Title: Announcement Regarding Issuance of Disciplinary Board Resolution No. (51/2021 Disciplinary Board) (49/2021 Authority)

Announcement Regarding Issuance of Disciplinary Board Resolution No. (51/2021 Disciplinary Board) (49/2021 Authority) and imposition of a fine of 14 thousand Dinars against First: NCM Investment Company, Second:  Mr. Abdullatif Mohammed Al-Aiban -Grant Thornton Al Qatami, Al Aiban & Partners- in his capacity as the auditor of NCM Investment Company for violating Clients’ Funds and Clients’ Assets, Conduct of Business, Corporate Governance, and Anti-Money Laundering and Combating Financing of Terrorism.

For the following reasons:

First: NCM Investment Company:

1. Provision of Item (5) 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 portfolios management policy prepared and approved by the Company did not include the requirements stipulated in the item mentioned above which consists of stating the maximum limits of concentrations in components of each Investment Portfolio according to each Security type, the sector in which it invested, country in which it invested and Security Issuer.

2. Provision of Article (7-2) of Module Eight (Conduct of Business) of the Executive Bylaws of the aforementioned Law and their amendments:

Some of the promotions prepared by the Company and published through different media channels did not include the requirements stipulated in Article (7-2) and Article (7-4) previously mentioned.

3. Provision of Item (7) of Article (5-6) of Module Fifteen (Corporate Governance) of the Executive Bylaws of the aforementioned Law and their amendments:

The audit committee did not hold at least four meetings with the internal auditor during 2019 and 2020.

4. Provision of Item (9) of Article (5-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of the aforementioned Law and their amendments:

The audit committee did not review and approve the audit plans proposed by the internal auditor and provide feedback for the financial year that ended on 31/12/2020.

5. Provision of Article (7-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of the aforementioned Law and their amendments:

This is due to the Company’s failure to assign an independent expert to report to the general assembly or the Board of Directors on the transaction of buying 4,600,000 shares of Noor Al Mal for Financial Brokerage of Foreign Shares (Jordan), which is a subsidiary company owned by 99.99% (according to the annual financial statements that ended on 31/12/2019), in Noor Capital (Cayman Islands) in the amount of 4,600,000 US Dollars that is equivalent to 1,399,201 Kuwaiti Dinars (one million, three hundred and ninety thousand, and two hundred and one Kuwaiti Dinars) in accordance with the contract signed between the previously mentioned two parties dated on 29/04/2019 and the Company’s statement in the document attached to its letter addressed to the inspection team on 18/1/2021. The value of the previously mentioned transaction equals 10.33% of the Company’s total assets according to the periodic financial statements for the period that ended on 31/03/2019.

6. Provision of Item (3) of Article (3-8) of Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws of the aforementioned Law and their amendments:

This is due to the Company’s failure to obtain the official documents from the competent authorities in the State of Kuwait for the owner of portfolio no. (102279).

Second: Mr. Abdullatif Mohammed Al-Aiban - Grant Thornton Al Qatami, Al Aiban & Partners - in his capacity as the auditor of NCM Investment Company violated the provision 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:

The report of the auditor Mr. Abdullatif Mohammed Al-Aiban (Grant Thornton Al Qatami, Al Aiban & Partners), that ensures the Company’s compliance with the provisions of Module Seven (Clients’ Funds and Clients’ Assets) of the financial year that ended on 31/12/2019, of the investment portfolios management policy prepared and approved by the Company failed to include the following:

1. Evidence of commitment to meeting the Client’s investment goals and methods for achieving the same.
2. Determining the powers, authorities and responsibilities of the Licensed Person in each type of Investment Portfolio.
3. Regulating the relationship between Clients’ investments and any Subsidiary, Associate company or Related Party.
4. A statement explaining the investment policies followed in accordance with the Client’s instructions (conservative or balanced or non-conservative policy).
5. How to determine variation and distribution method for Investment Portfolio consisting-assets according to the Client’s instructions.
6. Method of determining targeted market which is invested in subject to the Client’s instructions.
7. Determining risks related to an Investment Portfolio and Securities therein, as well as the applicable ways to reduce such risks.
8. Maximum limits of concentrations in components of each Investment Portfolio according to each Security type, the sector in which it invested, country in which it invested and Security Issuer.
1. Bases and controls related to distributions of Securities which shall be purchased and sold for the Clients’ account and for the Investment Portfolios managed by the Licensed Person.

The Resolution included the infliction of the following penalty: -

“First: NCM Investment Company is fined an amount of two thousand Dinars for each of the attributed violations.

Second:  Mr. Abdullatif Mohammed Al-Aiban -Grant Thornton Al Qatami, Al Aiban & Partners- in his capacity as the auditor of NCM Investment Company is fined an amount of two 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 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.