Title: Announcement regarding issuance of Disciplinary Board Resolution No. (65/2022 Disciplinary Board) (17/2022 Authority) and the imposition of a fine against: 1- UniCap Investment and Finance Company. 2- Mr. Rashid Ayoub Yousef Alshadad (Rödl Middle East - Burgan International Accountants) for violating the rules of Disclosure and Transparency, Corporate Governance, and Clients’ Funds and Clients’ Assets

Announcement regarding issuance of Disciplinary Board Resolution No. (65/2022 Disciplinary Board) (17/2022 Authority) and the imposition of a fine against: 1- UniCap Investment and Finance Company. 2- Mr. Rashid Ayoub Yousef Alshadad (Rödl Middle East - Burgan International Accountants) for violating the rules of Disclosure and Transparency, Corporate Governance, and Clients’ Funds and Clients’ Assets.

For the following reasons:

1) UniCap Investment and Finance Company violated the following:

First: Provision of Item (1) of Article (3-5-1) of Module Ten (Disclosure and Transparency) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

It was proven to the Authority beyond any doubt that the Company did not include some insiders.

Second: Provision of Article (4-1-1) of Module Ten previously mentioned:

It was proven to the Authority beyond any doubt that the Company did not disclose the financial effect resulting from the exchange and settlement agreement between Iskan General Trading and Contracting Company (a subsidiary owned by the Company in 99%) and Iskan International for Real Estate Renovation Company (an associate company owned by the Company in 30%) concluded on 13/08/2020 as the Company disclosed it on Boursa Kuwait’s website on 22/09/2020.

Third: Provision of Item (5) of Article (6-3) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

It was proven to the Authority beyond any doubt that the Company’s risk management did not review the transactions made with the related parties and provide proper recommendations thereof to the Board of Directors.

Fourth: Provision of Article (7-7) of Module Fifteen previously mentioned:

It was proven to the Authority beyond any doubt that the Company did not assign an independent expert to present a report to the Board of Directors on the Company’s receipt of a financing and provision of part of it to Iskan General Trading and Contracting Company (a subsidiary) in order to enter into an agreement of managing and participating in a real estate portfolio with Iskan International for Real Estate Renovation Company (an associate company) concluded on 05/01/2020 in a total amount of KWD 5,580,080, which is 11.3% of the Company’s total assets as stipulated in the financial statements of the year that ended on 31/12/2019.

Fifth: Provisions of Items (1, 2, 3, and 4) of Article (11-9) of Module Fifteen previously mentioned:

It was proven to the Authority beyond any doubt that the integrated report prepared by the Company on the year that ended on 31/12/2020 did not include the following requirements:

a- Clarification of the strategic goals, which the company endeavours to achieve, and the procedures and policies adopted by the company to achieve such goals, in addition to a mechanism to link between the company’s ability to achieve goals and create and maintain corporate value inside the company.
b- Clarification of the business model followed by the company in carrying on its business and the external factors that affect the company’s financial position, in addition to the efforts exerted by such company to create corporate values and maintain them in the short, medium, and long term.
c- Presenting the company’s activities and the associated risks as well as indicating the levels of performance and the way they are measured, and the opportunities available for the company to expand its scope of operations and maximize its profits.
d- The management’s expectations of the company’s activities, and assessing the difficulties encountered thereby, in addition to identifying the activities of high risks to give them priority of review, and to specify the opportunities, challenges and doubts encountered by the company to achieve its strategic goals.

2) Mr. Rashid Ayoub Yousef Alshadad (Rödl Middle East - Burgan International Accountants) in his capacity as the external auditor of UniCap Investment and Finance Company:

He violated the provision of Article (2-5) of Module Seven (Clients’ Funds and Clients’ Assets) of the mentioned Executive Bylaws, as it proven to the Authority through viewing the report of UniCap Investment and Finance Company’s compliance with the rules stipulated in Module Seven prepared by the mentioned auditor on the financial year that ended on 31/12/2020 that the report did not include the notices noted by the inspection team on the Company in which the policy of the investment portfolios management prepared and approved by the Company did not include the requirements included in Items (1, 2, 3, and 5) of (First: Aspects related to all types of Investment Portfolios) and Items (1, 2, 3, 5, and 6) of (Second: Aspects related to Investment Portfolios managed by the Licensed Person) of Article (5-4-1) of the same Module), which are as follows:

• Evidence of commitment to meeting the client’s investment goals and methods for achieving the same.
• Determining the powers, authorities and responsibilities of the company in each type of investment portfolio.
• Regulating the relation between clients’ investments in the company with those of any subsidiary, associate company or related party.
• Detailed guidance on procedures applicable in the event of any mistake while executing clients’ orders.
• A statement explaining the investment policies applicable in accordance with the client’s instructions (conservative or balanced or non-conservative policy).
• How to determine variation and distribution method for investment portfolio consisting-assets according to the client’s instructions.
• Method of determining markets to be invested in subject to the client’s instructions.
• Maximum limits of concentrations in components of each investment portfolio according to each security type, the investment sector, investment country and security issuer.
• Bases and controls related to securities distributions which shall be purchased and sold for the clients’ account as for the investment portfolios managed by the company.

The Resolution included the infliction of the following penalty: -

“First: UniCap Investment and Finance Company is fined an amount of two thousand Dinars for each of the first, third, fourth, and fifth violations, and is fined an amount of five thousand Dinars for the second violation.

Second: Mr. Rashid Ayoub Yousef Alshadad (Rödl Middle East - Burgan International Accountants) in his capacity as the external auditor of UniCap Investment and Finance Company is fined an amount of one 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.