The executive regulations of the law establishing the Capital Markets Authority and regulating securities activity required companies listed on the Kuwait Stock Exchange when forming the company’s board of directors that the board shall have a commensurate structure to the size and nature of the company’s activity, in addition to the tasks and responsibilities entrusted to it, and that when forming the board of directors, the diversity in scientific expertise and professional and specialized skills shall be taken into consideration, and that the members shall be familiar with the relevant laws and regulations, and the rights and duties of the board of directors, in addition to having a full understanding and awareness of the company’s activities, and all the risks that its financial position may be exposed to.
The executive regulations also required companies listed on the Kuwait Stock Exchange to comply with the following regarding the formation of the company’s board of directors:
– The company’s board of directors shall consist of a sufficient number of members so as to allow it to form the necessary number of committees emanating from it within the framework of the requirements of the governance rules.
– That the diversity of expertise and specialized skills, which contributes to enhancing efficiency in decision-making, shall be taken into account in forming the company’s board of directors.
– That the majority of the company’s board of directors shall be non-executive, and it shall include at least an independent member, provided that the number of independent members shall not exceed half of the board members.
– That among the members of the company’s board of directors are independent members that allow them to take decisions without being subjected to pressure or obstacles, by including the company’s board of directors who are independent members who are entrusted with advisory tasks related to the company’s various activities, and in a way that helps the board of directors to take sound decisions that contribute in achieving the interests of the company. The board of directors shall include at least one independent member and not to exceed half the number of board members at most. The following are the controls that shall be met by the independent member:
- It shall be independent, and the matters that are incompatible with independence of the members shall include, but not be limited to, any of the following:
- To own five percent or more of the shares of the company for which it is nominated, or to be its representative.
- To be any of the company’s board of directors members’ first degree of kinship or the executive management of the company or any company of its group, or the main related parties.
- To be a member of the board of directors in any company of its group.
- To be an employee of the company or of any company of its group or of any of the stakeholders.
- To be an employee of the legal persons who have controlling stakes in the company.
- The independent member shall have the qualifications, experience and technical skills that are appropriate for the company’s activity.
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