Kuwait Capital Markets Authority Rules And Regulations

Correct: The units of the scheme must be offered through private placement and targeted exclusively at Professional Clients is the right answer because the Kuwait Capital Markets Authority (CMA) Executive Bylaws explicitly state that marketing for a collective investment scheme (CIS) incorporated outside the State of Kuwait is restricted to private placements and must be directed only to Professional Clients.

Incorrect: The suggestion that units may be marketed to retail investors with a simplified disclosure is wrong because the regulations strictly prohibit the marketing of foreign CIS units to the general public or retail investors. The claim that any person licensed for investment advisory services may conduct the marketing without a separate license is wrong because the activity is limited to Licensed Persons practicing as a CIS Manager or Subscription Agent who have secured a specific marketing license from the Authority. The statement regarding exceeding the approved share of units is wrong because a marketer is prohibited from exceeding the share approved by the Authority without obtaining prior approval and paying the prescribed fees.

Takeaway: Marketing foreign collective investment schemes in Kuwait requires a specific license from the CMA and is strictly limited to Professional Clients through private placement.

Correct: The categorization of the client, the characteristics of the execution venues, and the likelihood of settlement is the right answer because Chapter 5, Section 4 of the Kuwait Capital Markets Authority (CMA) Executive Bylaws mandates that licensed persons consider these specific factors, among others, to achieve the best possible result for their clients during order execution.

Incorrect: The option focusing on the client’s educational background, firm profit targets, and inflation is wrong because these are not regulatory criteria for best execution; profit targets, in particular, could create a conflict of interest. The option regarding the number of employees at the issuing company and internal marketing budgets is wrong because these factors are irrelevant to the technical process of trade execution. The option suggesting that only the speed of execution should be considered is wrong because best execution is a multi-factor assessment that must also include price, size, and the nature of the security.

Takeaway: Under CMA regulations, licensed persons must evaluate a comprehensive set of criteria, including client type and venue characteristics, to ensure the best possible outcome for client transactions.

Correct: The mandatory sequence for amortizing accumulated losses using financial reserves before a capital reduction is to first use the voluntary reserve, then the portion of the legal reserve that exceeds 50% of the company’s capital, followed by the share premium, and finally the remaining balance of the legal reserve. This hierarchy is designed to preserve the most restricted reserves for as long as possible.

Incorrect: The suggestion to use the legal reserve in full before the voluntary reserve is incorrect because the legal reserve is a statutory requirement intended to be the last line of defense. The proposal to use the share premium before the voluntary reserve or the excess legal reserve is incorrect as the share premium is prioritized for use only after those specific reserves are exhausted. The claim that the entire legal reserve should be used before the share premium is incorrect because the law requires splitting the legal reserve into two stages, with the share premium being utilized after the excess portion but before the core 50% portion.

Takeaway: Under Kuwait CMA regulations, companies must follow a specific four-step sequence when utilizing reserves to offset losses, prioritizing the use of voluntary reserves and excess legal reserves before touching share premiums or the core legal reserve.

Correct: The board of a company subject to the Kuwait Capital Markets Authority (CMA) Corporate Governance rules must be structured to ensure a balance of power and authority. According to Module 15, the board must consist of a majority of non-executive members. Additionally, independent members must represent at least 20% of the board, provided that there is at least one independent member. This structure is designed to enhance the board’s ability to make objective decisions and provide effective oversight of management.

Incorrect: The proposal that the board should have a majority of executive members is incorrect because the CMA specifically requires a non-executive majority to ensure independent oversight. The claim that the board must consist of at least 50% independent members exceeds the minimum regulatory requirement of 20%, and the suggestion that the Chairman and CEO roles can be combined is a direct violation of the CMA’s requirement for the separation of these two positions. The idea that the board must be entirely non-executive is wrong because executive members are permitted to sit on the board as long as they do not constitute the majority, and the omission of a requirement for independent members contradicts the mandatory 20% rule.

