Background on applicable regulations
- CMA's ambit predominantly covers publicly listed entities, but has far reaching effects on all entities looking to raise public and private finance.
- Besides, CMA regulations has detailed provisions governing various finance activities typically encountered by a corporate, viz.,:
- Mergers & Acquisitions (Chapter 7)
- Capital Raise (Chapter 7)
- Listing Requirements (Circular No. 3 read with Chapter 7)
- Investment Funds (Chapter 8)
- Other Securities related Services (Chapter 5)
- As an independent advisor, AB provides a wide range of services across broad categories of Transaction, Valuation & Financial Advisory. AB, upon request, shall prepare a CMA Compliance Roadmap for any corporate finance activity, to enable seamless and effective compliance functions.
CMA Regulations & Requirements
Regulations
- Financial transactions involving securities between two listed companies or on exception basis between a listed and unlisted entity are brought within the ambit of CMA.
- Such financial transactions can arise on account of Acquisitions, Mergers, listing services and Capital Raise among others.
- CMA promulgates hiring independent consultants, timely approval by board and shareholders and has also imposed penalties for inaction/violation.
1. Acquisitions (5-30%)
- For all acquisitions, acquirer is required to obtain prior approval (Article 249) and submit an offer document fulfilling the requirements listed by the CMA. (Article 258)
- Requires adherence to minimum float rules and minimum offer price. (Circular 3 & Article 287)
- Settlement of purchase consideration with adherence to minimum cash settlement proportion in certain instances. (Article 287)
2. Acquisitions (more than 30%)
- The acquirer is required to get prior approval from CMA for acquisition of more than 30% stake. (Article 249)
- Adherence to mandatory offer provisions if the acquirer intends to make an offer for more than 30% stake. (Article 271)
- Requires issuance of prospectus in instances of settlement of purchase consideration through new shares. (Article 268)
- Suspend listing of bidders securities during reverse acquisition. (Article 290)
- Adherence to disclosure rules and regulatory requirements for continued listing. (Article 382)
- Structure purchase consideration components. (Article 287)
3. Capital Increase
- Obtain prior approval (Article 249) from the CMA for capital raise / increase in the following instances:
- Initial Public offerings
- Rights Issue of shares,
- Private placement,
- Issue of various debt instruments.
- Requires preparation and issue Prospectus/Offer document in compliance with CMA general requirements and regulations. (Articles 258 & 268)
- Adherence to minimum paid up capital and issue size requirements. (Circular No. 3)
4. Investment Funds
- Obtain prior approval and license from the CMA to establish investment funds in the State of Kuwait. (Article 297)
- Requires preparation and issue of prospectus & other legal agreements in compliance with CMA general requirements and regulations. (Article 305 & 308)
- Adherence to disclosure rules and regulatory requirements for private placement and deemed public offerings. (Article 302 & 303)
- Comply with CMA requirements regarding the obligations of the fund manager and Board of Directors. (Article 312 & 316)
- Comply with CMA requirements regarding the administration activities of the fund manager and Board of Directors. (Articles 323 - 345)
5. Stock Exchange Listing (Circular No. 3)
- Fulfillment of minimum requirements of financial profit track records and other key metrics.
- Adherence to free float and minimum paid up capital requirements.
- Fulfillment of minimum shareholding requirements for promoter, non-promoter and public.
- Requires issuance of listing prospectus and submission of formal listing application as per listing rules of CMA.
- Obtain prior regulatory approvals in accordance with CMA regulations.