affect investors’ or potential investors’ decisions in disposing Securities and investment products.

Investment Advisor shall comply with the provisions set out in Chapter Eight of Module Eight (Conduct of Business) of these Bylaws when conducting investment research.

In addition to conditions stated in Article (1-5) and taking into account what is stipulated in Article (1-6) of this Module, if the person is only licensed to practice the activity of Investment Advisor and the activity of Valuation of Assets or one of those two activities and not other Securities Activities, they shall comply with the following conditions: 1. All the employees of the Licensed Person who undertake major duties related to the activities of Investment Advisor or the activities of Valuation of Assets shall have both qualifications and experience to conduct those activities in accordance with Appendix 3 of this Module. 2. Where relevant, there shall not be less than four employees who are Representatives in respect of one or both of the activities of the Investment Advisor Activity and the Valuation of Assets Activity. 3. To have at least one senior investment advisor who meets the following minimum conditions: a. To have obtained a masters degree or a PhD in the economic, administrative or financial domains or one of the authorized professional certificates to perform the duties of the Investment Advisor in accordance with Appendix 3 of this Module. b. To have a minimum of five years’ experience in the field of investment consultation or financial analysis or in a similar professional field as referenced in the activities of the Investment Advisor as stated in Appendix 3 of this Module.

The duties of a Subscription Agent include, but not limited to, the following: 1. Offer or sale of Securities on behalf of an Issuer, Ally or agent. 2. Obtain Securities from Issuer or its Ally in order to market them. 3. Manage Securities issuances.

A Custodian offers services of safeguarding assets on behalf of clients by maintaining the Client Assets, performing any related administrative duties in this regard, executing actions on them and complying fully with all duties related to such custody. A Custodian may keep assets of both Kuwaiti and non-Kuwaiti Clients.

Licensed Persons who are licensed to carry out Custodian activity shall comply with rules set out in Module Six (Clients’ Funds and Assets) of these Bylaws, in addition to complying with Module Thirteen (Collective Investment Schemes) of these Bylaws when safeguarding the assets that comprises the Collective Investment Schemes.

The duties of a Custodian include, but not limited to, the following: 1. Safeguard the assets that comprise Collective Investment Schemes in accordance with rules set out in Module Thirteen (Collective Investment Schemes) of these Bylaws. 2. Safeguard the money and assets under its custody or under the custody of a sub-Custodian on behalf of a Client. 3. Open accounts, receive assets and transfer the same on behalf of a Client and in accordance with his instructions. 4. Complete settlement for transactions related to assets under custody. 5. Execute Client’s instructions with regard to rights attached to those assets such as subscription, attending the general assemblies and voting on behalf of the Client and acting in accordance with his instructions in order to safeguard his interests. 6. Reconcile the contents of the Client’s accounts with the contents with the Central Securities Depository and Licensed Persons and other financial services providers regarding the custody of assets. 7. Collect and distribute profits, interests and reclaim deducted taxes of assets subject to custody. 8. Ensure compliance with the laws and rules regulating any action and trading on those assets under custody. 9. Prepare periodic reports related to the contents of the Clients’ accounts and send these to the Clients and the supervising entities if any. 10. Undertake the role of the Representative of a Trustee in relation to Bond and Sukuk Assets.

In addition to the licensing regulations set out in this Module and Module Six (Policies & Procedures of Licensed Persons) of these Bylaws, and in light of what was stated in Article (1-33) of this Module, whoever is seeking to practice the activity of Custodian shall provide the Authority with the following: 1. The internal policies which are followed for practicing the activity to ensure the ability of the Licensed Person to perform his duties. 2. The IT systems used to ensure the ability of a Custodian to perform his duties. 3. Any other activities which the Authority may specify.

The Person licensed to practice the activity of Custodian shall be responsible for the damages that may occur to Clients from non-commercial risks or professional responsibility, or the ones resulting from the damage or theft of Clients documents, assets and funds. A Licensed Person shall provide the Authority with arrangements followed to compensate Clients for such damages. The Authority may request from the Licensed Person to achieve such purpose by fulfilling one of the following conditions as a minimum: 1. Insurance policy against damages set out in this Article. 2. Bank guarantee

The Custodian shall abide by everything the Authority issues, including the organizational instructions for his work and other regulations issued by the Exchange or the Clearing Agency and approved by the Authority.

A Securities Broker registered in the Exchange shall receive and transmit sale and purchase orders concerning securities in accordance with Clients’ instructions in his capacity of being registered within the list of brokers at the Exchange.

A Securities Broker not-registered at the Exchange shall arrange transactions on Securities shall receive and transmit sale and purchase orders of securities in accordance with the Clients’ instructions in his capacity of being a non-registered broker at the Exchange.

An Investment Controller shall provide its services to investment Funds in accordance with Module Thirteen (Collective Investment Schemes) of these Bylaws. The Investment Controller shall comply with the following: 1. Ensure that the Fund Manager comply with the Law, Bylaws, decisions, instructions of the Authority, Articles of Association, Prospectus and any other documents issued by the Fund Manager. 2. Value shares or investments Units in accordance with the method stated in the Articles of Association of the Fund. 3. Ensure that the Fund Manager is performing his responsibilities for the interests of Unit holders in accordance with the Articles of Association of the Fund and the provision of these Bylaws and that the money is invested within the limits of prescribed methods and policies set in the scheme. 4. State any transactions that demonstrate a conflict of interest. 5. Meet at least twice a year with the Administrative Authority of the Fund to review the compliance of the Fund with the Law, Bylaws, decisions, instructions of the Authority, Articles of Association, Prospectus and any other documents issued by the Fund Manager. 6. Notify the Authority with any Violations committed by the Fund Manager.

A Credit Rating Agency shall undertake the businesses related to collecting data and information to evaluate the credit rating of a given entity aiming to issue a credit classification of that entity and shall review such classifications as needed or at the request of the entity requiring the rating.

No person may carry on the activity of Valuation of Assets unless it is an auditing office in accordance with Article (11) of the Companies Law.

The activity of Valuating of Assets includes the following: 1. Evaluating in kind shares that form the company’s capital either when it is incorporated or when increasing capital. 2. Evaluating the share of a general partner in accordance with Article (43) and Article (298) of the Companies Law. 3. Evaluating net assets of companies entering into a Merger, conversion, division or Acquisition Offer. 4. Evaluating the share of a partner who does not want to stay in partnership in accordance with Article (16) of the Companies Law. 5. Evaluating the share of a partner who refuses to amend the partnership contract in accordance with Article (52) of the Companies Law. 6. Evaluating the share of a dismissed partner in accordance with Article (55) of Companies Law. 7. Evaluating the share of a deceased partner in a professional company in accordance with Article (307) of the Companies Law. 8. Evaluating attached shares in accordance with Articles (62) and (69) of the Executive Regulations of the Companies Law. 9. Any other cases stipulated in the Companies Law or these Bylaws.

All conditions stipulated in Article (1-29) of this Module are applicable on all persons carry on the Valuation of Assets’ activity.

1-41 Market Maker

A Market Maker shall be registered with the Exchange to carry on market making activity on a certain Security or more for a one year renewable term. A market maker may not request a waiver from carrying on market making activity on such Security within the first three months of commencing market making activity on such Security.

Registration of Market Maker on a listed Security requires obtaining a license from the Authority to practice the market making activity. Market Making license is subject to the provisions of this Module. The registration is suspended automatically, or becomes cancelled when the license is suspended or cancelled.

The Exchange may register a Market Maker on more than one Security at the same time.

The Exchange may permit registration of more than one Market Maker on any one Security.

After obtaining the approval of the Authority, an Exchange shall set the detailed procedures and conditions to organize the activity of Market Makers provided that such are not to violate the provisions and conditions stated in this Chapter.

A Market Maker shall enter into an agreement with the Exchange to define, in detail, the rights and obligations of the Market Maker as well as work conditions.

A company’s Treasury Shares shall not be used in market making operations.

A Market Maker is exempt from disclosure of the interests in accordance with the provisions of Chapter Four of Module Ten (Disclosure and Transparency) of these Bylaws on the Shares that it holds under its capacity. The Market Maker shall disclose if the interest it holds exceeds 10% of a Listed Company capital, and shall update disclosure on every incremental change of 1% over the minimum amount mentioned above.

A Market Maker is not permitted to exercise voting rights in respect of the Shares that it holds for its market making activity, nor is it permitted to authorize a third party to exercise these voting rights, nor may it appoint Members of the Board of Directors or exert any direct or indirect influence on the company’s decisions. Its Shares shall be included within the required quorum for holding a general assembly, and its Shares shall be calculated within the Shares represented at the assembly.

Securities held by Market Maker in its capacity as such shall not be included within the percentage referred to in Article (74) of the Law regarding Mandatory Acquisition.

An Exchange may set a minimum cash requirement for the Market Maker portfolio to practice the market making activity. Also, it may set the maximum and minimum percentage rates of what shall be kept in cash or Securities to practice the activity.

A Market Maker is not permitted to practice the activity of market making in Securities other than in respect of the Securities he is authorized to work on. Moreover, it is not permitted to use a Market Maker Portfolio for other activities.

A Market Maker may dispose of the profits and financial surpluses resulted from its work in a way it considers appropriate after transferring these profits and financial surpluses from the Market Maker Portfolio.

A Market Maker may invest the cash available in the Market Maker Portfolio in short term Debt Instruments.

Market Maker orders are tracked separately by the trading system in order to account for them within the clearing and settlement system as per the conditions and rules under which the Market Maker works.

Market Maker Orders shall not be given preference or priority when entering or presenting those orders in the trading system.

A Security on which a Market Maker registers, is subject to the following: 1. A period of no less than three months shall elapse from the listing of the Security on the Exchange. 2. The number of Market Makers for one Security shall not exceed five, unless the Authority approves an increase to this number. The Exchange shall set other conditions that shall be applicable to such Securities.

A Market Maker is required to maintain the continuous presence of buy and sell orders for a Security for which its registered as a Market Maker in accordance with an agreement entered into between a Market Maker and an Exchange, and which shall be changed in accordance with the movement of the Security’s prices within certain periods of time set by the Exchange.

A Market Maker shall make buy and sell orders available for a period set by the Exchange.

A Market Maker shall maintain the minimum cash requirement set by the Exchange.

A Market Maker shall provide buy and sell orders in accordance with the tranches set by the Exchange as indicated in the agreement entered into between the Market Maker and the Exchange. The Exchange may set a rate as a percentage of the maximum sell orders from the total daily orders of a single Security.

A Market Maker shall execute buy and sell orders (transactions) with a monthly trading value of not less than a specified percentage set by the Exchange out of the total trading value on the Security for the same month.

A Market Maker shall provide the Authority with a weekly report on the following: 1. A summary of the buy and sell deals executed in each trading session. 2. The average daily difference between the buy price and sell price. 3. The average size of buy and sell orders entered in each trading session. 4. The percentage of executed orders during the day out of the total value of orders.

A Market Maker shall submit to the Authority a weekly list of its ownership percentages in the Shares in which the Market Maker operates, and any changes occurring to those percentages.

A Market Maker may be temporary exempted from its market making obligations on a certain Security in the following cases: 1. If the Authority decides to change the difference in price between the bid and ask orders in the event of severe market fluctuation. 2. If a Security has buy orders entered with the price limit up and no sell orders entered, or if a Security has sell orders entered with the price limit down without any buy orders entered. 3. The relevant Security is suspended from trading. 4. The Authority issues a decision to suspend a Market Maker from carrying on its activity. 5. Other cases set by the Authority, or by the rules of the Exchange or Clearing Agency.

1-42 Qualified Securities Broker registered with an Exchange.

A Qualified Securities Broker registered in the Exchange shall receive and transmit sale and purchase orders concerning securities according to clients’ instructions, and receipt and deposit funds and assets from licensed parties from regulatory bodies in Kuwait.

Qualified Securities Broker registered with an Exchange shall perform the following tasks: 1. Open accounts for clients and take all the necessary steps to obtain the whole and correct data which allows him to know the client 2. Receive and deposit funds and assets of the client in the omnibus account specific to the Qualified Securities Broker registered in the Exchange for the clients benefit from licensed parties from regulatory bodies in Kuwait3. Work under the supervision of a clearing agency for clearing and settlement issues as a result of clients trading transactions and risk management and reconciliation of records with related parties according to regulations approved by the Authority 4. Execute client’s instructions in using the funds and assets available from the account management

In addition to the licensing regulations set out in this Module and Module Six (Policies & Procedures of Licensed Persons), and in light of what was stated in article (1-42-2), whoever is seeking to practice the position of a qualified securities broker registered in the exchange shall provide the Authority with the following: 1. The internal policies which is followed to ensure the ability of a qualified securities broker registered in the exchange to perform his duties. 2. The IT systems used to ensure the ability of a qualified securities broker registered in the exchange to perform his duties.3. Any other activities which the Authority may specify.

A qualified securities broker registered in the Exchange shall abide by everything the Authority issues, including the organizational instructions for his work and other regulations issued by the Exchange or the Clearing Agency approved by the Authority.

Transfer of the License Resulting from Merger Processes

Without prejudice of the provisions set out in Module Nine (Mergers and Acquisition) of these Bylaws, the provisions of this Article shall apply to Licensed Persons by the Authority.

1- If the Merger process demands transfer of the Securities Activities license from the Merged Company or companies to the Merging Company or new company (as the case may be), the Authority shall issue its decision of transferring the license by granting a license to the Merging Company or the new company (as the case may be) to practice the Securities Activities granted to the Merged Company or companies as the case may be after the Authority issues its approval of executing the Merging process and announcing the general assembly’s decisions to the companies involved in the Merging Process in the Official Gazette and establishing the new company, provided that the license shall only be valid from the date of annotating the Merger in the Commercial Register. 2- The Authority shall grant the Merging Company or the new company (as the case may be) a specific period which starts from the date defined by the Authority to fulfil the conditions stipulated in Article (1-7) of Chapter One (Securities Activities) of this Module.

1- In case the Merged Company practices the same Securities Activity, one license shall be issued for the Merging Company or the new company (as the case may be) as specified by the Authority in this concern. 2- All licenses issued by the Authority for the same Securities Activity granted to the Merged Companies shall be deemed automatically revoked starting from the date of annotating the Merger in the Commercial Register.

Registration of Registered Persons in the Registered Employment Positions shall continue in case they transfer from the Merged Companies to the Merging Company or new company (as the case may be) for the purpose of practicing the same positions, and in the same positions they are registered in at the Authority.

In case of failure of the Merging Company or the new company (as the case may be) in submitting the required documents and information within the period specified by the Authority for fulfilling the license requirements without a good reason acceptable to the Authority, the Authority may revoke or suspend the license or restrict the activity or take any other measure it deems appropriate.

2-1 Reviewing the Accounts of Licensed Persons

Each Licensed Person shall maintain a comprehensive accounting system and maintain books, records, and accounts that enable the production of financial statements and income statements in accordance with the international standards for financial reporting.

Each Licensed Person shall comply with the following: 1. Execute operations in accordance with a general or special authorization obtained from the competent department. 2. Organize the disposition of assets under general or special authorization from the competent department. 3. Compare registered assets during appropriate periods of time and take the necessary actions towards any material changes. 4. Record transactions in order to prepare financial statements in accordance with the criteria stipulated in Article (2-1-1) of this Module.

Within one month of obtaining a license, a Licensed Person shall appoint an Auditor who is registered by the Authority, provided that the auditor shall not be a manager, officer, employee, shareholder, or a partner of the Licensed Person.Each Licensed Person shall notify the Authority within a period not exceeding five Business Days of the date of appointment, dismissal or resignation of the Auditor.

The Authority may require a Licensed Person to submit periodic reports on their work in accordance with each type of activity. Moreover, a Licensed Person shall submit an annual report with the audited financial statement as well as a reviewed quarterly financial statement.

2-2 The Sharia Supervisory System for Persons Licensed to Operate in accordance with Islamic Sharia

In addition to the conditions and provisions of Licensed Persons stated in these Bylaws, all Persons Licensed to operate in accordance with the provisions of Islamic Sharia shall comply with the rules and procedures stated in Article (2-2) of this Module. The provisions of Article (2-2) of this Module are not applicable on Units Subject to the Supervision of the Central Bank.

November 2015Securities Activitiesand Registered PersonsIn addition to the conditions for the application for a license for each activity, the following conditions shall be met by a person licensed to operate in accordance with the Islamic Sharia: 1. Its Articles and Memorandum of Association shall state that the practice of such activities, particularly the Securities Activities, shall be in accordance with Islamic Sharia 2. Its internal organization shall include a Sharia supervision and auditing system stipulated in its internal regulations to ensure professional and effective performance in accordance with the international criteria approved by the Authority. 3. The Sharia audit system of the Licensed Person shall consist of an Internal Sharia Auditing Unit and External Sharia Auditing Office. The Licensed Person may appoint a Sharia Supervisory Board to give the Sharia opinion regarding the activities of the company. It is not permitted to combine the tasks of the Internal Sharia Auditing Unit and External Sharia Auditing Office in one entity.

Those who were licensed to operate in accordance with Islamic Sharia shall fulfil the following conditions: 1. To comply with the conditions and regulations and all Sharia provisions that may be approved by the Authority. 2. To have a code of ethics in accordance with the provisions and principles of the Islamic Sharia 3. The internal regulations, contracts, agreements and forms they use, the products they provide and the tools they issue shall be in accordance with the provisions of Islamic Sharia.

The Internal Sharia Auditing Unit shall be an administrative unit responsible to the auditing committee and competent to supervise the commercial and financial transactions to ensure compliance with the Sharia decisions and criteria as well as the Authority’s relevant decisions.

The Sharia Audit Officer shall be responsible for the Sharia Auditing Unit. The Licensed Person may appoint an external entity to perform some tasks of the Sharia Audit Officer in accordance with the provisions of Article (3-2-8) of this Module, which entity shall be an External Sharia Auditing Office registered at the Authority.

The Internal Sharia Auditing Unit shall verify the application of Sharia by reviewing randomly selected cases of diverse daily transactions of the business of the Licensed Person; to ensure that the departments comply with the Sharia standards and the related decisions of the Authority, within periodical appointments and field visits to locations or organizations that the Licensed Person deals with, as necessary.

The Internal Sharia Auditing Unit shall submit periodical reports to the auditing committee of the Board of Directors of the Licensed Person, which reports shall be subjected to periodical reviews and audits.

3-1 General Provisions

The provisions of this Chapter shall apply to Registered Persons as follows: 1. Any person who holds or performs Registered Positions and Employment Positions for the Licensed Person. 2. Registered Auditors. 3. External Sharia Auditing Offices registered at the Authority. As for the Units Subject to the Supervision of the Central Bank, the provisions of Registered Persons of this Chapter shall be applied in accordance with a Memorandum of Understanding entered into between the Central Bank and the Authority.

The Authority shall prepare a special record of the Registered Persons. Registration shall be completed when all conditions and regulations stated in this Chapter are fulfilled.

The Authority may cancel the registration of any Registered Person or restrict their activity in the event of not fulfilling those conditions and provisions. The Authority may re-register such persons when all condition and provisions are fulfilled.

Cancellation of a registration of a Registered Person shall not restrict the Authority from conducting any investigation or to undertaking any procedure against that Person regarding any Violation committed during their registration.

Each Licensed Person who practices Securities Activities shall appoint employees to fulfil Registered Employment Positions as stated in Article (3-2-2) of this Module. Only natural persons shall occupy Registered Employment Positions. The position of Member of a Board of Directors of a Licensed Person is a Registered Position.

Each Licensed Person who practices Securities Activities shall appoint employees to fulfil Registered Employment Positions as stated in Article (3-2-2) of this Module. Only natural persons shall occupy Registered Employment Positions. The position of Member of a Board of Directors of a Licensed Person is a Registered Position.

The following are Registered Employment Positions: 1. Chief Executive Officer. 2. Senior Executive. 3. Financial Manager. 4. Risk Management Officer. 5. Internal Audit Officer. 6. Sharia Audit Officer, for Persons Licensed to Operate in accordance with Islamic Sharia Principles. 7. Compliance Officer. 8. Representative of Securities Activities: a. Representative of a Securities Broker registered in a Securities Exchange. b. Representative of a Securities Broker not registered in a Securities Exchange. c. Representative of an Investment Advisor. d. Representative of an Investment Portfolio manager. e. Representative of a Collective Investment Scheme manager. f. Representative of a Custodian. g. Representative of an Investment Controller. h. Representative of a Subscription Agent. i. Representative of a Credit Rating Agency. j. Representative of a Market Maker. k. Representative of a Valuation of Assets. l. representative of a Qualified Securities Broker registered with an Exchange. 9. Any other Employment Positions that the Authority deems are Registered Employment Positions.

A Licensed Person is responsible for registering any individual who works for them in the Registered Positions and Employment Positions at the Authority. The fit and proper rules shall determine the applicable registration procedures. Candidates for Registered Positions and Employment Positions shall comply with the fit and proper rules stated in Article (3-3) and Appendix 3, 4 and 5 of this Module.

A senior investment advisor of a Licensed Person who is licensed to carry on only the activity of Investment Advisor or Valuation of Assets, and to carry on any other type of Securities Activities, should be treated as Registered Positions and Employment Positions.

Only Registered Person are allowed to occupy Registered Positions and Employment Positions.

An individual may be registered for more than one Registered Employment Positionsdefined under Article (3-2-2) of this Module. As an exception, the following occupations shall not be performed jointly: 1. Internal Audit Officer, Sharia Auditing Officer, Compliance Officer, Risk Management Officer and Financial Manager. 2. Registered Employment Positions stated in paragraph (1) of this Article or any other Registered Employment Positions. 3. Representative of Market Maker and representative of Investment Portfolio manager or representative of Collective Investment Scheme manger. 4. representative of a Qualified Securities Broker registered with an Exchange and representative of Investment Portfolio Manager or representative of Collective Investment Scheme Manager.

A Registered Person shall not occupy any Registered Employment Positions for more than one Licensed Person.

Without prejudice to the Licensed Person’s obligation to appoint and register an individual to undertake each of the Registered Employment Positions in accordance with Article (3-2-5) of this Module, a Licensed Person may outsource specific duties related to some of the Registered Employment Positions as stipulated by the Authority, provided that the Licensed Person shall still be liable for any duties performed by the external entity. As an exception from the previous paragraph, it is not permitted to assign an external entity to undertake the job of the Chief Executive Officer, Senior Executive, Financial Manager and Representative of Securities Activities.

A Registered Person in a Registered Employment Position shall reside in the State of Kuwait.

A Licensed Person shall notify the Authority within five Business Days from the date the Registered Person no longer occupies a Registered Position or Employment Position.

When any Registered Employment Position is vacant, a Licensed Person shall fill the vacany within a period not exceeding six months, except the Chief Executive Officer as the Licensed Person shall appoint a replacement within a period not exceeding one year from the date of such vacancy, provided that the Licensed Person shall assign one of the Members of the Board of Directors or one of their Senior Executives registered in the Authority to undertake the duties of the Chief Executive Officer during that period and shall notify the Authority within five Business Days from the date of conducting such action.

The Authority may cancel the registration of any Registered Person upon their request or upon the request of the Licensed Person in the case of the termination of their Registered Positions and Employment Positions.

The Authority may exempt the Licensed Person from the requirements of Registered Positions and Employment Positions stated in Article (3-2-6) and Article (3-2-8) of this Module, or it may impose additional conditions, in accordance with the type of activity to be licensed.

3-3 Fit and Proper Rules

Fit and proper rules shall be applied to Licensed Person and Registered Positions and Employment Positions at the Licensed Person, Special Purpose Vehicle Company that issue Securities shall be exempted from such requirement.

A Candidate shall meet the following criteria: 1. Academic qualifications in accordance with the professional field in which they are engaged. 2. Appropriate professional experience in a field in accordance with the nature of work in the organization and the job to which they are nominated. 3. Technical, leadership and administrative abilities that allow them to be independent in judgement, make appropriate decisions and understand all technical requirements and recent updates related to their responsibilities. 4. Achieving all assigned tasks and responsibilities as well as working to achieve the organization’s goal. 5. Being aware of all technical updates and professional and administrative developments. Appendix 3 of this Module includes the qualifications and experience required of each Candidate.

The Authority may take all necessary procedures to verify the technical and professional abilities that qualify a candidate for Registered Employment Positions, including setting the necessary rules and conditions and passing qualification exams set by the Authority and the possibility of holding an interview for the candidate if deemed necessary.

Each Candidate shall submit a declaration to the Authority on the following: a. He shall not have been convicted of a crime involving a breach of honour or trust or related to money laundering, financing terrorism or corruption crimes. b. He has good reputation and manner. c. He has not been dismissed from his position by a disciplinary decision from a Regulatory Body or by a final judgment.

The Authority may take all necessary procedures it deems appropriate to verify that a Candidate fulfils the conditions stated in these honesty and integrity criteria whether inside or outside Kuwait.

A Candidate shall not have been declared bankrupt unless he has settled and no arrest order or warrant to pay his debt shall be in existence against him. The Authority may consider the circumstances of exoneration of an individual in the event that it occurs within the three past years.

A Candidate shall comply with the procedures stated in Appendix 4 of this Module when he submits an application for a Registered Position or Employment Position in the Authority.

3-4 Auditors

The Authority shall keep a record of Auditors who may review and audit Licensed Persons, Kuwaiti companies listed in the Exchange, Collective Investment Schemes and Special Purpose Vehicle Companies licensed by the Authority. Registration in this record shall be made after fulfilling conditions and regulations stated in this Chapter.

Without prejudice to the provisions of Decree Law No. 5 of 1981 Regarding the Practice of Auditing, an Auditor who wishes to be registered in the registry referred to in Article (3-4-1) of this Chapter shall meet the following: 1. Registered as class (A) in the Ministry of Commerce and Industry’s register, and have practiced auditing for at least five years from the date of registration in class (A) in the above-named register. 2. The number of employees working in an Auditors’ review and audit teams shall not be less than five full-time employees. An Auditor shall be considered a Professional Employee when undertaking review and audit functions. 3. Professional Employees shall amount to not less than one third of the total number of employees in the review and audit teams. 4. Each employee of a review and audit team working for the Auditor shall hold a bachelor degree in accounting from Kuwait University or from one of the equivalent universities or higher institutions inside or outside Kuwait. 5. A Professional Employee shall head each review and audit team of the Auditor. Excluding Clients whose issued capital is less than 3,000,000 Kuwaiti Dinars or Clients stated in Article (3-4-1) of this Chapter, at any time the number of current Clients for each Professional Employee shall not exceed: a. Ten Clients for each Professional Employee with experience not less than seven years who heads a review and audit team. b. Seven Clients for each Professional Employee with experience not less than five years who heads a review and audit team. 6. The percentage of Kuwaiti employees in each review and audit team shall not be less than 15% during three years from registering the Auditor in the Authority’s registry of Auditors; provided that the percentage shall reach 30% within six years of registration and the total percentage shall not be less than 50% after nine years of registration.

Auditors registered at the Authority shall have a clear plan for professional training and development of review and audit team employees of not less than thirty hours per year. Auditor shall implement the training plan during the registration period.

Each Auditor shall have a professional code of ethics in accordance with the latest international practices, such as the professional code of ethic issued from IFAC (International Federation of Accountants). All review and audit team employees shall be required to sign and comply with this code.

Each Auditor shall register with the Authority using the specific form accompanied by the following: 1. Name, date of registration in the Ministry of Commerce and Industry Auditor’s register, headquarters and contact details. 2. Certificate of registration in the Ministry of Commerce and Industry’s register of Auditors. 3. A certificate for each authorized signatory. 4. A list of the names of the review and audit team employees including Professional Employees stating their nationality, professional qualifications and experience. 5. A statement of current Clients at the time of submitting the application. 6. The approved organizational structure. 7. A brief statement of technical and internal policies and procedures used. 8. A written declaration and undertaking of the following: a. To provide all information required by the Authority. b. To notify the Authority as soon as they are unable to meet one of the conditions of registration as stipulated in the previous Articles. c. Not to accept tasks which present a conflict of interest. d. Not to accept tasks which harm the profession’s integrity. e. To notify the Authority as soon as any decision or ruling of any penalty, punishment or legal violation by a Regulatory Body or judicial authority is issued. 9. To pay the fees stipulated by the Authority. 10. Any other requirements set by the Authority. The Authority shall determine the application within thirty days from the Auditor’s submission of an application which fulfils all data, information and conditions stated in this Chapter. The application shall be submitted in accordance with Auditor registration application set out in Appendix 8 of this Module. In the event of a rejection of the application, such determination shall be justified.

Each registered Auditor shall observe the following: 1. If the Auditor is a partner or works for an entity that provides advisory services, there shall be complete separation between teams that work in review and audit and those who provide advisory services. 2. He shall not provide additional services to Clients except for ancillary services. He is prohibited from providing services that impact his independence and neutrality such as advisory services and internal auditing while undertaking review and audit. 3. He shall revise the details of his work plan and results of review and audit in coordination with the Client’s internal audit committee. 4. He shall meet periodically with the Client’s internal audit committee before submitting the quarterly and annual financial statements to the Board of Directors to make any decision or recommendations. He may meet with the Client’s internal audit committee or its Board of Directors, if necessary. 5. He shall not review or audit for any Client for a period exceeding four consecutive financial years unless the Client is under liquidation. The term shall be calculated as of the date of registration in the Auditors’ register with the Authority. He may resume providing the same services for the Client after a suspension period of not less than two consecutive years. 6. He shall notify the management body of the Client or the company’s Board of Directors and shareholders with any matters of material importance as: a. The appropriateness and efficacy of the internal audit system and rules and regulations applicable to the company and to what extent they are applicable. b. The company’s ability to continue practicing its activities. 7. He shall notify the management body of the Client with any evidenced or suspected violations of the applicable laws, bylaws, instructions and Articles of Association of the Client. Moreover, he shall notify the Authority and general assembly of the Client in the event that there are significant and material violations.

The Authority may review the registered Auditors’ work in examining the accounts of Licensed Persons and Companies Listed on the Exchange and to ascertain whether they were performed in accordance with the International Financial Reporting Standards, the International Auditing Standards and the disclosure requirements issued by the Authority. In issuing a report, the Auditor shall rely on recognized International Financial Reporting Standards and policies and procedures of quality control in accordance with those Standards.

Each Auditor registered with the Authority shall submit an annual report in June of each year including a statement of the human resources available to them during the year, as well as a statement of the auditing, advisory and other services he provided to companies subject to the supervision of the Authority. In addition to the training during the year, measuring and managing risks and quality control, the report shall illustrate the commitment to what is required under paragraph (6) of Article (3-4-2) of this Module.

The Board of Commissioners may suspend an Auditor registered at the Authority from auditing Licensed Persons and Companies Listed on the Exchange for a certain period of time, in which case such determination shall be justified. Cancellation from the Auditor’s register after being appointed shall not restrict the Auditor from undertaking his duties until the date of the next annual ordinary general assembly meeting. An Auditor who is suspended from auditing Licensed Persons and Companies Listed on the Exchange may submit to the Authority an application to resume this activity in accordance with the conditions set by the Authority.