Takeaway: Under Kuwait CMA Module 15, a balanced board must maintain a majority of non-executive members and at least 20% independent members to ensure accountability and protect stakeholder interests.

Correct: The requirement to cover the shortage from the firm’s own funds and notify the Capital Markets Authority immediately is the right answer because under Kuwait CMA regulations, while internal discrepancies have a three-day resolution window, any shortage identified during reconciliation with a third party (such as a bank) that cannot be corrected immediately must be covered by the Licensed Person to protect the client, followed by an immediate report to the Authority.

Incorrect: The suggestion that the firm has three business days to resolve the shortage is wrong because the three-day grace period only applies to discrepancies within the Licensed Person’s internal records and accounts, not to shortages in funds held with third parties. The option suggesting the firm should wait for a bank investigation before taking action is wrong because the Licensed Person bears the immediate responsibility to restore the client’s fund balance regardless of the bank’s internal processes. The claim that the firm only needs to disclose the discrepancy in the annual auditor’s report is wrong because the regulations mandate immediate notification to the Authority specifically when a shortage occurs that requires the firm to use its own capital.

Takeaway: Licensed Persons must immediately rectify any shortages in client funds held by third parties using their own capital if the error cannot be fixed instantly, and they must notify the CMA of such events without delay.

Correct: The investor is exempt from the immediate mandatory offer requirement but must rectify the ownership level within two years is the right answer because the Kuwait Capital Markets Authority (CMA) regulations provide specific exceptions for mandatory acquisitions, including those resulting from inheritance, wills, or court judgments, provided the person complies with the regulations within no more than two years from the increase.

Incorrect: The claim that a mandatory offer must be submitted within 30 days is wrong because it describes the general rule for standard acquisitions and fails to account for the specific legal exception granted for court judgments. The option suggesting an immediate sale of the excess shares is wrong because the law allows for a generous two-year window to achieve compliance rather than requiring an immediate market disposal. The idea that the investor is permanently exempt is wrong because the regulatory exception is time-bound, requiring the investor to address the ownership threshold within the two-year grace period.

Takeaway: While crossing the 30% ownership threshold in a listed company normally triggers a mandatory offer, acquisitions resulting from court judgments or inheritance are granted a two-year period to reach regulatory compliance.

Correct: The Risk Management Unit must maintain independence by having a direct reporting line to the Board of Directors and is strictly prohibited from exercising any financial powers or authorities that could lead to a conflict with its regulatory and supervisory role.

Incorrect: The suggestion that the unit should report to the Chief Financial Officer is incorrect because the unit must be independent from executive functions to ensure objective oversight. The claim that the unit has the authority to approve related party transactions is wrong because the regulations state the unit reviews these transactions and provides recommendations to the Board, rather than granting final approval. The idea that the unit must be staffed by external consultants is incorrect as the CMA rules require the company’s internal organizational structure to include this unit, provided the staff are appropriately qualified and independent.

Takeaway: To ensure effective oversight, Kuwait CMA regulations require the Risk Management Unit to be independent of executive management, report directly to the Board, and avoid any operational financial authority.

Correct: Disclosing the material information to both the CMA and the Exchange immediately, and before the start of the next trading session, is the right answer because Module 10 (Disclosure and Transparency) of the CMA Executive Bylaws requires the prompt release of any information that could significantly influence the price of the security or investor behavior, regardless of whether the agreement is binding or non-binding.

Incorrect: Waiting until the agreement is legally binding is wrong because the potential impact of a strategic MoU is sufficient to trigger disclosure requirements to prevent information leakage or insider trading. Allowing a two-day grace period for financial studies is incorrect as the law mandates immediate disclosure to ensure all market participants receive the news simultaneously. Stating that disclosure is only mandatory for related party transactions is wrong because the materiality of the event, such as a significant acquisition, is the primary trigger for disclosure under the Executive Bylaws, regardless of the counterparty’s identity.

Takeaway: The Kuwait CMA emphasizes the immediacy of disclosing material developments to ensure market transparency and protect investors from information asymmetry.

