CmaBoardReleases
Title: Announcement Regarding Issuance of Disciplinary Board Resolution No. (53/2021 Disciplinary Board) (28/2021 Authority) and imposition of a fine of (4) thousand Dinars against Hayat Invest Company for violating the Collective Investment Schemes, Corporate Governance, and Anti-Money Laundering and Combating Financing of Terrorism
Announcement Regarding Issuance of Disciplinary Board Resolution No. (53/2021 Disciplinary Board) (28/2021 Authority) and imposition of a fine of (4) thousand Dinars against Hayat Invest Company for violating the Collective Investment Schemes, Corporate Governance, and Anti-Money Laundering and Combating Financing of Terrorism
For the following reasons:
- Provision of Article (1-15) of Module Thirteen (Collective Investment Schemes) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:
The Company marketed percentages of the ownership shares of two real estate projects outside the State of Kuwait to some of its clients from high net worth investors in the following way:
- A percentage of the ownership shares of a residential project in India:
A percentage of the mentioned ownership shares was offered to some clients, and 12 of the Company’s clients invested in a percentage of the ownership shares of this project, provided that all of the mentioned clients are classified by the Company as professional clients who submitted an investment request on subscription forms prepared by the Company and were granted certificates as evidence of their ownership of a percentage of the mentioned ownership shares.
- A percentage of the ownership shares of a residential and commercial project in France:
A percentage of the mentioned ownership shares was offered to some clients, and 2 of the Company’s clients invested in this project, provided that the mentioned two clients are classified by the Company as professional clients who submitted investment request on subscription forms prepared by the Company.
The two mentioned projects are considered a form of marketing Foreign Collective Investment Schemes. Therefore, the Company was obligated to obtain a permission from the CMA to market the mentioned scheme, which the Company did not do.
- Provision of Item (8) of Article (5-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:
This is due to the Chairman of the Board of Directors and the CEO’s review and approval of the evaluation of the performance of the internal audit manager for the financial period that ended on 31/12/2019, provided that this is one of the tasks of the audit committee and not part of the tasks of the Chairman of the Board of Directors and the CEO. Moreover, this matter will obstruct the independence of the internal audit department and its employees pursaunt to the provisions of Article (6-7) of the same Module.
- Provision of Item (3) of Article (6-3) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:
This is due to the Chairman of the Board of Directors and the CEO’s review and approval of the evaluation of the Risk Management Officer for the financial period that ended on 31/12/2019, which conflicts with the independence of that department, because the evaluation was performed by the Company’s CEO.
- Provision of Article (7-3) of Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:
It was proven to the CMA that the Company’s Compliance Officer does not have the required independence because the Company has attributed many tasks of several positions to him.
The Resolution included the infliction of the following penalty: -
“The violating Company is fined an amount of one thousand Dinars for each of the attributed violations.”
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 Laws 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.