September 7, 2022 auto

CMA developing system to regulate general assemblies

KUWAIT: Kuwait’s Capital Markets Authority (CMA) decided recently to implement the first phase of its project to develop a mechanism for participation in the general assemblies of companies listed on Boursa Kuwait. In an exclusive interview with Kuwait Times, Ahmad Al-Melhem, Chairman of Capital Markets Authority, Board of Commissioners, Managing Director, discussed in detail the new mechanism and elaborated on the purpose of implementing it.

Some companies do not have an option whether to implement the new system or not, Melhem said. “This new mechanism is optional for companies at the first stage although an article has been formulated in the CMA regulation list which allows the Authority to make it mandatory for a company to hold an online general assembly meeting in case the Authority thinks it necessary to intervene to protect the rights of minority shareholders in the general assembly,” he said.

“CMA will obligate some companies to hold its general assemblies with the new system due to the existence of internal disputes with shareholders of their companies, which we were informed by their actions, in addition to companies that have a clause of voluntary withdrawal from the stock exchange, as we received objections from a minority of shareholders of these companies. The authority will receive a recorded copy of the general assembly meeting to be published in the stock exchange,” Melhem said.

“The new mechanism aims to record and archive these meetings to keep them for future review of the events of these assemblies and the disputes that may arise among shareholders. It will also allow for companies to hold the meeting directly without the need to postpone it as a result of a lack of quorum and the inability of all shareholders to personally attend the general assembly, whether it is for the ordinary or extraordinary general assembly,” he said.

Melhem stressed the importance of the new system for foreign investors. “It is also a great opportunity for the foreign investor to be able to attend the proceedings of the meeting and vote on its provisions, not to mention that the attendance of the assembly and voting online is available to the custodian of the foreign investor. It is a worthy step for the Authority to take, especially to encourage both passive and active investors to attend the general assembly and contribute to achieving a quorum and taking decisions that achieve their interest,” he said.

“Since Kuwait Clearing Company is the authority responsible for holding the general assembly meetings, and it has a registered list of the of shareholders, it is the one that implements the new online system of general assembly meetings. Therefore, it has prepared the technical system to hold these meetings whether virtually or physically. At this stage, the shareholders have the choice between attending the general assembly in person or remotely, and it can be considered a first step to qualify shareholders to move to the online system completely,” Melhem explained.

“We are on the verge of launching several systems, including the Central Counterparty Clearing (CCC), which will contribute to avoiding market risks and ensure a smooth future performance of open contracts, and will also qualify us to upgrade the CMA level, or ensure inclusion in the FTSE Russell indexes,” Melhem said.

“We are willing to prepare a register for financial analysts. Instead of being subjected to legal accountability as a result of publishing through social media without a license, they will be given a financial analysis license enabling them to publish in accordance with rules of impartiality and objectivity and avoid conflict of interests,” he pointed out.

Regarding the implementation of the new system for unlisted companies on the stock exchange, he said: “The companies listed on the stock exchange are subject to the supervision of the CMA. Therefore, the implementation of this new mechanism will be through us. But it is permissible for the Ministry of Commerce, as it is the supervisor of unlisted companies, and keeps the register of shareholders with Kuwait Clearing Company to benefit from this system. Our system was developed in the consultation with the Ministry of Commerce, Boursa Kuwait and Kuwait Clearing Company, in addition to the Capital Markets Authority. A joint effort was previously approved by the aforementioned authorities and they can implement it.”


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