The Board of Commissioners may cancel registration of an Auditor registered at the Authority if he violates the provisions of Article (3-4-2) of this Module, if his registration in the Ministry of Commerce and Industry Auditors’ register is cancelled or if a final judgment in a crime/ felony involving a breach of honour or trust is issued.

3-5 External Sharia Auditing Office

Each External Sharia Auditing Office shall be an independent entity with an individual or company license and specialized in regulating all the commercial and financial transactions of the Licensed Person to ensure compliance with Sharia standards and the Authority’s relevant decisions. It shall submit its reports in these regards to the general assembly of the Licensed Person. Where applicable, the External Sharia Auditing Office shall submit its annual report to the assembly of a Fund’s Unit holders.

The Authority shall maintain a special register of the External Sharia Auditing Offices approved by it; it is not permitted to any Licensed Person to seek assistance in external Sharia auditing from an entity not registered at the Authority.

An External Sharia Auditing Office shall not provide any services to any Licensed Person unless it is registered in the External Sharia Auditing Office’s register of the Authority.

An External Sharia Auditing Office consists of Sharia Auditors who are supported by one or more accountant and legal advisors. All of the above shall have experience not less than five years. It is permitted to outsource some of the ancillary duties mentioned above.

A Sharia Auditor shall: 1. Have an accredited university degree in the field of Islamic Sharia in order to be qualified to practice the profession of Sharia auditing, or a professional qualification in the fields of fiqh in financial transactions in accordance with the provisions of Islamic Sharia from specialized entities of good standing. 2. Work as full–time employees. 3. Have not been convicted with a final judgment in a crime involving a breach of honour or trust, or have been convicted with punishment restraining his freedom unless he was exonerated.

An External Sharia Auditing Office may apply for registration with the Authority as follows: 1. Complete an External Sharia Auditing Office registration application in accordance with Appendix 9 of this Module. The Authority shall issue its determination on the application within thirty days of the applicant submitting all required information and documents stated in the approved form. 2. The office shall have a license from the Ministry of Commerce and Industry to practice the activity of providing Sharia consultations. 3. Sharia Auditors in the office shall fulfil the conditions stated in Article (3-5-5) of this Module. 4. The office shall separate between the Sharia Auditors team who undertake external Sharia auditing from any team that provides Sharia consultations.

An External Sharia Auditing Office of a Licensed Person shall be appointed for one financial year that could be renewed for maximum of four consecutive years. It may not be reappointed thereafter before the elapse of a minimum of two financial years.

Taking into consideration Article (2-11) of Module Thirteen (Collective Investment Schemes) of these Bylaws, the general assembly of a Licensed Person shall appoint an External Sharia Auditing Office in its annual meeting provided that such shall be selected from the offices registered at the Authority. The general assembly shall set an annual fee for the office. Licensed Person or the Fund shall not commence its activity before entering into a contract with External Sharia Auditing Office.

An External Sharia Auditing Office concludes its duties at the end of a set period of time assigned by the general assembly of the Licensed Person and after not being renewed or that office was cancelled from the registry of External Sharia Auditing Offices in the Authority. The External Sharia Auditing Office shall notify the general assembly of the Licensed Person of this action.

A report of an External Sharia Auditing Office shall include the following: 1. Securities transactions that were examined and reviewed without violating the confidentiality of those transactions. 2. Bodies in charge of performing the examined transactions and stages of accomplishment. 3. Reference to the regulations related to those transactions. 4. Violations of Sharia, if any, either in the Securities transactions or in the execution of them as well as how to address such deficiencies and the suggested time period for the same. 5. Numbers and dates of field visits to the Licensed Person and their results. 6. The signature of the Sharia Auditor and the legal representative of the office.

The report submitted by the External Sharia Auditing Office shall be published within the annual report of the Licensed Person.

A partner in an External Sharia Auditing Office or any affiliate thereof shall not occupy the position of chairman or Member of a Board of Directors of the Licensed Person concerned. The above shall be applied to relatives of first of kin who supervise the management of the Licensed Person or its accounts.

The External Sharia Auditing Office or one of its members are not licensed to provide any of the following services to the Licensed Person who appointed them: 1. Work for compensation. 2. Sharia consultations. 3. Training including holding fairs, seminars or workshops. 4. Representing them before third party, especially as members of the Board of Directors of the companies in which the Licensed Person is a shareholder. 5. Obtaining any financial or in-kind privileges other than what the general assembly of the Licensed Person set for them, whether those privileges were from the Licensed Person or Subsidiary Companies.

The provisions of this Module shall apply to each Licensed Person according to the nature of his licensed activity. The provisions of this Module shall apply to the Units Subject to the Supervision of the Central Bank in coordination between the Authority and the Central Bank by virtue of a memorandum of understanding signed between the two parties.

Each Licensed Person shall prepare a manual of policies and procedures in order to ensure compliance with the Law and these Bylaws, and these shall regulate, in particular, the following: 1. The organisational structure of Licensed Person which specifies explicitly the limitations of the authority, capacity and responsibility pertinent to the Board of Directors and executive management and all other various main supporting positions of the Licensed Person. In addition, this will set out the administrative levels and capacities pertaining to approval of entering into transactions, payment of expenses and financial costs and carrying out procedures of ratification of operations and transactions. 2. Monitoring systems and internal control programs. 3. Human resources, training and development. 4. Adherence to fit and proper requirements for Licensed Persons. 5. Conflicts of interest. 6. Separation between activities carried out by the Licensed Person, except for Investment Portfolio management and the establishment and management of Collective Investment Schemes, in a manner that ensures that information does not leak between such activities. 7. Handling Clients’ complaints. 8. Risk management. 9. Anti-Money Laundering and Combating the Financing of Terrorism. 10. Compliance. 11. Standards of professional conduct. 12. Implementation and management of the operations of the licensed activities, including the documentary cycle required to be followed. 13. Emergency plans and ensuring business continuity. 14. Protection of whistleblowers in respect of any unlawful practice of the Licensed Person. 15. Sharia supervision for persons licensed to operate in accordance with the provisions of Islamic Sharia. 16. Any other policies and procedures as required by the Authority. The Licensed Person shall provide the Authority with the manual of policies and procedures, and the Authority may request to have said manual amended to ensure compliance with the laws and regulations in force.

Without prejudice to Article (2-1) of this Module, the policies and procedures of implementing and managing business operations for Custodians shall include – in particular – the following: 1. Procedures followed for keeping records and accounts which include distinguishing the Client’s Assets and Funds from the ones of another Client, or the ones of the Licensed Person to ensure compliance with the provisions of Chapter Two, in particular Article (2-3) and Article (3-1) of Chapter Three of Module Seven (Clients’ Funds and Clients’ Assets) of these Bylaws, and the means of defining the keeping entity, and the value and ownership of the Client’s assets at all times. 2. Procedures followed by the Licensed Person to ensure the conformity of the Client’s accounts and records with the bank accounts of the Client’s Funds, as well as the records of any other party that keeps the Client’s Assets and Funds. 3. The method of delivery of reports notifications and notices, whether written to be delivered by courier or mail, or through fax or E-mail or any other modern communication mechanism. 4. Receiving and executing Client’s orders, and determining whether that will be in writing or through recorded phone calls or E-mail or any other modern communication mechanism. 5. Evidence of separating the tasks performed by operational departments of the Licensed Person, and the departments that offer any other services to the Client.

A Licensed Person shall set proper precautions to maintain clear and proper division of major responsibilities among Member of a Board of Directors and members of the executive management, all in a manner sufficient to determine the capacities and responsibilities attached to each position, in a manner that ensures sufficient monitoring and supervision being in place.

A Licensed Person shall set proper precautions for the execution of operations and the disposal of assets and funds by the entity within the Licensed Person authorised accordingly and pursuant to the powers granted to such entity.

A Licensed Person shall set proper precautions to prevent leakage or disclosure of information arising from any Securities Activity to persons who operate under the Licensed Person in another Securities activity, or to any persons other than those entitled to have access to such information (“Chinese Wall”).

Risk management systems are considered an essential part of strategic management of a Licensed Person, and accordingly shall include the main aspects which would enable the Licensed Person to determine, analyse, assess and evaluate risks and management thereof and the mechanisms of following up on them and report them properly to ensure protection and to add value to the establishment and to all other concerned parties through supporting the objectives of the establishment in the following way: 1. Presenting a business framework to support the implementation of current and upcoming activities. 2. Developing methods of decision making, planning and setting priorities through comprehensive and organised consideration of the activities of the organisation, relevant developments and the positive and negative aspects of possible projects. 3. Contributing to the effective use and appropriation of the capital and resources available to the organisation. 4. Reducing excessive volatility in secondary trading. 5. Maintaining and developing the assets and the reputation of the organisation. 6. Developing and supporting the manpower and the informational resources of the organisation. 7. Maximising the efficiency of operation.

Risk management systems of the Licensed Persons shall include the main aspects that would enable them to determine risks and to manage them in a proper manner, including at the least the following: 1. Credit risks: potential risks of exposure to failure of another party to meet its commitments. 2. Market risks: potential risks of exposure to fluctuations in the market value of assets. 3. Liquidity risks: potential risks of insufficiency of funds required to meet the Licensed Person’s obligations upon maturity. 4. Operations risks: potential risks of failure of financial, administrative or technical systems or human errors. 5. Any other risks that the Licensed Person may incur.

2015The Licensed Person shall set in place policies and procedures that determine the following: 1. Method of managing credit risks within the framework of the risk management system, setting a maximum limit for the amount of exposure of any one party and assessing the same periodically and to set out the procedures to be followed in the event of reaching said limit. 2. Method of managing market risks to which the Licensed Person might be exposed in various circumstances and the methods to be followed in the measurement of such risks. 3. Method of managing liquidity risks to which the Licensed Person might be exposed in various circumstances and the methods of managing liquidity that would enable them to deal with such risks in unexpected circumstances. 4. Method of managing operational risks to which the Licensed Person might be exposed in various circumstances and rating of the same according to the nature of the business of the company. 5. Methods adopted in the measurement of various other risks to which the Licensed Person might be exposed in various circumstances and the methods of rating the same and the policies and procedures to be followed to manage them.

The Risk Management Officer shall file a report to the Board of Directors related to risks every six months, and submit a copy thereof to the Authority. The Board of Directors shall notify the Authority whenever any breach of the risk management system occurs, and report upon the procedures that are to be followed to deal with such. The Board of Directors is responsible for approving policies and procedures for managing the risks of the Licensed Person to ensure that all such risks are defined, rated and managed, and for maintaining continuous monitoring thereof in a proper manner.

The Authority has the right to impose any additional requirements or to request specific reports to ensure that the Licensed Person has the ability of managing their risks in a manner that corresponds to the nature and volume of Securities Activities that they carry out. The Authority also has the right to relieve the Licensed Person of some requirements as it may deem fit.

Policies and procedures of dealing with complaints of Clients shall in particular include the following: 1. A template of a complaint form which indicates information and documents needed from the Client. The form shall be published on the website of the Licensed Person. 2. Procedures for receiving a complaint, including notifying the Client of receipt of the respective complaint and number thereof. 3. Procedures required to be taken on the part of the Licensed Person to ensure proper handling of complaints and in a timely manner. 4. Procedures of settling complaints, ensuring that each employee dealing with Clients is notified of such procedures. 5. Procedures required to be taken to notify the Client of the results of the investigation of a complaint. The Licensed Person is required to inform a complaining Client of the steps taken in response to a complaint within a maximum period of thirty days as of receipt of the complaint.

The Compliance Officer of a Licensed Person shall follow up on Clients’ complaints and shall be responsible for the due consideration thereof. The Licensed Person may suspend consideration of a complaint submitted by a Client if such a complaint is subject of legal proceedings.

A Licensed Person shall send a report biannually to the Authority concerning Clients’ complaints. A Licensed Person shall maintain a record of each complaint for five years from the submission thereof.

A Licensed Person shall set in place proper precautions to ensure its ability to maintain its operations, in particular to maintaining sufficient capital for its purposes, and to fulfil its legal obligations in the event of an unexpected suspension of their business, taking into consideration the nature, volume and diversity of their business. Such precautions shall be documented and periodically updated and tested to ensure their effectiveness and continued relevance to the latest developments in the field of activity of the Licensed Person.

Records related to precautions pertaining to business continuity shall be kept for five years as of suspension of use or amendment thereof.

Policies and plans in respect of emergencies and the need to maintain business continuity shall include in particular the following: 1. Identifying the internal unit or the individual in charge of the implementation of the business continuity plan and the means of communications with concerned entities domestically and internationally in the event of an unexpected suspension of the operations of the Licensed Person. 2. Setting priorities to be followed upon an unexpected suspension of the operations of the Licensed Person. 3. The Licensed Person’s plans for ensuring the continuing availability of appropriate human, technical and financial resources. 4. Documented means of communication whether internally among units of the Licensed Person, or externally with Clients and all other entities. 5. The Licensed Person’s plans for maintaining the continuity of operation of its technical systems and its policies for maintaining and safeguarding assets and records and for retrieval of any necessary information upon the occurrence of any unexpected suspension of its operations.

The Authority has the right to impose additional requirements or to make requests for specific reports to ensure that the Licensed Person has the ability to continue their business, particularly holding a sufficiency of capital, in a manner that is commensurate with the nature and volume of the Securities Activities that they carry out.

Chapters One, Two, Three and Four of this Module apply to all Licensed Persons who manage or maintain Clients’ Assets and Funds, in particular the following: 1. Investment Portfolio Manager 2. Collective Investment Scheme Manager 3. Custodian 4. Clearing Agency 5. Qualified Securities Broker Registered with an Exchange Chapter Five of this Module applies to the Investment Portfolio Manager activity, and Chapter Six applies to the activity of Qualified Securities Broker Registered with an Exchange, and Chapter Seven is applicable to the Custodian activity.

Client’s Funds are all cash monies held or received by any Licensed Person for or on behalf of a Client in the course of any Securities Activity. When a Client designates a certain amount for the purpose of covering present or future, actual or contingent or prospective obligations, such money shall no longer be regarded as client funds. Client’s assets are all non-cash money and Securities and other assets held or received by any Licensed Person for or on behalf of a Client in the course of any Securities Activity. A Licensed Person’s fees are not included in Client’s funds if they are due subject to a contract entered into between the parties.

A Licensed Person shall make all appropriate arrangements to hold and maintain Client’s Funds and Clients’ Assets and not use the same unless for their assigned purposes. The Licensed Person may not use these funds or assets or rights arising from the same for his own account, or for the account of any other Client or third party, and all arrangements for holding and maintaining Clients’ Funds and Clients’ Assets shall be provided by means of automated and supervisory systems of the Licensed Person adequate to maintain accurate records and to manage operations effectively.

A Licensed Person shall comply with the following requirements: 1. To separate all transactions and orders executed by the Licensed Person for his own account from the transactions and orders he executes for Clients. 2. To ensure that the Client is the Interested Person of all his fund related transactions in regard of deposit, withdrawal and money transfer. Besides, these transactions shall be issued and received from Client’s named accounts.

A Licensed Person shall keep records and accounts to enable it to distinguish assets and funds held for one client from the assets and funds held for any other Client or for the Licensed Person. He shall ensure that each Client’s assets and funds are recorded in a separate account in the name of the Client. On a regular basis, a Licensed Person shall conduct reconciliations between its internal accounts and records with the bank accounts in which Clients’ funds are held and with the records of any third party by whom Clients’ funds and assets are held in respect of any Security Activity.

In the event that any difference or discrepancy arises as a result of a Licensed Person’s reconciliation concerning Clients’ records and accounts this shall be resolved at the end of the Business Day on which the reconciliation is performed; and in no case later than three Business Days after the day on which the discrepancy arose. When any discrepancy arises as a result of a reconciliation between a Licensed Person’s internal records and with a Clients’ account at a bank where clients’ funds are held or with the records of any third party which holds Clients’ funds, the Licensed Person shall correct the discrepancy immediately. If the Licensed Person’s reconciliation identifies that the sum required to be held in such an external account is greater than the sum reported by the party concerned then the Licensed Person shall pay the difference from his own funds. The Licensed Person shall inform the Authority immediately in such an event.

Each Auditor of a Licensed Person shall ensure the Licensed Person’s compliance with the rules stipulated herein and provide the Authority with an annual report of the same.

A Licensed Person’s creditors shall not have recourse on a Licensed Person’s Clients’ Assets or Clients’ Funds.

On receiving any client funds, a Licensed Person shall immediately place such funds into a separate and independent account opened with a Local Bank except in cases where settlement of a Client’s dealings is to be performed in a foreign market in which case these shall be settled in accordance with the relevant settlement procedures. The Licensed Person shall take the Care of a Prudent Person in the selection, appointment and periodic review of the bank where such Clients’ Funds are deposited, ensuring that such Client accounts are segregated from the accounts of the Licensed Person’s accounts. Clients’ funds may be placed in one or more banking account.

A Licensed Person may transfer Clients’ funds to third parties such as a Clearing Agency for the purpose of fulfilling the Clients’ obligations arising from Securities transactions, provided that such transfers shall be limited to the amount necessary for such fulfilment. A Licensed Person shall ensure that an entity receiving Clients’ funds keeps the same in an independent and separate account designated for the Licensed Person’s Clients.

3-3 Primary Default Event

A Primary Default Event in respect of a Licensed Person shall be deemed to occur in the following cases: 1. Disorder of the financial or administrative status of a Licensed Person, including inability to fulfil an obligation on the due date or appointing a liquidator or a receiver or bankruptcy administrator or any attachment of its assets. 2. When the Authority imposes a limitation on the Licensed Person prohibiting it from holding Clients’ Funds.

In the event that Primary Default Event, the following actions shall be taken: 1. Notifying the Authority immediately. 2. Instituting, and informing the Authority of, a plan within five Business Days as of the date of Primary Default Event. 3. Suspending all the Licensed Person’s dealings of, except in the cases approved by the Authority.

In the event that the Authority rejects a plan proposed by a Licensed Person in the event of a Primary Default Event, the following actions shall be taken: 1. All Clients’ funds held in a Client bank account and all Clients’ transaction accounts of the Licensed Person shall be treated as pooled and placed in an independent account, except for Clients’ funds held in a Clients’ transaction account at a Clearing Agency as a part of clearing and settlement process. 2. The Licensed Person, the liquidator, receiver, administrator, or the person who manages the Licensed Person shall distribute Clients’ funds after settlement of required expenses, so that each Client who is a beneficiary receives a sum which is in proportion to his entitlement to the Clients’ funds. 3. If, in connection with a clearing arrangement, Clients’ funds are remitted directly to the Licensed Person, any such remittance shall be included in the notional pool referred to in paragraph (1) of this Article, and they shall be distributed in accordance with paragraph (2) of this Article; except for the cash monies of a specific Client which shall be transferred directly to him after deducting any transfer charges in the following two cases: a. no client funds in excess of the amount recorded in the relevant Client transaction account are held by the licensed person as margin in relation to the positions recorded in that Client transaction account. b. If the accounts or reports of Clearing Agency clearly indicate that these funds are for specific Client of the Licensed Person.The Authority may require implementation of precautionary actions or procedures other than the ones above in respect of any Primary Default Events.

The Licensed Person shall immediately stop receiving Clients’ funds upon the occurrence of a Primary Default Event. In the event that a transfer of any Client’s assets to the Licensed Person occurs, he shall return the same immediately to the Client, except the following cases: 1. The funds are Client’s funds relating to a transaction that has not settled at the time of Primary Default Event of the Licensed Person; 2. The funds are due from the Client to the Licensed Person at the time of the Primary Default Event.

3-4 Secondary Default Event

A Secondary Default Event occurs upon disorder of the financial or administrative status of a third party who holds funds of a Licensed Person’s Clients, including the inability of the party to fulfil any obligation on its due date or the appointment of appointing a liquidator, receiver or administrator or the attachment of any of its assets.

In the event of a Secondary Default Event, all Clients’ Assets shall be treated as a pooled and deposited in an independent account with a Local Bank or the Licensed Person Clients’ account held with the defaulted person pursuant to Article (3-4-1) and shall be treated in the following way: 1. Any shortfall in Clients’ funds held shall be borne by all the clients rateably in accordance with their entitlements, unless a breach of the Licensed Person’s obligations stipulated herein would then occur. 2. The Licensed Person’s accounts and registers shall be amended to reflect the result of applying paragraph 1 of this Article. The Licensed Person shall prepare a record showing the total shortfall resulting from the Secondary Default Event and each Client’s share thereof. The Authority may require implementation of any action or procedure differing from the actions set out above to resolve any Secondary Default Event.

A Licensed Person shall not transfer Clients’ funds to an insolvent after the incidence of a Secondary Default Event only under the Client’s order to settle a commitment for the Client towards another insolvent person, these funds should return to the Client immediately or transfer to another person based on the Clients instruction.

Article from (3-3) to (3-4-3) of this Module shall not be applicable to banks in the event of any Primary Default Event or Secondary Default Event. The Authority and the Central Bank shall act pursuant to their signed memorandum of understanding.

4-1 Deposit of Assets and Conditions for Depositing Assets with Third Parties

A Licensed Person may deposit Clients’ Assets held by it on behalf of his Clients into an account or accounts open with a third party who is licensed by the Authority, or licensed by an equivalent foreign regulatory entity, to hold Clients’ Assets. A Licensed Person shall take Care of a Prudent Person while selecting this Person and considering in particular the following: 1. Legal requirements and market practices. 2. Financial status and reputation. 3. Dangers of depositing assets at one entity.

A Licensed Person shall ensure segregation between his Clients’ assets deposited with a third party and any other assets belonging to the Clients of such person by maintaining separate accounts with the person where the Clients’ assets are held.

In case of depositing Clients’ Assets at another custodian, the Licensed Person shall prepare a periodical report on the entity where the Clients’ Assets were deposited, in respect of keeping and possessing such assets.

5-1 Roles and Responsibilities of Licensed Persons

Before providing any service to a Client, a Licensed Person shall take all required actions to obtain correct and full information and data which enable him identify the Client and determine his investment purposes. In particular, the Licensed Person shall: 1. Obtain sufficient and detailed personal information of the Client such as name, date of birth, nationality, occupation, home address, work place, name of any agent or legal representative together with their contact details, and, for a corporate body, its memorandum of association, nationality and head office address. 2. Establish whether the Client is Member of a Board of Directors or a member of the executive or one of the Insiders for a Listed Company. 3. Ascertain the Client’s financial status and determine how consistent it is with investment purposes. 4. Ascertain the Client’s ability to take risks whether low, moderate or high. 5. Ascertain the Client’s experience and its relevance to various investment areas, identifying the Client’s activity levels in relevant stocks and how far he depends on investment consultancies. 6. Ensure the Client’s compliance with all requirements and controls of Money-Laundering and Counter-Terrorism Financing stipulated in Module 16. Thus, the Licensed Person shall implement Due Care procedures for the Client on a continuous basis as well as constant auditing of all transactions to ensure that all operations are consistent with Client’s knowledge, information, financial resources and the source of his funds. 7. For corporate Clients, ensure that Client’s main activities include dealing in Securities in accordance with its Articles of association and memorandum of association. 8. Update Clients’ information and data at least annually and review the same as necessary, such as upon the expiry of a civil ID or a passport or a commercial license.

A Licensed Person shall not ensure validity of the information provided by the Client as stipulated in Article 5-1-1 of this Module. He may provide services for Clients based on the provided information unless he knows or may know invalidity or inaccuracy of the same.

If there is insufficient information relating to a Client in respect of Article 5-1-1 of this Module, the Licensed Person shall notify the Client that it shall suspend services to the client unless such information is provided within three Business Days as of the notice. The Licensed Person shall suspend such services to a Client who fails to provide the information after the expiry of the notice term.

A Licensed Person shall be exempt from obtaining the information referred to in paragraphs 4 and 5 of Article 5-1-1 of this Module, if the services to be provided are for a Qualified Professional Client.

A Licensed Person shall be exempt from obtaining the information referred to in paragraphs 3, 4 and 5 of Article 5-1-1 of this Module if the services to be provided are a Professional Client by Nature.

Upon providing investment services for Clients, the Licensed Person shall ensure the contents of the following table according to each Investment Portfolio type: Investment Portfolio managed by The Licensed Person: Consistency with Clients’ investment needs and financial positions, Consistency with instructions issued by Clients, Relevance to Client’s ability to take risks Investment Portfolio managed by the Client: Consistency with instructions issued by Clients Investment Portfolio for Custody: Relevance to Client’s ability to take risks.

A Licensed Person shall always consider Client’s benefit and endeavours to achieve his Clients’ benefits and care for their investment. He shall particularly comply with the following: 1. He shall manage the Client’s investments himself and shall not delegate any other Licensed Person so to do. Subject to the client’s approval given in writing, he may delegate specialist companies to manage Client’s investments outside Kuwait in accordance with the relevant foreign markets’ systems and without violating provisions of the Law and these Bylaws. 2. He shall commit to establishing one primary Investment Portfolio for each Client, and for every Investment Portfolio category subject to the system managing the portfolio. This is in addition to the possibility of establishing Investment sub-Portfolios of the primary Investment Portfolios owned by the Client in order to strictly control the components of each portfolio and procure effective and sufficient management thereof. 3. He shall enable a Client which holds an Investment Portfolio of any type to exercise all his rights arising from his ownership of Securities, such as rights of taking any action on Securities, voting, nomination and appointment to Boards. The Licensed Person may not exercise any such rights on behalf of the Clients without a written authorization by the Client whether in the contract or via special authorization. All this shall be without prejudicing cases stipulated in paragraph 8 of Article 5-1-8 of this Module or where there is a condition in the agreement between the Client and the Licensed Person and other person(s) which restricts the Client’s right of exercising all or part of his rights arising from Securities ownership. 4. He shall not participate in the Shares of newly established companies on behalf of the Clients (holders of Investment Portfolios); yet without violating his right to subscribe on behalf of these Clients. Subscription applications shall be provided to each subscriber and Securities certificate shall be issued in the name of each Subscriber separately. 5. He or his employees shall be responsible for any mistake that may occur while executing Clients’ transactions and orders. He shall take necessary actions to recover the same. Defaults of gross negligence or bad intention or deliberate violations of the Licensed Person’s duties in managing Client’s investments shall not be waived. 6. He shall keep in safekeeping ownership documents which prove ownership in the name of the Client or where applicable in the name of the Licensed Person who manages Client’s investments.

In all cases, a Licensed Person shall act with good faith and for the Clients’ benefit. He shall take the Care of a Prudent Person, and be always honest in all his transactions through compliance in particular with the following: 1. He shall use Client’s Funds and Clients’ Assets solely for the purposes stated in the signed contract and act within the limits of his authorization. 2. He shall not provide false or exaggerated data or information about any existing or possible investments in order to direct Clients to take decisions serving the Licensed Person’s own interests. 3. He shall not provide any guarantee for any Client against losses arising from Securities dealings unless the nature of the Security so guarantees. 4. He shall not make any promise of, nor promote any investment by promising, profit or gain from making an investment in an Investment Portfolio. 5. He shall not use the Investment Portfolios he manages for Clients in different purposes nor for his own benefit, especially in financing purposes of whatever type, whether in the form of giving loans or credit facilities or mortgaging Investment Portfolio as collateral to obtain loans or credit facilities for his own benefit. 6. He shall not make unnecessary purchases and sales in respect of any Client’s account for the purpose of gaining resultant commissions and fees. 7. He shall not enter into any transaction or dealing in respect of any Client’s account which may have any of the following purposes or consequences: • Influencing prices of Securities listed on an Exchange of or any relevant Security. • Creating any false or illusionary impression of the value of any Security listed on an Exchange or of the level of interest in selling or purchasing the same. • Setting an artificial price of any Security listed on an Exchange or of that of any relevant Security. 8. He shall not execute a Client’s order if such would incur a penalty set by a Regulatory Body or nor issue any order when a ruling or instruction of an investigatory authority or judicial entity has ordered the suspension of the Client’s relevant activities nor if there are reasons or information indicating that Client’s orders may entail the following: • Improper and misleading practices for the purpose of Securities manipulation. • Insider trading. • Not abiding by applicable laws and rules concerning Securities Activity, especially the clearing and settlement rules applicable in the Exchange and Clearing Agency.Paragraphs 6 and 7 of this Article shall not apply to Investment Portfolios managed by the Client.

Without prejudice to Article 4-1 of Module Eight (Conduct of Business), each agreement concluded with a Client shall in particular: 1. Define the form and type of Investment Portfolio, goals and purpose thereof, relevant controls, and where the Portfolio is to be managed by the Licensed Person the investment policy which shall be followed, provided that the Licensed Person shall obtain the written consent of the Client in the event that the investment policy is to be changed. 2. State the limits of the authorization issued by the Client to the Licensed Person which indicate the extent of the powers and authorities of the Licensed Person in managing the Investment Portfolio as appropriate to the form of the portfolio (Investment Portfolio managed by the Licensed Person, Investment Portfolio managed by the Client, Investment Portfolio for custody).This is in addition to documentation of order transmission and confirmation, stating whether this shall be done in writing or via recorded phone calls or E-mail. 3. Indicate whether the contract is intended to persist for a specific or indefinite time, and the notice period which shall be considered and applied by the two parties should any party wish to terminate the contract. In the event of a contract with a specific time limit, any party may terminate the contract before the expiry date provided that such termination is in proper time and for reasonable excuse. The Licensed Person shall not terminate a contract before its expiry date without due cause and in such case the Client shall be notified of the termination with sufficient notice to enable him to take proper actions to protect his interests. 4. State the policy for informing the Client of completed transactions as well as frequent reports regarding the results of client requests. 5. State the reports to be provided to the Client, including their frequency and method of presentation. 6. Describe the way of delivering Investment Portfolio assets to the Client, immediately and without delay, in the event that the Client requires the same or upon non-renewal or termination of the contract between the Licensed Person and the Client. 7. Indicate whether the Client is Member of a Board of Directors of any Listed Company or holds an executive position or is an Insider with Inside Information. The Client shall provide the Licensed Person with any changes thereof. 8. State the Licensed Person’s policy for keeping the accounting records and the relevant supporting documentation. 9. State the method of delivery of reports, notices and other communications whether written to be delivered by courier or mail, or through fax or E-mail or any other modern communication mechanism. 10. State whether the parties agree to the option of Arbitration in accordance with the Arbitration Rules of the Authority in the event of any dispute arising concerning the contract. 11. A statement that the Licensed Person and the Client shall abide by laws and regulations, especially the Law and these Bylaws.

