The Legal Department of the Capital Markets Authority undertakes the task of administrative investigation into the violations contained in the law establishing the Capital Markets Authority and regulating the activity of securities and its executive regulations referred to it by the authority. The following rules and procedures:
- The Executive Director of the Authority issues a decision to refer the violation to the Disciplinary Board, accompanied by the relevant papers and investigation records.
- The Disciplinary Board issues its decision regarding the violation referred to it.
- The Board of Commissioners of the Capital Markets Authority and the stakeholders shall be notified within a period of seven working days from the date of the issuance of the disciplinary board decision.
The authority may be satisfied with warning the violator to stop committing the violation with a pledge not to repeat it in the future, and it may subject him to further supervision.
Functions of the disciplinary board
The law establishing the Capital Markets Authority and regulating Securities Activity, in Article No. 140 thereof, clarified the responsibilities of the Disciplinary Board of the Capital Markets Authority. The Board considers the following matters:
1- Deciding on the disciplinary accountability referred to him and submitted by the authority related to the violation of the provisions of the law or the regulation or any decisions or instructions issued thereunder.
2- Deciding on the grievances filed against the decisions of the Stock Exchange and the committee for looking into the violations therein. The Disciplinary Board of the Authority, when examining the grievances in the decisions of that committee, is considered an appellate body and its decision is final.
Penalties imposed by the disciplinary board
The Disciplinary Board, after verifying the violation, may impose any of the following penalties:
- Warning to the violator to stop committing the violation.
- Obligating the violator to re-pass the qualifying exams.
- Suspension from work or practicing the profession for a period not exceeding one year.
- Suspension from practicing the work or profession permanently.
- Suspension of the license for a period not exceeding six months.
- Revocation of the license.
- Imposing restrictions on the activity or activities of the violator.
- Cancellation of voting, power of attorney or authorization obtained in violation of the provisions of the law.
- Suspending or canceling any acquisition offer or purchase deals outside the scope of the acquisition offer if they were made in violation of the provisions of Chapter Seven of the Law or its Executive Regulations.
- Banning the exercise of the right to vote for a period not exceeding three years for a shareholder who refrains from submitting any statement or submits a statement that is incomplete or contrary to the truth or the law or its implementing regulations.
- Suspending the effectiveness of a valid prospectus in accordance with the provisions of the law.
- Suspending the trading of a security for a limited period, or suspending or canceling the decision to list a security before it becomes effective.
- Dismissal of a member of the board of directors or a manager in one of the licensed companies or listed companies or the investment controller or the security of maintaining a collective investment system, who did not carry out the responsibilities stipulated in the law or its executive regulations.
- Imposing financial penalties that range according to the severity of the violation, with a maximum of fifty thousand Kuwaiti dinars.
The Disciplinary Board may order the cancellation of the transactions related to the violation and its consequences, or obligating the violator with sums of money equal to the value of the benefit he obtained or the value of the loss he avoided as a result of committing the violation, and the value may be doubled in case of repeated violations.
The Disciplinary Board may impose one or more restrictions on the activity or activities of the violator from the following restrictions:
- Preventing a person licensed or registered with the Authority from entering into some types of transactions.
- Preventing a person licensed or registered with the Authority from practicing some business for a specified period.
- Suspension of the licensed activity for a specified period.
- Preventing a person registered with the Authority from carrying out certain works or suspending, amending or canceling his registration from the job or jobs he is registered with.
- Suspending any person from dealing in a security, securities or stock exchange for a specified period.
Enforcement of disciplinary board decisions
Decisions of the Disciplinary Board of the Capital Markets Authority are enforceable immediately upon their issuance, unless the decision sets a date for implementation. The authority shall implement the decision of the disciplinary board.
Implementation of disciplinary sanctions
In the event that the disciplinary board’s decision includes imposing financial penalties on the violator, the value of the financial penalties must be met immediately and within the period specified in the disciplinary board’s decision, and they are collected by the authority directly.
The Capital Markets Authority may take the necessary legal measures to ensure the implementation of the decisions of the Disciplinary Council, and in the event of non-compliance with them, it has the right to submit a report to the Capital Markets Prosecution and request that precautionary measures be taken.
Appeal against the decisions of the disciplinary board
Anyone against whom one of the penalties stipulated in the law establishing the Capital Markets Authority and Regulating Securities Activity may file a written grievance with the Authority within fifteen days from the date of being notified in writing of the decision. Failure to respond to the grievance within thirty days from the date of its submission constitutes a rejection thereof.
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).