What are the cases and procedures for transferring ownership of securities with the approval of the Kuwait Stock Exchange?
The answer to this question is explained by the Capital Markets team at Al-Rashed, Al-Hadlaq and Al-Roudhan Law Firm and Legal Consultations, in accordance with the rules of the Kuwaiti Stock Exchange and the executive regulations of the law establishing the Capital Markets Authority and regulating securities activity.
First – Cases of transfer of ownership of securities with the approval of the Stock Exchange
The rules of the Kuwaiti Stock Exchange clarified that the ownership of listed securities may be transferred with the approval of the Stock Exchange in the following cases:
- Transfer of ownership based on an amicable settlement between the creditor and the debtor or the real guarantor who owns the security.
- Transfer of ownership at the request of the mortgagee creditor to own the mortgaged securities in the event that the mortgagee creditor is a bank or financial institution and the debtor or mortgagor is a professional client, and there was an agreement at the time or after the conclusion of the mortgage contract on the right of the mortgagee creditor in the event of the debtor’s breach of his obligations to own the thing mortgaged or sold.
- Transfer of ownership of the necessary number of company shares to secure the membership of the board of directors in accordance with the contract of the concerned company.
- Transfer of ownership based on an enforceable court ruling, unless the ruling was issued in respect of one of the cases in which the approval of the Stock Exchange is not required.
- Transfer of ownership at the request of a government agency (in the context of the state offering its owned securities to the private sector).
- Cases of transfer of ownership from partners to the company and vice versa, as well as transfer of ownership between subsidiaries and associates or between group companies.
- Securities granted to company employees in implementation of the Securities Purchase Option Program.
- Transfer of ownership based on a merger or acquisition transaction.
- Any other cases of transfer of ownership between two parties may be included in the trading rules set by the stock exchange or the executive regulations of Law No. 7 of 2010 regarding the establishment of the Capital Markets Authority and the regulation of securities activity.
- Transferring the ownership of the securities to shareholders or creditors in the event of the liquidation of the company owning the shares.
- Transfer of ownership of securities to participants or creditors in the event of liquidation of a collective investment scheme.
- Transferring the ownership of the securities owned by the company to another company as profits in kind.
- Transferring ownership of securities for subscription or in-kind participation in private subscription funds.
- Transferring the ownership of securities for subscription, subscription or redemption in kind in contractual collective investment systems.
- Any other case that the Stock Exchange deems appropriate after the approval of the Authority.
In all of the previous cases, the stock exchange collects the usual trading fees upon obtaining its approval for the transfer of ownership, provided that the clearing agency notifies both the authority and the stock exchange about the person acquiring, directly or indirectly, ownership of more than 30% of the traded securities of a listed joint stock company following the execution of Transfer of ownership of listed securities.
Second – Procedures for transferring ownership of securities with the approval of the Stock Exchange
The transfer of ownership of the securities is carried out with the approval of the Stock Exchange according to the following procedures:
- Those concerned shall apply to the Stock Exchange to obtain its approval of the transfer of ownership according to the form prepared for this, containing the documents proving the applicability of one of the cases of transfer of ownership of securities with the approval of the Stock Exchange.
- The Stock Exchange issues its decision regarding the application for approval or rejection, or a request for further clarifications or documents, after verifying the applicability of one of the cases of transfer of ownership of securities with the approval of the Stock Exchange.
3 . In the event of the approval of the stock exchange, the parties to the transaction submit a request to the clearing agency to transfer ownership, and the clearing agency does this after verifying the identity of the parties to the transaction and their legal representation, and the documents indicating ownership and the absence of any violations, legal restrictions or an agreement that prevents the completion of the transfer of ownership.
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