Information That Securities Companies Provide To Their Regular Clients

What information should stock companies provide to their regular clients?

The client in the securities activities sector is the person to whom the securities companies provide or intend to provide the services of securities activities they are licensed to practise. The securities companies classify their clients as professional or regular clients, and each non-professional client is classified as a regular client. The regular client is the non-professional client.

In accordance with the executive regulations of the law establishing the Capital Markets Authority and regulating Securities Activity, the persons authorized to practise the activities of an investment portfolio manager, a collective investment system manager, a subscription agent or a custodian shall provide the regular client – in particular – with the following information:

  1. The name and address of the person authorized to practice securities activities, and its contact details.
  2. The language used in communicating with the client, that is approved in receiving information and documents.
  3. The means of communication used between the authorized person and the client.
  4. A statement indicating whether the authorized person is working with the client in its capacity as an agent for an entity, and the name and contact details of this entity.
  5. The nature and timing of reporting on the services the authorized person provides to the client.
  6. A brief statement of the authorized person’s conflict of interest policy, and any additional details requested by the client in this regard.

A person authorized to practise securities activities who maintains or manages the funds or assets of regular clients shall, in particular, provide these clients with the following information:

The extent to which the client’s assets or cash can be deposited with other persons on behalf of the authorized person.

Limitation of the authorized person’s liability for errors made by third parties.

It is possible – if it applies to the investment case – to deposit the client’s assets or cash in a pooled clients account with a third party, and alerting the client to the risks arising from that.

The extent to which the client’s assets or cash that are deposited with other persons can be separated from those assets or funds of such persons or authorized person.

The authorized person shall notify the client of the competent courts and the applicable law in the event of any dispute relating to the client’s cash assets and funds outside the State of Kuwait.

A brief statement of the measures the authorized person takes to protect the client’s assets or cash, including a reference to any investor compensation program that the authorized person applies.

The authorized person shall notify the regular client of any of its rights or of a third party to withhold the money and assets of the client deposited with it or with third parties. The authorized person shall, before entering into securities financing transactions with respect to the assets deposited with it on behalf of a regular client, notify the client in writing, provided that this notification includes all information about the obligations and responsibilities of the authorized person, including the terms of this transaction, and the risks involved.

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