Title: Speech of CMA Chairman in the Opening of the Corporate Governance Forum
Date Publish 20 March 2016
Ladies and Gentlemen
We would like to welcome you in the CMA’s Corporate Governance Forum, which we we’re keen to organize today while we approach the date of implementing Corporate Governance regulations on the upcoming June 30.
This Forum’s purposes may exceed Corporate Governance regulations and the importance of their implementation. It does not merely shed light on the role of the sound implementation of Corporate Governance regulations in enabling the companies to stay in business and achieve progress.
This Forum announces the late commencement of a new era, which today we have to be fully prepared for its requirements.
Kuwaiti private sector is known for taking initiatives and being prepared to adopt best international practice. For instance, history shows that accounting standards implementation (in relation to book keeping) showed in the Kuwaitis commercial activities in the beginning of the previous century, and their communication with the commercial centers which existed back then in the Gulf, Indian and Africa.
Later on, the accounting standards came with foreign oil companies that worked in Kuwait in the first half of the previous century.
The banking sector has witnessed licensing British Bank of the Middle East in 1942, and the first accountant who worked at the Bank came from the Bank’s branch in Basra.
Kuwait financial sector has witnessed the establishment of National Bank of Kuwait in 1952 as the first public shareholding company, followed by the establishment of many other public shareholding companies, which was the start of a new and unprecedented era not only in Kuwait but also in the Gulf. An era that is based on segregating ownership from administration similar to the international practice.
The economic activity has flourished in Kuwait, supported by the oil revenues and private sector’s initiatives and adoption of best international practice. The era witnessed the establishment of more shareholding companies, in addition to the establishment of the first market for trading shares in the region, which consequently developed to Kuwait Stock Exchange, as well as the first clearing company (Kuwait Clearing Company), financial brokerage companies and other activities.
Ladies and Gentlemen,
The initiative and desire to take the lead were the motivations behind the economic activity growth in Kuwait which witnessed the adoption of best international practice in the financial and business area, although they were not enforced by the law.
After going through a number of financial crises, the issuance of Law No. 7 of 2010 on the Establishment of the Capital Markets Authority and Regulating Securities Activities announced the commencement of a new model in Kuwait financial market, and Article (3) of the Law specifies CMA’s aims.
Therefore, CMA’s role concentrates mainly on growing and developing the market, enhancing transparency, fairness and integrity among persons who deal in the market, and ensure the sound and fair implementation of the Law.
Ladies and Gentlemen,
Developing and growing the market can only be achieved through the adoption of best international practice (just as the pioneers of the field did in the past) even though it had its cost back then, but it had many benefits which will show in the future. Issuance of Module Fifteen of the Executive Bylaws was a cornerstone in the development process. Corporate Governance is not a luxury any more, it is a demand and reality to any market that aspires to join the emerging markets. It is a cornerstone in the development plan of the market.
Ladies and Gentlemen,
This Forum coincides with the steps taken by the government towards economic reform, due to the continuous decrease in the global oil prices, and disruptions in countries’ budgets. These steps were included in the economic reform paper and recently approved by the Council of Ministers.
I would also like to announce CMA’s reward that will be granted annually to the best ten governance reports submitted to the CMA by licensed persons. We anticipate enhancing the culture of corporate governance and its full and sound implementation in the Kuwaiti market.
The CMA also sets an example in this field. It announces issuance of the governance report for its work as part of its annual report.
Additionally, it announces organizing this forum annually under the name “CMA’s Annual Forum”, provided that it covers a different issue every year,
Clarification to Editors
The Capital Markets Authority was established pursuant to Law No. 7/2010, approved by the Kuwaiti Parliament in February 2010, and amended by Law No. 108/2014. Pursuant to the Law, the Authority 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 Authority's Law.
Furthermore, the Law's provisions stipulate the supervision of mergers, acquisitions, and disclosure operations. The Authority also aims to provide awareness programs related to securities activities.
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