5-2 Licensed Persons’ Operational Requirements and Controls

In executing a Client’s transactions a Licensed Person shall abide by the mechanisms stipulated in the contract between the two parties and in addition shall comply with the following: 1. Secure the Client’s interest when transmitting the Client’s orders to another entity for execution. 2. Not to combine orders regarding Securities traded on an Exchange received from one Client with those of any other Client. In the case of non-listed Securities, a Client’s orders may be combined with those of another Client or of other Clients provided that all the Clients concerned are informed accordingly. 3. To execute the Client’s orders for Securities sales or purchases without interfering directly or indirectly in the Client’s decision concerning the same, without prejudicing any duties required of the Licensed Person to give advice and guidance. 4. To abide by the tools and mechanisms approved by the Exchange when executing relevant transactions. 5. Not to execute a Client’s order concerning a sale or purchase unless there sufficient funds or Securities, respectively, in the Client’s account. The Licensed Person shall not use any other Client’s Funds or assets for the benefit of another Client. 6. Keep safe documents relating to sale and purchase transactions performed for the Client. Paragraph 2 of this Article shall not apply to Investment Portfolios managed by the Licensed Person.

When calculating fees and commissions due to a Licensed Person for managing a Investment Portfolio, he shall consider the following: 1. He shall not take any fee for establishing an Investment Portfolio. 2. Fees and commissions for Investment Portfolio shall be reasonable and shall be consistent with the nature of the services provided to the Client. 3. The Client shall be made aware of the method of calculating commissions and fees for all services to be provided, including any the incentive bonus related to the profits achieved by the Client, and how these fees and commissions shall be paid.

Since Investment Portfolios allow direct access to Clients’ accounts and due to the confidentiality and privacy of the same, in addition to direct dealing in Securities sale and purchase orders systems, certain controls and internal audit restrictions that shall be applied by the Licensed Person, including the following: 1. The physical location at which Investment Portfolios are managed shall be secured and equipped with effective monitoring tools. 2. Access to such location shall be restricted to a limited number of employees who each shall be certified by the executive management of the Licensed Person, and that these employees shall be the only ones who are authorized to deal with the Clients’ accounts. 3. Complete separation shall be maintained between makers of investment decisions for Investment Portfolios managed by the Licensed Person and any person who executes orders for Investment Portfolios managed by the Licensed Person. 4. In the event of death or inheritance, and until a determination of the heirs is issued, the Licensed Person shall freeze the Client’s account unless otherwise the portfolio management contract specifies otherwise. Thus, when the Licensed Person obtains a copy of the determination of the heirs, he may remove the restrictions on the Client’s account and formal procedures to transfer the contents of the Client’s account to the heirs shall commence no later than three months. The Client’s account shall be finally closed after disbursements are completed.

5-3 Reporting Systems

A Licensed Person shall set up a comprehensive reporting system to his Clients a clear and accurate image of the status of his Investment Portfolios and completed transactions, including the following: 1. Comprehensive periodic reports – on monthly basis at least – which indicate the composition of the assets of the portfolio and value of the Investment Portfolio, and including the following at least: a. Investment Portfolio number. b. Report date. c. Cash balances available for the Client. d. Securities included in the Investment Portfolio. e. Total value of Investment Portfolio on the report date. f. Realized and unrealized profits/losses ratio for the year to date. g. Mortgage details and determining the Person/entity to which the portfolio is mortgaged and the rank of such mortgage. h. Total fees and commissions whether for the purchase and/or sale of Securities or managing an Investment Portfolio or for any other service provided by the Licensed Person within the period. i. Description of each Security in the Investment Portfolio: • Security name. • the Exchange the Security is listed on. • Security average purchase cost. • Market value of Security listed on the Exchange. • Value of each Security according to purchase currency thereof, complying with international accounting standards in determining and evaluating the Security value as per exchange rate. • Security weight to total Investment Portfolio. k. Statement of movements within the Investment Portfolio for the period. 2. Notices concerning any matters related to Securities in the Investment Portfolio owned by the Client. The notices are as follows: a. Notices regarding the dates of companies’ general assembly meetings where the Client owns Securities and of other meetings of Securities holders. b. Notices regarding declarations of general assemblies where the Client owns Securities of any profits or revenues distribution whether in cash or bonus Shares or physical assets or other rights. c. Notices regarding the Licensed Person receiving any profits and revenues distributions in cash or bonus Shares or physical assets or other rights, provided that profits receipt period shall not exceed ten Business Days as of distribution commencement. d. Notices regarding the resolutions taken by boards of companies where the Client owns Securities, and related to any amendments in the capital of the Issuer, limited to the authorized capital or converting Securities to Shares in company capital. e. Notices of any Subscription or capital increase or Acquisition Offer or Mergeror liquidation or changing a Security Issuer Company’s objectives or name or in the event that suspension thereof or withdrawal from the Exchange. f. Notices regarding any resolutions issued by Regulatory Bodies against the companies where the Client owns Securities. The Licensed Person shall provide the Client with the notices set out above immediately upon the occurrence of any amendment on Securities as above mentioned.

A Licensed Person shall provide the Authority with periodic reports concerning all Securities Investment Portfolios for which he is responsible, whether managed by the Client or by the Licensed Person or for is held for custody purposes pursuant to the attached forms in Appendix 2 of this Module. Below are the reports to be prepared: 1. Report identifying the Securities Investment Portfolios established or closed by the Licensed Person during the month, no later than five Business Days as of the end of each month. 2. Report identifying the Securities Investment Portfolios managed by the Licensed Person whether managed by him or by the Clients or for custody, and value of each. This in addition to identifying whether each portfolio is owned by a natural or corporate person with the authorizations issued by Clients to other persons on these portfolios, no later than ten Business Days as of the end of each quarter. 3. Report identifying any trading by Members of the Board of Directors and employees of the Licensed Person on Securities Investment Portfolios with the Licensed Person, no later than ten Business Days as of the end of each month. 4. Report identifying any trading by Investment Portfolios of Clients on Securities issued by the Licensed Person or the Parent Company or Subsidiary or Associate companies, no later than five Business Days as of the end of each month. 5. Report identifying any trading by Investment Portfolios of foreign Clients (non-Kuwaiti) on listed Securities, no later than five Business Days as of the end of each month. This is in addition to informing the Authority immediately of the following: a. Upon any change or development which genuinely affect the Licensed Person’s performance of his duties in managing Investment Portfolios activity. b. Upon refraining from executing transactions for a Client pursuant to paragraph 8 of Article 5-1-8 of this Module. c. Upon any problem or default in the internal control system of the Licensed Person. d. Report indicating name of the entity authorized to manage Investment Portfolios. This report shall define in detail the managerial entity which manages each Clients’ Investment Portfolio and any company portfolios. This is in addition to immediately informing the Authority of any change in the identity of the entity authorized to manage any Investment Portfolio. e. A copy of the Investment Portfolios management manual and its policies for managing Investment Portfolios as approved by the Licensed Person’s Board Members. This is in addition to notifying the Authority of any amendment of such manual.

Preparing Clients’ securities Investment Portfolios’ management policies and procedures.

A Licensed Person shall manage Investment Portfolios according to clear policies which are consistent with the volume and nature of his activities and suitable to meet Client’s investment needs. The guidance in particular shall include the following:First: Aspects related to all types of Investment Portfolios: 1. Evidence of commitment to meeting the Client’s investment goals and methods for achieving the same. 2. Determining the powers, authorities and responsibilities of the Licensed Person in each type of Investment Portfolio. 3. Regulating the relation between Clients’ investments with those of the Licensed Person and any Subsidiary, Associate company or Related Party. 4. Fulfilling Clients’ requests without compromising the authorised purposes of the Licensed Person. For example, Investment Portfolio managers who work pursuant to Islamic Sharia shall not invest a Clients’ money in Securities which do not meet the Islamic Sharia requirements even if this was the Client’s request or order. 5. Detailed guidance on procedures applicable in the event of any mistake while executing Clients’ orders. Second: Aspects related to Investment Portfolios managed by the Licensed Person: 1. A statement explaining the investment policies applicable in accordance with the Client’s instructions (conservative or balanced or non-conservative policy). 2. How to determine variation and distribution method for Investment Portfolio consisting-assets according to the Client’s instructions. 3. Method of determining investment targeted market subject to the Client’s instructions. 4. Determining Investment Portfolio related risks and the Securities therein, as well as the applicable ways to reduce such risks. 5. Maximum limits of concentrations in components of each Investment Portfolio according to each Security type, the investment sector, investment country and Security Issuer. 6. Bases and controls related to Securities distributions which shall be purchased and sold for the Clients’ account as for the Investment Portfolios managed by the Licensed Person.

A Licensed Person who is authorized to manage Securities Investment Portfolios shall abide by the following: 1. He shall not establish Investment Portfolios for his interest with another Licensed Person, except for the portfolios established with another Licensed Person for investment in foreign markets or an Investment Portfolio mortgaged as guarantee for any bank. Both Portfolio contract parties and the bank are required to have agreed on the mechanisms for managing the Investment Portfolio concerned. 2. He shall not make internal transfers between Investment Portfolios he manages. 3. A manager of an Investment Portfolio is prohibited from purchasing or selling Treasury Shares in a Portfolio owned by the company which has Issued those Shares. 4. The Licensed Person shall ensure that a person managing an Investment Portfolio is not a Member of a Board of Directors of, and shall not hold any Executive Position in, any other Licensed Persons.

5-5 Auditing Requirements

The department within the Markets Sector of the Authority which is responsible accordingly shall be provided with all reports mentioned in this chapter within the periodicity indicated for each report. The Authority may stipulate any electronic system or format for the submission of these reports.

The Authority may require any Licensed Person to provide any information or data or reports or additional papers which the Authority deems necessary for the fulfilment of all requirements and conditions stipulated in this chapter.

6-1 Roles and Responsibilities of Licensed Persons

Before providing any service to a Client, a Licensed Person shall take all required actions to obtain correct and full information and data which enables him to know the client and determine his investment purposes. In particular, the Licensed Person shall: 1. Obtain sufficient and detailed personal information of the Client such as name, date of birth, nationality, occupation, home address, work place (for natural persons), name of any agent and its legal representative together with their contact details, for a regular body, and as for a corporate body, its memorandum of association, nationality and head office address. 2. Ascertain the Client’s financial status. 3. Ensure the Client’s compliance with all requirements and controls of Anti-Money-Laundering and Combating Financing of Terrorism stipulated in Module Sixteen of these Bylaws. 4. For Corporate Clients, ensure that Client’s main activities include dealing in Securities according to its Articles of Association and Memorandum of Association. 5. Update Clients’ information and data as necessary, when the need arises, such as upon the expiry of a civil ID or a passport or a commercial license for corporate clients.

A Licensed Person is not required to ensure validity of the information provided by the Client as stipulated in Article 6-1-1 of this Module. He may provide services for Clients based on the information provided unless he knows or may know invalidity or inaccuracy of the same.

If there is insufficient information related to a client in respect of Article 6-1-1 of this Module, the Licensed Person shall notify the Client. The Licensed Person shall suspend such services to a client who fails to provide the information after the expiry of the notice term.

In all cases, a Licensed Person shall act with good faith and for the client’s benefit. He shall take the Care of a Prudent Person, and always be honest in all his transactions through compliance in particular with the following: 1. He shall not use the account he manages for Clients for purposes other than those specified for it or for the benefit of the Licensed Person nor for his own benefit, especially in financing purposes of whatever type, whether in the form of giving loans or credit facilities or mortgaging Investment Portfolio as collateral to obtain loans or credit facilities for his own benefit. 2. He shall not execute a Client’s order if such would incur a penalty set by a Regulatory Body or nor issue any order when a ruling or instruction of an investigatory authority or judicial entity has ordered the suspension the client’s orders nor if there are reasons or information indicating that client’s orders may entail the following: • Improper and misleading practices for the purpose of Securities manipulation. • Insider trading. • Not abiding by applicable laws and rules concerning Securities Activity, especially the clearing and settlement rules applicable in the Exchange and Clearing Agency.

A Licensed Person shall always consider Client’s benefit and endeavours to achieve his Clients’ benefits and care for their investment. He shall particularly comply with the following: 1. He shall enable a Client to exercise all his rights arising from his ownership of Securities, such as rights of taking any action on Securities, voting, nomination and appointment to Boards. The Licensed Person may not exercise any such rights on behalf of the Clients. 2. He shall commit to establishing one account for each Client in the licensed person correct, this account shall be restricted to one client only. 3. He or his employees shall be responsible for any mistake that may occur while executing Clients’ transactions and orders. He shall take necessary actions to recover the same. Defaults of gross negligence or bad intention or deliberate violations of the Licensed Person’s duties in managing Client’s investments shall not be waived. 4. He shall keep in safekeeping documents which prove ownership in the name of the Client.

Without prejudice to Article 1-4 of Module Eight (Conduct of Business), each agreement concluded with a Client shall in particular: 1. Procedures of order receipt and execution, stating whether this shall be done in writing or via recorded phone calls or E-mail or other modern means of communications. 2. Procedures for informing the Client of completed transactions as well as frequent reports regarding the results of client requests. 3. State the reports to be provided to the Client, including their frequency and method of presentation. 4. State the Licensed Person’s policy for keeping the accounting records and the relevant supporting documentation. 5. State the method of delivery of reports, notices and other communications whether written to be delivered by hand or mail, or through fax or E-mail or any other modern means of communication 6. State whether the parties agree to the option of arbitration in accordance with the Arbitration Rules of the Authority in the event of any dispute arising concerning the contract. 7. A statement that the Licensed Person and the Client shall abide by laws and regulations, especially the Law and these Bylaws.

In executing a Client’s transactions, a Licensed Person shall abide by the mechanisms stipulated in the contract between the two parties and in addition shall comply with the following: 1. Secure the Client’s interest when transmitting the Client’s orders to another entity for execution. 2. Not to combine orders received from one Client with those of any other Client. 3. To execute the Client’s orders for Securities sales or purchases without interfering directly or indirectly in the Client’s decision concerning the same. 4. To abide by the tools and mechanisms approved by the Exchange and the Clearing Agency when executing relevant transactions. 5. Not to execute a Client’s order until verifying that the Client can fulfil its obligations within the specified time for settlement. 6. he shall commit to execute the client’s settlement of the transactions in accordance with the regulations set out by the Authority. 7. Licensed Person shall not use the funds and assets of a client for the benefit of another. 8. Keep safe documents relating to sale and purchase transactions performed by the Client.

Since the work of a Qualified Securities Broker registered with an Exchange allows direct access to Clients’ accounts and due to the confidentiality and privacy of the same, in addition to direct dealing in Securities sale and purchase orders systems, there shall be certain controls and internal audit restrictions that applied by the Licensed Person, including the following at least: 1. The specific physical location at which qualified securities broker registered with an Exchange are managed shall be secured and equipped with effective monitoring tools. 2. Access to such location shall be restricted to a limited number of employees who each shall be certified by the executive management of the Licensed Person, on condition that these employees shall be the only ones who are authorized to deal with the Clients’ accounts and are registered as a qualified securities broker registered at an exchange in the Authority.

6-3 Reporting Systems

A Licensed Person shall set up a comprehensive reporting system to his Clients giving the Client a clear and accurate portrayal of the status of his accounts and completed transactions, by preparing periodic reports which indicate the composition and value of the of the client’s accounts, and it shall include the following at least: 1. Client account number. 2. Report date. 3. Cash balance available for the Client. 4. Securities included in the account. 5. Total value of account on the report date. 6 Realized and unrealized profits/losses percentage for the year to date. 7. Mortgage details and determining the Person/entity to which the account is mortgaged and the rank of such mortgage. 8. Total fees and commissions whether for the purchase and/or sale of Securities or for any other service provided by the Licensed Person within the period. 9. Description of each Security in the account: • Security name. • the Exchange on which the Security is listed. • average purchase cost of the Security. • Market value of Security listed on the Exchange. • Value of each Security according to purchase currency thereof, complying with international accounting standards in determining and evaluating the Security value as per exchange rate.

Licensed Person shall notify the Authority of the following: 1. Upon any change or development which materially affect the Licensed Person’s performance of his duties as a Qualified representative of a Securities Broker registered with an Exchange. 2. Upon refraining from executing transactions for a Client pursuant to paragraph 2 of Article 6-1-4 of this Module. 3. Upon any problem or default in the internal control system of the Licensed Person.

Roles and Responsibilities of the Licensed Person

The Licensed Person shall , before providing services to Clients, take all necessary measures to obtain accurate and complete information and data, which allows him to know the Client, while complying with the provisions stated in the rules of Anti- Money Laundering and Combating Financing of Terrorism mentioned in Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of these Bylaws.

A Licensed Person shall not ensure validity of the information provided by the Client as stipulated in Article (7-1-1) of this Module. He may provide services for Clients based on the provided information unless he knows or may know of its invalidity or inaccuracy.

If there is insufficient information relating to a Client as stipulated in Article (7-1-1) of this Module, the Licensed Person shall notify the Client. The Licensed Person shall suspend such services to a Client who fails to provide the information after the expiry of the notice term.

Duty of Honesty In all cases, a Licensed Person shall act with good faith and for the Clients’ benefit. He shall take the Care of a Prudent Person, and be always honest in all his transactions.

Duties of Care A Licensed Person shall always consider Client’s benefit and endeavours to achieve his Clients’ benefits. He shall particularly comply with the following: 1. He shall enable Clients to exercise all their rights arising from his ownership of Securities, such as rights of taking any action on Securities, voting, nomination and appointment to Boards. The Licensed Person may exercise any such rights on behalf of the Clients with written authorization by the Client whether in the contract concluded or via special authorization. 2. He shall commit to establishing one account only to each Client in the Licensed Persons records, such account may only be owned by one Client.

Contracts and Agreements Concluded Without prejudice to Article (1- 4) of Module Eight (Conduct of Business), each agreement concluded with a Client shall include in particular: 1. The procedures that need to be followed for record keeping which include distinguishing between the Client’s Assets and Funds, and the ones held for any other Client or for the Licensed Person, and the means of ensuring that each Client’s Assets and Funds are recorded in a separate account in the name of the Client, as well as the means of specifying the keeping entity and the value and the ownership of the Client’s assets at all times. 2. State the reports to be provided to the Client, including their frequency and method of presentation. 3. State the method of delivery of reports, notifications and notices whether written to be delivered by courier or mail, or through fax or E-mail or any other modern communication mechanism. 4. Mechanism of receiving the Client’s orders and their execution, and specifying whether this shall be done in writing or via recorded phone calls or E-mail or any other modern communication mechanism. 5. Rights and obligations of every Client. 6. State whether the parties agree to the option of Arbitration in accordance with the arbitration Rules of the Authority in the event of any dispute arising concerning the contract. 7. A statement that the Licensed Person and the Client shall abide by laws and regulations, especially the Law and these Bylaws.

Reporting Systems

A Licensed Person shall set up a comprehensive reporting system to his Clients a clear and accurate image of the status of their accounts and assets by preparing comprehensive periodic reports which indicate the composition of the assets and value of the Clients accounts, and including the following at least: 1. Client’s account number. 2. Report date. 3. Cash balances available for the Client. 4. Assets and funds included in the Client’s account. 5. Entity keeping the Assets and Funds included in the Client’s account. 6. Details relevant to the ownership of assets and funds included in the Client’s account. 7. Total value of Client’s account on the report date. 8. Mortgage details and determining the Person/entity to which the securities are mortgaged and the rank of such mortgage.

Reports to the Capital Market Authority A Licensed Person shall provide the Authority with an annual report submitted by an independent external audit office on the Licensed Person. In particular it shall include the following: - Evidence of the availability of the necessary IT systems which enable the Custodian to perform his tasks in a manner that is commensurate with the nature and volume of the work that he carries out, and in line with IT systems adopted by the Custodian at the Clearing Agency and the Exchange. - State the Clients assets: It shall include the arrangements required for fulfilment of the stipulations in Article (3-2) of this Module.

Notice Requirements A Licensed Person shall notify the Authority immediately upon the occurrence of any change or development which materially affect the Licensed Person’s performance of his duties in the Custodian activity.

Except for the provisions of Chapter Two, the general provisions applied in this Module shall apply to all Licensed Persons.

A Licensed Person must act honestly, fairly and professionally, in order to fulfil the interests of its clients.

When providing any recommendation or advice to a Client regarding Securities, a Licensed Person shall consider that such a recommendation or advice is compatible with the Client’s interests and conditions.

A Licensed Person shall enter into an agreement with the Client before providing any services, which shall specifically include the following information: 1. Profile of the Licensed Person and the services he provides 2. Conditions of the services to be provided and the mutual obligations between the parties. 3. A report on the proposed investment strategies, including the necessary guidelines and precautions regarding the risks accompanying investments, or regarding specific investment strategies in case the Licensed Person shall manage the Client’s Funds. 4. Information that enables the Client to understand the nature of the service and its risks. 5. The procedures that need to be followed in case of any error committed while executing the Client’s orders, and mechanism for resolving such an error and the person responsible for such error, whether it was committed by the Licensed Person, one of its employees or a third party. 6. The departments entrusted with making decisions for the benefit of the Licensed Person’s Client. 7. The related expenses, fees and charges for the services provided by the Licensed Person, and the method of its calculation.

Without prejudice to the rights of a Licensed Person to collect commissions, charges and fees required for providing services as mentioned in the agreement entered with the Client, the Licensed Person, while practicing an activity involving Securities, shall not pay any fees or commissions, provide monetary or non-monetary benefits or gifts, whether directly or indirectly, to his clients. Furthermore, it shall not receive any of the mentioned except in the following cases: 1. Fees, commissions or non-monetary benefits that are not intended to encourage the Licensed Person to provide better service for its clients, such as symbolic gifts. 2. Any charges or monetary amounts incurred by the Licensed Person for providing services to its client such as, costs of safekeeping , commissions of settlement and clearing and fees that do not contradict in its nature with the duties of the Licensed Person to act honestly, fairly and professionally in a way that fulfils the interests of its clients. The prohibition set out herein shall apply to employees of the Licensed Person.

Prior to providing services or performing a transaction for a Client, a Licensed Person shall not offer to share any loss which the Client would be exposed to unless there is a joint investment agreement between the Client and the Licensed Person which provides for sharing in the benefits and losses of investment.

A Licensed Person shall adopt policies and procedures for maintaining confidentiality of available information or inside information it obtains in the course of practicing Securities Activities; more specifically, data and information related to its Clients and their investments, by taking all actions to ensure data and information remain confidential except in the following cases: 1. Disclosure requirements in accordance with the applicable law and especially, the Law and these Bylaws. 2. Disclosure based on judicial orders and judgments or investigation authorities. 3. If Clients approve such disclosure.

A Licensed Person (including its Board of Directors and employees) shall comply with the regulations set out by Law regarding unfair use or disclosure of Inside Information or involvement of unfair practices regarding Securities.

Scope of Application This Chapter shall apply to Licensed Persons for the following activities: 1. Investment Portfolio Manager. 2. Collective Investment Scheme Manager. 3. Subscription Agent. 4. Custodian.

A Licensed Person shall categorise its Clients as either Retail or Professional Clients. Professional Client shall be divided into Professional Client by Nature and Qualified Professional Client. Each Client who is not professional shall be categorised as Retail Client.

A Licensed Person must notify each Client of his categorisation at the beginning of dealing with him or when such categorisation is changed; and the Client must be informed of the following: 1. The benefits and limitations of each category. 2. The rights of the Client related to the change of his category.

A Licensed Person shall re-categorise a Professional Client - upon his request - to a Retail Client.

Re-categorisation of a Client shall not affect actions and transactions implemented under his original categorisation.

The following are considered Professional Client by Nature: 1. A government, public entity, central bank or an international institution (World Bank or International Monetary Fund). 2. Licensed Person and other financial institution that is subject to Regulatory Bodies inside or outside the State of Kuwait. 3. Any company whose paid capital is at least One Million Kuwaiti Dinars or its equivalent. In all cases, a Licensed Person may agree in writing with a Professional Client by Nature to be categorised as a Retail Client.

Any Client, who fulfils one of the following criteria, shall be considered a Qualified Professional Client: 1. The Client has carried out Securities’ transactions, in significant size, at an average no less than KD 250,000 per quarter over the previous two years. 2. The size of the Client’s funds and assets with the Licensed Person is no less than KD 100,000. 3. The Client works or has worked in the financial sector for at least one year in a Professional Position which requires knowledge of the transactions or services envisaged. The Licensed Person shall take due care to ensure the fulfilment of the previous criteria.

To categorise a Client as a Qualified Professional Client, the following procedures shall be followed: 1. The Client shall notify the Licensed Person in writing regarding its desire to be categorised as a Qualified Professional Client, either generally or in respect of a particular service, transaction or a specific kind of transaction or Securities. The agreement entered into with the Client shall include a declaration of its awareness and acceptance of the impacts of such categorisation. 2. The Licensed Person shall notify the Client in writing with the impacts of his categorisation as a Qualified Professional Client.

If a Client no longer fulfils the conditions that made him eligible for categorisation as a Qualified Professional Client, the Licensed Person must re-categorise the Client as a Retail Client and notify that client of his new categorisation.

Re-categorisation of a Client shall not affect actions and transactions implemented under his original categorisation.

A Licensed Person shall prepare a specific record for Client categories including: 1. Category of the Client, and reasons and justifications of such categorisation. 2. Sample of notices, declarations and agreements related to the Client’s category.

A Licensed Person shall provide Retail Client with the following information: 1. The name, address and contact details of the Licensed Person. 2. The language in which the Client may communicate with the Licensed Person and receive information and documents. 3. The methods of communication to be used between the Licensed Person and the Client. 4. A statement indicating if the Licensed Person works with the Client in its capacity as an agent of an entity, the name of such an entity and its contact details. 5. The nature and timing of the reports on the performance of the services to be provided by the Licensed Person to the Client. 6. A summary of the conflicts of interest policy used by the Licensed Person, and any other additional details requested by the Client in this regard.

Taking into consideration the rules set out in Module Seven (Clients’ Funds and Assets) of these Bylaws, if a Licensed Person proposes to keep or manage funds or Assets of Retail Clients, it must provide these clients, in particular, with the following information: 1. Whether Client’s funds and assets may be deposited with third party on behalf of the Licensed Person. 2. The limits of liability of the Licensed Person for any omission of the third party. 3. Whether Client’s funds and assets may be held in an omnibus account by a third party, if applicable to such investment, and a prominent warning to the Client of the resulting risks. 4. Whether Client’s funds and assets may be held with a third party to be separately identifiable from the funds and assets of that third party or of the Licensed Person. 5. The Licensed Person shall notify the Client with the competent courts and the applicable law in case of any dispute in relation to assets or funds of the Client outside the State of Kuwait. 6. A summary of the steps which the Licensed Person takes to ensure the protection of the Client’s Assets or funds, including reference to any relevant investor compensation program applied by the Licensed Person.

A Licensed Person must notify the Retail Client about the existence of any rights belonging to the Licensed Person or a third party in relation to seizing the Client’s funds and assets deposited with the Licensed Person or third party.

A Licensed Person, before entering into Securities financing transactions in relation to assets held by it on behalf of a Retail Client, must notify the Client in writing, provided that such notification must include all information on the Licensed Person’s obligations and responsibilities, including transaction’s terms and risks involved.

A Licensed Person, with whom funds and assets of a Professional Client are deposited, must provide such Client with the required information under paragraph (5), Article (2-13) and (2-14) of this Module.

A Licensed Person must notify the Client - as applicable - in writing with the required information under Articles (2-11) to (2-15) of this Module before providing its services related to Securities activities and any changes that may occur.

While providing its services, a Licensed Person must take all appropriate steps in order to limit cases of conflicts of interest that may occur between: 1. The Client and the Licensed Person, including its managers, employees, agents or any persons directly or indirectly linked to them by Effective Control. 2. The Client and another client of the Licensed Person.

The following cases - including but not limited to - shall be construed among conflicts of interest: 1. Making financial gain, or avoid financial loss, at the expense of the client. 2. Carrying on the same business as the Client or receiving from a person other than the client an inducement or amount in relation to a service provided to the Client other than defined fees, commissions and expenses related to that service. 3. The Licensed Person, without reasonable motivation, does not give preferential treatment to Securities issued by it or Securities issued by the Parent Company or Subsidiary Companies over other Securities listed in the Exchange; and in all cases, the Client’s approval must be obtained before being involved in a transaction related to such Securities. 4. The Licensed Person shall not arrange transactions with the knowledge or capability of knowing that it shall be one of the involved parties in such transaction.

A Licensed Person must keep and regularly update a record of the kinds of service or activity carried out by him or on behalf of that Licensed Person in which a conflict of interest has arisen resulting in harm to the interests of one or more Clients.

A Licensed Person shall take precautionary measures in order to limit cases of conflicts of interest or resulting in harm to the interests of its clients.

In relation to cases of conflicts of interest, if precautionary measures made by a Licensed Person under Article (3-4) of this Module are not sufficient to prevent harm to the interests of a client, then the Licensed Person shall disclose in writing to the Client about the cases of conflicts of interest before undertaking business for the client; such disclosure must include sufficient details on the nature of such cases and related persons. In all cases, any transaction - in case of conflicts of interest - may be entered if the Client approves such transaction after disclosing all details related to cases of conflicts of interest and related persons.

A Licensed Person must prepare policies and procedures in order to limit cases of conflicts of interest; provided that such policies and procedures are suitable for the nature and size of the Licensed Person’s business, and if the Licensed Person is a member of a Group, such policies and procedures must take into consideration any cases of conflicts of interest resulting from the structure of the group as well as business activity of other members of the group.

Conflicts of interest policy set out in Article (3-6) of this Module must include the following: 1. Identifying the circumstances which constitute a conflict of interest resulting in harm to the interests of one or more Clients. 2. Defining procedures that must be followed and measures to be taken in order to manage cases of conflicts of interest.

A Licensed Person may impose information barriers “Chinese Wall” in order to limit cases of conflicts of interest; and for this purpose it may oblige its employees or agents performing some Securities Activities to withhold the information held from any other employee or person working in favour of the Licensed Person in other activities.

If a Licensed Person takes measures set out in Article (3-8) of this Module, it shall be construed as evidence that the Licensed Person’s action shall not be regarded among cases of conflicts of interest; unless otherwise proven.

A Licensed Person must establish adequate arrangements aimed to limit cases of conflicts of interest between Members of the Board of Directors, its clients, employees or agents; or making use of the confidential information of those clients, in particular, the following cases: 1. Enter into Securities transactions in which one of the Licensed Person’s clients is a party. 2. Enter into Securities transactions through using confidential information related to clients. 3. Provide inappropriate advice or recommendation to the Client in order to perform a process or to enter into a Securities transaction with the purpose of attaining a benefit for any of the Licensed Person’s employees or agents. 4. Disclose any confidential information obtained by one of the Licensed Person’s employees or agents, to another person with the purpose of entering into Securities transactions in which one of the Licensed Person’s clients is a party, or provide inappropriate advice or recommendation to another person in order to enter into such a transaction.

Cases set out in Article (4-1) of this Module shall be applied to transactions performed by any employee of a Licensed Person or for any of his Relatives, or a Subsidiary Company owned by him or owned by any of his Relatives.

