Subscribing to Security
Subscribing to security is the corporate offering process for security after completely finishing of its establishment for the reason of people’s buying it, also subscribing to security is whether to be a private subscription being as an invitation directed to a certain category or a person or certain persons to buy a security, or it is a public subscription being a general invitation directed to audience to buy security through various means of publication.
According to the executive regulation for Money markets authority establishing and security regulation law, it is not permitted to invite for subscription to any security whether at publishment or at offering unless presenting to this subscription a prospectus compatible with data and procedures stipulated in law No.7 for the year 2010 and its executive regulation and being endorsed by Money markets authority, excluded from that except for preferred shares a permission of emission or offering shares for subscription at whatever of the following states:
- Invitation of no more than fifty persons in Kuwait State for subscription to shares.
- Emission or offering shares by amount with no more than 1,000,000 Kuwait Dinars through a period of twelve months from the time of the last issuance.
- Emission of shares represents a percentage with no more than 10% from the last issuance for the same shares class occurred through a time limit of no more than twelve months.
- Emission of bonus shares to be distributed as profits for shareholders.
- Emission of shares within the employee stock purchase option system.
- Emission of shares to the issuer’s creditors for the purpose of restructuring their debts.
- Any other cases determined by the Money markets authority.
Also, in all of those mentioned cases it is not permitted to direct promotional advertisements for subscription using public advertising media which are available to audience unless the Money markets authority decides otherwise.
It is also permitted for the Money markets authority to exempt from inclusion of the prospectus draft some data and information mentioned in the eleventh book (Security trading) of the executive regulation of the law No.7 for the year 2010, besides it is permitted to exempt from attaching some documents, declarations and disclosures and that if the emission or offering nature or security nature requires this exemption, and it is also permitted for the authority to inquire any other information for the contents of the prospectus.
Also the persons responsible for the prospectus are the same issuance and every member of the board director of the issuance, and the subscription agent if any, and any person agreed to take responsibility on the prospectus contents, also the prospectus responsible persons are obliged by solidarity with each other of recompensing any person may has been harmed as a result of untruthfully or inaccuracy of information contained in the prospectus or as a result of omission of and data or information should be mentioned in the prospectus.
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