What are the periods of prohibiting insiders (persons with access to the internal information),  from dealing in the securities of a company listed on the Kuwait Stock Exchange?

The answer to this question is given by the team of capital markets lawyers in RHR Law Firm in accordance with the executive regulations of the law No. 7 for the year of 2010 concerning the establishment of the Capital Markets Authority and regulation of Securities Activity.

First of all, an insider (person with access to the internal information),   is defined as any person who, by virtue of his position, has access to material information or data about a company listed on the Kuwaiti Stock Exchange that was not previously available to the public.

The Executive Regulations mentioned the periods of prohibition of dealing in the securities of insiders in its tenth book (Disclosure and Transparency), as it decided that the insider with the listed company is prohibited from dealing in the securities issued by it during the following periods:

1. Ten working days before the end of the fiscal year quarter and until the announcement of the financial results for that period.
2. Ten working days before the end of the fiscal year and until the financial results for that period are announced.

During these prohibition periods, an insider with the listed company may trade in its securities if he obtains prior approval from the Capital Markets Authority. During the prohibition periods, he may trade in the securities of that company in the following circumstances:

1. Ownership transfer as a result of inheritance or will.
2. Dealing with securities in order to carry out a court order.
3. Transfer of ownership to and from or between licensed companies’ portfolios, provided that the transfer is in the best interests of the original owner of the paper.
4. Transfer of ownership up to the second degree between spouses and relatives.
5. Purchasing or assigning priority rights to securities

Furthermore, in accordance with the contract of the concerned company, purchasing the necessary number of shares to secure the membership of the board of directors.

1. Transfer of ownership to pay off a financial institution’s debt.
2. Concluding a merger or acquisition transaction.
3. Securities mortgage.
4. Transfer of ownership from the listed company to the employee as part of the stock purchase option program implementation.

Outside of the prohibition periods, the insider may trade in the securities of the listed company unless he has inside information, and the controlling person within the listed company may trade in the securities of the listed company unless he has inside information. Subject to the provisions of the permissible trading ratio for a company listed on the Kuwaiti Stock Exchange.

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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).