Securities are of economic value to their owner, who obtains returns and profits from them, whether from the issuer or by selling them to obtain the material consideration for them. Given this economic value of the securities, they may be the subject of a transfer of ownership between two persons, where the creditor can, based on the The contract concluded with the debtor who owns it requires the seizure of the securities.

Securities registered in the name of the debtor are seized by means of sequestration of what is owed to the debtor with a third party, and this seizure is indicated in the register of those securities with the issuing company or the clearing agency that maintains this record. Manager of those investment portfolios.

Securities concept

The Kuwaiti legislator defined securities as any instrument, whatever its legal form, that proves a share in a negotiable financing operation with a license from the Capital Markets Authority, such as shares issued or proposed to be issued in the company’s capital, any instrument that creates or acknowledges indebtedness issued by a company, loans, bonds and sukuk, and all tradable public debt instruments, and any right relating to any of the securities, and units in a collective investment scheme.

Notification of seizure of the security

The Regulations of the Capital Markets Authority of the Kuwait Clearing Agency, in the event it receives a notification of attachment of a security in payment of a debt owed by the seller during the settlement period, permits the seizure of the cash consideration of the security. It also authorized, in the event that it received a notification of seizure of the cash consideration of a security in fulfillment of a debt owed by the buyer during the settlement period, to seize the security subject of the transaction after registering it in the name of the buyer. Seizure of securities in the event that the seizure was a local bank or a Kuwaiti financial institution

Execution of reservation at the responsibility of the barrier

The attachment is carried out at the responsibility of the distrainer creditor if it is a local bank or a Kuwaiti financial institution, and the distrainee is a professional client, in the event that the attachment occurs on securities or on profits, returns or rights arising from them by virtue of an enforceable judgment, expedited performance order, or an appended notarized contract In the executive form, and the data of the garnishee with the bond under which the seizure was signed was identical to his data recorded in the securities holders’ register at the clearing agency.

The establishment of any temporary or substantive disputes in the implementation shall not result in the suspension of the execution procedures or the suspension of the distribution of the proceeds of the implementation

The effect of the distrainer not entitlement to the debt subject of the attachment by a final judgment

In the event that a final judgment is issued that the distrainer is not entitled to the debt if it is a local bank or a Kuwaiti financial institution that has taken enforcement procedures as necessary, this judgment shall be considered an executive document to restore the situation to what it was, by purchasing the securities executed on it at the distrainer’s expense, and to return it to the garnishee On him amounts equal to the difference in the price of the securities and all the returns that resulted from them after execution on them.

In the event that it is not possible to restore the situation to the way it was, the distrainee may resort to a claim to assess the equivalent performance for the execution without a right.

Seizure of securities in the event that the blocker is a bank or a foreign financial institution

Deposit the confiscation of a bank guarantee for the value of the seized securities

The regulations of the Kuwait Capital Markets Authority required the distrainer, if it is a foreign bank or financial institution, to deposit with the Execution Department a bank guarantee issued by one of the local banks for the value of the seized securities. Whether it is temporary or substantive, and the claim for indebtedness if the implementation is under a judgment covered by expedited enforcement.

50% of the proceeds of selling the securities shall be paid to the confiscator, and the remaining amount shall be paid to him after fulfilling the conditions for releasing the bail.

Effect of a ruling not entitlement of the confiscator to the debt subject of seizure

The issuance of a final ruling that the distrainer (a bank or a foreign financial institution) does not entitle the debt that he has taken all or part of the execution procedures to require, leads to the existence of two cases, namely:

First: Restore the situation to what it was for the securities

In order to restore the situation to what it was, the amount of the guarantee is allocated to restore the situation to what it was before execution for the securities that were sold beyond the right of the barrier, by repurchasing those securities and paying an amount equal to the difference in the price of the security, and any cash profits or securities as a grant Arranged on the paper after implementation on it.

Second: It is not possible to restore the situation to what it was for the securities

In the event that it is not possible to restore the situation to the way it was due to the unavailability of the securities required to be purchased in the stock exchange, the guarantee and the amount withheld from the execution proceeds will be withheld, and that guarantee and the amounts will be allocated as a guarantee to fulfill the provisions issued in favor of the distrainee regarding compensation for unlawfully selling part of his money

Consequences of holding securities

Seizure of securities entails withholding what is due from their profits, whether they are cash dividends or securities, and what is due until the day of sale.

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