What are the duties of Investment Portfolio Management Companies?

The Securities Disputes Lawyer in RHR for Law Firm in Kuwait clarifies the answer to this question.

According to Book Seven (Customers’ Money and Assets) of the Executive Regulations of the Law Establishing the Capital Markets Authority and Regulating Securities Activity, an investment portfolio management company must always keep the client’s interests in mind, and make every effort to achieve its clients’ interests and take care of their investments. You must, in particular, adhere to the following rules:

1. Managing the client’s investments on their own and not allowing others to do so. Specialized companies can be authorized to manage the client’s investments outside the State of Kuwait if the client agrees in writing, in accordance with the relevant foreign market regulations, and without violating the provisions of the law establishing the Capital Markets Authority and regulating securities activity, as well as its executive regulations.
2. Commitment to create one main investment portfolio for each client, for each type of investment portfolio, according to the mechanism by which the portfolio is managed, with the option of creating sub-investment portfolios that fall under the client’s main investment portfolio, with the goal of tightening control over the components of each portfolio and managing them efficiently and effectively.
3. Enabling clients in all types and forms of investment portfolios to exercise their rights resulting from securities ownership, such as the right to dispose of securities, vote, nominate, and be appointed to corporate boards of directors, while portfolio management companies are not permitted to exercise those rights on behalf of clients. Except with the client’s written authorization, whether in the contract or a special authorization, all without prejudice to the cases in which investment portfolio management companies must refrain from executing the client’s orders contained in Book Seven (clients’ money and assets) of the executive regulations of Law No. 7 of 2010, or if there is a condition in an agreement between the client, the investment portfolio management company and any another parties who limit the client’s right to exercise all or some of the rights arising from security ownership.
4. The investment portfolio management company shall not participate in the formation of new companies from shares on behalf of clients who own investment portfolios, without prejudice to his right to subscribe on their behalf, provided that subscription applications are submitted and securities certificates are issued separately in the name of each subscriber.
5. Incurring liability for any mistakes made by the investment portfolio management company or its employees when executing clients’ deals and orders, and do everything possible to correct the errors. Furthermore, errors resulting from gross negligence, bad faith, or willful breach of the Portfolio Management Company’s duties in managing the client’s investments may not be exempted.
6. Keeping documents proving ownership in the client’s name or in the name of the investment portfolio management company that manages the client’s investments.

If you are looking for a Kuwaiti law firm that specializes in providing legal services to the securities, capital and stock market activities, you can count on us at Taqneen, Law Firm and Legal Consultations.

To book an appointment or request legal advice about the duties of securities companies in the optimal implementation of clients’ orders, we are pleased to receive your inquiries at (info@Taqneen.com).