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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
El Hassan Abdelrazek
The CML and its Regulations were issued to regulate the securities market in Kuwait and to organize stocks and securities in a fair, transparent and competitive way. They also help to keep the public aware of stock activity, along with the risks, the benefits and the responsibilities associated with investing in securities and aim to encourage growth and to provide protection to those partaking in trading activities of securities and stocks.
On 5 June 2012, the Board of Commissioners of the Capital Market Authority (“Board of Commissioners“) issued a set of detailed instructions aiming to apply full disclosure policies in such a manner that would achieve justice and transparency while preventing conflicts of interest and exploitation of internal information (“Disclosure Requirements”).
Disclosure Requirements are applicable to all listed companies (“Issuing Companies”) having their securities listed with the Kuwaiti Stock Exchange (“Stock Exchange”). Moreover, according to the Disclosure Requirements, Issuing Companies must disclose any information related to the company which is not known to the public and would be critical to the potential investor’s investment decisions.
The information shall be deemed to be critical to the public’s investment decision and hence the Disclosure Requirements shall be triggered if the information falls under the “materiality” criteria defined therein. Material information includes any event that might have an effect on the Issuing Company’s assets, financial position or normal course of business, leading to a change in the Issuing Company’s securities price, tradability, attraction or reluctance of investors to purchasing the security or reducing the Issuing Company’s capability to meet its financial obligations.
The Disclosure Requirements include a wide range of cases and events that may occur and constitute Material Information triggering the disclosure requirement. Upon the occurrence of any of such events, Issuing Companies are obliged to announce such matters to the public in accordance with the mechanism specified by the Disclosure Requirements. As previously illustrated, the material cases and events provided under the Disclosure Requirements are quite extensive and include numerous events that may be directly or indirectly related to the Issuing Companies. However, the following are some of the most significant and relevant of these cases:
As noted above, these cases are a sample provided under the Disclosure Requirements requiring announcement and disclosure thereof to the public. Nevertheless, in order for the Issuing Company to determine the impact and materiality of the potential information (hence disclose it as required) it must take into consideration the relevance of the information to the “prudent investor’s” decision. A prudent investor is defined as the normal investor seeking to increase his profits. In other words, the Issuing Company must take in to consideration whether or not the prudent investor shall rely on such information in his investment decision. Also in determining the materiality of the information, the Issuing Company must consider different factors related thereto including but not limited to its size (large, medium and small), recent developments related thereto and the general status of the market and the sector it operates in.
Finally, it is also worth noting that the Disclosure Requirements have provided exceptions to the disclosure requirements, where the Issuing Company may be entitled to postpone disclosing material information if such information is still unconfirmed or within the negotiations phase.
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