Title: Announcement regarding issuance of Disciplinary Board Resolution No. (41/2022 Disciplinary Board) (223/2021 Authority) and the imposition of a fine against each of: 1- Wafra International Investment Company. 2- Mr. Bader Adel Al-Abduljader – (Ernst & Young Office-Al-Aiban, Al-Osaimi & Partners) as Wafra International Investment Company’s External Auditor for violating the rules of Collective Investment Schemes and Clients’ Funds and Clients’ Assets

Announcement regarding issuance of Disciplinary Board Resolution No. (41/2022 Disciplinary Board) (223/2021 Authority) and the imposition of a fine against each of: 1- Wafra International Investment Company. 2- Mr. Bader Adel Al-Abduljader – (Ernst & Young Office-Al-Aiban, Al-Osaimi & Partners) as Wafra International Investment Company’s External Auditor for violating the rules of Collective Investment Schemes and Clients’ Funds and Clients’ Assets.

For the following reasons:

First- Wafra International Investment Company

1. Provision of Article (77) of Law No.7 of 2010 and its amendments, and Article (1-15) of Module Thirteen (Collective Investment Schemes) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

The Company markets and sells units of a collective investment scheme established outside the State of Kuwait, which is the (Project Greenhouse SPC LTD), incorporated in the Cayman Islands on March 31, 2020, to clients inside the State of Kuwait without obtaining a license from the Authority.

2. Provision of Item (1) of Article (5-2-3) of Module Seven (Clients’ Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

Some employees in charge of the administrative system dealing with Company accounts and clients who performed their work in their own offices and which are not places that are secured and equipped with effective control tools.

3. Provision of Items (4), (5), (6) of (Second: Aspects related to Investment Portfolios managed by the Licensed Person) of Article (5-4-1) of Module Seven (Clients’ Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

The investment portfolio management policy (prepared and approved by the Company) does not include the requirements stipulated in the previously mentioned items.

Second- Mr. Bader Adel Al-Abduljader – (Ernst & Young Office-Al-Aiban, Al-Osaimi & Partners) as Wafra International Investemnt Company’s External Auditor

This is because it was proven that he violated the provisions of Article (2-5) of Module Seven (Clients’ Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

This is because of what was proven by reviewing the report on the extent to which Wafra International Investment Company complied with the provisions of Module Seven (Clients’ Funds and Clients’ Assets) prepared by the aforementioned auditor for the financial year ending 12/31/2020, the report did not include the observations that were monitored on the Company by the inspection team which are the following:

1) Some employees in charge of the administrative system and dealing with the accounts of the Company and clients carry out their work in their private offices and which are not places that are secured and equipped with effective control tools.

The matter that constitutes a violation by the aforementioned Company of the provision of Clause (1) of Article (5-2-3) of Module Seven (Client’s Funds and Clients’ Assets) of Law No. 7 of 2010 and its amendments.

2) Not notifying some clients of investment portfolios of notifiable matters, as well as not notifying some other clients of notifiable matters immediately.

3) The investment portfolio management policy prepared and approved by the Company does not include some of the requirements stipulated in Items (4), (5) and (6) of (Second: Aspects related to Investment Portfolios managed by the Licensed Person) of  Article (5-4-1) of Module Seven (Clients’ Funds and Clients’ Assets) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, as shown below:

a. Determining the risks related to the investment portfolio and the securities it contains, and the methods used to reduce those risks.

b. Maximum limits for concentrations in the components of the investment portfolio, for each type of security, the sector in which it is invested, the country in which it is invested, and the issuer of the security.

c. The foundations and controls related to the operations of distributing securities that will be bought and sold for the account of clients, for the investment portfolios managed by the Company.

4. The reports sent to the Authority in accordance with Form No. (2) of Appendix No. (2) of Module Seven (Clients’ Funds and Clients’ Assets) for the periods ending on 31/03/2021, 30/06/2021 and 30/09/2021 to the Authority regarding Securities Investment Funds on Investment Funds.

The Resolution included the infliction of the following penalty: -

“First: Wafra International Investment Company is fined an amount of ten thousand Dinars for the first violation and one thousand Dinars for each of the second and third attributed violation and obligating it to pay an amount of thirty thousand Dinars, the value of the fees prescribed for marketing and selling units of a collective investment scheme established outside the State of Kuwait.

Second: Mr. Bader Adel Al-Abduljader (Ernst & Young Office-Al-Aiban, Al-Osaimi & Partners) as Wafra International Investment Company’s external auditor is fined an amount of five thousand Dinars for the attributed violation.”

 In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these rules in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.