The measures set out in Article (4-1) of this Module must include, in particular, the following: 1. All the Licensed Person’s employees shall be informed of the restrictions set out in Articles (4-1) and (4-2) of this Module in accordance with adopted policies and procedures. 2. The employee shall immediately inform the Licensed Person’s Compliance Officer of any transaction performed for himself, any of his Relatives, or a Subsidiary Company owned by him or owned by any of his Relatives. 3. The Licensed Person shall define a list - to be periodically updated - of Securities not to be dealt with by its employees or agents. 4. The Licensed Person shall keep a record of transactions disclosed by its employees in accordance with item (2) of this Article; and if the Licensed Person refers any of its activities to another Person, then it must ensure that this person maintains the above-mentioned record.

A Compliance Officer shall prepare appropriate measures to monitor personal dealings of employees of a Licensed Person in relation to Securities in order to ensure compliance with the Law and these Bylaws.

If a Licensed Person is acting as a securities Broker registered at an Exchange or as an Investment Portfolio Manager, or as a Qualified Securities Broker registered with an Exchange then the employees of a Licensed Person may not buy or sell Securities or establish Investment Portfolios unless performed through the Licensed Person, with the exception of services not provided by the Licensed Person.

When executing Client’s orders, a Licensed Person must take due care to achieve the best possible result for its clients, taking into account the execution factors including transaction price, size, likelihood of execution and settlement as well as any other consideration.

When executing a client order, a Licensed Person must take into account the following criteria: 1. Nature and needs of the Client. 2. Client’s categorisation as a Retail Client or Professional Client. 3. Characteristics of the order to be executed. 4. Characteristics of Securities subject of order, including type and nature. 5. Characteristics of the execution venues to which that order can be directed. 6. Execute orders with priority according to the order they were received by the Clients. If the transactions are executed based on the Client’s orders, then the Licensed Person shall be released from the obligations mentioned in items (1) through (4) of this Article.

If a Licensed Person executes an order on behalf of a Retail Client, the best possible result must be determined in terms of the total consideration, representing the price of the Security and the costs related to execution, including expenses, fees, and commissions.

In case there is more than one venue through which an order could be executed, then a Licensed Person must compare such venues while taking into consideration fees and other expenses related to the order execution.

The Licensed Person may not receive any commissions in a way as to discriminate unjustifiably between execution venues.

Without prejudice to the restrictions set out in the Law and these Bylaws, a Licensed Person shall execute any order or instruction that may be issued by a Client.

A Licensed Person must set policies and procedures that enable it to provide the Client with the best service, in particular, policies and procedures related to orders execution and instructions of the clients.

Order execution policies and procedures set out in Article (5-7) of this Module must include information related to different execution venues through which a Licensed Person shall execute its Clients’ orders, in addition to factors affecting the choice of such venues.

A Licensed Person shall provide its clients with any information that may be required by those clients regarding policies and procedures of executing their orders.

A Licensed Person must review policies and procedures of executing its clients’ orders regularly; such review must be performed in case of any material change that may affect such policies and procedures, and such review shall include evaluating these policies and to what extent they are complied with.

Upon execution of any purchase or sale of a Security, a Licensed Person must send to the Client a notification related to execution of such deal, as long as the Client waives such notification, according to the form prepared by the Licensed Person, and the notifications must particularly include the following: a. Client’s account number. b. Name of the Licensed Person. c. Name of the Client. d. Date of receiving the order from the Client. e. Date and time of order execution. f. Type of deal whether it is a sale or a purchase. g. Name of Security subject of the deal. h. Volume, price, commission, the net value and the total price of the deal. i. Mechanism of executing the deal, whether through a written order, phone call or an electronic mail. j. Currency in which the transaction was implemented. The Licensed Person must prepare notifications on executing Securities deals, and send them on the same day of the execution of the deal.

When executing orders on behalf of clients, a Licensed Person must apply policies and procedures which provide for the prompt and expeditious execution of client orders.

Upon execution of clients’ orders, the Licensed Person, must ensure that orders executed on behalf of clients are promptly and accurately specified and recorded.

A Licensed Person is prohibited from making use of information related to clients’ orders; thus, it must exert due diligence to prevent use of such information by its employees or agents.

A Licensed Person must prepare and maintain accurate records for each executed deal and all records must be updated at all times and sufficient enough to demonstrate compliance with these Bylaws.

A Licensed Person must prepare and maintain accurate records for the clients’ accounts; provided that: 1. They clearly indicate, at all times, the assets and liabilities of each Client and liabilities of all clients collectively. 2. They include the necessary information to enable the Licensed Person to prepare a statement of the assets and liabilities of each Client and details of the deals executed for his account. 3. They determine all Client’s funds and Assets for which the Licensed Person is responsible whether under his control or under the control of another person.

A Licensed Person’s records must include the following: 1. Details of all orders entered by any Client concerning a Security whether it was modified, cancelled, executed or not executed. 2. Details of all purchase and sale deals of any Securities performed by the Licensed Person for a Client or performed by the Licensed Person for its own account. 3. A record of income and expenses related to each Client along with an explanation of their nature. 4. Details of all received amounts and expenses from the Client’s funds and Assets. 5. A record of the Client’s funds and Assets.

A Licensed Person must register and maintain adequate information of Securities’ activities performed by it in order to demonstrate compliance with these Bylaws. The Authority may also define the nature and extent of information that must be recorded and maintained by the Licensed Person.

A Licensed Person must take the necessary steps to record and maintain telephone conversations and electronic communications related to the Licensed Person’s activities, made with, sent from or received on equipment provided by the Licensed Person to an employee or agent; or the use of which by an employee or agent has been permitted by the Licensed Person, to enable that employee or agent to carry out any of the following activities: 1. Receive clients’ orders. 2. Execute clients’ orders whether on the basis of the Client’s instructions or on the basis of the Licensed Person’s decision to enter into a deal on behalf of the Client. 3. Transmit clients’ orders to other entities for execution whether on the basis of the Client’s instructions or on the basis of the Licensed Person’s decision to enter into a deal on behalf of the Client. 4. Execute transactions on behalf of the Licensed Person or any other person in the Licensed Person’s Group.

A Licensed Person must take the necessary steps in order to prevent any of its employees or agents to make, send or receive relevant telephone conversations and electronic communications on equipment, other than what is mentioned in Article (6-5) of this Module.

If a Licensed Person was unable to record a telephone conversation due to unforeseen circumstances, the Licensed Person may accept the Client’s instructions in writing.

When receiving telephone calls from clients, a Licensed Person must undertake, particularly, the following: 1. Employee of a Licensed Person shall introduce himself to the client. 2. Confirm Client’s identity. 3. Define type of order (Purchase – Sale – Cancellation – Modification), name of Security, volume, price, order period and date.

A Licensed Person must maintain records, reports, telephone conversations and written and electronic correspondence as well as documents related to its activity; for no less than five years commencing from the date the record was created or until settlement of a dispute between the Licensed Person and the Client or any other Person; provided that they shall be valid for review on request during such a period, and that they shall remain subject to inspection and audit at all times by the Authority or anyone appointed for this purpose.

No promotion or an invitation may be directed to any person encouraging him to become involved in an investment related to a Security, unless it is made through a Licensed Person and the content of the promotion must be approved by the Licensed Person.

A Licensed Person must ensure the clarity of the content of the Financial Promotion and that it does not contain false, misleading or deceptive statements; and that such promotion includes a phrase, in clearly identifiable font, referring to that it was prepared for promotional purposes.

If a Licensed Person becomes aware that a Financial Promotion no longer complies with the provisions set out in this Module, it must cancel it through the same means used by the Financial Promotion.

Financial Promotion must include the following information: 1. Name of the Licensed Person who issued the promotion or approved its content. 2. The accurate information defining the investment benefits and risks. 3. Sufficient information of investment provided that it must appear clearly in the promotion. 4. Undertaking that it does not disguise, diminish or obscure important items from the investment subject of promotion. 5. Or any data that may be required by the Authority.

If a Financial Promotion contains an indication of past or future performance of certain investment, a Licensed Person must include a warning in the promotion that the past performance is not a reliable indicator of future results.

A Licensed Person must maintain an adequate record of any Financial Promotion it communicates or approves its content.

A Licensed Person, when producing investment research directed to its clients or to the public, must clearly disclose any cases of conflicts of interest mentioned in this Module.

A Licensed Person must take the necessary arrangements to ensure that the following restrictions are satisfied: 1. The financial analysts must not trade in Securities, for their own account or on behalf of another Person, which is the subject of the investment research that has not been published yet. 2. The financial analysts and other persons involved in the production of the investment research may not obtain any benefit from those with material interest in the subject matter of the investment research. 3. The Licensed Person, the financial analysts and other persons involved in the production of investment research must not promise Issuers favourable research coverage. 4. The Issuer or any other Person must not, before the dissemination of investment research, be permitted to review a draft of the investment research for the purpose of verifying the accuracy of factual statements made in that investment research, or for any other purpose other than verifying compliance with the Licensed Person’s legal obligations, if the draft includes a recommendation or a target price.

In circumstances through which a Licensed Person produces or disseminates investment research for marketing purposes, investment research must include the following: 1. Clearly identify the fact that investment research was prepared for marketing purposes. 2. A clear statement that such investment research did not consider the necessary conditions in order to ensure the Licensed Person’s independence, and that there is no obligation to comply with the restrictions imposed under Article (8-1).

A Licensed Person must take due care to ensure that all recommendations produced or disseminated by it is fairly presented, and to disclose its interests or indicate conflicts of interest concerning Securities that are subject of such recommendations.

Published research must include information about a Licensed Person and the name and title of the Person who prepared the investment research.

A Licensed Person must take due care to ensure that: 1. Facts in a recommendation are clearly distinguished from interpretations, estimates, opinions and other types of non-factual information. 2. Its sources for a recommendation are reliable and clearly refer to these sources and their date. 3. All projections, forecasts and price targets in a recommendation are clearly labelled as such and the material assumptions made in producing or using them are indicated. 4. A clear explanation of the recommendation made “buy”, “sell” or “hold” and associated risks. 5. Date of preparing the recommendation.

A Licensed Person must clearly disclose in a recommendation all of its relationships and circumstances that may reasonably be expected to impair the objectivity of the recommendation, in particular a significant financial interest in any Security on which an investment research is produced; in particular, its relation with the Parent Company or the Subsidiary Companies of the Securities subject matter of the research.

A recommendation produced by a Licensed Person must disclose clearly and prominently information on its interests and conflicts of interest relating to any major shareholdings in the Issuer’s capital, and any agreements with the Issuer.

The Merger provisions set out in Chapter Two of this Module shall apply to the Companies Licensed by the Authority or Listed on the Exchange.

The acquisition provisions set out in Chapter Three of this Module shall apply to Acquisitions Offers that an offer to acquire or a solicitation to procure the acquisition of shares of a Listed Company or unlisted company in the event of a Reverse Acquisition.

A company may merge with another company of the same legal nature or of another legal nature, and the Merger shall be in one of the following ways: 1. Merger by Amalgamation. 2. Merger by Consolidation. 3. Merger by Division and Amalgamation.

A Member of a Board of Directors of a Company involved in a Merger process shall not vote in the Board of Directors’ meetings, subcommittees, or the general assembly of the company if he has an interest in the Merger. It shall not be interpreted as an interest if the Member of a Board of Directors of a company involved in a Merger holds less than 5% of the shares that have voting rights in the general assembly meetings. Disclosure of any indirect interest or in alliance with others shall be disclosed in accordance with the provisions of Module Ten (Disclosure and Transparency) of these Bylaws.

Without prejudice to the provisions of Article (289) of the Companies Law, all companies involved in a Merger shall disclose the following stages of the Merger: 1. When companies reach an Initial Agreement regarding the Merger. 2. When obtaining approval on the Draft Merger Contract by the Authority. 3. When general assembly of each of the companies involved in the Merger issue their resolutions of accepting the Merger. 4. When the Merger resolution is Officially Announced for each of the companies involved in the Merger.

The disclosures referred to in Article (2-3) of this Module shall be announced as follows: 1. If one of the Merged or Merging Companies is a member of an Exchange, the disclosures shall be announced in the Exchange and the website of each of the companies involved in the Merger. 2. If all the companies involved in the Merger are unlisted, the disclosures shall be announced on the websites of those companies. In all cases, the Authority’s approval of the Draft Merger Contract shall be announced in at least two daily newspapers, in addition to the other means set out herein.

Companies involved in a Merger shall submit to the Authority the Draft Merger Contract for its approval. Approval of the Central Bank is required for the Units Subject to the Supervision of the Central Bank. The Draft Merger Contract may not be published or circulated to shareholders or partners before obtaining these approvals. Each shareholder or partner will have the right to receive a copy of the Draft Merger Contract after the Authority’s approval.

The Draft Merger Contract shall include the following information: 1. Adequate information about the Merged Companies and all parties that are involved in the Merger. 2. Details of the shares of the companies involved in the Merger, and any rights or restrictions associated with them. 3. Reasons and purposes of the Merger. 4. The Merger conditions that are agreed upon between the companies involved in the Merger. 5. Information about the Investment Advisor who is responsible for the evaluation of assets and liabilities. 6. The date of the evaluation. 7. The initial report of the values of assets and liabilities of the Merged Companies, based upon the assets’ fare value. 8. The compensation to be received by partners or shareholders of the Merging Company or the New Company, and the basis of determining thereof. 9. The timeframe for the Merger. 10. A breakdown of all the procedures to be performed in order to finalize the Merger. 11. Details of any Effective Control which any of the companies involved in the Merger has in any other company. 12. Any other details or information requested by the Authority.

The following information shall be attached to the Draft Merger Contract: 1. The full report issued by the Investment Advisor who is responsible for the evaluation of assets and liabilities, which shall include an asset valuation report. 2. A report of the basis of the initial evaluation of the assets and liabilities, and for determining the shareholders’ and partners’ rights after the Merger. 3. The audited financial statements of the companies involved in the Merger for the past three years. 4. The procedures to be followed in the event of forming of a New Company as a result of the Merger.

n the event that a Merger involving a party with Effective Control of either the Merging or Merged Companies or both before the execution of the Merger, the Draft Merger Contract shall include the additional following information: 1. Name of persons with Effective Control and names of any Subsidiary or persons with whom they are Acting in Concert with it. 2. Statement of the current ownership of each party with Effective Control in each party of the Merger, including any shares owned or controlled, or any Subsidiary or persons with whom they are Acting in Concert with, or where a person with Effective Control or any Subsidiary or persons with whom they are Acting in Concert with has the option of buying thereof. 3. A statement of whether a person with Effective Control holds a position of employment or serves as a Member of a Board of Directors at any of the companies involved in the Merger. 4. The opinion of the Members of a Board of Directors regarding the Merger and whether it is fair and reasonable for the rest of shareholders other than the party with Effective Control, and a statement that the Members of a Board of Directors have developed this position without any role by a Person with Effective Control. 5. Any reservations made by Members of a Board of Directors regarding the Merger, if any.

An Investment Advisor shall be independent, not a Stakeholder, and shall be licensed by the Authority; and may not subscribe for or purchase Shares in any of such companies or transact in the Financial Derivatives of such Shares for their own account unless they create and maintain a Chinese Wall separating the Licensed Activities in accordance with the provisions of Module Five (Securities Activities and Registered Persons), Module Six (Policies and Procedures of Licensed Person) and Module Eight (Conduct of Business) of these Bylaws.

A Person which will be responsible for the valuation of the assets of the companies involved in the Merger shall be independent, not a Stakeholder, and shall be licensed by the Authority and may not subscribe for or purchase Shares or stakes in any of such companies or transact in the Financial Derivatives of such shares for their own account.

Companies involved in a merger shall make the following documents available for review: 1. The Draft Merger Contract and its attachments. 2. The resolutions of the Boards of Directors of the Merged Companies concerning the Merger. 3. The company contract of the companies involved in the Merger and any other similar documents. 4. The audited financial statements for the three years preceding the Merger for the companies involved in the Merger. 5. Any report, letter, assessment or any other document referred to in the Draft Merger Contract. 6. Any document establishing an irrevocable obligation to accept the Merger. 7. Documentation of the financial arrangements for the financing of the Merger if such arrangements are referred to in the Draft Merger Contract. 8. Any other documents requested by the Authority.

The documents set out in Article (2-11) of this Module shall be made available for review by the shareholders at the the companies’ headquarters of the companies involved in the Merger no later than ten Business Days before the commencement of the general assemblies of such companies for the consideration of the Merger.

In the event of a Merging Company being listed on an Exchange, any Treasury Shares of such company may be used as a part of the shares that shall be issued in favour of the shareholders of the Merged Company provided that an approval shall be obtained from the Authority and an extraordinary general assembly of the Merging Company. An independent clause approving the use of Treasury Shares in the Merger shall be included in the agenda of the extraordinary general assembly of the Merging Company.

Each Merging Company shall comply with the provisions of the Protection of Competition Law and its Executive Bylaws if the Merger would lead to control or increasing existing control of the Relevant Market value.

If one of the parties involved in a Merger is a Listed Company both parties shall acknowledge their full acceptance that the continuation of trading in the shares of any Listed Company involved in the Merger at the Exchange shall be in accordance with the rules set in in this regard.

In the event of withdrawal, companies involved in a Merger shall be prohibited from undertaking any other Merger for six months commencing from date of announcing the withdrawal from executing the Merger.

Contracts of Financial Derivatives in the Exchange shall include provisions regulating the rights of such contracting parties on executing the Merger.

Companies addressed by the provisions of this Module shall be bound by the above-mentioned provisions and shall follow the procedures for the Merger as set out in Appendix 1 of this Module.

3-1 General Provisions

Any Person may submit a Voluntary Acquisition Offer at any time in accordance with the provisions of these Bylaws.

An Offeror shall treat all shareholders within each separate category of shares of the Offeree Company equally. During the Offer Period or while an offer is under consideration, an Offeror, an Offeree company or any of their advisors may not submit information to certain shareholders without making such information available to the rest of the shareholders.

An Offeror shall submit his offer directly to shareholders of the Offeree Company provided that each shareholder shall be given the choice to sell their Shares to the Offeror or to retain them.

An Offeror shall obtain approval from the Central Bank before submitting an Acquisition Offer to any Unit Subject to the Supervision of the Central Bank.

An Investment Advisor, of any of the Offer parties, shall be independent, not a Stakeholder, and shall be licensed by the Authority unless they create and maintain a Chinese Wall between the licensed activities in accordance with the provisions of Module Five (Securities Activities and Registered Persons), Module Six (Policies and Procedures of Licensed Person) and Module Eight (Conduct of Business) of these Bylaws.

If an Offeror is a Company Listed on the Exchange the Offeror and the Offeree Company shall obtain independent advice concerning the offer from an Investment Advisor and shall make available the details of such advice to the shareholders or partners of the two companies.

The Board of Directors of an Offeree company shall provide its shareholders with adequate information and recommendations in order to enable them to reach a decision to approve or to refuse the offer.

Members of a Board of Directors of an Offeree company shall avoid any conflict of interest when making any recommendation to the company’s shareholders with regard to any Acquisition Offer.

An Offeror company shall comply with the provisions of the Protection of Competition Law and its Executive Bylaws if the acquisition would lead to control or increase in existing control of the Relevant Market value.

Except for dealings of the Offeror, an Insider who is in possession of Inside Information may not deal in shares of the Offeree Company, its Subsidiaries or persons with whom they are Acting in Concert with it. This prohibition also includes dealing in the shares of the Offeror company or its Subsidiaries or with whom they are Acting in Concert with if any of these parties is a Listed Company on the Exchange.

Without prejudice to the provisions of Article (3-1-7) of this Module, an Insider who is in possession of Inside Information related to any Offer is prohibited from making a recommendation to any other Person concerning dealing in related shares. An Insider shall not reveal the Inside Information.

Once the Initial Agreement concerning a Voluntary Acquisition Offer is disclosed, shares of the Offeree Company shall be suspended for one hour in the trading session. In the event of a Mandatory Acquisition Offer, such suspension from trading shall commence once the committed person discloses or the Authority announces the obligation of a Person to submit a Mandatory Acquisition Offer to the Offeree company.

During the Offer Period, an Offeror or any Subsidiary or person with whom they are Acting in Concert with it may not sell any shares of the Offeree company without obtaining prior approval by the Authority.

If an Offeror or any Subsidiary or persons with whom they are Acting in Concert with it purchases shares of the Offeree company at a price higher than the offer price during the Offer Period, they shall increase the value of their bid to not less than the highest price paid to acquire the shares during such period; and they shall disclose directly after purchase that the Offer shall be modified, and the disclosure shall set out the number of purchased Shares and the price paid.

An Investment Advisor of an Offeree company together with the Investment Advisor of any Subsidiary or persons with whom they are Acting in Concert with or Group member may not perform any of the following during the Offer Period: 1. Subscribing for or purchasing shares of the Offeree company or dealing in the Financial Derivatives of such Shares for their own account. 2. Encouraging any Person by any means or form to keep deal in or abstain from Dealing in Securities related to the Offeree company.

An Offeree company may not, during an Offer Period or primary negotiations concerning an offer, perform any of the following: 1. Issue new Shares within the limits of authorized capital, or issue or grant option contracts related to such Shares. 2. Issue any Securities convertible to Shares. 3. Dispose of any Asset of Significant Value. 4. Enter into contracts that are beyond the normal business operations of the company. 5. Adopt any procedure that would lead to refusing the offer or constraining the shareholders’ choice to make a decision in this regard. 6. Impose significant financial obligations on the company, with the exception of those within the limits of enabling it to finance and practice its normal operations. Restrictions imposed under this Article shall not violate an Offeree company’s right to take any action set out in this Article, provided that the approval of the shareholders is given in a general assembly or if the company becomes committed to take such action before offer submission.

Members of a Board of Directors of any of the offer parties may not vote in the Board of Directors, its sub-committees, or the general assembly, if they have an interest in the Acquisition Offer and it shall not be construed as an interest if a Member of a Board of Directors has a participation in the Offeree company or the Offeror company if the percentage of such participation does not reach 5% of Traded Shares of the Offeree company. Any indirect interest or in alliance with others shall be disclosed in accordance with the provisions of Module Ten (Disclosure and Transparency) of these Bylaws.

If a Person has Effective Control of either an Offeror company or an Offeree company or both before the execution of an acquisition, the Offer Document shall include the following additional information: 1. Name of any person with Effective Control and any subsidiaries or persons with whom they are Acting in Concert. 2. A statement of the existing ownership of the person with Effective Control in each party of the Acquisition Offer, including any shares owned or controlled by that party, or by any Subsidiary or person with whom they are Acting in Concert with it, or that the party with Effective Control or any Subsidiary or person with whom they are Acting in Concert with has an option of purchasing such shares. 3. A statement of whether the person with Effective Control holds a position of employment or serves as a Member of a Board of Directors at any of the companies involved in the Acquisition Offer. 4. An opinion of the Members of a Board of Directors of the Offeree Company concerning the Acquisition Offer and whether it is fair and reasonable for the rest of the shareholders other than the party with Effective Control, and the fact that the Members of a Board of Directors have developed this opinion without any role by such person. 5. Any reservations made by the Members of a Board of Directors concerning the Acquisition Offer, if any.

3-2 Rules Regulating Acquisition Offers

Without prejudice to the obligation of disclosure set out in these Bylaws, an Offeror and an Offeree company shall disclose the following information: 1. Whether the parties have concluded an Initial Agreement with regard to an Acquisition Offer. 2. If a Person is obliged to submit a Mandatory Acquisition Offer in accordance with the provisions of the Law and these Bylaws. 3. When the Offeree company is notified of a serious intention to submit an unconditional offer. 4. When the Authority approves the publishing of an Offer Document. 5. Any recommendation, when made, of the Board of Directors of the Offeree company concerning the submitted offer. 6. The completion of the Collection Period, disclosing the percentage of Shares collected. 7. The completion of all the procedures for the execution of the Acquisition Offer. 8. Any other disclosure required by the Authority.

The Authority shall be notified before the disclosure of an Initial Agreement regarding an Acquisition Offer, and such disclosure shall include name of the Offeror and the Offeree company provided that such disclosure shall not include information that is listed in the Offer Document such as price, timeline, Acquisition Manager, sources of finance or other information that shall be included in the Offer Document.

A Person obligated to submit a Mandatory Acquisition Offer shall immediately disclose their obligation to submitting an Acquisition Offer Document even if they do not have all the related information. If an obligated Person abstains from disclosure within thirty days commencing from the date of notification of a resolution by the Authority requiring them to submit an Acquisition Offer, the Authority shall announce its resolution in the relevant Exchange; provided it shall include the following information: 1. Name of the person obligated to submit an Offer whether it be a natural Person or a corporate entity. 2. Name of the Offeree company where the Offeree company is listed on the Exchange. 3. The requirement to complete the Mandatory Acquisition Offer in thirty days. 4. A reminder of the penalties for the violation of such provisions as are set out in the Law.

3-3 Offer Document

An Offer Document shall in particular include the following information: 1. Adequate information about the Offeror and Offeree company. 2. Details of the Offeree company’s shares and any related rights or obligations. 3. Total amount of the submitted offer. 4. Full description of the financing of the offer and the sources of financing, as well as stating the names of the main lenders or those who make the necessary arrangements for financing. 5. Details of the required documents and the procedures necessary to be followed for offer acceptance. 6. A statement of any conditions or restrictions to which the offer is subject, and any related procedures. 7. The Timeline for the Acquisition Offer. 8. Ownership of shares and any Control shares of the Offeror in the Offeree company. 9. Ownership of shares and any Control shares of the Offeror in the case of a Non-Cash Voluntary Acquisition Offer. 10. Ownership of shares and any Control shares of the Offeror in the Offeree Company which includes an interest in the Members of the Board of Directors of the Offeror; or ownership of or control by a Subsidiary or a person with whom they are Acting in Concert, along with their name and the ownership of shares or a Controlled stake by persons who are committed to accept the offer irrevocably before publishing the Offer Document, along with their names. 11. Any other information required by the Authority.

An Offer Document shall include a statement stating whether there is an agreement, arrangement or procedure between the Offeror or any Subsidiary or person with whom they are Acting in Concert with the Offeror and any of the Members of a Board of Directors of the Offeree company or its shareholders as well as details of such agreements or procedures.

An Offer Document shall include a statement clarifying whether the Shares that are meant to be acquired under the offer shall be transferred to any other Persons or not along with the names of the parties in any related agreement, procedure or memorandum of understanding, if any, as well as the details of any Securities owned by those persons in the Offeree company.

If an offer includes issuing unlisted Securities as payment of the offer value, then the Offer Document shall include a valuation of such Securities by an Investment Advisor licensed by the Authority.

If an offer includes issuing Securities and the Offeror is an unlisted company the Offer Document shall include adequate financial information of the Offeror including financial statements audited by Auditors registered with the Authority for the three financial years preceding the offer.

An Offeror shall submit an Offer Document to the Authority in order to obtain its approval; and the Offer Document may not be published before the Authority’s approval.

The Authority shall issue its approval of an Offer Document within ten Business Days at most commencing from date of receiving all documents, data and other information that may be required; and the Authority may refrain from issuing its approval in the following cases: 1. If the offer does not comply with the provisions of the Law and the requirements of these Bylaws. 2. If the offer is not accompanied by the required fees. 3. If the Offeror fails to submit the data required under the provisions of the Law and these Bylaws. 4. If the offer includes incorrect or missing statement that would affect the decision of the shareholders.

If the Authority approves an Offer Document, it shall be published by the Offeror or their representative in accordance with a timetable approved by the Authority pursuant to the mechanism for issuing an announcement set out in Article (3-3-9) of this Module.

An acquisition Offeror shall disclose the Authority’s approval of the Offer Document on an Exchange and it shall be announced on the website of the Offeror company and of the Offeree company as well as in a minimum of two daily newspapers.

The Board of Directors of an Offeree company shall, within seven Business Days from receipt of the Offer Document, submit a response to the Authority stating its opinion and recommendations to the shareholders, as well as the opinion of an Investment Advisor; and the recommendation to the shareholders related to the offer shall be published in accordance with the mechanism adopted under Article (3-3-9) of this Module.

An Offeror and the Offeree company shall make the following documents available for review: 1. Offer Document and its attachments. 2. The recommendation of the Board of Directors of the Offeree company concerning the Offer. 3. The Company Contracts of the Offeror company and the Offeree company and any other similar documents. 4. The audited financial statements of the Offeror company and the Offeree company for the three years preceding the Acquisition Offer, if any. 5. Any report, letter, evaluation or other document that was presented or referred to in the Offer Document. 6. Any document that serves as evidence for an irrevocable commitment to accept the Offer. 7. Documentation of the financial arrangements regarding financing the offer if such arrangements were set out in the Offer Document. 8. Any other documents required by the Authority. The Offer Document shall clarify the place in which such documents shall be available for review.

Without prejudice to any of the provisions set out in these Bylaws, an Offeror may submit to the Authority a request to modify an Offer Document within five Business Days, at most, of the closing of Collection Period of the Offeree company’s shares; this is in case of desire to modify one of the conditions related to executing the process mentioned in the Offer Document provided that such a modification shall be made in favour of the shareholders of the Offeree Company, and the following procedures shall be followed: 1. The Offeror shall submit a request to the Authority setting out the reasons for modifying the Acquisition Offer attaching the Modified Offer Document, which may not be published before being approved by the Authority. 2. Procedures for executing the Acquisition Offer process shall be suspended for ten Business Days, during which the Authority shall issue its decision concerning the Modified Offer Document. 3. In the event that the Authority approves the Modified Offer Document, the collection process of the portfolio of the Acquisition Manager shall reopen, provided that the shares of those willing to participate in the Acquisition Offer are collected, even if they never participated in the previous collection process. The re-opening of the collection process shall be announced in accordance with the mechanism of announcement set out in Article (3-3-9) of this Module; and the Acquisition Manager shall be immediately release any shares related to participants in the previous collection process as well as those willing to decline their participation in the Acquisition Offer after the modification of the Acquisition Offer Document. 4. In the event that the Authority’s rejects the Modified Offer Document, the Offeror shall complete the procedures of executing the acquisition process in accordance with the Original Offer Document; as of the day following the the Authority’s announcement rejecting the Modified Offer Document.