Correct: Conducting a close examination of the transaction, recording the findings in writing, and retaining those records for at least ten years is the specific requirement under the Kuwait Capital Markets Authority (CMA) Executive Bylaws. This ensures that unusual transaction patterns are scrutinized and that a long-term audit trail is available for the Authority and auditors.

Incorrect: Freezing assets and transferring them to a Central Bank escrow account is an incorrect procedure for the initial identification of an unusual transaction; the law requires examination and documentation first. Notifying the client of the suspicion is strictly prohibited as it constitutes ‘tipping off,’ and the five-year retention period is insufficient under CMA AML/CFT rules which mandate ten years. Terminating the relationship immediately without further investigation or documentation is incorrect because the Licensed Person is specifically required to examine the transaction closely and record their findings.

Takeaway: Licensed Persons in Kuwait must investigate transactions lacking economic purpose and maintain written records of these findings for a minimum of ten years.

Correct: The power to call upon experts for technical opinions and to hear witness testimonies is a specific authority granted to Judicial Officers under Chapter 1, Section 3.1 of the Executive Bylaws. This allows them to gather comprehensive evidence and technical insights during their investigations into potential crimes or violations of the Capital Markets Law.

Incorrect: The claim that officers can only visit premises if a formal written complaint is received from a known source is incorrect because they are authorized to act on anonymous reports or perform periodic inspections. The assertion that they are restricted to reviewing only voluntarily submitted documents is wrong, as the law empowers them to review all records, books, and statements they deem necessary for their work. The idea that a Judicial Officer can immediately and permanently revoke a license during an inspection is incorrect because their role is to investigate and collect evidence; the authority to impose such sanctions lies with the Disciplinary Committee or the Board of the Authority.

Takeaway: Judicial Officers of the Kuwait Capital Markets Authority are granted broad investigative powers, including the right to inspect premises, summon witnesses, and engage technical experts to ensure the integrity of the capital markets.

Correct: An external auditor registered with the Authority is the right answer because the CMA Executive Bylaws (Module Five) define Registered Persons to include not only individuals in specific employment positions within a firm but also external auditors and Sharia auditing offices that are registered with the Authority.

Incorrect: The second-degree relative of the firm’s Compliance Officer is wrong because this individual is classified under the definitions of Relatives or Related Parties rather than being a Registered Person. The client managing their own portfolio is wrong because they are a service recipient (customer) and do not hold a registration status with the Authority for performing regulated securities activities. The employee in the general maintenance department is wrong because only specific roles designated as Registered Employment Positions (such as CEO or Compliance Officer) require registration, and general support or logistics roles are not included in that list.

Takeaway: The definition of a Registered Person under Kuwait CMA rules encompasses both internal personnel in regulated roles and specific external professionals like registered auditors and Sharia auditing offices.

Correct: Under the Kuwait Capital Markets Authority (CMA) regulations, Kuwaiti public shareholding companies are mandated to submit a listing application to the Exchange within their second year of practicing their main activities. However, an explicit exemption is granted to companies that are fully owned by the government, which are not required to submit such an application.

Incorrect: The claim that a company must wait for three years of operations is incorrect because the regulations specify the second year as the deadline for the listing application. The statement regarding a three-year lock-up for all shareholders is wrong because the non-disposal undertaking only applies to shareholders holding 20% or more of the company’s shares and lasts for one year from the listing date. The suggestion that listing is automatic is incorrect as the company must actively submit an application and satisfy the Exchange’s specific listing conditions.

Takeaway: Kuwaiti public shareholding companies are subject to a mandatory listing application window during their second year of operations, with a specific exemption provided for government-owned entities.

Correct: The individual having worked in the financial sector for at least one year in a professional position requiring knowledge of the services is one of the three specific criteria defined by the CMA for qualified professional client status.

Incorrect: The requirement for transaction volume is an average of KD 250,000 per quarter over two years, so a total of KD 100,000 over one year is insufficient. The minimum asset threshold for qualification is KD 100,000, meaning a portfolio of KD 50,000 does not meet the regulatory requirement. The process of a professional client by nature requesting retail status is a downward re-categorization for higher protection and does not serve as a qualifying criterion for professional status.

