Title: Press Release Regarding Amending Some Provisions of Capital Adequacy Regulations for Licensed Persons

Kuwait January 22, 2022 – The Capital Markets Authority’s Board of Commissioners, in its meeting held on January 19, 2022, issued some amendments to Capital Adequacy Regulations for licensed persons, stipulated in Module Seventeen of the Executive Bylaws of Law No. (7) of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments, as the amendments mainly included the following:

• Adding a definition to the term "Financial Institutions", indicating the nature of investments that can be classified as "Financial Institutions".

• Extending the deadline for submitting capital adequacy reports for annual financial periods to 90 days, in order to coincide with the deadline for submitting annual financial statements.

• Exempting the licensed persons to whom the exemption stipulated in Article (2-7) of Module Seventeen applies, from submitting quarterly capital adequacy reports for the annual financial periods.

• Permitting the calculation of the minority rights arising from the compilation of the financial statements of the existing collective investment schemes licensed by the CMA, within the rights of the qualified minority in the available regulatory capital.

• Defining the percentage of capital adequacy regulations for equity investments classified as FVOCI as per IFRS 9, or classified as investment in associates/joint venture as per IAS 28.

•Granting the CMA the right to require licensed persons to calculate the capital charge for investment risk at a rate of 60% on investments that the CMA deems to be high in risk.

The amendments mentioned above are considered the first amendments to the capital adequacy regulations for licensed persons issued within Resolution No. (170) of 2019 on 19/11/2019. These amendments come within the framework of the approach adopted by the CMA in keeping pace with the implementation of the regulations and controls that it issues, by following up on the observations and inquiries received by the authorities concerned with implementing the instructions, in addition to the extensive studies carried out by the CMA on the capital adequacy reports that were submitted to it. In order to observe the extent to which the licensed persons comply with the appropriate application of these regulations.

It is also worth noting that the capital adequacy regulations are one of the effective control tools and mechanisms that will enhance the efficiency of the performance of companies licensed to deal in securities and ensure the safety of their financial positions in a manner corresponding with the scope and nature of the risk they are exposed to, in addition to their role to protecting the rights of investors, and creating a safe investment environment by providing the necessary precautions to secure the risk related to the business and transactions of licensed companies, especially the ones resulting from the introduction of new financial products and activities within the stages of market development (such as short selling, stock lending and borrowing, repurchase agreements, etc.) in addition to capital adequacy regulations that parallels to the activities of the capital market infrastructure institutions created in the market (e.g. Central Counterparty, etc.).

Ends-

Notes to Editors:

The Capital Markets Authority was established pursuant to Law No. 7/2010, approved by the Kuwaiti Parliament in February 2010. Pursuant to the Law, the CMA shall regulate and supervise the securities activities, achieve transparency and fairness, observe listed companies’ execution of Corporate Governance regulations, and protect investors from unfair practices which violate the CMA's Law.

Furthermore, the Law's provisions stipulate the supervision of mergers, acquisitions, and disclosure operations. The CMA also aims to provide awareness programs related to securities activities.

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