An acquisition Offeror may submit to the Authority a request to extend the Collection Period of an Acquisition Offer; in accordance with the following conditions: 1. The acquisition Offeror may submit a request to extend the Collection Period before the acquisition Offer Document is published; with a justified request to be submitted to the Authority that shall include the modified timetable. 2. The acquisition Offeror may submit a request to extend the Collection Period to a maximum of five Business Days before the end of collecting the Offeree company’s shares, and the following procedures shall be adopted: a. The Offeror shall submit to the Authority a request setting out the reasons for its request to extend the Collection Period; provided that the modified timetable of the acquisition Offer Document be attached. b. The Authority shall notify the Offeror of its decision concerning the extension of the Collection Period for those wishing to participate in the Acquisition Offer. c. In the event that the Authority’s approves, the acquisition Offeror shall announce the extension of the Collection Period and publish the updated timetable by using the mechanism of announcement set out in Article (3-3-9) of this Module. d. In the event that the Authority’s rejects the extension request, the Offeror shall follow the original timetable

3-5 Additional Provisions of Mandatory Acquisitions

A Person who acquires, directly or indirectly, more than 30% of the Securities admitted to trading of a Listed Shareholding Company shall within thirty days from the date of acquisition submit an offer to purchase all the remaining Shares traded in the exchange as per the conditions set in these Bylaws.The following cases shall be exempt from this provision: 1. Acquisition in consideration of the public interest and in the interest of the remaining shareholders. In the event that the Authority issues such exemption, the decision shall be in writing and includes the reasons for such exemption. 2. Obtaining the stated percentage when a company increases its capital and some shareholders refrain from subscription. 3. Obtaining the stated percentage because of debt restructure. 4. Obtaining the stated percentage because of inheritance, will, or court judgment. In such case, the Person shall comply with this article within no more than two years as from the increase. 5. Obtaining the referred percentage during a privatization of a Listed Company and during the privatization period. 6. If a Person’s ownership exceeds the percentage stated as a result of the Listed Company’s returning and cancelling Treasury Shares that would lead to an increase in the percentage ownership of one of the shareholders to become more than 30 % of the Shares traded in the Listed Company. 7. Obtaining the percentage referred to as a result of transferring shares of a Listed Company between companies form a single Group; provided that the company which obtained such percentage shall remain within the investment Group. Ownership transfer shall be executed as an off market transaction, and it shall be regarded among the cases excluded from trading through such system. 8. If a Person obtaines the stated percentage as a result of a Merger. 9. Obtaining the percentage referred to as a result of executing the Shares in fulfilment of a debt or obtaining them as a result of settling debts of financial institutions in kind through transferring ownership of the pledged Shares. 10. Obtaining the percentage referred to without any Control, whether directly or indirectly, over the Board of Directors and without practicing the voting rights arising out of such percentage; provided that it shall be recorded in the shareholders’ register of the Issuer Company. This exemption will not be granted if an owner of such percentage practices its voting rights or if he Controls the Board of Directors directly or indirectly. The Clearing Agency shall notify the Authority in the event that voting rights on such percentage are exercised. 11. Obtaining the percentage referred to by one of the Financial Institutions which guarantee underwriting the shares of the Listed Company. 12. Obtaining the percentage stated as a result of the transfer of shares between Relatives. 13. In the event of objection by one of the Regulatory Bodies on which any of the parties of acquisition are subject to. 14. Obtaining the percentage referred to as a result of practicing the activity of Market Maker; provided that such percentage shall not be used in voting at the company’s general assemblies, authorizing a third party to vote, or using it to appoint Members of a Board of Directors or affecting such company’s resolutions. 15. Obtaining the percentage referred to by governmental bodies to secure the public interest and the interests of shareholder; provided that the voting rights of the percentage exceeding 30% of the traded Securities shall not be exercised and that this be recorded in the shareholders’ register of the Issuer Company. This exemption shall not be granted if the governmental bodies exercise voting rights of a percentage exceeding 30% of the traded Securities. The Clearing Agency shall notify the Authority in the event that such voting rights are exercised. 16. Such other cases as provided for in rules and regulations issued by the Authority.

A Mandatory Acquisition Offer shall be a cash offer equivalent to the highest price of the following: 1. The weighted average of the daily price in the Exchange of the Offeree company through the six months preceding the date of disclosing the Mandatory Acquisition Offer; and this price shall be calculated by the Exchange; or 2. The highest price paid by the Offeror, any Person whether Subsidiary or person with whom they are Acting in Concert with it during the six months preceding the date of disclosing the Mandatory Acquisition Offer.

All persons comply with Mandatory Acquisition Offer provisions referred to in this Module shall follow the procedures of executing Mandatory Acquisition Offers set out in Appendix 5 of this Module.

3-6 Percentage of Sale or Purchase Permitted for Controllers of a Listed Company’s Shares

A Controller may sell or purchase Shares of a Listed Company without being obliged to submit an Acquisition Offer in accordance with provisions of Article (74) of the Law provided that the following provisions shall be taken into consideration.

The Controller of a Listed Company may sell or purchase Shares of such company with a specific range of the company’s capital, in accordance with the following percentages: • ± 2% semi-annually for ownerships over 30% to 50%. • ± 5% semi-annually for ownerships over 50% to 100%. The Controller shall complete the form prepared for this purpose as set out in Appendix 6 of this Module and submit the form to the Authority before achieving such interest

The Controller of a percentage of more than 50% of a Listed Company’s Traded Shares, who previously submitted an Acquisition Offer under the provisions of the Law and these Bylaws, may increase their ownership in any percentage in the controlled company’s capital.

The permitted percentage of sale or purchase shall be calculated in two periods throughout the calendar year: 1. The period from 1 January to 30 June. 2. The period from 1 July to 31 December. The permitted percentage of sale or purchase shall be calculated based on the total ownership of the Controller at the beginning of these periods. This percentage shall also include any sale or purchase, whether directly or indirectly, by the Subsidiary Companies or persons with whom they are Acting in Concert with it.

The Controllers shall be entitled to sell or purchase directly in the Exchange; such parties shall comply with the requirements of disclosure provisions as set out in these Bylaws; provided that the disclosure shall include the following: 1. Disclosing the percentage of Shares sold or purchased. 2. Disclosing the Subsidiary Companies or persons with whom they are Acting in Concert with it. 3. The total remaining percentage permitted for the Controller to sell or purchase within six months

In the event of exceeding the permitted percentage of purchase, or in the event that the percentage of ownership decreased to become less than 30% of the Listed Company’s Shares but then increased again over such percentage, the Controller shall be obliged to submit a Mandatory Acquisition Offer in accordance with the provisions of Article (3-6-2) of this Module.

The Controller shall be obligated to disclose the sale process in the event it intends to reduce its ownership in the company subject to Control to become less than 30% percentage of the company’s Traded Shares, by contacting the Authority before achieving such interest and completing the form concerning sales or purchases permitted for the Controllers of a Listed Company in the Exchange set out in Appendix 6 of this Module. The form referred to shall be submitted to the Authority and announced in the Exchange.

3-7 Additional Provisions for Voluntary Acquisitions

An Offeror shall notify the Authority of any Initial Agreement concerning an Acquisition Offer of a Listed Company before disclosure in an Exchange; such notification shall be accompanied by an acknowledgment to pursue this offer, and that it has taken all necessary procedures in order to proceed with the acquisition process, and in the event of withdrawal for reasons unacceptable to the Authority, the Offeror shall be responsible for any damages that may occur to any Person as a result of such withdrawal and the Authority may require the Offeror to submit any other guarantees to ensure the Offeror’s commitment.

It is not permitted to withdraw from a Voluntary Acquisition Offer after disclosing the Initial Agreement in the Exchange except for cases set out in Article (3-7-4) of this Module.

In the event of an Offeror’s withdrawal of an Acquisition Offer, he shall be prohibited from submitting any Acquisition Offer to the concerned company within the six months subsequent to the Authority’s approval of withdrawal.

The Authority may issue its approval of an Offeror’s withdrawal of a Voluntary Acquisition Offer in the following cases: 1. Occurrence of an event of fundamental importance after the disclosure of the Initial Agreement. 2. Violation of any of the terms and conditions required to complete the transaction. 3. Failure to collect the intended percentage of Shares as stated in the Offer Document. 4. Any other case defined by the Authority.

In the event that the Authority approves a withdrawal from a Voluntary Acquisition Offer during the Collection Period of the Offeree company’s shares, the Acquisition Manager shall immediately release the shares of those participating in the Acquisition Offer.

Withdrawal from a Voluntary Acquisition Offer is prohibited after the Authority has issued its approval for undertaking an Acquisition Offer process in accordance with procedures set out in Article (16) of Appendix 2 of this Module.

All Persons shall be bound by the provisions of Voluntary Acquisition Offer set out in this Module and shall follow the procedures of executing Voluntary Acquisition Offers set out in Appendix 2 of this Module.

3-8 Non-Cash Voluntary Acquisition

A Non-Cash Voluntary Offer is an offer to acquire, or solicitation to procure the acquisition of Shares of one or more classes or Shares of an Offeree Listed Company other than Shares owned by the Offeror, its Subsidiary or those Acting in Concert with it on the date of offer submission in exchange of Shares issued by the Offeror company or for a combination of cash and Shares issued by the Offeror company.

If the equivalent used for financing the Offer includes issuance of Securities that will be listed or Securities issued by a Listed Company, a new Prospectus shall be prepared in accordance with these Bylaws.

In the event that an Offeror Company wishes to submit a Non-Cash Voluntary Acquisition Offer that consists solely of Shares to be issued in its capital to the shareholders of the offeree company, then the Offeror company shall submit an undertaking to its shareholders whose ownership along with any Subsidiary and person with whom they are Acting in Concert with it reaches 20% of the total outstanding Shares Issued by such company not to sell their shares in the Offeror company for not less than twelve months commencing from date of execution of the Acquisition Offer.

All Persons shall comply with Non-Cash Voluntary Acquisition provisions set out in this Module and follow the procedures of executing Non-Cash Voluntary Acquisition Offers set out in Appendix 3 of this Module.

3-9 Competitive Acquisition

An Offeror of a Competitive Acquisition Offer is any party or parties submitting one or more Competitive Acquisition Offers other than the Original Acquisition Offer. A Competitive Acquisition Offer is a Voluntary Acquisition Offer submitted with the purpose of competing with an Original Acquisition Offer. A Competitive Offer Period is the period commencing from the disclosure of a Competitive Acquisition Offer until a decision thereupon has been issued by the general assembly of the Offeree company.

A Competitive Acquisition Offer may be submitted if the offer includes a material addition or fundamental modification of the terms and conditions of the Original Acquisition Offer; the Offeror of a Competitive Acquisition shall clarify the purpose of the Offer Submission.

An Offeror of a Competitive Acquisition may submit its Offer after an Original Offer Document has been published and five Business Days before the end of Collection Period of the Original Acquisition Offer; proceedings of the Original Acquisition Offer shall be suspended for ten Business Days following Competitive Acquisition Offer submission during which the Authority shall issue a resolution on the Competitive Acquisition Offer and in the event that the Authority approves the Competitive Acquisition Offer Document proceedings of the Original Acquisition Offer shall continue to be suspended until the ordinary general assembly of the Offeree Company issues its resolution choosing between the offers, taking in consideration the periods set out in Article (3-9-10) of this Module. In this case, the Original Acquisition Manager shall release Shares collected before the suspension of the proceedings of the Acquisition Offer. In the event that the Authority disapproves a Competitive Acquisition Offer Document, proceedings of the Original Acquisition Offer shall resume after excluding the suspension period.

An Offeror of a Competitive Acquisition shall be required to abide by the disclosure rules when submitting a Competitive Acquisition Offer Document in accordance with Article (3-2-1) of this Module, taking into consideration the announcement mechanism set out in Article (3-3-9) of this Module.

An Offeror of a Competitive Acquisition shall pay the fees defined for a Competitive Acquisition Offer Document to the Authority, directly after disclosure.

Members of the Board of Directors of the Offeree company shall deal neutrally with both the Original Acquisition Offer and Competitive Acquisition Offer, and the Board of Directors of the Offeree Company shall make the same information available for both the Offeror of an Original Acquisition and Offeror of a Competitive Acquisition.

Without prejudice to any of the provisions set out in these Bylaws, the Offeror of an Original Acquisition, after a Competitive Acquisition Offer has been submitted, and before the ordinary general assembly of the Offeree company is held for considering the choice of the two offers, may submit to the Authority a request to modify the Offer Document if it wishes to modify the conditions related to the Acquisition Offer provided that such a modification shall be material and in favour of the shareholders, and the following procedures shall be adopted: 1. An Offeror of an Original Acquisition Offer may submit a request to the Authority to modify their Offer setting out their reasons provided that the Modified Offer Document shall be attached with the request; and the Offer Document and its contents may not be published before being approved by the Authority. 2. Procedures of the Original Acquisition Offer and Competitive Acquisition Offer shall be suspended for ten Business Days during which the Authority shall issue its decision concerning the Modified Offer Document. 3. In the event that the Authority approves the Modified Original Offer Document, the procedures of executing a Competitive Acquisition Offer set out in clause No. (5) as well as the subsequent paragraphs of Appendix 4 of this Module shall be completed. 4. In the event that the Authority disapproves the Modified Offer Document, the Offeror shall complete the procedures of executing the Acquisition Offer in accordance with the Original Offer Document commencing from the subsequent day of the Authority’s announcement of rejecting the Modified Offer Document.

An Offeror of a Competitive Acquisition Offer may modify its offer after the Original Acquisition Offer has been modified in accordance with Article (3-9-7) of this Module provided that the same provisions and procedures adopted in relation to modification of Original Acquisition Offer are followed.

In all cases, an Offeror of an Original Acquisition Offer and an Offeror of a Competitive Acquisition Offer may not modify such an offer more than once.

All persons shall comply with provisions concerning Competitive Acquisition Offers referred to in this Module and shall follow procedures of executing Competitive Acquisition Offers set out in Appendix 4 of this Module.

Except for provisions set out in Article (3-9) of this Module, an Offeror of a Competitive Acquisition Offer is under the same obligations imposed on an Offeror of an Original Acquisition Offer.

3-10 Reverse Acquisition

A Reverse Acquisition is any arrangement under which a Listed Company issues new shares and offers them to shareholders of an unlisted company in return of their shares, so that the new shares represent more than 50% of the Issued Shares in a Listed Company after the acquisition has been executed.

Each Listed Company shall immediately notify the Authority and disclose in the Exchange any information received concerning any arrangement relating to a Reverse Acquisition as defined in Article (3-10-1) of this Module.

While disclosing or executing any Reverse Acquisition, the Shares of the Offeror shall be suspended from trading until the transaction is completed, and once it is completed the listed shares of the Offeror shall be delisted; the company may submit a new listing request in accordance with the listing requirements set out in these Bylaws.

Module Eleven (Dealing in Securities) of these Bylaws sets out the provisions related to owning a percentage of not less than 5% and not more than 30 % of the Shares of a Listed Company.

3-12 Protection of Minority Rights

Any shareholder or a number of shareholders, whose ownership percentage of Shares of a Listed Company is not less than 5% and not more than 30%, may submit to the Authority an objection of the decisions of an ordinary or extraordinary general assembly in accordance with the following conditions: 1. The objection shall be submitted within fifteen days from date of the issuance of the resolution objected to or their knowledge thereof, whichever is longer. 2. The objecting shareholders shall not be among those who approved the objected resolution. 3. The objected resolution shall constitute an abuse of minority rights.

The objection shall be submitted in the form of a grievance and shall include the following: 1. Names of the objecting shareholders and evidence of their ownership of Shares in the company subject to objection. 2. A statement of the objected resolution and its date of issuance. 3. A detailed statement of the reasons behind the objection to the resolution and stating how it amounts to an abuse of minority rights.

The Authority may ask objecting shareholders or the company subject to the objection to provide additional data or documents deemed necessary to decide on the grievance.

The Authority shall decide on the grievance within twenty days from the date of the submission of the grievance or the date it was provided with data or documents set out in Article (3-12-2) of this Module. If the Authority does not respond to such grievance during that period, the grievance shall be construed as disapproved.

The Authority’s resolution may be challenged before the competent court within sixty days from the date notifying the concerned parties, or the date of their knowledge thereof, or the date of publication on the Authority’s website or in the Official Gazette. Any challenge shall be made through a writ of summons before the competent court filed against the Authority and the company subject of the grievance or the grievant, otherwise the lawsuit shall be dismissed. The competent court may confirm, annul or modify the general assembly’s resolutions.

1-1 Scope of Application - General Provisions

Provisions of Disclosure and Transparency set out in this Module shall be applied to all Listed Companies in an Exchange, Issuers and Insiders, as well as those persons committed to disclosure in accordance with the conditions referred to in this Module.

1-2 Submission of Information to the Authority

An Exchange, Clearing Agency, Issuer or any other Person shall immediately submit to the Authority any information or explanations required by the Authority in order to achieve its objectives in relation to disclosure and transparency.

1-3 Listed Company’s Obligations

Each Listed Company shall prepare a register including all information set out in disclosures described in this Module and shall update this register in accordance with the disclosures as submitted, and any Person may review this register during official working hours.

Each Listed Company shall assign a Person to be responsible for responding to the Authority’s questions concerning disclosure and transparency.

A Listed Company shall not hold a Board of Directors’ Meeting during Trading hours in order to avoid news leaks from such meetings. Results of a Board of Directors’ Meeting regarding matters set out at Appendix 5 in this Module shall be disclosed at least fifteen minutes prior to the commencement of the Trading session subsequent to such meeting.

Each Issuer or Obligor shall disclose resolutions issued in ordinary and extraordinary General Assembly meetings of the shareholders or holders of listed Bonds or listed Sukuk - as the case may be - regarding matters set out in Appendix 5 of this Module at least fifteen minutes before the commencement of the Trading session subsequent to such meeting.

Upon receiving any notification under the provisions of this Module during Trading hours, an Exchange shall announce all information set out in such notification immediately. If such notification was received after Trading hours, an Exchange shall announce it at least fifteen minutes before the commencement of the Trading session subsequent to receiving the notification.

The management of an Exchange shall prepare a special register to record the disclosures received and their contents. Any party with a relevant interest may review such a register upon submitting a request to the management of the Exchange after paying fees.

In circumstances where an Exchange decides to suspend Trading on a Security under conditions set out in this Module, the Exchange shall immediately notify the Authority with its resolution, attached with justifications and reasons on which such a resolution is based.

An Exchange shall publish a daily report, fifteen minutes at least before the start of the Trading session, on its web site clarifying disclosures of interests in accordance with the provisions of Chapter Two of this Module, and such a report shall include changes to any previously announced information.

1-5 Coordination with the Governmental and Regulatory Authorities

The Authority may sign Memoranda of Understanding or undertake other arrangements with other Governmental and Regulatory Authorities having some employees described as Insiders, so that such entities shall prepare a list of those employees which shall be updated every six months at most.

1-6 Liability for Damages

Each Person obligated to submit a notification, disclosure or an announcement under this Module shall be liable for any damages that may occur to the Authority, an Exchange, or any other Person as a result of the Person failing to submit such notification, disclosure or announcement in accordance with the provisions of the Law and these Bylaws or due to the submission of incorrect, misleading or inaccurate information relating thereto.

2-1 Interested Persons

An Interested Person is any person who has an interest that represents 5% or more of a Listed Company’s capital. This interest may be held directly, indirectly, as a Group or in alliance with others.

An interest reaching 5 % or more of a Listed Company’s capital shall be regarded as an indirect interest or in alliance with others in the following cases: 1. Shares owned by minor children included under the custody of the Interested Person. 2. Shares owned by the Interested Person through Investment Portfolios, electronic trading accounts, or through third parties provided that he controls the voting rights of such Shares. 3. Voting rights held by a third party under an agreement concluded with that Interested Person providing for the temporary or permanent transfer of the voting rights of those Shares. 4. Voting rights attach to shares which are lodged as collateral with a lender (the Interested Person). 5. Voting rights attached to Shares deposited with an Investment Portfolio or electronic trading account, provided that the Person holding the Investment Portfolio or electronic trading account (the Interested Person) controls that voting rights of such shares.

A Person, its Subsidiary Companies and the companies over which it has Effective Control shall be deemed as a Group acting as an Interested Person if its collective ownership of Shares reaches 5% or more of a Listed Company’s capital. In this case, that Person shall be liable to disclose such collective ownership, its details and any change occurring to it that exceeds 0.5 % of the Listed Company’s capital, even if the change is made by one of its Subsidiary Companies or companies in which it has Effective Control on owning 5% or more in the same Listed Company. Disclosure shall be made in accordance with Appendix 3 of this Module. In all cases, Subsidiary Companies of that Person and the companies in which it has Effective Control shall immediately notify the Person of any ownership they have in a Listed Company or any change occurring to that.

A manager of a Collective Investment Scheme shall be deemed as an Interested Person with regard to Shares constituting such scheme in accordance with Appendix 3 of this Module for disclosing the interest and changes occurring to it, unless the Scheme’s articles of association sets out that the manager is not permitted to exercise the voting rights on Shares constituting this scheme. In this case, the manager of the Collective Investment Scheme shall disclose the scheme’s interest where it represents 5% or more in such Shares without consolidating this interest with his other interests. Disclosure shall be made in accordance with Appendix 1 of this Module for disclosure of interests and Appendix 2 of this Module for disclosure of changes in interest.

An Interested Person shall disclose all interests whose total may reach 5 % or more in a Listed Company’s Capital whether directly or indirectly or as a Group or in Alliance with others, even if such interests result from multiple sources or cases as set out in Article (2-1) of this Module.

The following Shares are to be excluded for the purposes of determining whether a person has an interest for purposes of Article (2-1-1) of this Module: 1. Shares held by an Investment Portfolio Manager within its activity in managing and keeping portfolios of its clients, provided that a person does not exercise voting rights attached to such shares, or can only exercise the voting rights attached to such Shares under instruction of the Client. 2. Shares held by a Market Maker acting in this capacity, subject to the percentage of such shares not being equal to or in excess of 10 % of the Listed Company’s Capital, provided that Market Maker does not intervene in the management of the company nor exert any influence on it to buy such Shares or back the share price.

Each Interested Person shall disclose to the Authority, the Exchange, and the Listed Company within not more than five Business Days from acquiring the interest. In addition, each interested person shall disclose any change occurring to his interest that exceeds 0.5% of the Listed Company’s capital, within not more than ten Business Days as of the date of the change; such notification shall remain mandatory when the change results in a decline of interest below 5% of the Listed Company’s capital.

A disclosure of an interest, or change to an interest, of an Interested Person pursuant to Article (2-1-7) of this Module shall be made in accordance with Appendices 1, 2 and 3 of this Module. The disclosure shall include, in particular, the following information: 1. Name of the Interested Person. 2. The date on which the relevant threshold was reached or crossed. 3. Name of persons associated with the interest referred to in Article (2-1) of this Module. 4. The purpose of acquiring the disclosed interest. 5. The type of interest. 6. The percentage of previous interest in comparison with percentage of the disclosed interest. If the purpose of acquiring the disclosed interest has been changed, the Interested Person shall immediately disclose to the Authority, the Exchange and the Listed Company such a change and the person may not dispose Shares subject to the interest unless such disclosure is made.

2-2 Obligations of Listed Companies

Shareholding companies listed in the Exchange shall disclose, at the beginning of each year, the names of their shareholders whose shares represent 5% or more in their capital, as well as any change occurring to this percentage, in accordance with Appendix 4 of this Module.

Upon listing, listed shareholding companies shall provide the Exchange with the following data and information: 1. General information about the company (company name, its objectives, capital, contact details and any other information). 2. The names of the Members of the Board of Directors and the executive management. 3. Auditor. 4. Disclosure of major shareholders. 5. A list including all its Subsidiary Companies and Associate Companies Listed in the Exchange. 6. Any other information set out by the Authority. Such data and information shall be updated when any change occurs, and the Exchange shall designate one page on its web site for each Listed Company which shall be updated in accordance with information received from such company.

3-1 Scope of Application

Those provisions shall apply to Listed Companies, Members of Boards of Directors and members of the executive body of a listed company, and any other Insiders who have access to Inside Information.

A Person is considered an Insider in a Listed Company in the following cases: 1. Members of the Board of Directors and members of the executive body of a Listed Company, its Subsidiary Companies and a Parent Company who have access to Inside Information related, directly or indirectly, to a Listed Company or its clients. 2. Any other Person or entity who is directly linked to the company and holds Inside Information related to the Listed Company or its clients including, but not limited to, the Parent Company, the Auditor, banking firms, advisory firms, Credit Rating Agencies, information technology companies, and entities to which the Listed Company assigns one of its activities.

3-2 Responsibilities of the Listed Company

A Listed Company shall take procedures to limit the potential misuse of Inside Information as follows: 1. To maintain strict confidentiality of its Inside Information by taking adequate measures to maintain the confidentiality when dealing with such Inside Information, except as stipulated by disclosure requirements pursuant to the Law and these Bylaws. 2. To take adequate measures for maintaining confidentiality of Inside Information related to its clients. 3. To prepare and maintain effective contractual arrangements that bind any third party who gains knowledge of Inside Information related to the company or its clients to maintain the confidentiality of that Inside Information and not to misuse it or transfer it, or cause it to be transferred directly or indirectly to other Persons, or urge others to deal in Securities based on that Inside Information. 4. To keep at all times an updated record for the dealings of its Insiders in the securities of that company. 5. To get an acknowledgment from all its Insiders comprising the following: a. The Insider in the Listed Company is aware that he holds Inside Information related to the company and its clients and that he is included in the Insiders in a Listed Company Watch list. b. He is liable for the legal consequences of his exposure to Inside Information of the Listed Company and its Clients, and that he is fully aware of the consequential penalties of misuse or improper handling of such Inside Information. c. The Insider in the Listed Company shall notify the Listed Company of any dealings in its Securities, or those of the Parent Company or any Subsidiary Companies, before and after executing those dealings.

Each and every Listed Company shall maintain a special record comprising the following: 1. Disclosures and notifications of the Insiders. 2. A detailed and accurate statement of compensations, salaries, incentives and other financial benefits due to each and every Member of a Board of Directors and members of the executive body and this shall be included in the reports to the General Assembly. Any party with a relevant interest may have access to this record during normal working hours.

3-3 Responsibilities of the Insider

An Insider shall act with honesty and integrity and in particular he shall comply with the following: 1. Maintain the confidentiality of the Inside Information of which he becomes aware by virtue of his position, professional, or any personal relationship. 2. Refrain from selling, purchasing or subscribing to equity offerings related to Listed Securities related to which he becomes aware of Inside Information by virtue of his position, professional or any personal relationship. He shall not disclose such, give advice to a third party on the basis of Inside Information, or transfer or cause to be transferred Inside Information directly or indirectly to other people. He also shall not encourage others to trade on Securities based on that Inside Information he is in possession. 3. To maintain confidentiality of data and information related to clients of Listed Company. He shall not use or exploit the data or information related to clients of the company.

3-4 Trading Restriction Periods

1. Each Insider in the Listed Company is prohibited from trading in Securities Issued by the company during the periods set out below: a. Ten Business Days before the end of each quarter of the financial year until the announcement of the financial results for that period. b. Ten Business Days before the end of the financial year until announcement of the financial results for that period. 2. An Insider in the Listed Company may trade in the Securities Issued by the Listed Company during the restriction periods set out in paragraph (1) of this Article after first obtaining approval from the Authority. 3. An Insider in the Listed Company may trade in the Securities Issued by the Listed Company during restriction periods in the following cases: a. Transfer of ownership as a result of inheritance or will. b. Transfer of ownership pursuant to a judicial judgement. c. Transfer or ownership from and to or among the Investment Portfolios managed by the licensed companies, provided that such is solely in favour of the beneficial owner. d. Transfer of ownership among Relatives. e. Subscription on Pre-emptive Rights of Securities. f. Purchase of the required number of Shares to guarantee membership of the Board of Directors pursuant to the company contract. g. Transfer of ownership to settle a debt with a financial institution. h. Entering into a Merger or Acquisition Offer. 4. Apart from the prohibition periods set out in paragraph (1) of this Article, an Insider in the Listed Company may trade in the Securities issued by the company if he does not hold Inside Information. 5. Apart from the restriction periods set out in paragraph (1) of this Article and taking into consideration the provisions of the percentages permitted for a Controller of a Listed Company as set out in Article (3-6) of (Chapter Three: Acquisition) of Module Nine (Mergers and Acquisitions) of these Bylaws, a Controller Insider in a Listed Company may deal in Securities issued by the company if he does not hold Inside Information. Each of the above is without prejudice to the obligation of disclosure as set out in Article (3-6) of this Module.

3-5 Corporate Insiders Watch List

A Listed Company shall prepare a list of its Insiders as per Appendix 5 of this Module, and submit it to the Authority and the Exchange taking the following into consideration: 1. To name its Insiders in a Listed Company as shown in Article (3-1-2) of this Module. a. To enact effective contractual arrangements that require other Insider entities to maintain a list of its employees who have access to Inside Information related to the Listed Company and its clients. b. To enact effective contractual arrangements that require other Insider entities to provide the Listed Company with a list of its employees who have access to Inside Information related to the Listed Company and its clients. 2. The Listed Company shall update the corporate Insiders watch list and submit to the Authority and the Exchange an updated list upon the occurrence of the following events: a. When the reason behind listing an existing Person is changed. b. When a Person, who is not mentioned in the list, becomes an Insider. c. When a Person who is mentioned in the list no longer holds Insider status.

3-6 Corporate Insider Disclosure

Without prejudice to Article (3-4) of this Module and other disclosure requirements as set out by the Law and these Bylaws, disclosure shall be made in accordance with Appendix 6 and Appendix 7 of this Module, taking the following into consideration: 1. An Insider in the Listed Company shall, upon taking up his duties, disclose to the Authority, Exchange, and the Company all the Shares he and his minors who are under his custody own in Listed Companies on an Exchange, in accordance with Appendix 6 of this Module. 2. An Insider in the Listed Company shall disclose his intention to sell or purchase Securities of the Listed Company, its Parent Company or any Subsidiary Company if listed in an Exchange to the Compliance Officer in that company before executing the transaction. Such disclosure shall contain the name of the Insider in a Listed Company and names of his minors who are under his custody who intend to execute such transaction, the position he holds in the Listed Company, quantity and nature of the Securities which he intends to trade, nature of the transaction and its date. 3. An Insider in the Listed Company shall disclose to the Authority, Exchange, and Listed Company any purchase or sale transactions he executed on the Securities of the Listed Company, its Parent Company, immediately after the completion of such transaction in accordance with Appendix 7 of this Module.

The following conditions are considered as trades executed by corporate Insiders in a Listed Company: 1. If an Insider in a Listed Company trades the Securities issued by the company as a proxy, guardian or custodian. 2. If any corporate Person, through which an Insider in a Listed Company and his minors who are under his custody own 50% or more of the capital of this corporate Person, either directly or indirectly, or control the rights of more than 50% of its voting rights in any general assembly for that corporate Person, trades in the Securities issued by it. 3. If a corporate Person trades in the Securities of a Listed Company while one of his employees is a Member of a Board of Directors in that Listed Company. 4. Transactions of the staff of the Governmental or Regulatory Authorities which receives Inside Information concerning the Listed Company.

3-7 Exchange’s Obligations

The Exchange shall receive the Insiders watch list, and verify the compliance of the Insiders whose names are included in the list with the provisions of this Module when trading in Securities. Further, the Exchange shall verify the Insider’s obligation to refrain from trading during restriction periods set out in Article (3-4-1) of this Module, and announce all received disclosures in accordance with the provisions of this Module.

