Regulation of Securities Offerings in Kuwait: Key Points
The Kuwait Capital Markets Authority (KCA) plays a crucial role in regulating the offering of securities in Kuwait. In this article, we will delve into the key points from the KCA’s bylaws that outline specific requirements for issuers and obligors.
Licensing Requirements
Before engaging in certain activities such as asset evaluation or rating agencies, companies must obtain a license from the KCA. This ensures that only qualified entities participate in these activities, promoting transparency and investor protection.
Asset Evaluation and Rating Agencies
- Asset Evaluation: In-kind assets must be evaluated by a company licensed by the Authority to undertake “asset evaluation” activities.
- Rating Agencies: The KCA requires issuers and obligors to provide one or more reports issued by a credit rating agency for bonds and sukuk issuances, with an exemption for public offerings.
Prospectus Requirements
The prospectus must be prepared in accordance with the rules and regulations of the Authority, providing detailed information about the securities being offered, issuer particulars, and redemption mechanics.
- Public Offering: For public offerings, a comprehensive prospectus is required.
- Private Placement: The requirements for a private placement’s prospectus are less onerous but still require an Arabic translation.
Qualified Investors
Qualified investors or professional investors are defined as government entities, licensed companies, financial institutions with supervisory bodies, or individuals who meet specific criteria such as having dealings in securities in large volumes.
Exemptions
Shareholding companies may issue shares without the need to obtain approval of their prospectus under certain circumstances:
- Issues to no more than 50 persons in Kuwait
- Issues not exceeding 1 million KD within a year
- Issues representing not more than 10% of the last issue of the same category of shares
Conclusion
The KCA’s bylaws provide a comprehensive framework for regulating securities offerings in Kuwait, ensuring transparency and protecting investors. By understanding these key points, issuers and obligors can navigate the regulatory requirements and maintain compliance with the Authority’s rules and regulations.