Takeaway: Licensed Persons must verify that clients meet specific financial or professional experience thresholds before categorizing them as qualified professional clients under CMA Module Eight.

Correct: The investment company is considered to have Significant Influence because it owns more than 20% of the other company and meets specific criteria such as the exchange of administrative employees and the provision of basic technical information. According to the CMA Glossary, these factors establish influence even if full control is not present.

Incorrect: The classification as a Subscription Agent is wrong because a subscription agent is a person who sells or markets securities for an issuer, which does not describe a 22% ownership and operational relationship. The term Special Purpose Vehicle (SPV) is incorrect as an SPV is a company set up for a specific, limited purpose like issuing Sukuk or securitization, not a general manufacturing firm. The definition of a Trust is wrong because a Trust refers to contractual arrangements to protect bonds or Sukuk assets, which is not applicable to a standard equity ownership scenario.

Takeaway: Significant Influence is established by a 20% ownership threshold combined with operational indicators like personnel exchange or technical support.

Correct: The requirement to publish information through the Exchange within seven business days after the end of each month is the right answer because the Kuwait CMA Executive Bylaws specifically mandate that public fund managers must disclose material information to the public through the Exchange within this timeframe to ensure ongoing transparency.

Incorrect: The option suggesting submission to the Authority only within 15 business days is wrong because material information for public funds must be accessible to the public via the Exchange, and the 15-day period is the deadline for quarterly financial statements. The option regarding 15 business days after the end of each quarter is incorrect because material information reporting is a monthly requirement, not a quarterly one. The option stating 45 days after the end of the financial year is incorrect as this specific timeline applies to the submission of audited annual financial statements rather than monthly material disclosures.

Takeaway: Public fund managers in Kuwait must ensure that material information is disclosed to the public via the Exchange within seven business days following the end of every month.

Correct: The disclosure of material information may be delayed if such disclosure would damage the confidentiality of negotiations or preliminary procedures for a deal related to the listed company or any other transactions. This provision exists to protect the commercial interests of the company and its shareholders during sensitive stages of a transaction.

Incorrect: The suggestion that a delay is permitted to prevent a decrease in share price is incorrect because the disclosure rules are designed to ensure all investors have access to price-sensitive information, regardless of whether the impact is positive or negative. The claim that a delay is allowed until an internal audit is finished is wrong because the materiality of the event triggers the disclosure requirement, not the completion of internal administrative reviews. The option regarding a unanimous board vote is incorrect because disclosure obligations are based on the nature of the information and regulatory thresholds, not the specific voting ratio of the board of directors.

Takeaway: Under Kuwait CMA regulations, listed companies are permitted to delay the disclosure of material information only if immediate announcement would jeopardize the confidentiality of ongoing negotiations or preliminary deal procedures.

Correct: The purchase or sale of a listed security between the accounts of investment portfolios managed on behalf of a person where that person did not interfere in the management and the transaction shows no evidence of prior arrangement is the right answer because CMA regulations specifically exempt these transactions from being considered criminal fraud. The lack of client interference and the absence of pre-planned patterns in volume, price, and time demonstrate that the trade was not intended to create a false impression of market activity or ownership change.

Incorrect: Executing transactions between a parent company and its subsidiaries to fix a price level is wrong because it is explicitly defined as a criminal offense under the CMA Law as it involves using accounts of the same person/entity to create an artificial price. Matched orders where a person acts in agreement with another to coordinate price and volume are wrong because they are considered fraudulent acts that mislead the public about genuine supply and demand. Frequent contradictory trades by a person who is not a market maker are wrong because they are classified as illegitimate when they constitute a significant percentage of trading or result in noticeable price changes, as this distorts the market integrity.

Takeaway: Under Kuwait CMA rules, market manipulation is defined by the intent to mislead the market; however, transactions where the beneficial owner has no control over the execution, such as in discretionary managed portfolios, are generally exempted from criminal liability.