4-1 Definition of Material Information

A Listed Company shall disclose Material Information within the timing set out in Article (4-2) of this Module, including but not limited to the following: 1. Entering into a joint venture or Acquisition Offer transaction which has a Significant Effect on a Listed Company. 2. Entering into or terminating a contract with Significant Effect. 3. Purchase or sale of an asset with Significant Effect. 4. Listing Securities of the Company in another Exchange or foreign market. 5. Existence of a new product, or invention that may lead to a significant improvement in revenues. 6. Any change with Significant Effect in the production or activities of a Listed Company, such as increase and availability of resources that may lead to a significant improvement or decline in revenues. 7. Any tangible effect as a result of enactment of laws or decisions by a local or foreign Governmental Body, international organization or other entity. 8. Any change in the accounting policies or standards, showing the reason for any change of policy and the effect on the financial statements. 9. Any change in the formation of Members of the Board of Directors, senior management members, executive management, Sharia Supervisory Board, external Auditor or External Sharia Auditing Office. 10. Significant changes to the Listed Company’s obligations, whether short or long term, including obtaining financing, or any other form of credit facilities, with Significant Effect, or issuance of debt instruments by the Listed Company, stating the details of any issue and its intended purpose. 11. Any change with Significant Effect in capital investment plans that may lead to significant improvement or decline in revenues, such as setting up factories, increasing equipment, increasing production lines and targeted markets. 12. Any change with Significant Effect in the capital structure. 13. Any default on debt, obligation or interests. 14. Any lawsuit that may affect the general course of the business and activity of a Listed Company, its financial position, legal structure or any definite judgment issued which has a Significant Effect on the company as set out in Appendix (8) of this Module. 15. The occurrence of any dispute or disagreement with any party such as client, supplier, sub-contractor, worker or employee which may affect the general course of business of the Listed Company. 16. Any asset valuation report for any of the company’s assets that may affect its business 17. Any transaction between a Listed Company and the Parent Companies, Subsidiary Companies or Associate Companies or any arrangement by which both parties may enter into a project, share an asset or provide financing, which has Significant Effect. 18. Any credit rating for the Listed Company or any change thereto, as set out in Appendix (9) of this Module. 19. Any change or amendment to the objectives or activities of the Listed Company. 20. Announcement of any Merger, conversion, division or liquidation of a Listed Company or any of its Subsidiary Companies or Associate Companies which has a Significant Effect on the Listed Company. 21. Non-recurring event that may occur or be effected by a Listed Company, including but not limited to, compensation for nationalization of a property, receiving compensation, payment of compensation to a third party that may significantly affect the Listed Company’s earnings and its financial position. 22. Availability of Material Information related to Subsidiary Companies and Associate Companies of a Listed Company, which has a Significant Effect on its financial position. 23. If a Listed Company or one of its main activities stops operating, stating the reasons behind that whether as a result of disaster, fire, voluntary cessation or for any other reason. 24. Disclosure of the Authority’s approval on a sale or purchase of Treasury Shares, which shall be made immediately after the issuance of the approval. 25. Disclosure of a call for a general assembly meeting provided that such disclosure shall include a summary of the meeting agenda. 26. Disclosure of a call for a meeting of the Board of Directors in the cases set out in Appendix 5 of this Module, provided that such disclosure shall include a summary of the meeting agenda. 27. Disclosure of the result of general assembly meetings or Board of Directors meetings, and the disclosure of postponement, if any, including reasons behind such postponement. 28. Disclosure of financial statements (on a quarterly and yearly basis). 29. Disclosure of Material Information set out in Appendix 14 of this Module related to listed Bonds and Sukuks. In general, disclosure shall be made for any changes with Significant Effect (either increase or decrease) in assets, liabilities, income or expenses of a Listed Company. Disclosure shall also cover any Material Information not mentioned and to which the definition of Material Information applies. In all cases, the Board of Directors of a Listed Company shall disclose its assessment of the expected effects of such Material Information on its financial position, excluding the effects that cannot be foreseen or measured, as well as the expected earnings from tenders and similar contracts including disclosure of any effects may be harmful to the Listed Company. A Listed Company shall provide the Authority its justifications for the cases excluded from the provisions of this paragraph.

4-2 Timing of Disclosure of Material Information

A Listed Company shall immediately disclose Material Information according to the following: 1. If information became available during working hours of the Authority or the Exchange, disclosure shall be made immediately upon availability, taking all the necessary precautions to prevent leakage of information before disclosure. 2. If the information became available outside working hours of the Authority or the Exchange, disclosure shall be made fifteen minutes before the start of the next trading session after the availability of the Material Information.

If a Listed Company’s Securities are listed in a foreign Exchange or market, it take all the necessary measures to ensure that the disclosure of Material Information is made simultaneously in all such markets. If the regulations of a foreign market require the company to disclose Material Information during a day which is a public holiday in Kuwait, the Company shall disclose the information to the Authority and the Exchange immediately upon the next commencement of the latter’s business hours and at least fifteen minutes before starting the next trading session of the Exchange in Kuwait.

If a Material Information related to a Listed Company is incomplete, or if a Listed Company expects that some Material Information will be available during the trading session, it shall immediately notify the Authority and Exchange in this regard, and request temporary suspension of Trading of its Securities, and shall issue an announcement in this regard comprising the following: 1. All available details about the information, reasons for non-disclosure, reasons behind requesting the suspension of trading and the expected duration. 2. To undertake to announce further details as soon as possible. In the case above, an Exchange may suspend dealing in Securities of a Listed Company after ensuring that suspension of trading is in the interests of traders, and the Exchange shall, in case of accepting the request of a Listed Company, immediately notify the Authority regarding the suspension and the reason for any deficiency in disclosure and shall set out as much detail as is reasonable in this regard, and shall state the expected duration of the suspension.

The Authority may temporarily suspend trading of any Security in an Exchange if it becomes aware of any information or circumstance that impacts the activities of the Issuer of such Security, and if the Authority deems that such circumstances may impact the market or traders.

4-3 Delay in Disclosure of Material Information

If disclosure of Material Information would damage the confidentiality of negotiations or preliminary procedures for a deal concerning a Listed Company or any other transaction, the Listed Company may delay disclosure until reaching a binding agreement with respect to such deal or transaction, subject to the following: 1. The purpose of delaying disclosure is not to mislead with regard to the facts and circumstances that are necessary to evaluate the Listed Company’s Securities. 2. The Listed Company shall take all measures to ensure the confidentiality of Material Information until disclosure. 3. After subsequent disclosure of the Material Information, the Listed Company shall provide, the justifications behind such delay of disclosure. If the Authority finds these justifications unacceptable, it may take disciplinary action against the Listed Company. The Listed Company may consult the Authority before delaying the disclosure to determine the validity of such delay.

Each Listed Company shall maintain strict confidentiality regarding the Material Information referred to in paragraph (2) of Article (4-3-1) of this Module by taking all measures to ensure that access to such information is limited to specific people in the Listed Company and shall not disclose such information to employees and others except to the limits necessary for them to perform their duties.

4-4 Dealing with Rumours and News

Where there is speculation, news or information about a Listed Company occurring in any media or communication channel, or where there is any rumour or information being circulated among traders, which is likely to have an impact on the price of or the investment decisions of traders concerning a Security issued by a Listed Company, the Listed Company shall respond with immediate clarification, denial or confirmation in accordance with the timing set out in Article (4-2-1) of this Module, according to the validity of the information.

If a Listed Company fails to comment on speculation, news, information or rumour as set out in Article (4-4-1) of this Module, the Exchange shall notify the Listed Company regarding the necessity to comment or to provide any reason for not commenting. The Exchange or the Authority in this case may temporarily suspend the trading of the Securities of the Listed Company and take the measure deemed appropriate in accordance with the Law and these Bylaws. In all cases, the Authority may give instructions to the Exchange to require any Listed Company to comment as set out in this Article, and also the Authority may notify the Listed Company directly.

4-5 Unusual Trading Activity

If there is unusual trading activity in the Trading of a Security of a Listed Company regarding the Securities’ price or volume of trading, the Exchange shall require the Listed Company to comment on this as follows: 1. If a Listed Company decides that the unusual trading activity is due to Material Information previously disclosed in accordance with the required procedure, it is necessary to re-disclose that information together with any change in respect of the previously disclosed Material Information. 2. If the unusual Trading activity is due to speculation, news, rumours or information, the Listed Company shall immediately comment in accordance with Article (4-4-1) of this Module. 3. If the unusual Trading activity is due to a leak of Material Information not previously disclosed by the Listed Company or where such disclosure has been delayed in accordance with Article (4-3) in this Module, the Listed Company shall immediately disclose that Material Information regardless of whether such disclosure is in the interests of the Listed Company or not. 4. If the Listed Company is not able to identify the reason behind the unusual trading activity, it shall issue a general announcement indicating that there has been no recent development that is likely to impact the Listed Company or its affairs in the way which would cause such unusual trading activity. In all cases, the Authority may give instructions to the Exchange that any Listed Company shall comment as set out in this article, and also the Authority may notify the Listed Company

In the event of unusual trading activity, the Authority or the Exchange suspend trading in the Securities of the Listed Company and take appropriate procedures according to the Law and these Bylaws.

4-6 Mechanism of Disclosure of Material information

Material Information is disclosed by a Listed Company by submitting to the Authority and the Exchange the information to be disclosed by completing one of the forms in Appendices 8, 9, 10, 11 or 12 in this Module. The disclosure department in the Authority shall be provided with a receipt issued by the Exchange when such a form has been duly submitted. The Authority may set up an electronic system for disclosure to ensure that the disclosure is complete and expeditious.

Announcement of Material Information through media by a Listed Company does not meet the requirements specified in this Module.

When preparing an announcement, the company shall take the following into consideration: 1. The announcement shall be truthful, clear and not misleading. 2. The announcement shall contain sufficient information and data that allows any Person to understand the effect of the Material Information. 3. The announcement shall not hide or ignore any negative information about the company. 4. The announcement shall not express future expectations as if they are certain events, exaggerate the possibility of its occurrence, or provide estimations without objective grounds. 5. The announcement shall not be for promotional purposes or include promotional phrases. 6. The announcement shall avoid excessive technical terminology and shall be prepared in simple understandable language as far as possible.

Each Listed Company shall ensure that the preparation and authorisation of an announcement shall be undertaken by specific employees who are adequately acquainted with the matters to be disclosed and the requirements set out in the Law and these Bylaws.

If an announcement fails to meet any of the requirements set out in Article (4-6-3) of this Module, or if there is any need to published clarification or additional information regarding previously announced Material Information, the Authority or Exchange may instruct the Listed Company to amend the announcement as necessary.

4-7 Publication of Information on Listed Company’s website

A Listed Company shall make each disclosure of Material Information available on its website and maintain an archive on its website of previous disclosures of the last five years, which shall be available at all times for any Person to access without payment.

A Listed Company shall ensure that no Material Information is disclosed on its website before being disclosed at the Exchange.

4-8 Obligations of an Exchange

An Exchange shall immediately announce any disclosure of Material Information sent to it in accordance with this Module. It may not delay or suspend any disclosure related to a Listed Company waiting for approval from official entities.

An Exchange shall not delete any news listed on its announcements board or its website which include false information, and the matter shall be remedied by the issuance of a new announcement called a “corrective announcement”, which shall contain the false information and a statement of the accurate information; additionally, the Exchange shall clearly identify the false announcement by a special visual indicator, explain reasons for the mistake, by filling out the form set out in Appendix 7 of this Module.

When making a disclosure of a development relating to a previous announcement of Material Information, the Exchange shall call such subsequent disclosure a “supplementary disclosure” and shall include reference to each previous disclosure related to the same subject. Such disclosure shall include links to previous disclosures of the same subject on the website of the Exchange, by filling out the form set out in Appendix 8 this Module.

An Exchange shall not repeat in the next trading session the announcements provided at the last session of the past day, provided that a daily link is added to the website under the name of “last session announcements” which shall include all the announcements of the last session. All previous announcements shall be under the same link.

The Exchange shall maintain an announcement record on its website.

The provisions of this Chapter shall be applied to Securities regardless of their form or purpose. Collective Investment Scheme units are excluded from these provisions except for the application of the provisions of pledge and attachment stated in Chapter Nine (Pledge of Securities) and Chapter Ten (Attachment of Securities) of this Module.

No Securities may be issued, either directly or indirectly, or offered unless approved by the Authority.

In the event that the Issuer or the Obligor is one of the Units Subject to the Supervision of the Central Bank, it shall obtain the Central Bank’s approval, while a Foreign Issuer shall obtain all the necessary approvals of the Regulatory Bodies in the country of incorporation. Meeting the conditions for the issuance or offering of Securities by an Issuer or Obligor shall not entail any rights thereof to be given a license for issuing, offering, trading or marketing those Securities.

Bonds and Sukuk may be directly issued by the Obligor or indirectly by a Special Purpose Vehicle Company wherein the Bonds and Sukuk are issued by that company rather than by the Obligor itself.

Applications for the issuance or offering of Securities shall be submitted to the Authority through the form designed for this purpose, and shall include the following information: 1. Description of the Securities to be issued or offered. 2. Statement of the kind of subscription, whether it is a Public Offer or Private, and the expected subscription opening and closing dates. 3. Main purposes and grounds for the Securities’ issue or offering. 4. Estimated fees, costs and charges for the process of the issue or offer and any relevant actions. 5. In the case of Bonds or Sukuk, the application for issue or offering shall set out the terms and conditions for redemption. 6. In the event that the Bonds or Sukuk are Convertible into Shares, the application for issuance or offering shall state the terms, conditions and procedures for their conversion into shares. 7. Information and data of the Issuer, Obligor, Subscription Agent, Investment Advisor, Obligor, Credit Rating Agency, and of any personal or in-kind guarantees. 8. Information concerning any legal action by or against the Issuer, Obligor or guarantor in case of a guaranteed issue for Bonds or Sukuk. 9. Any further information required by the Authority.

The following documents shall be enclosed with the Security issuance or offering application: 1. An application for Securities issuance or offering signed by the person authorized by the Issuer or Obligor (as the case may be). 2. A draft of the proposed Prospectus, which shall be prepared in accordance with the form approved by the Authority. The draft shall be issued in Arabic and accompanied by an English translation with a statement showing that it is in compliance with the conditions of contents and disclosure. 3. A copy of the subscription application. 4. A copy of any existing or upcoming agreements entered into between the Issuer and other for the purpose of issuing or offering such Securities, in the event that the Authority requires any such agreement. 5. A copy of the Company Contract of the Issuer, Obligor or guarantor, if any. 6. A copy of the commercial register and license or any other similar documents of the Issuer, Obligor or guarantor, if any. 7. A copy of the Company Contract for which shares are convertible, if any. 8. In the event of an issuance of Preferred Shares, a statement of the classification of the Preferred Shares in accordance with the International Financial Reporting Standards shall be attached. The Authority may require the Issuer to re-classify such Shares. 9. A copy of the credit rating report in the event of issuing or offering Bonds or Sukuk. 10. The audited annual financial statements of the Issuer, Obligor or guarantor, if any, for the last three financial years before the application submission date, unless the Securities are issued for subscription in the Issuer’s capital upon its foundation. In the event that the company was founded less than three financial years ago, the financial statements of the provisional period or periods elapsed before the application submission date shall be submitted. Additionally, the quarterly reviewed financial statements shall be submitted in the event that a period of more than six months has elapsed from the last annual audited financial statements prior to the application submission date. 11. A report prepared by an Asset Valuator of any assets in kind in the event that subscription in Securities are to be against assets in kind. 12. A real estate Appraisal Report shall be issued pursuant to Appendix 1 in this Module if the intended Securities are Bonds and Sukuk secured by real estate assets. 13. A copy of the documents proving that the Issuer and Obligor have acquired all the approvals required in accordance with the memorandum of association of the Issuer or Obligor for the issuance or offering of Securities in order to obtain the Authority’s approval. 14. The approval of the Board of Directors of the company into whose shares the Preferred Shares, Bonds or Sukuk shall be converted, and the approval of the company’s General Assembly in accordance with the company’s Memorandum of Association to increase the issued capital of the company for the purpose of making available the Shares required for converting the Preferred Shares, Bonds or Sukuk, pursuant to this Module.Article 2-5 15. A copy of the resolution of the Board of Directors or competent fund’s Administrative Authority by the Obligor, approving the security of the Bonds or Sukuk if the Securities are secured Bonds or Sukuk. 16. Any further documents or information required by the Authority.

The Authority shall decide upon the application of the Securities issue or offering in a Public Offer within thirty days at most from the date of the submission of duly completed documents and information as required by the Authority.

If the Authority finds reasonable grounds for disapproving a Securities issue or offering, it shall notify the company in writing of its resolution and the grounds upon which the decision is based within the period referred to in Article (2-6) in this Module.

Issuance, offering, subscription and allocation of Securities shall be within a period of six months at most from the date of the Authority’s approval for the issuance or offering. The Authority may extend the said period in the event that it finds reasonable justification for such extension.

In addition to the continuing obligations stipulated in these Bylaws, a foreign Issuer or Obligor shall: 1. Notify the Authority directly in the event that any provision in this Module contradict any provision stipulated by a securities regulatory authority to which the foreign Issuer or Obligor is subject, to enable the Authority to take any further resolutions or steps required, including the exclusion of the Securities issuance from any provision stipulated in this Module. 2. Provide any information and documents to the Authority which have been notified and submitted to the securities regulatory authority in the country of incorporation. 3. Report immediately to the Authority any amendment of any law, legislation, or regulation in the country of incorporation that may affect its obligations arising from the Securities and its ability to meet such obligations. 4. Notify the Authority immediately of any disciplinary action taken against it by a securities regulatory authority in the country of incorporation.

If a company’s capital consists of shares in kind upon incorporation or upon the increase of its capital, or if the subscription price for a security is partly or wholly not cash, i.e. in kind, such shares in kind or non-cash subscription price shall be evaluated by one of the Asset Valuators licensed by the Authority, in accordance with the principles and regulations stated in the following articles.

Asset Valuators licensed by the Authority shall evaluate the assets indicated in Article (3-1) in this Module, in response to an application of the Issuer or the Issuer’s founders or pursuant to a court mandate if such assets are evaluated for forced sale. Regulatory Bodies’ approval of the appointed Asset Valuator and the appraiser’s report is not required. Appraisal may not be assigned to the Issuer’s Auditor or another Auditor which is a party to the Issuer.

Real estate located in or out Kuwait shall be evaluated in accordance with the appraisal mechanism followed by the Authority, hereinafter referred to in Appendix 1.

Excluding the cases where the appraisal is conducted pursuant to a court mandate, the Ministry shall be notified of such appraisal to verify it is conducted by an Asset Valuator, who is licensed by the Authority. Neither the Authority nor the Ministry shall assume responsibility for the contents of an appraisal’s report.

An Asset Valuator shall be liable for any professional negligence or mistakes relevant to its conclusions within the limits of the information available to it.

An Issuer, Obligor or offeror, as per each case individually, shall provide the Asset Valuator with all the required information. The managers of the Issuer, Obligor or offeror, as per each case individually, shall be held liable for any non-disclosure of information or the submission of incorrect information in this regard.

An Issuer or Obligor shall submit one or more reports on a proposed issue of Bonds and Sukuk issued by a Credit Rating Agency. The credit rating report shall specify the type of Securities for which investors shall be invited to subscribe. Excluding Bonds and SukukPublic Offer, the Authority may exempt in whole or in part any entity from the provisions of this chapter.

The final report of a credit rating of Bonds and Sukuk shall be delivered to the Authority upon the submission of the application for their issue. If the final report of credit rating is not delivered to the Authority the Authority may accept a reference rating instead.

In respect of a Public Offer, the Authority may disapprove an issue application if the credit rating report raises doubts as to the ability of the Issuer or Obligor to meet its obligation towards the Bondholders.

The Authority may commit the Issuer or Obligor, as per each case individually, to enter into an agreement with a Credit Rating Agency to prepare an annual credit rating report for the Bonds or Sukuk to the date set by the Authority. In such case, the Issuer or Obligor shall continuously provide the Credit Rating Agency with the information needed on a timely basis. The credit rating report shall be regularly sent to the holders of Bonds and Sukuk. The Issuer or Obligor may not change a Credit Rating Agency unless approved by the Authority.

No person may issue an invitation to subscribe in a Security, either upon issuance or by offering, unless the issuance or offering complies with the information and procedures stipulated in the Law and these Bylaws and is approved by the Authority.

The Authority may exempt an Issuer from including in a Prospectus the statements and information referred to in this Module if the Authority deems disclosing such data and information would not be in the public interest.

The Authority may require the inclusion in the Prospectus of information further to the data and information set out in this Module.

Pursuant to Article (5-7) in this Module, persons in charge of a Prospectus shall jointly indemnify any Person that may incur any damages resulting from incorrect or non-accurate information therein or as a consequence of negligence concerning any data or information required to be included.

Except for Preferred Shares, Shares may be issued or offered for subscription without compliance with the provisions of Article (5-1) of this Module in the following cases: 1. An invitation to no more than fifty Persons for subscription of Shares in Kuwait. 2. Issuance or offering of Shares of no more than KWD 1,000,000 within twelve months from the last date of issue. 3. Issuance of Shares of no more than 10% of the last issue of the same class of Shares within a period of no more than twelve months. 4. Issuance of bonus Shares to be distributed among shareholders as a dividend. 5. Issuance of Shares within the framework of an employees’ stock option plan. 6. Issuance of Shares for the benefit of the Issuer’s creditors for the purpose of restructure the Issuer’s debts. 7. Any other cases determined by the Authority.No promotion through the mass media for an issuance or offering shall be permitted in the cases stated in this Article.

A Public Offer Prospectus shall include all information that may enable investors to evaluate the Issuer’s financial status and future prospects and the rights arising from the Securities offered, in accordance with the nature of issue or offering and nature of the Securities. The Public Offer Prospectus shall consist, in particular, of the following details: 1. An index of the contents of the Prospectus. 2. The name and address of the Subscription Agent. In the event that the Issuer is not the Subscription Agent a further statement of the rights, obligations and duties of the Subscription Agent. 3. Amount of Securities issued or offered. 4. Subscription opening and closing dates. 5. Subscription minimum limit. 6. Detailed description of the risks related to subscribing in the Securities. 7. Detailed statement of the use of the proceeds of the issuance. 8. Procedures for returning money to subscribers if their applications are not approved either wholly or partially and a statement of the repayment schedule and indemnifications resulting from any delay in repayment of the subscription money in the event that the issue be cancelled. 9. A statement that the Prospectus has been prepared in accordance with the applicable Law and these Bylaws and approved by the Authority. 10. A statement of the Central Bank’s approval of the issue or offering for the Units Subject to the Supervision of the Central Bank. 11. Declaration that the Authority shall not be a party to any claim related to damages arising from a Prospectus approved by the Authority. 12. Representation by the Issuer, Obligor and Subscription Agent which states that they assume responsibility in the event that the information included in the Prospectus is incorrect, that the Prospectus does not omit any Material Information and that it is based upon accurate data and information. 13. Statement setting out the Islamic Sharia opinion if the Securities comply with the Islamic provisions. 14. Statement of the Board of Directors or on behalf of each Member of the Board of the Issuer and Obligor, confirming that all the information shown in the Prospectus is complete, accurate and true, that the statement is issued after due diligence, that disclosure is made of all information relating to the Securities, Issuer, Obligor and guarantor for the purpose of deciding whether to subscribe in such Securities or not and that all the provisions of this Module, Law and Bylaws, Companies Law and its Executive Regulations and the laws and instructions issued by the Authority are complied with.Article 5-6 15. Representations of the legal advisors of the Issuer or Obligor certifying that they have reviewed the Prospectus and relevant documents and ensured that they comply with the relevant legal requirements and that the Obligor has obtained all the approvals required to ensure the validity and effectiveness of its obligations. 16. If the Prospectus includes a technical statement made by an expert or a Licensed Person or a Registered Person, the Prospectus shall include a reference to the approval of the person who prepared such technical statement that it may be included in the Prospectus, and that it remains valid. 17. An explicit notice as follows: “We recommend that you seek advice of an appropriately qualified Licensed Person regarding the contents of this Prospectus before deciding to take part in the subscription”. 18. The subscription fees or estimated fees, together with the person responsible for paying these fees. 19. Copy of the Memorandum of Association and Articles of Association of the Issuer. 20. A statement of the names of the Persons in charge of supervising the Issuer directly or indirectly.

A Public Offer Prospectus shall include information about the persons in charge of the Prospectus, as follows: 1. The Issuer and any Member of a Board of Directors of the Issuer. 2. Subscription Agent, if any. 3. Any Person with responsibility for the contents of the Prospectus.

A Public Offer Prospectus shall include the details of the Securities to be offered as follows: 1. Number and class of the Securities offered. 2. Statement of the rights arising from Securities in accordance with the details included in Article (5-9) in this Module. 3. Procedures for exercising pre-emptive rights related to Securities. 4. Statement of the convertibility of the Securities’ to other forms of Securities. 5. Brief description of any restrictions on dealing in offered Securities and any future arrangements for dealing therein. 6. Statement whether the Securities offered are listed on an Exchange or not. 7. Purpose of issuing such Securities. 8. Period of time for allocation of subscribed Securities.

Rights arising from Securities shall include the following: 1. In the case of issuing or offering ordinary Shares, the rights arising from such shares shall be as follows: a. Voting rights. b. Short-term rate of profitability of the shares. c. Rights upon the Issuer’s liquidation. d. rights in the event that he subscription is not covered. 2. In the case of issuing or offering Preferred Shares, the relevant rights shall include the following: a. Profits to be distributed among the holders of Preferred Shares, with provisions determining the periods of distribution of dividends. b. Any restrictions on payment of dividends for Shares. c. Rights of the holders of Preferred Shares concerning voting, profits, liquidation proceeds of the company and any other rights. d. Terms and conditions to redeem convertible Preferred Share. e. Terms and conditions for the conversion of Preferred Shares into ordinary Shares. f. Procedure for exercising rights relating to Preferred Shares before and after being converted. g. Disclaimer of liability stated in Article (13-13) in this Module. 3. In the case of issuing or offering Bonds, Sukuk or any other debt instruments. the rights arising from such shares shall be as follows : a. Payable returns. b. Date of payment. c. Redemption payment. d. Provisions of formation and operation of the Bondsholders and Sukukholders Association. e. Events which would lead to the acceleration of the redemption or redemption of Bonds and Sukuk. f. Terms and conditions of converting Bonds and Sukuk into ordinary Shares. g. Rights of the Bondholders and Sukukholders, in the event that the Issuer or Obligor is bankrupt, wound up or liquidated.

A Public Offer Prospectus shall include the following information concerning the Issuer: 1. Issuer’s name, address and date of incorporation. 2. Issuer’s legal form. 3. Issuer’s issued and paid capital. 4. Number and detail of any Securities previously issued by the Issuer. 5. Brief description of the Group of which the Issuer is a member, if any, and the place occupied accordingly in such Group. 6. Statement of the names of the shareholders who hold 5% or more of the shares in the capital of the issuer, showing the percentage of shares held by each of them. 7. Audited and approved financial statements for the last three years preceding the date of applying for the approval of the Prospectus. In the event that more than nine months has elapsed from the date of the last approved financial statements, the submission of financial statements updated for this period and reviewed by an Auditor shall be required. 8. Statement of the distribution of the Issuer’s profits for the last five years preceding the date of applying for the approval of the Prospectus, inclusive of the value and kind of the shares distributed. 9. Brief description of the transactions carried out or to be carried out by any Related Parties. 10. Names and positions of the members of the Issuer’s Board of Directors or of the Board of the entity managing the Issuer. 11. The financial and in-kind benefits given to the members of the Issuer’s Board of Directors or of the Board of the entity managing the Issuer during the financial year preceding the application for the approval of the Prospectus, and the estimated value of the benefits intended to be given to them in the financial year of subscription. 12. Number and class of Shares owned by each Member of a Board of Directors of the Issuer in the Issuer’s capital. 13. Resume of each present or proposed Member of a Board of Directors of the Issuer and the nature of any family relationships between the Members of the Board of Directors. 14. Statement of any other position occupied by any Member of a Board of Directors of the Issuer. 15. Detailed description of the Issuer’s main activities as follows: a. Description of the Issuer’s main activities and any further exceptional factors that have a substantial effect on these activities. b. Statement of specific clients or suppliers and patents, intellectual property rights, licenses or private contracts which have a major significance for the Issuer’s activity. c. Information of the Issuer’s current investments, if any, and their relevant risks. d. Information of claims, judicial actions or arbitration procedures, whether considered, suspended or alleged to be taken against the Issuer or any of its Subsidiary Companies, which may have substantial effect on its financial position.Article 5-10 e. Basic information of all the main contracts of the Issuer or the Issuer’s Subsidiary Companies within the two years preceding the date of applying for approving the Prospectus and the parties of these contracts, provided that routine contracts entered into within the ordinary course of the Issuer’s business are not included.

If an invitation to subscribe is limited to Professional Clients or a specific category of clients or definite Person or Persons approved by the Authority, a Private Placement Prospectus may be prepared regardless of the provisions of the Articles from (5-6) to (5-10) of this Module, provided that the Private Placement prospectus includes the following information in particular: 1. Issuer’s name, address and date of incorporation. 2. Sales Agent’s name and address, if the Issuer is not the Sale Agent. 3. Subscription Agent’s name and address, if any. 4. Subscription period. 5. Subscription minimum, if any. 6. Kinds of investors eligible for subscription. 7. Details of the intended use of the proceeds of the issue. 8. Statement that the Prospectus has been prepared in accordance with the Law and these Bylaws and approved by the Authority. 9. Statement of the Central Bank’s approval for the issue by Units Subject to the Supervision of the Central Bank. 10. Statement that the Authority shall not be a party to any claim of damages arising from a Prospectus approved by the Authority. 11. Representation of the Issuer, Obligor or Subscription Agent, that it assumes responsibility in case the information included in the Prospectus proves to be incorrect, that the Prospectus does not omit any Material Information and that it is based on factual information and details. 12. Statement of the Board of Directors or on behalf of each Member of the Board of the Issuer and Obligor confirming that all the information shown in the Prospectus is complete, accurate and true, that the statement is issued with due care, that all information relevant to Securities, Issuer, Obligor is disclosed to the investors for the purpose of deciding whether to subscribe in such Securities or not and that all the provisions of this Module, Law and Bylaws, Companies Law and its Executive Regulations and the laws and instructions issued by the Authority are complied with. 13. Representation of the legal advisors of the Issuer or Obligor, certifying that they have reviewed the Prospectus and relevant documents and ensured that they comply with the relevant legal requirements, and that the Obligor has obtained all the approvals required to ensure the validity and effectiveness of its obligations. 14. An explicit notice as follows: “We recommend that you seek advice of an appropriately qualified Licensed Person regarding the contents of this Prospectus before deciding to take part in the subscription”. 15. Brief description of the transactions carried out or to be carried out by the Related Parties.Article 5-11 16. Details of the offered Securities as follows: a. Number and class of the Securities offered. b. Statement of the rights arising from Securities, based on the details included in Article (5-9) in this Module. c. Brief description of any restrictions on Trading of the Securities being offered and any future measures concerning Trading thereof. d. Purpose of issuing such Securities. 17. The Private Placement Prospectus shall include the following information concerning the Issuer: a. Number and detail of any Securities previously issued by the Issuer. b. Audited and approved financial statements for the last three years preceding the date of applying for the approval of the Prospectus. In the event that more than nine months has elapsed from the date of the last approved financial statements, the submission of financial statements updated for this period and reviewed by an Auditor shall be required. 18. Information of claims, judicial actions or arbitration procedures, whether considered, suspended or alleged to be taken against the Issuer or any of its Subsidiary Companies, which may have substantial effect on its financial position.

