Title: The Capital Markets Authority (CMA) Issues a Resolution Aimed at Protecting Minority Interests upon Delisting of Listed Companies
Date Publish 14 February 2021
Kuwait, February 14, 2021 – In line with CMA’s endeavor to adopt and apply international best practice to develop capital markets in the State of Kuwait, and to promote principles of fairness, competitiveness and transparency that lead to achieving greater protection for dealers in it in accordance with the provisions of Law No. 7 of 2010 and its Executive Bylaws, in addition to protecting the minority interests (shareholders of companies) from the decisions of general assemblies that may be unfair to their interests due to the approval of the majority and the controlling groups to the voluntary delisting from the Exchange.
The CMA has issued on Sunday February 14, 2021 Resolution No. (16) of 2021 regarding amending Article (2-5-1) - Voluntary Delisting of Shares of Shareholding Companies from the Exchange - of Chapter Two ( Listing Shares of Shareholding Companies in the Exchange) of Module Twelve (Listing Rules) 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.
This Resolution included important amendments related to the conditions and procedures for submitting the voluntary delisting request from the Exchange for each listed shareholding company. It specified a voting percentage of not less than 75% of the attendance of the general assembly for voluntary delisting as a condition for approval of the voluntary delisting request from the Exchange. In terms of setting this standard as a condition for accepting the delisting request, the CMA aims for the companies to establish arrangements acceptable to the various categories of their shareholders in order to achieve the general acceptance of the company's investor base for the delisting proposal.
It shall be noted that the Resolution excludes companies listed on the Exchange whose general assembly was held and agreed on the voluntary delisting clause from the Exchange prior to its issuance date.
This Resolution comes consistent with the efforts made by the CMA to raise the efficiency and development of the market and enhance fairness in its dealings, and to complement its role in raising standards related to improving the business environment and protecting minorities in companies in line with international best practice.
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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