Correct: The presumption that an Investment Portfolio manager is acting in concert with a client arises specifically when the manager exercises voting rights attached to the shares within that portfolio. This is a regulatory safeguard to ensure that consolidated voting power is transparently disclosed and regulated under the acquisition rules of Module Nine.

Incorrect: The suggestion that a 5% ownership threshold is required is incorrect because the definition of acting in concert in this context is based on the exercise of voting control by the manager, not the size of the individual holding. The idea that simple trade execution triggers the presumption is wrong because routine brokerage or portfolio management transactions do not constitute acting in concert unless voting rights are exercised. The claim that a specific written agreement to vote together is necessary is incorrect because the CMA Bylaws presume the concert party relationship exists simply by the manager exercising the voting rights, unless proven otherwise.

Takeaway: Under Kuwait CMA regulations, the presumption of acting in concert between a portfolio manager and a client is fundamentally tied to the manager’s authority to exercise voting rights over the shares.

Correct: 12 months is the right answer because, according to the Kuwait Capital Markets Authority (CMA) Executive Bylaws concerning the listing of debt instruments, an obligor must demonstrate that its working capital is sufficient for its current requirements for at least twelve months following the date of the listing application.

Incorrect: The 3-month period is wrong because it provides insufficient assurance of the issuer’s ability to maintain operations and service debt in the short term. The 6-month period is wrong because it does not meet the specific regulatory threshold of one year required for listing debt securities. The 24-month period is wrong because, while a longer duration is financially sound, the minimum regulatory requirement set by the CMA is specifically twelve months.

Takeaway: To ensure the financial viability of debt issuers, the CMA requires a minimum working capital sufficiency period of 12 months from the date of a bond or sukuk listing application.

Correct: The requirement for the Fund’s external auditor to be distinct from the Fund Manager’s auditor is a fundamental independence rule under the CMA Executive Bylaws. Furthermore, the maximum tenure for an external auditor is capped at four consecutive financial years to ensure audit rotation and objectivity.

Incorrect: The statement suggesting that the same entity can perform both Internal and External Sharia Audit functions is incorrect because the regulations explicitly prohibit combining these tasks to maintain the integrity of the oversight process. The claim that a non-Sharia Fund Manager cannot appoint an external office for internal Sharia tasks is wrong; the rules allow this provided the manager covers the costs and the office does not also act as the fund’s external Sharia auditor. The assertion that an auditor can be reappointed after a one-year suspension is incorrect because the CMA requires a minimum cooling-off period of two consecutive financial years.

Takeaway: To safeguard the interests of unit holders, the CMA mandates strict auditor independence, including a four-year rotation limit and a clear separation between internal and external Sharia oversight roles.

Correct: The requirement for a company to be classified as a professional client by nature is having a minimum paid-up capital of KD 1 million or its equivalent. This specific threshold is established under the CMA Executive Bylaws to identify entities with sufficient financial scale to be treated as sophisticated investors without additional qualitative assessments.

Incorrect: The suggestion that total assets must exceed KD 5 million is incorrect because the CMA regulations specifically utilize paid-up capital as the benchmark for this classification rather than total balance sheet assets. The requirement for five years of market activity is wrong because the classification is based on the entity’s financial structure and legal status, not its historical trading experience. The mention of an annual turnover of KD 2 million is incorrect as turnover is not a criterion used by the CMA to define a professional client by nature.

Takeaway: Under Kuwait CMA rules, a corporate entity is categorized as a professional client by nature if it maintains a minimum paid-up capital of KD 1 million or its equivalent.

Correct: 15 days is the right answer because, according to the Kuwait Capital Markets Authority (CMA) Module Seven (Financial Resources), licensed persons are required to submit their Capital Adequacy reports within 15 days of the end of the reporting period to ensure the Authority can monitor the firm’s financial stability and risk exposure promptly.