No promotion of Private Placement is permitted unless in compliance with the financial promotions regulations, which are set forth in Chapter Seven of Module Eight (Conduct of Business) of these Bylaws, provided that they shall not be made through mass media.

A Prospectus for Bonds and Sukuk convertible into Shares shall include the following: 1. Class of Shares into which Bonds and Sukuk shall be converted. 2. Rights and privileges related to such Shares. 3. Terms and conditions of conversion. 4. The total number of shares which subject to conversion rights. 5. Period during which the conversion rights may be exercised and date from which such rights can be exercised. 6. Effects of exercising conversion rights and payments related to such conversion. 7. Agreements for the transfer of conversion rights, if any. 8. Rights of the Bonds and Sukukholders, in the event of bankruptcy, winding up or liquidation of the company whose shares shall be subject to conversion rights. 9. Agreements for amending subscription rate, price of the tender, number of Shares or others taking into consideration the amendment of capital of the company whose Shares are subject to the rights of conversion.

In the event that the Issuer of the Bonds and Sukuk convertible into Shares is different from the Issuer of the Shares that they shall be converted into, the Prospectus shall include the information required by the Authority of the company, whose Shares, the Bonds and Sukuk shall be converted into.

Prospectus shall include the information required by the Authority of the company whose Shares, the Bonds and Sukuk shall be converted into, as follows: 1. Authorized and issued capital, amount of Shares allocated for conversion of Bonds and Sukuk, term of licensing capital increase, pre-emptive rights related to capital increase and provisions and procedures for issuing such Shares. 2. Persons who exercise or may exercise direct or indirect Control, either jointly or severally, on the company and a statement of the percentages of their ownership in the capital. 3. Information of the profitability relating to the company’s shares for each year during the last three financial years. 4. Percentages of dividend distributions for the last three financial years. 5. Date of profits maturity. 6. Details of any agreement under which future profits are waived or agreed upon being waived. 7. Summary of the provisions of any shareholders’ agreement related to the company. Information concerning the company, in which the company whose shares the in Bonds and Sukuk will be converted, in which the latter company owns not less than 10% of the paid capital, provided that such portion is not less than 5% of the net asset value of such company.

Sukuk Prospectus shall provide the following information of the Sukuk Assets: 1. Type and date of valuating the Sukuk Assets. 2. Description of the returns of the Sukuk Assets. 3. Location of the Assets and applicable law to related receivables. 4. Amount, value and maturity of receivables. 5. Ratio of receivables of SukukAssets upon incorporation, in the event that receivables are based on or backed by such Assets. 6. Standards for choosing Assets and details of replacement procedures. 7. Reference to any material representations submitted by the Issuer regarding Assets and receivables. 8. Origination of related Assets, investments or receivables. 9. Summary of the main conditions of insurance policies of the Asset-Backed Sukuk. 10. Obligors’ specifications and further details required by the Authority. 11. Description of the material risks related to SukukAssets and details of methods of risk treatment and mitigation. 12. Description of sale, transfer or waiver of SukukAssets or their relevant rights to the Issuer and statement of date thereof.

Sukuk Prospectus shall provide the following information, at minimum, concerning the cash flows resulting from Sukuk Assets: 1. Detailed description of Sukuk structure and cash flows. 2. Anticipated method of the Issuer’s fulfilment of its obligations towards Sukukholdersthrough cash flows, including information about any credit enhancement. 3. Statement of the cases wherein cash flows are decreased, the availability of any liquidity support and any mechanism of covering risks of a profits decrease, as the case may be. 4. Investment standards relevant to investing surplus liquidity. 5. Details of how to collect payments from obligors. 6. Summary of the priority payment provisions by the Issuer to the holders of certain class of Sukuk, if any. 7. Details of the service provider’s fees and other fees due from the Issuer to be fulfilled by the cash flows. 8. Details of any other procedures of payment to Sukukholders. 9. Information about the accumulation of the financial surplus relevant to Sukukstructure, if any.

Sukuk Prospectus shall provide the following additional information: 1. Originator’s name, address and basic information. 2. Service provider’s name, address and a summary of its responsibilities, its qualifications and the provisions of termination. 3. Name, address and basic information of any Obligor, and payment obligations relating to the cash flows derived from Sukuk Assets, as the case may be. 4. Name, address and basic information of providers of credit enhancements, as the case may be. 5. Name, address and basic information of the bank where the main accounts are opened for purposes of issuance.

A Prospectus of an Asset-Based Sukuk shall include sufficient information about the assets as deemed by the Authority which establish that the procedures proposed for sale, transfer or conversion of SukukAssets or rights and dues arising from Sukuk Assets to the Issuer create a true sale in accordance with these rules.

Any Prospectus and other promotional material related to an Asset-Based Sukuk shall include an explicit reference to the fact that the terms and conditions of such Sukukimply an obligation of transfer of the relevant Asset-Based Sukuk by means of purchase undertaking or any other form of obligation, from the Issuer to Obligor or any other Person.

A Sukuk Prospectus shall include the eligibility of the holders of Sukuk for the profits of Sukuk Assets and redemption of Sukuk.

A SukukProspectus shall include information about any Guarantor similar to the information required for the Issuer and Obligor.

A Prospectus shall become effective thirty days after being submitted to the Authority with all required documents, information and statements required, unless the Authority declares its approval or disapproval in writing prior to the expiry of the said period. This period may be extended with the Issuer’s approval.

The Authority may refuse approval of a Prospectus in the following cases: 1. The Prospectus does not comply with the Law or these Bylaws. 2. The Prospectus is submitted without proof of payment of the fees required. 3. The Issuer fails to provide the financial statements required by Law or any regulation or bylaw issued thereunder. 4. The prospectus includes an incorrect or incomplete statement, which may affect the subscriber’s decision.

In the event of a Public Offer, the Issuer shall provide the Exchange, Issuer, Subscription Agent, Obligor and Guarantor with sufficient copies of the Prospectus approved by the Authority, provided that copies of the prospectus shall be available to the public for free.

In the event of a substantial change or mistake or difference of information or data of the Prospectus approved by the Authority, the Issuer or Subscription Agent shall provide the Authority with a supplementary prospectus including the necessary amendments, prior to the end of the subscription period. Each Subscriber shall be given a supplementary Prospectus after being approved by Authority and before the end of the subscription period. The provisions of Article (5-25) of this Module shall apply to the supplementary prospectus. Any subscriber who subscribed before being provided with the supplementary prospectus shall be entitled to withdraw from subscription. In such case, the Issuer shall return the subscription payments to the withdrawing subscriber immediately when he decides to withdraw his subscription.

The Issuer, Subscription Agent and all Obligors, if any, shall place the Prospectus approved by the Authority on their websites to be available for printing and downloading at least two Business Days before the opening of the subscription.

In the event of a Public Offer, it shall be advertised by publishing a summary of the Prospectus thereof in two local newspapers issued in the Arabic language and one local newspapers issued in the English language, provided that these newspapers are widely circulated, that the announcement is published at least two Business Days before the opening of subscription and that it includes the following information, at a minimum: 1. Name and number of the commercial register of the Issuer, Obligor and Guarantor, if any. 2. Securities’ risks. 3. Name of the Subscription Agent, Investment Advisor, other agents or trustee (as the case may be). 4. How the public may obtain a copy of the Prospectus. 5. Statement that recommends to investors to read the contents of the Prospectus before investment, to assess relevant risks and seek professional advice. 6. Subscription applications opening and closing dates. 7. Disclaimer statement as follows:“The Authority or other Regulatory Bodies in Kuwait assumes no responsibility whatsoever for the contents and accuracy of this announcement or damages resulting from relying on any part of this announcement”

Marketing and financial promotion materials of Securities available for public in Kuwait or targeting the investors therein, including Private Placement of Securities, shall fulfil the following conditions: 1. Comply with the rules, restrictions and obligations applicable under the Law, these Bylaws, regulations, guidance principles and instructions issued by the Authority. 2. Include an explicit statement that investor shall refer to the Prospectus for more detailed information. 3. Include the following disclaimer: “The Capital Markets Authority and all other Regulatory Bodies in Kuwait assume no responsibility whatsoever for the contents of this document and do not approve the contents thereof or verify the validity and accuracy of its contents. The Capital Markets Authority and all other Regulatory Bodies in Kuwait assume no responsibility whatsoever for any damages that may result from relying on the contents of this Prospectus either wholly or partially. It is recommended to seek the advice of an Investment Advisor”.

Without prejudice to the obligation of disclosure under the Law and instructions issued by the Authority, the Issuer and Obligor, if any, and any Person who undertakes any relevant role in respect of the issue, shall maintain the confidentiality of the information concerning the issue prior to the Authority’s approval of issuance or announcement thereof. The Issuer and Obligor may provide the Subscription Agent, Investment Advisor, Credit Rating Agency, agent or trustee with all information related to the issuance of the Securities for the purpose of processing the issue. These persons shall be notified in writing that such information is confidential and that they shall not deal in any Securities of the Issuer or Obligor that may be affected by the issue process, unless such information is made public.

Subscription in Securities shall be open for a period not exceeding three months. The Issuer may close the subscription in the event that all the Securities offered for subscription are already subscribed for. The Issuer may keep the subscription open until the end of the subscription period. Such action shall be made clear in the Prospectus.

Securities shall be subscribed by one or more Subscription Agents or other entity approved by the Authority. Subscription payments shall be deposited in a bank account opened by the Subscription Agent in the name of the Issuer. No withdrawals shall be made from such account unless for the purpose of transferring the total value of the subscription payments to the Issuer or returning payment to the subscribers in accordance with Article (5-39) of this Module in the event of the cancellation of the issue, unless otherwise provided for in the Prospectus.

Subscription applications shall be submitted to the Subscription Agent with the required subscription payment. The receipt signed and issued by a Subscription Agent shall provide for the following information: 1. Type of Securities. 2. Name, commercial register number and headquarters address of the Issuer and Obligor. 3. Name, information (number of civil identification or commercial register), address and nationality of the applicant. 4. Subscription date. 5. Number of Securities subscribed for. 6. Paid amount of Subscription. 7. Par value of security. 8. Specific dates and terms and conditions of payment. 9. Maturity date of Preferred Shares, Bonds and Sukuk, if any, and the terms of their redemption. 10. Statement of collaterals, if any. 11. In the event that the Securities comprise Preferred Shares, Bonds and Sukukconvertible into Shares, the receipt shall state the details of Shares into which, Bonds and Sukuk shall be converted, and the dates wherein the Bondholders and Sukukholders shall exercise the right of conversion. The subscription by the investor shall be deemed final upon the issue of receipt by the Subscription Agent. Subscription may be conducted electronically via any modern means of payment or communication. Subscription shall be considered complete upon the deposit of the subscription payment in the subscription account as detailed in the Prospectus.

Securities not paid in full shall be registered in the name of the Subscription Agent and their payments shall be made in full by transferring such payments to the subscription account. In the event that the Issuer or Subscription Agent denies that the Securities value is paid in full, the certificate issued by the bank where the account referred-to is opened shall be relied upon for verification of payment. In the event that the subscriber fails to complete unpaid amount for his subscription by its due date, the Issuer shall request the Subscription Agent to sell the Securities on behalf of the subscriber, deposit the value of such sale in the account indicated in the previous paragraph of this article, transfer an amount which fulfils the unpaid value of Securities to the Issuer’s account and deliver the rest of the value, if any, of the sale to the subscriber.

Securities shall be allocated in accordance with the method set out in the Prospectus during a maximum period of five Business Days from the date of subscription closure.

Subscription shall be cancelled and subscription payments shall be repaid to subscribers as per article (5-39) of this Module in the event that at least 50% of the Bonds and Sukuk are not covered within the subscription period, unless otherwise provided for in the Prospectus. In the event of oversubscription for the Bonds and Sukuk, the excess shall be returned to subscribers and Bonds and Sukuk shall be allocated among them, pursuant to the Prospectus.

The Issuer shall provide the Obligor and Subscription Agent with a copy of the statement referred to in article (5-38) of this Module and its attachments. The Subscription Agent shall, within a period of no more than one Business Day following its being provided with the statement referred to and its attachments, transfer the subscription payments and any returns, if any, to the Issuer or Obligor, in accordance with the Prospectus. In the event that the issue is cancelled, the Subscription Agent shall, within a period of not more than five Business Days from the date of the issue cancellation, return the amounts of subscription and any further returns achieved, if any, in accordance with the instructions shown in the subscription application and conditions stated in the Prospectus. In the event that the Issuer expresses a desire to cancel the issue, it shall advertise such cancellation within a maximum period of fifteen days from the date of subscription closure. Cancellation shall be advertised the same way the Prospectus is advertised.

Securities shall be deposited at a central securities depository of Securities of a Clearing Agency. The statement of holding of Securities issued by the Clearing Agency is prima facie evidence of title of the Securities and any rights arising therefrom. A statement of holding shall be delivered to each security holder showing the number of its Securities. In the event of pledge or attachment of Securities, the creditor pledgee and attachment creditor shall be given a receipt of Securities with annotation of pledge or attachment.

Any action related to Securities not deposited with a Clearing Agency, or not recorded in their registers in accordance with the procedures applicable by a Clearing Agency in this regard, shall not be taken into consideration.

Each Issuer shall have a special register kept with a Clearing Agency for each issue, The register shall contain the names, nationality, domicile, and number of Securities registered for each holder, the type and the capital paid in for each Security. The register shall be updated by any changes required to be registered and which are received from the Clearing Agency. Any party with a relevant interest may request the Clearing Agency to provide them with such information from the register.

The Clearing Agency shall, within the specific dates determined by the Authority, provide the Authority with any information concerning the information entered into the register of the Securities’ holders kept with such Clearing Agency.

Pursuant to a complaint presented by any party with a relevant interest, or pursuant to the results of inspection procedures, the Authority may decide to maintain the register of the Securities’ holders by some agency other than the Clearing Agency. Both agencies shall take the necessary actions to deliver and receive the register of the Securities’ holders and the other documents showing the entries added thereto within the specific dates set by the Authority.

The statement of holding of Securities shall include the following details: 1. Name, commercial register number and headquarters address of the Issuer and Obligor. 2. Capital of the Issuer and Obligor. 3. Name of the Security’s holder. 4. Par value and number of security. 5. Return eligible for heirs, if any, and the specific dates for paying the same. 6. Annual dividend of the security from the company’s profits, if any. 7. Statement of collaterals of securities, if any. 8. Redemption conditions for Bonds and Sukuk. 9. In the event that the Securities comprise Bonds and Sukuk convertible into Shares, the receipt shall state the dates whereon the Bondholders and Sukukholder may exercise the right of conversion, and the conditions of conversion.

The provisions of this chapter shall apply to Special Purpose Vehicle Companies which issue the kinds of Securities referred to in Paragraph (9) of article (5) of the Law.

Special Purpose Vehicle Companies which issue Securities may not be incorporated and carry out any activities unless it is licensed by Authority. These companies shall exercise their activities without the need to obtain a commercial license, as per Law No. (111) of 2013 regarding License of Commercial Stores.

Special Purpose Vehicle Companies’ purposes are limited to the issue of Bonds and Sukuk as shown in their contracts. These companies shall not pursue any other purposes, even if similar to their purposes. They shall be wound up by force of law once the purposes for which they are formed are achieved.

The term of Special Purpose Vehicle Companies shall not be less than the term of Bonds and Sukuk issued thereby.

Special Purpose Vehicle Companies may be formed by one person. Founders or shareholders, during the term of the company, shall not be more than three.

The capital of Special Purpose Vehicle Companies shall be registered as a trust in the name of the Persons whom the Authority agrees as appropriate to hold such Shares in the capital of the Special Purpose Vehicle Companies, particularly the following: 1. A Licensed Person or Registered Person by the Authority and its Subsidiary Companies. 2. Law firm. 3. Obligor or originator of Bonds. The Authority may disapprove any of the above entities in the event that they are not sufficiently qualified, experienced or independent. The disapproval of the Authority shall be justified.

The phrase (Special Purpose Vehicle Company) shall be added to the title of this kind of companies in all papers, prints and communications thereof.

The company contract of Special Purpose Vehicle Companies shall be issued in writing and shall not be required to be issued as an official document. This provision shall apply to any amendment thereof.

The contracts of Special Purpose Vehicle Companies shall be issued in accordance with the form approved by the Authority. The founders, if there be such, may not omit obligatory information required in the said form. Beyond the obligatory information required, founders may abide by the provisions of the form either wholly or partially or add other conditions which do not conflict with the obligatory provisions stipulated in this Module.

A Special Purpose Vehicle Company shall be incorporated in accordance with the following procedures: 1. The incorporation application shall be submitted in accordance with the form shown in Appendix (2) accompanied by all the documents and information stated in the form. Fees as determined shall be paid. 2. Following the receipt of the company incorporation application complete with all requirements referred to in Paragraph (1) of this Article, the Authority may at any time require further information or documents it finds necessary to decide upon the application. In the event that the applicant fails to submit such information and document within the period set by the Authority the application shall be deemed to be withdrawn. 3. The Authority shall make a decision regarding an incorporation application after receiving it complete with all information and documents stated in paragraphs (1) and (2) of this article.

The Authority shall note in the register of the application of incorporation of Special Purpose Vehicle Companies the date of the application submission, names of applicants and approval of the company incorporation and date of issue or decision of the application rejection and date of notifying the applicants with such rejection.

In the event that the incorporation application is approved, founders shall be notified of such approval for forming the Special Purpose Vehicle Company, calling for the founders to sign the company contract before a competent official of the Authority within one week at the most from the date of issuing the approval.

The Authority shall issue a license for the company following payment of the fees set, place a copy of the company contract in the company’s file at the Authority and shall be exempt from publishing its contract or any amendment thereof in the Official Gazette. In the event that an incorporation application is rejected, such rejection shall be issued by a justified decision by the Authority

Special Purpose Vehicle Companies shall be exempt from the condition of having an office thereof, provided that it has an elected domicile to where notifications, correspondence and notices shall be sent. The special purpose vehicle company may not have employees or file in the Ministry of Social Affairs and may not seek to recruit foreign employees.

Excluding the requirements stated in this Chapter, Special Purpose Vehicle Companies shall be exempt from the duties required of Licensed Persons by the Authority.

Special Purpose Vehicle Companies shall be exempt from holding ordinary or extraordinary general assembly meetings in accordance with the procedures stipulated in the Companies Law, and shall replace these meetings with the shareholders’ written agreement on its resolutions.

Special Purpose Vehicle Companies shall be exempt from retaining an annual percentage of profits for reserves as per Article (118) of the Companies Law.

Special Purpose Vehicle Companies shall take the form of a shareholding company. Provisions of shareholding companies in the Companies Law shall apply in the event that there is no particular provision in this regard in the Company Contract or this Chapter.

The company shall have legal personality from the day of issue of the Authority license.

The minimum capital of a Special Purpose Vehicle Company shall be KWD 100 or the formation charges, whichever is higher. The capital shall not necessarily be in proportion to the rights and obligations transferred to the company or the total amount of the Securities issued thereby.

The contract of a Special Purpose Vehicle Company may not be amended, unless it is approved by the Authority.

In the event that a Special Purpose Vehicle Company is formed for the issue of Sukuk, it may exercise one or more of the following activities: 1. Issue of Sukuk, act as a Trustee or agent or perform all activities related to the issue of Sukuk. 2. Ownership or holding of Sukuk assets or disposal of Sukuk assets on behalf of Sukukholder. 3. Management and use of assets for the purposes for which the Sukuk are issued. 4. Distribution of Sukuk returns and redemption value. 5. Conclusion of contracts with the Originator, Obligor or others taking part in the issue. 6. Other supporting and ancillary activities. 7. Other activities approved by the Authority.

In the event that a Special Purpose Vehicle Company is formed for the issue of Bonds, it may exercise one or more of the following activities: 1. Issue of Bonds, acting as a Trustee or agent or perform all activities related to the issue of Bonds. 2. Grant loans to Obligors, which are equal to the subscription payment. 3. Distribution of Bonds returns and redemption value. 4. Other supporting and ancillary activities. 5. Other activities approved by the Authority.

Shareholders may assign the management of Special Purpose Vehicle Company to any of the persons stated in article (7-6) in this Module. In this case, most managers or Members of the Board of Directors shall be employees of the entity to which the management of the company is assigned. This entity or any subsidiary thereof shall exercise the role of secretary.

The entity to which the management of the Special Purpose Vehicle Company is assigned shall be in charge of the following: 1. Prepare the minutes of meetings of the Board of Directors or management, including the record of negotiations of such meetings, proposed resolutions and voting procedures. 2. Prepare the financial statements and records required in accordance with the contract of the Special Purpose Vehicle Company. 3. Submit any notification or representation required in accordance with the Law and these Bylaws. 4. Notify the Obligor five Business Days before the maturity date of any amounts under the conditions stipulated in the Prospectus to deposit such amounts in the account opened by the Paying Agent for paying the Periodic Distributions and redemptions in the name of the company. 5. Notify the Clearing Agency of redemption of Bonds and Sukuk wholly or partially, in case the conditions of redemption are fulfilled and provide it with the proof of fulfilling the redemption conditions. 6. Other duties and responsibilities stated in the contract of the Special Purpose Vehicle Company.

Special Purpose Vehicle Company shall not be liable for the acts performed by the managers thereof in its name and for its account, if such acts are not within the purposes for which it is created. In such case, the managers of the company shall be liable for any damages that may be incurred by the company or others as a result of such acts.

Managers of Special Purpose Vehicle Company shall take the necessary measures for evaluating the present and future obligations as to enable the company to meet such obligations on its due date.

Managers of Special Purpose Vehicle Company may not hold the company liable for any obligations other than those arising from the issue of Bonds and Sukuk.

Special Purpose Vehicle Company shall notify the Authority of any changes in respect of managers, Members of the Board of Directors, secretary, shareholders or domicile within ten Business Days from the occurrence of such change.

Special Purpose Vehicle Company shall comply with the provisions stated in Module Ten (Disclosure and Transparency) of these Bylaws in the event that the Bonds or Sukuk issued thereby are listed on the Exchange.

Managers of Special Purpose Vehicle Company may be removed by Authority resolution or court order based on a claim filed by one of the Bondholders or Sukukholders in the event that their conducts may negatively affect the public interest or the interest of the Bondholders or Sukukholders of the company or if their conduct does not serve the company’s purposes. In such case, the management of the company may be assigned to another entity decided by the Authority, until the company assigns a new managing entity approved by the Authority.

Shares issued by a Special Purpose Vehicle Company may not be disposed of or transferred unless approved by the Authority and may not be subject to attachment or forced sale. In the cases in which Shares issued by the company are allowed to be disposed of, such disposition shall abide by the provisions of article (8-3) of this Module.

In the event that one of the shareholders or the managing entity of the company declared bankruptcy, appoint a receiver or liquidator, the Shares thereof shall not be included in bankruptcy, receivership or liquidation.

Taking into consideration the Law and these Bylaws, Special Purpose Vehicle Company may issue Bonds and Sukuk for Public Offer or Private Placement pursuant to a resolution issued by shareholders conditioned by Authority’s approval.

Special Purpose Vehicle Company may not offer its Shares in Public Offer and may not directly or indirectly resort to a Public Offer for increasing its capital or for taking loans.

Documents of issue of Bonds and Sukuk shall include an undertaking by the Obligor that it shall incur all the obligations and liabilities of the Special Purpose Vehicle Company and shall pay any fines or indemnifications that may be incurred by the Special Purpose Vehicle Company in accordance with the provisions of Law and these Bylaws based on the Prospectus.

A Special Purpose Vehicle Company shall be subject to the procedures and provisions for auditing, controlling and examining the accounts of the Licensed Persons as per the Law and these Bylaws. The company shall provide the representative with the audited annual financial statements and reviewed quarterly financial statement. The Company Contract may include special provisions as an exception of the provision of review of accounts of the Licensed Persons, provided that the Authority approves such provisions and any amendments thereof.

The Auditor shall submit an annual report on all the company’s actions with the Originator or Obligor, any change of the company’s main activities or the shareholder’s activities.

A Special Purpose Vehicle Company may not be subject to merger or division, unless approved by the Authority. Special Purpose Vehicles may not be converted into another form different from that permitted in accordance with article (7-18) in this Module.

The contract of the a Special Purpose Vehicle Company shall include a provision that it shall be deemed automatically wound up during one month from the date of fulfilling the condition of expiration of Bonds and Sukuk. The contract of the Special Purpose Vehicle Company shall also include a provision of irrevocable authorization by the shareholders to issue a resolution dissolving the company and assigning a liquidator thereof.

A Special Purpose Vehicle Company may not be wound up or liquidated, unless the obligations arising from Bonds and Sukuk are fulfilled, unless the Authority and Representative approve to transfer the obligations arising from Bonds and Sukuk to the Obligor directly or to another Special Purpose Vehicle Company.

The Authority shall appoint a liquidator of a Special Purpose Vehicle Company whether that liquidator is the managing entity or other entity to take the necessary actions of the company’s liquidation in accordance with the provisions stipulated therein.

Rights and obligations arise for all persons who traded listed Securities by selling or purchasing through the Exchange’s trading system with settlement pursuant to the rules adopted by the Clearing Agency. The title of the Securities that are listed in an Exchange shall only be transferred by virtue of completing the entries in the designated registers at the Clearing Agency, unless such transfers are in violation of the law or rules upon which the securities were issued.

In the event that a Person owns alone or in alliance more than 5% of the Shares of a Listed Company on the Exchange and this person desires to increase such share to less than 30% of the company’s Shares, it may be done in accordance with the rules of trading applicable on the Exchange provided that the provisions of disclosure of interests included in Module Ten (Disclosure and Transparency) of these Bylaws are complied with.

Unlisted Securities shall be transferred by a notation of such action on the Security’s register maintained by a Clearing Agency. The Clearing Agency shall set the rules and regulations of transfer, prepare the transfer forms and shall be responsible for verifying the procedures of transferring unlisted Securities.

Non-Kuwaiti investors may own and subscribe for Sukuk and Bonds, taking into consideration any restrictions stipulated in the Prospectus or any other law on Shares’ ownership by non-Kuwaitis.

No founder shares may be created. Profit shares may be created by a decision adopted by the extraordinary general assembly against payments bearing no interest made to the company after its incorporation. A holder of a profit share shall not be a shareholder in the company and may not enjoy or exercise any of the shareholders rights during the existence of the company or upon its liquidation except for his profit share, which shall be subject to the decisions of the company ordinary general assembly with regard to the annual profit and loss accounts.

Profit shares shall be assigned in the presence of the assignor and the assignee, or their delegates, at the Clearing Agency which maintains the company shareholder register, to record such assignment by the form prepared by the Clearing Agency. Profit shares of some or all years may be assigned and such assignment may include the share profit of the debt they resulted from.

A Clearing Agency shall issue a certificate to the assignee on what has been assigned. The clearing agency shall notify the Issuer Company of the Shares about the assignment.

Profit shares shall be cancelled in the event that the right which created such shares is terminated. Such assignment shall be in accordance with the conditions agreed with the company upon issue.

Contracts for the sale of listed and unlisted Securities may state that the seller reserves the right to repurchase the Securities in return of for the payment of a certain amount during a specified period of time. Such contracts shall include an agreement to deposit the Securities concerned with a Custodian, who shall manage and dispose of them in accordance with the agreement between the seller and the buyer. Such agreement shall be noted in the Securities register. Securities trading rules shall include provisions which regulate such agreements and these agreements shall be excluded from the trading rules for listed Securities. The provisions of article (508) of the Civil Law shall not apply to such contracts.

Securities may be pledged in accordance with a contract signed by the creditor pledgee, debtor and In-Kind Guarantor, if any, even if their value is not paid in full.

Investment Portfolios may be pledged by virtue of a contract signed by the creditor pledgee, debtor, the company managing a portfolio and In-Kind Guarantor, if any.

A pledge shall be documented in writing and shall not be enforced before a Clearing Agency, Investment Portfolio Manager, Issuer or third party, unless it is recorded and registered as stated in this Module.

A pledge agreement shall include the following: 1. Amount of debt secured by the pledge. 2. Whether the pledge secures the fulfilment of a debt and the returns on the debt or not and in the event that no such provision is included in the contract it shall be deemed that the pledge covers the debt and returns thereof. 3. Whether the debtor acquired a certain amount or not. 4. Whether a specific bank account is allocated for all the transactions related to the debt secured by the pledge. Such accounts are deemed reasonable evidence of the payment of the debt amount to the debtor and the debtor’s repayments or such evidence shall be based on the bank’s periodical ratification of the balance of the debt. 5. Whether the mortgage includes the returns of the pledged Securities or not and if the pledge agreement does not have such provision the pledge shall be deemed to include the returns of the pledged Securities. 6. Whether the pledgee assigns its voting rights or not. 7. Default events, upon which a debt is due prior to its maturity date as stated in the agreement. 8. Whether the pledgor agrees that the creditor pledgee shall acquire the ownership of Securities, the sale of Securities in the event that the debtor fails to fulfil its contractual obligations and the method of determining the ownership or sale price. 9. Procedures of notice of events of default upon their occurrence and the evidence of their occurrence in accordance with the agreement.

There shall be a notation of the pledge of registered Securities on the Clearing Agency’s register made in the presence of the debtor, creditor pledgee and In-Kind Guarantor, if any, or their legal representatives, after providing the Clearing Agency with a true original copy of the pledge agreement signed by them. There shall be a notation of the pledge of Investment Portfolios on the account of such portfolios by the Investment Portfolio Manager by virtue of an agreement to be signed by the portfolio owner, creditor pledgee and Investment Portfolio Manager.

The Clearing Agency shall notify the Exchange of any pledge on listed Securities on the Exchange in order to allow the Exchange to take necessary steps to prevent trading of Securities through the trading system in use. The Clearing Agency shall provide the creditor pledgee, pledgor and pledge notary, upon their request, with an extract of the Securities statement of holding with a notation of the pledge.

In the event that the pledged Securities are eligible for cash dividends or other profits in the form of Securities provided as bonus shares, the pledge provisions stated in the pledge agreement and these Bylaws shall be applicable on such profits. Unless the pledge agreement states otherwise, a Clearing Agency shall mark the Securities distributed as bonus shares by the same notation of pledge on the pledged Securities.