Incorrect: 30 days is wrong because it exceeds the strict 15-day window mandated for financial resource reporting under the CMA rules. 45 days is wrong because, while it is a common deadline for submitting full interim financial statements, the Capital Adequacy report is a specialized regulatory filing with a shorter deadline. 90 days is wrong because this timeframe is typically reserved for annual audited financial statements and would be far too long for the Authority to effectively monitor capital adequacy.

Takeaway: Licensed persons must adhere to a strict 15-day deadline for the submission of Capital Adequacy reports to the CMA to demonstrate ongoing financial solvency and regulatory compliance.

Correct: Considering the nature and categorization of the client, the characteristics of the order, and the likelihood of execution and settlement is the right answer because the Kuwait Capital Markets Authority (CMA) Executive Bylaws, specifically Book 5 (Securities Activities), require Licensed Persons to take all reasonable steps to obtain the best possible result for their clients by weighing these specific factors alongside price, cost, and speed.

Incorrect: The suggestion that only the lowest commission and fastest speed should be considered is wrong because best execution is a multi-dimensional obligation that includes qualitative factors like settlement certainty and the specific nature of the security. The option focusing on the Licensed Person’s profitability is wrong because it ignores the fiduciary duty to prioritize the client’s interests over the firm’s own revenue. The option regarding the client’s net worth and historical volume is wrong because, while client categorization matters, the specific execution of an order must be judged based on the characteristics of that specific transaction and the prevailing market conditions, not just the client’s total wealth.

Takeaway: Under CMA regulations, achieving best execution requires a holistic evaluation of various criteria, including client type, order size, and the probability of successful settlement, to ensure the client’s interests are protected.

Correct: Offering units through private placement to Professional Clients only is the right answer because the Kuwait Capital Markets Authority (CMA) Executive Bylaws specifically mandate that Collective Investment Schemes (CISs) incorporated outside the State of Kuwait must be marketed exclusively to Professional Clients and through the mechanism of Private Placement.

Incorrect: The suggestion that retail investors can participate if the fund is from a highly regulated jurisdiction is wrong because Kuwaiti regulations do not provide an exemption for retail marketing of foreign schemes based on the country of origin; the restriction to Professional Clients is absolute. The claim that any local bank can market the scheme is incorrect because the marketer must specifically be a Licensed Person authorized to practice the activity of a CIS Manager or Subscription Agent. The idea that marketing can start upon filing is wrong because the Authority must first issue a formal marketing license before any promotional activities can take place.

Takeaway: Foreign Collective Investment Schemes may only be marketed in Kuwait to Professional Clients via private placement by appropriately licensed entities after obtaining a specific marketing license from the CMA.

Correct: The cancellation of a listing is authorized if trading has been suspended for six months and the company has failed to meet the requirements to resume. This ensures market liquidity and protects investors from stagnant listings that do not meet transparency or regulatory standards.

Incorrect: The failure to distribute dividends is wrong because dividend policy is generally a matter of corporate governance and profitability, not a direct regulatory trigger for delisting under the CMA Executive Bylaws. The resignation of a board member without replacement in 15 days is wrong because, while it may be a governance breach, the specific delisting trigger related to personnel involves the failure to appoint a compliance officer after being notified by the Authority. The drop in market capitalization for 30 days is wrong because the regulations focus on the duration of trading suspension (six months) or the cessation of activities (one year) rather than short-term market value fluctuations.

Takeaway: The CMA maintains the integrity of the exchange by delisting companies that fail to maintain active trading status for six months or those that cease operations for more than a year.

Correct: The requirement for the marketing of foreign Collective Investment Schemes (CIS) to be conducted through a person licensed by the Capital Markets Authority (CMA) as a Marketing Agent, and only after obtaining prior CMA approval, is the fundamental regulatory hurdle for cross-border offerings. This ensures that the CMA can vet the foreign fund’s home jurisdiction and the suitability of the fund for local distribution.