The pledgor may, by virtue of a pledge agreement or any amendments thereof, assign to the creditor pledgee its rights to attend the general assembly meetings and meetings of Bondholders Association and Sukukholders Association, as the case may be, and to authorize the pledgee to vote in such meetings on behalf of the pledgor. In all such cases, the pledgor’s right to vote based on the Securities pledge shall be transferred to the pledgee starting from the day following the date wherein the debt secured by a pledge falls due without being paid by the debtor.

Upon making a notation of the pledge in the Securities’ register or on the portfolio pledge agreement, the Clearing Agency shall clarify in such notation whether the creditor pledgee has the right to exercise voting rights on the pledged Securities or not and whether there are default events wherein the debt shall be considered due before its date of maturity stated in the agreement or not.

If the right to attend and vote in the general assembly meetings and meetings of Bondholders Association and Sukukholders Association is assigned to the creditor pledgee, the Clearing Agency shall enable the creditor pledgee to attend and vote in the general assembly meetings and shall note the transfer of such right to attend and vote in person or by proxy.

Resolutions issued by the company’s general assembly meeting, Collective Investment Scheme, Fund, or Bondholders Association and Sukukholders Association shall be applicable to the creditor pledgee as applicable to the pledgor. In accordance with such resolutions, the creditor pledgee may exercise all rights resulting from the pledge under the laws, regulations, resolutions and agreements applicable to the pledged Securities, concerning appeal thereof and objection thereto even if the pledgor does not assign voting rights arising from such Security to the creditor pledgee.

The Investment Portfolio Manager and the Clearing Agency shall provide the creditor pledgee with periodic reports on pledged Securities.

In the event that the creditor pledgee is a bank or Financial Institution and the debtor or pledgor is a Professional Client, the parties may agree when they enter into a pledge agreement or afterward to give the creditor pledgee the right to acquire the ownership or sell or execute the pledge regardless of the provisions of articles (231) and (233) of the Companies Law and the provisions of chapter three of the Civil and Commercial Pleadings Law.

In the event stated in article (9-13) of this Module, the Investment Portfolio Manager and Clearing Agency, as the case may be, shall execute the creditor pledgor’s instructions concerning the ownership or sale or execution of the Securities and the fulfilment of the creditor’s rights upon a formal written notice sent to the debtor and Guarantor In Kind, if any, in accordance with the mechanism stated in the pledge agreement. The said formal notice shall be sent at least five Business Days prior to the date of acquiring ownership or sale. The sale may only be applied to cover payment to the creditor pledgee, who shall take due care in the disposal of money in the course of Securities’ sale, execution or acquiring ownership.

Attachment procedures taken after the date of pledge of Securities or portfolio shall not prevent the sale, execution or acquiring the ownership thereof as per articles (9-13) and (9-14) of this Module. In such case, the creditor pledgee shall acquire the rights which cover its debt. The attachment shall be fully effective concerning the amounts which exceed the right of the creditor pledgor, without prejudice to the owners of privilege rights. In the event that there is more than one pledge on the same Securities or Investment Portfolio, the creditor pledgee may decide to exercise its rights stated in the pledge agreement until its debt is covered. In the event that there are remaining pledged securities after collecting the debt, the remaining creditor shall exercise its rights to have its debt collected and so forth until the debt of the creditor of the least degree is collected. The creditor’s pledgees may agree with one another upon the method of selling the pledged securities and the distribution of proceeds among them.

The right to pledge shall end on the fulfilment of secured debt and shall be returned upon the end of the grounds for the fulfilment of the debt.

A pledge shall be cancelled by virtue of a letter to be sent to the Clearing Agency and signed by the creditor pledgee, if the creditor pledgee or its agent is a Local Bank, or by virtue of the presence of the creditor pledgee before the Clearing Agency and signing the form of pledge cancellation attached to this Module. The pledge shall be cancelled pursuant to an enforceable court judgment or arbitration award.

If the price of a pledged Security at the Exchange decreases and becomes insufficient for securing the debt, the creditor pledgee may set a date for the pledgor to complete the security (margin call). If the pledgor refuses, and the date set elapses without completing the security, the creditor may sell the Securities in accordance with the provisions of this chapter. This provision shall be applicable in the event that the value of a pledged Investment Portfolio decreases.

Without prejudice to the provisions of Article (10-1-1), issuer’s funds may not be attached to collect a debt of one of the holders of Securities issued by that Issuer. However, securities owned by a debtor and its profits may be attached, which shall be noted in the securities’ register held by the Clearing Agency. Securities shall be sold or redeemed, as the case may be, even if the attachment creditor does not submit the original receipt of the Securities deposit. The Clearing Agency shall make the necessary amendments in the register of the Securities’ holders in accordance with the outcome of the sale procedures.

If the Clearing Agency receives an attachment notice concerning a Security –to pay the debt of the seller– within the settlement period, the attachment shall be in the cash price of the security. If the Clearing Agency receives a notice of attachment of the cash price of a Security –to pay the debt of the buyer– within the settlement period, the attachment shall be of the Security subject of the deal after registering it in the buyer’s name.

The attachment of Securities includes attachment of their profits, whether they are cash profits or bonus Securities or any amount due until the date of sale.

In the event that attachment of Securities, profits, returns or rights arising therefrom is in accordance with a judgment or self-execution payment order or an authenticated contract attached to a writ of execution, where the information of the debtor in the evidence of indebtedness subject of the attachment conforms with the debtor information stated in the Securities register held by the Clearing Agency, and if the creditor is a Local Bank or Kuwaiti Financial Institution and the debtor is a Professional Client, the attachment will be enforced at the creditor’s risk. If any temporal or subjective disputes are filed at the time of execution, they shall not lead to the suspension of the execution procedures or distribution of the execution returns.

In the event that a final judgment is issued stating that the creditor referred to in Article (10-3) in this Module is wholly or partially ineligible for the debt on which the execution procedures are performed to fulfil, such judgment shall be deemed a writ of execution to restore things to their original condition by purchasing Securities executed at the creditor’s expense and repaying to the debtor amounts representing the difference of the price of Securities, if any, and the returns resulted therefrom after the execution thereof. In case it is difficult to restore things to their original condition as shown in the previous paragraph hereof, the debtor may file a case for assessing the fair amount against execution without legal basis.

To benefit from the provision of article (10-3) in this Module, a creditor which is a local bank or foreign Financial Institution shall deposit a bank guarantee issued by one of the Local Banks of the value of the attached Securities to the Execution Department, provided that such guarantee be valid and is not to be released until the issue of a final judgment in the execution disputes, whether such disputes are temporal or subjective, and indebtedness claim in the event that the execution takes place pursuant to a self-executed judgment. In all such cases, the creditor shall be paid 50% of the returns of the Securities sale and shall not acquire the rest of the remaining amount unless the conditions of releasing the guarantee referred to in the previous paragraph are met.

If a final judgment is issued stating that a creditor referred to in Article (10-5) herein above is not entitled to the debt subject of execution, wholly or partially, the guarantee amount shall be allocated for restoring things to their original condition before the execution of the sale of the Securities which exceed the creditor’s right, by repurchasing such Securities and paying the difference of the price of Securities, if any, and any further profits or bonus Securities resulted therefrom after the execution thereof

In case it is difficult to restore things to their original condition as shown in article (10-6) in this Module because the Securities required to be purchased are not available on the Exchange, the guarantee and amount resulting from execution shall be attached, the guarantee and amounts shall be allocated as a collateral to fulfil any further amounts due to the debtor based on judgments of indemnification of the sale of part of its funds without legal basis.

Securities, Investment Portfolios, profits, returns and rights due on Issuers, Obligors and Clearing Agency shall be executed in accordance with articles from (10-9) to (10-19) in this Module.

In the event that Securities and Investment Portfolios are pledged or have preference rights, creditors who own such rights shall be notified of such attachment. These creditors, as soon as they are notified of the procedures, shall be considered attachment creditors by the force of law.

Securities registered in the name of the debtor shall be attached as garnishment and a notation of such attachment shall be made in the Securities register held by the company Issuer or Clearing Agency which maintains the register. Investment Portfolios shall be attached as garnishment and such execution shall be noted by the manager of such Investment Portfolios.

It is permitted for any creditor with a debt that existed, determined and due to attach the debtor’s rights held by Issuers, Obligors and other Securities, Investment Portfolio, profits, returns and rights due to the debtor even if such rights are deferred or conditional. If the attachment is not imposed on a specific Security or right arising therefrom, it shall include all the execution debtor’s Securities, profits, returns and rights arising thereto which is held by third party at the time of attachment in addition to any further rights arising therefrom until the time of issuance of a report disclosing what they held in their custody.

It is permitted for any creditor with a debt that existed, determined and due to attach the debtor’s rights held by Issuers, Obligors and other Securities, Investment Portfolio, profits, returns and rights due to the debtor even if such rights are deferred or conditional. If the attachment is not imposed on a specific Security or right arising therefrom, it shall include all the execution debtor’s Securities, profits, returns and rights arising thereto which is held by third party at the time of attachment in addition to any further rights arising therefrom until the time of issuance of a report disclosing what they held in their custody.

If a creditor does not hold a writ of execution or in the event that the debt is not specified, the debt can only be attached by virtue of an order by a judge who reviews matters on a temporary basis in accordance with article (108) of the law and shall decide the attachment and determine the creditor’s due debt temporarily based on a petition represented by the attachment applicant. However, no such decision is required in the event that the creditor has a judgment which specifies the debt amount, even if it is unenforceable.

The creditor shall notify the debtor of the attachment by virtue of a document to be served the same manner stated in article (10-13) of this Module. The said document shall include the attachment order, date and other information referred to in article (10-13) in this Module. The attachment document may be used for notification after being served to the debtor.

The creditor shall notify the debtor of an attachment within eight days following serving the notice to the third party; otherwise the execution shall be deemed as withdrawn. In the event that there are several third parties, a date shall be set for each of them individually.

A creditor shall, within the term stated in article (10-15) of this Module, file a lawsuit against the debtor before the Competent Court to prove the validity of its rights and validation of attachment in the event that the attachment takes place pursuant to a judicial order, otherwise the attachment shall be deemed as withdrawn. In the event that the third party is a party to such lawsuit, it may not be excluded from the lawsuit. The judgment issued in such lawsuit shall only be deemed evidence against it concerning the validation of the attachment procedures. If such case of proving the creditor’s right is filed prior to the attachment, the court which considers the case shall also consider the case of the validation of execution procedures.

Without prejudice to articles (10-3), (10-4) and (10-5) in this Module, the debtor may file a case for cancellation of the attachment before the Competent Court. Notifying the Department of Execution of such case shall entail suspending the collection of the execution proceeds but not the sale, unless the court which considers the case decides otherwise.

The lawsuit of redeeming Securities or Investment Portfolios subject to attachment shall not result in suspension of sale, unless the judge of urgent matters issues such judgment.

Without prejudice to the provisions of this Chapter, the provisions of Articles (233) to (241) of the Civil and Commercial Pleadings Law shall apply to the attachment of Securities, Investment Portfolios, profits, returns and rights due on Issuers, Obligors and Clearing Agency.

Securities, profits, returns and rights due by Issuers, Obligors, Clearing Agency and others referred-to in the previous articles of this Chapter shall be sold through a Broker or Investment Portfolio Manager assigned by the Authority, which shall state in its decision whether they shall be sold through the trading system, through auction or otherwise as specified by the Authority.

Sale of Securities shall be declared by an announcement on the notice board on the Exchange, even if such Securities are unlisted or suspended from trading on the Exchange.

The Authority shall appoint one of the Brokers registered on the Exchange to determine the base price of the Securities unlisted or suspended from trading on the Exchange.

The representative of the Exchange which conducts the sale must register all the sale procedures and any objections or restrictions and how they are dealt with in the sale report and shall document the presence or absence of the creditor and debtor and their signatures in the former case or their refraining from signing if they are present.

In the event of an auction, the representative of the Exchange which conducts the sale shall state names of bidders, domicile, place of business, prices offered by each of them, their signatures or refraining from signing in the sale report, as much as it can. The sale report shall particularly include the statement of the final price of the award of the winning bid, the name of the winner, its domicile, place of business and signature. It is enough for the representative of the Exchange which conducts the sale to continue or delay sale by declaring the same publicly and stating it in the sale report. In the event that no person makes any bids for purchasing the Securities in the value estimated in accordance with Article (10-22) of this Module, the term of sale shall be extended to the following day, if it is not a holiday, or to the next business day following the holiday. In the event that no one bids on the estimated value, the sale shall be delayed for another day. In such case, Securities shall be sold to the winner, even if the price offered is less than their estimated value.

The provisions of Chapter Three of the Civil and Commercial Pleadings Law shall apply to the cases wherein no specific provisions are set forth.

The provisions of this Chapter shall apply to Sukuk issued by: 1. The Kuwaiti government, ministries, public authorities and institutions. 2. General shareholding companies. 3. Closed shareholding companies. 4. Special Purpose Vehicle Companies regulated by Authority in accordance with paragraph (9) of Article (5) of the Law and these Bylaws. 5. Foreign Issuers.

Government, ministries, public authorities, institutions, Public Shareholding Companies and Closed Shareholding Companies of Kuwait may issue tradable Sukuk which are divided among subscribers in consideration of a Subscription payment. Such Sukuk may be by Direct Issue or Indirect Issue.

Companies may not issue Sukuk directly or indirectly, unless they meet the following conditions: 1. The issued capital of company is paid in full. 2. The ordinary general assembly issues a resolution on Sukuk issue. 3. An External Sharia Auditing Office certified by the Authority performs an audit of the structure of Sukuk issue and gives its legal opinion as to approve it. In the event that there is a difference between the opinion of the External Sharia Auditing Office certified by the Authority and that of the advisory board of the Islamic supervisory board, the opinion of the advisory board shall prevail. 4. The Authority issues a resolution approving the Sukuk issue. 5. The company acquires the Central Bank’s approval of the Sukuk to be issued or of an Obligor if such be Units Subject its Supervision

An Issuer may make a Public Offer for Sukuk in the event that the Issuer takes one of the following forms: 1. Public Shareholding Company, 2. Special Purpose Vehicle Company, provided that such Sukuk are secured in full by an Obligor which shall be in the form of a Public Shareholding Company.

Sukuk offered for Public Offer shall meet the following conditions: 1. They shall not be redeemable before one year from their issue. 2. They produce periodical yields, whether such yields be fixed or variable. 3. They do not include any Financial Derivatives, such as swap deals or option contracts, excluding Sukuk convertible into Shares wherein the option right implied shall be subject to the discretion of the Bondholders and Shares subject to swap shall be listed on the Exchange.

The Issuer, Obligor or originator, as per each case individually, shall appoint an External Sharia Auditing Office certified by the Authority to perform the following duties: 1. Audit the structure of the Sukuk and give a legal opinion thereof. 2. Audit all the documents of the Sukuk issue.

The Issuer, Obligor or originator, as per each case individually, shall: 1. Offer the External Sharia Auditing Office the necessary support for performing its job. 2. Enable the External Sharia Auditing Office to access all the documents, registers and other information related to the Sukuk issue.

The Issuer may issue Sukuk based on its operations and assets in full where the returns thereof shall constitute a share in the annual profits made by the Issuer.

The Authority may determine the specific amount of Sukuk to be issued by which the Obligor shall be bound. This article shall not apply to Sukuk secured by the State or one of the public authorities or institutions.

In the event that that Sukuk are issued indirectly, it is not required for the capital issued to be in proportion with the whole amount of Sukuk issued, it is also not required for the capital issued to be in proportion with the Asset-Based Sukuk or the assets registered in the Issuer’s name.

Sukuk shall be structured and the process of creating Sukuk shall be conducted in accordance with the provisions of the Prospectus.

An Issuer may purchase assets before or after the subscription and issue agreements are effective. Asset-Based Sukuk including the rights related to such assets owned by a third party other than the Issuer, Obligor or originator, as per each case individually, shall be explicitly determined in the trust document, provided that the rights, benefits or eligibility can be transferred to the Issuer or the Issuer’s interest and Sukukholders as per the relevant laws.

In the event that Sukuk are issued by a Special Purpose Vehicle Company based outside Kuwait, the Issuer and Obligor shall submit any documents that prove that the Issuer has acquired all the approvals required for forming a Special Purpose Vehicle Company and to issue Sukuk as per the laws, regulations and regulations applicable in the country of foundation.

Each issue shall be comprised of registered Sukuk each of equal value. Sukuk of the same category in the same issue shall give their holders equal rights against the Issuer and Obligor.

Perpetual Sukuk may be issued if they abide by all the standards and requirements of Basel Committee on Capital Adequacy and any further resolutions or instructions issued by Regulatory Bodies in this regard. Subscription in such Sukuk shall be limited to Professional Clients only and other Clients may not subscribe therein.

Government, ministries, public authorities and institutions may issue permanent government Sukuk having no specific maturity date and the issuing entities shall be entitled to recover such Sukuk wholly or partially at any time at their own discretion or they may redeem them either wholly or partially within specific periods

An Obligor shall accept Sukuk which fulfil the debts due to the Obligor, even if before the date of their redemption, provided that the following conditions are met: 1. Indebtedness is documented in the Obligor’s registers at least one year before payment thereof. 2. Indebtedness is not resulting from asset purchase or exchange between Obligor and Sukukholder. 3. Approval of Sukukholders’ Association to redeem such Sukuk prior to the date of their redemption is given in accordance with the mechanism stipulated in the Second Paragraph of Article (11-64) in this Module.

An Obligor shall be entitled to re-offer Sukuk which it accepted in accordance with Article (11-17) in this Module for subscription if such subscription is not prohibited based on the Company Contract or in the event that such Sukuk are recovered pursuant to an obligation of redemption on the Obligor. Re-offering the recovered Sukuk for subscription in accordance with the previous Paragraph shall not be deemed a new subscription. They shall be dealt with as Sukuk subscribed in the batch issued therewith. Sukuk listed on the exchange and issued by banks shall be exempt from the conditions provided for in Article (11-17) in this Module concerning the Obligor’s acceptance of Sukuk to fulfil the debts due to the Obligor.

Sukuk redemption shall be subject to the conditions imposed when issued. In the event that there is specific date laid down for redeeming the fulfilling Sukuk, it may only be brought forward or delayed in accordance with the conditions stated in the Prospectus.

If an Obligor is winding up or being liquidated for reasons other than Merger, Sukukholders shall be entitled to require the fulfilment of their value prior to their date of maturity and the Obligor may propose such act. In the event that the Sukukvalue is fulfilled by either means, the yields of the remaining period of time of Sukukterm shall be dropped, unless the Prospectus provides for otherwise.

Obligations arising from Sukuk shall become extinct based on the conditions of extinction stipulated in the Prospectus. Obligor shall notify Authority of the same within ten Business Days after the date of obligations extinction, expressing the grounds thereof and shall attach the opinion of Auditor, Paying Agent and Clearing Agency to such notification.

The provisions of the relevant laws and decrees and their executive resolution shall apply to government Sukuk. The provision stipulated in this Module shall apply to government Sukuk as long as these provisions do not conflict with such decrees and amendments thereof. In the event of issuance of government Sukuk by a Special Purpose Vehicle Company, the entity authorized by the Minister of Finance shall found the said company, which shall be subject to the provisions stated in its memorandum of association; and the provisions of this Module shall apply to the matters not dealt with in the said memorandum.

Fixed and movable assets owned publicly by the state or its public utilities may not be used for issuing government Sukuk against them. Such Sukuk may be issued against Sukuk owned privately by the state. Assets which shall be used for issuing Sukuk shall be appraised by a committee which shall be formed and whose mechanism shall be determined by a resolution issued by the Minister of Finance.

Without prejudice to the provisions of Article (11-23) in this Module, the laws and decrees related to the issue of government Sukuk and their executive resolutions, the Authority may exempt government Sukuk from all or part of the provisions of this Module in accordance with a memorandum of understanding to be signed by the Authority and the Central Bank.

An Obligor shall be entitled to issue Sukuk convertible into Shares in accordance with a resolution issued by the Obligor’s extraordinary meeting based on a reasoned proposal by the Board of Directors pursuant to the following regulations and provisions: 1. Establishing the rules by which Sukuk can be converted into Shares, especially the value of Shares upon which conversion shall take place. 2. The price of issuing Sukuk shall not be less than the par value of share. 3. The total par value of share which Sukuk are proposed to be converted into, in addition to the par value of Shares of Issuer at the time of issue of this kind of Sukuk, shall not exceed the authorized capital. 4. The term within which the application of converting Sukuk into Shares is permissible. 5. Eligibility of a Sukukholder to recover its value if it does not desire to convert them into Shares.

Obligor’s shareholders shall have a Pre-emptive Right to subscribe for Convertible Sukuk if they so desire, within a period of ten Business Days from the date of being called for using such right. Shareholders may use their pre-emptive right of subscription in such Sukuk by exceeding their share in the Obligor’s capital in the event that the subscription conditions provide for the same, unless the Obligor’s general assembly issues a resolution that the shareholders waive their pre-emptive right in subscribing for these Sukuk.

Sukukholders who desire to convert them into Shares shall express their desire within the period stated in the Prospectus. Sukuk shall be converted into Shares in accordance with the conditions shown in the Prospectus. The company shall fulfil the value of Sukuk whose holders do not desire to convert into Shares on the maturity date unless the Prospectus states otherwise.

Having issued Convertible Sukuk, the Obligor may not issue or distribute free Sharesor profits of the reserve and may not issue other Sukuk or Securities convertible into Shares to the date of their conversion or redemption, unless it is approved by Sukukholders Association, if the Prospectus does not stipulate otherwise.

Having issued Convertible Sukuk, the Obligor may not reduce its capital or increase the portion determined as a minimum of the profits to be divided among shareholders to the date of their conversion or redemption, excluding the Obligor’s capital reduction due to losses, unless the Prospectus does not stipulate otherwise.

Shares acquired by Sukukholders due to the conversion of their Sukuk shall have a share in profits determined to be distributed for the financial year during which the conversion takes place.

Obligor may issue Sukuk whose holders shall have pre-emptive right to subscribe in any capital increase. Such issue shall take place for who may desire during a maximum period of fifteen Business Days from the date of notifying the same to Sukukholders. The Preemptive Right shall be limited to subscription in Shares whose par value does not exceed the value of Sukuk owned by who uses such right, unless the prospectus of shares of capital increase stipulates otherwise.

Any amendment of the conditions for converting Sukuk into Shares after the issue of Sukuk shall be approved by the Sukukholders Association, unless the Prospectus includes certain provisions aiming at regulating such amendment, provided that the amendment shall be consistent with the Prospectus.

An Obligor’s Board of Directors may issue a resolution for increasing its issued capital by the portion needed for converting Sukuk into Shares in accordance with the conditions and regulations of the Prospectus. The execution of such resolution shall be binding on meeting the conditions of converting Sukuk into Shares in accordance with the Prospectus. Such resolution shall be attached to the documents submitted to the Authority to acquire the approval for the issuance of the Sukuk. Upon meeting the conditions for converting Sukuk into Shares, the representative shall notify the Obligor of the names of the holders of Sukuk who desire to convert their Sukuk and the number of Shares eligible for each of them.

The Obligor may, within fifteen Business Days of receiving the notification referred to in Article (11-33) in this Module, take the necessary actions for making a notation of the board resolution indicated in this Module on the Commercial Register and recommending to the Clearing Agency which maintains the register of the holders to issue Shares and divide them among the beneficiaries.

In the event that the Obligor refrains from taking the actions stated in Article (11-34) in this Module, the Authority shall, pursuant to the representative’s application, address the Ministry and Clearing Agency to take such actions shown in Article (11-34) in this Module, after verifying that the Obligor’s refraining from taking these actions is unjustifiable.

In the event that Sukuk are secured by a joint guarantee, each Guarantor shall provide the same information, data, statements and representations stipulated in this Module concerning the Issuer and Obligor, unless any relevant obligation, based on its nature, applies only to the Issuer and Obligor.

The same information required to be included in the Prospectus about the Issuer and Obligor shall be required for a Guarantor as well. All the legal approvals necessary shall be duly acquired to ensure the validation and effectiveness of security against the Guarantor or third party.

In the event that the issue of Sukuk is secured by a Listed Company listed on an Exchange or in another exchange outside Kuwait, the Authority may exempt the Guarantor from disclosing the information the Authority finds as not essential for Sukukholders.

In the event that Sukuk are secured by an undertaking based on collateral in kind it shall be necessary to meet all the legal requirements of pledge or collateral for the interest of Sukukholders Association or its representative to make it valid and effective, before Sukuk are offered for subscription. The Issuer, Obligor or the entity, which provided the collateral, shall take such actions.

The Obligor shall, within a period of no more than one month from the termination of the subscription period determined, take necessary actions to make a notation of the total of Sukuk issued and secured by an undertaking in the pledge register. The notation application shall be attached to a statement approved by the Clearing Agency which maintains the register of Sukukholders that includes the names of Sukukholders, the number and value of Sukuk. Representative may take the action referred to in Article (11-39) in this Module, in the event that the Issuer refrains from taking it.

The Authority may require the Issuer, Obligor and Guarantor In Kind and a guarantor in person to disclose any additional information in the Prospectus in accordance with the Authority’s discretion.

Issuer shall assign a Paying Agent, approved by the Authority, in Kuwait to perform the duties thereof until Sukuk redemption. The Authority may decide to replace the Paying Agent with another one if it finds that such action shall preserve the rights of Sukukholders. An Issuer or Obligor may replace the Paying Agent after getting the Authority’s approval.

The structure of Sukuk issued in accordance with the provisions of this Module shall be consistent with the Islamic Sharia’s provisions and approved by an External Sharia Auditing Office certified by the Authority.

The structure of Sukuk issued in accordance with the provisions of this Module may depend on the transactions forming its basis, which may comprise any of the following contracts: 1. Ijarah contracts, which constitute the sale or transfer of a tangible asset to be leased later on for a period of time agreed upon in return for a consideration agreed upon and paid by the lessee. 2. Intifa’a contracts which include the right to utilize, own or develop any asset, or other legal rights of utilizing or holding such asset. 3. Salam contracts, whereby the seller undertakes to supply certain goods to the purchaser at a future date in exchange of an advanced price to be paid in full. 4. Contracts of Istisna’, which constitute an agreement of sale, construct or manufacture whereby the consideration is paid based on production upon delivering certain products at a future date in accordance with the specifications agreed upon. 5. Musharakah contracts which constitute the agreement of two or more Persons upon contributing to a project that aims at making profit through representing cash or in kind Shares with the purpose of sharing the resulting profits and losses. 6. Mudarabah contracts wherein two or more Persons agree to partner in a profitable project, where one of them represents a cash share or a share in kind and the other manages the project. 7 Murabaha contracts which constitute sale upon credit, where the seller transfers assets or goods immediately to the purchaser and adds a profit margin upon calculating the due payments deferred. 8. Contracts which create jus in rem, where the exercise of in rem right on a third parties’ properties pursuant to a valid contract between both parties only is allowed. 9. Khadamat Contracts where a prior sale of services to be used in the future takes place based on expected benefit thereof. 10. Other contracts or transactions approved by the Authority and an External Sharia Auditing Office in accordance with this Module.

Sukuk may be issued in one of the following forms: 1. Asset-Based Sukuk, 2. Asset-Backed Sukuk.

In the event that the Sukukholder of asset-based Sukuk has recourse against the Obligor, Issuer or originator, it shall have no more rights to such assets than any other ordinary creditor.

The rights of Sukukholders of Asset-Backed Sukuk arising from such Sukuk shall be fulfilled by their relevant assets only in accordance with the Prospectus. Assets of such Sukuk shall be separated from other assets or turned into Sukukin a manner that protects them from other creditors’ claims. The holders of such Sukuk shall depend on their relevant assets to fulfil the periodical distributions and redemption payments.

The Issuer or other third party may provide other warranties to support the credit worthiness of any form of Sukuk proposed.

Transfer of Sukuk Assets shall take place in accordance with the relevant laws. The originator shall be operationally active and shall not have been in default in meeting its financing indebtedness in the last three financial years.

The Issuer shall take the form of a Special Purpose Vehicle Company and may add further assets to the assets forming the basis of Sukuk upon issue within the term of the Asset-Backed Sukuk. After acquiring the Authority’s approval, Issuer may issue different categories of the same Sukuk, provided that each category be supported with similar assets.

The Representative, custodian, agent or other external party of the Issuer, Obligor or Originator, as per each case individually, shall be assigned to represent the holders of Asset-Backed Sukuk. For the purpose of performing its duties the assigned Person shall have the right to review such Sukuk Assets and their relevant information within the term of Sukuk.

Having acquired the Authority’s approval, the Issuer may purchase or hold Asset-Backed Sukuk which it is the Originator thereof. The Originator shall sell or waive such Sukuk or any surplus of a specified percentage of the total value of such Sukuk within the period set by the Authority upon approval.

Assets of such Asset-Backed Sukuk shall be separated from other assets of the Issuer or third party in a manner that guarantees that the holders of such Sukuk shall have control over their relevant assets and that no third party shall have any rights thereon.

The following provisions shall be considered concerning the Asset-Backed Sukuk: 1. The Originator shall have no existing or enforceable interest or right over assets or cash flows resulting from such assets prior to the issue of Sukuk. 2. There are no legal, contractual or other restrictions on transferring assets, rights or dues relevant to Sukuk Assets from the Originator to the Issuer. 3. Legal, regulatory or contractual approvals required for transfer of assets from the Originator to the Issuer shall be fulfilled. 4. The Originator may not take any action that may enable a third party to claim for compensation or require a certain return in relation to assets of Sukuk. 5. The valuation set for assets shall be fair and shall consider the Face Amount and any further legal or accounting requirements of Sukuk. 6. In the event that the assets comprise any Shares or Securities which represent equities, such Shares or Securities shall be listed or traded in an Exchange or in another exchange outside Kuwait approved by the Authority. No legal or administrative control over any company which Issues such Shares or Securities representing equities, shall be given. 7. Assets of all kinds are to be consistent with the provisions of Islamic Sharia. A detailed list of the assets and their basic information shall be certified by an External Sharia Auditing Office.

Assets of Special Purpose Vehicle Company shall be transferred by a real sale in accordance with the following provisions: 1. Contracted assets shall be separate from the originator’s assets and shall not be related any third party’s rights. 2. The Originator shall transfer all its rights and obligations related to the contracted assets to the Issuer and therefore the Originator shall not reserve any rights or benefits related thereto that may affect their transfer. 3. The Originator shall not own any share in the Issuer’s capital, either directly or indirectly. 4. The Originator shall not be in a position that enables it to exercise any control over the Issuer’s decisions. 5. The Issuer shall not have recourse against the Originator, unless the Originator provides credit enhancements to Sukuk structure. 6. Concerning the structure of Asset-Backed Sukuk, where the Originator acts in its capacity as a Servicer, the Servicer shall offer such services entirely on a commercial basis, taking into consideration the terms and conditions of such services at that time.