Incorrect: The statement regarding the conversion of the foreign fund into a Kuwaiti-domiciled fund is incorrect because the CMA rules specifically allow for the marketing of foreign-incorporated schemes without requiring a change in domicile. The claim that marketing is permitted without approval for fewer than fifty offerees is wrong because the marketing of any foreign CIS, regardless of the number of investors, requires formal CMA authorization. The assertion that a 50% guarantee bond must be deposited with the Kuwait Clearing Company is not a requirement under the CIS regulations for marketing activities.

Takeaway: Any marketing or distribution of a foreign collective investment scheme within the State of Kuwait must be facilitated by a locally licensed Marketing Agent and requires the explicit prior approval of the Capital Markets Authority.

Correct: The disposal of assets of significant value is specifically restricted under the Kuwait Capital Markets Authority (CMA) Executive Bylaws during the offer period. Such actions require express permission from the shareholders through a general assembly to prevent the board from taking “frustrating actions” that might diminish the company’s value or deter the offeror without shareholder consent.

Incorrect: Issuing a recommendation to shareholders is a mandatory duty of the board to help them reach an informed decision, not a restricted action. Entering into contracts within the normal course of business is explicitly permitted so that the company’s daily operations are not paralyzed by the offer. Appointing an independent investment adviser is a requirement for listed companies involved in an acquisition to ensure shareholders receive objective advice and is not subject to general assembly approval.

Takeaway: During an acquisition offer period, the offeree company’s board is prohibited from taking significant actions, such as asset disposals or issuing new securities, without the approval of the general assembly to ensure shareholder interests are protected.

Correct: The Executive Team of a contractual collective investment scheme must consist of at least two employees of the CIS Manager who are registered with the Authority as representatives, with at least one holding an executive position or being the CEO, and these members are jointly liable with the manager for any errors, negligence, or fraud.

Incorrect: The suggestion that the team must be composed of five professional clients is incorrect because the regulations require the team to be formed from the CIS Manager’s employees, not the scheme’s participants. The claim that only one registered representative is required is wrong because the law mandates a minimum of two registered representatives. The statement that team members are exempt from personal liability is false, as the CMA Executive Bylaws explicitly state that members are jointly liable with the manager for management failures or fraud.

Takeaway: Kuwait CMA regulations ensure accountability in contractual CISs by requiring a multi-person Executive Team of registered professionals who share legal liability with the CIS Manager.

Correct: The invitation to subscribe is limited to a maximum of fifty persons within Kuwait is the right answer because the CMA Executive Bylaws provide a specific exemption from the prospectus requirement for share issuances where no more than fifty persons are invited to subscribe within the State of Kuwait.

Incorrect: The scenario involving Preferred Shares is wrong because the CMA regulations explicitly state that Preferred Shares and Collective Investment Schemes are excluded from these prospectus exemptions. The value of KWD 2,500,000 is wrong because the regulatory threshold for exemption is a maximum of KWD 1,000,000 within a twelve-month period. The 20% issuance is wrong because the exemption for additional issuances of the same class is capped at 10% of the last issue within a twelve-month period.

Takeaway: The CMA allows for prospectus exemptions in specific private or small-scale share issuances, but these exemptions do not apply to Preferred Shares and are subject to strict limits on the number of investors and issuance size.

Correct: A listed company is permitted to delay the disclosure of material information if such disclosure would damage the confidentiality of negotiations or preliminary procedures for a deal or transaction. This exception exists to prevent the disruption of sensitive business developments that are not yet finalized and to protect the commercial interests of the company during the negotiation phase.

Incorrect: The idea that market volatility allows for a delay is incorrect, as the regulations prioritize transparency and the immediate dissemination of material facts over market timing. The requirement for a formal waiver from the Exchange’s surveillance department is not the standard procedure for delaying disclosure under these specific circumstances. The nature of a legal dispute (whether the company is claimant or defendant) does not provide a blanket justification for delaying material information; the primary criterion for delay is the protection of confidential negotiations or preliminary deal procedures.

Takeaway: Under Kuwait CMA rules, the duty to disclose material information can be temporarily suspended only if immediate publication would jeopardize the confidentiality of ongoing deal negotiations or preliminary transaction procedures.