Title: Press Release: The Capital Markets Authority Issues the Amended Collective Investment Schemes Bylaws

Kuwait, January 03, 2022 - Within the framework of the CMA's strategic goal of developing the legislative and regulatory structure of the capital markets, and to complement its continuous development initiatives in accordance with best international practice, while taking into account the recommendations issued by IOSCO, in addition to the views of stakeholders, the CMA issued today 03/01/ 2022 Resolution No. (01) of 2022, by which its approves the amended rules Collective Investment Schemes. The CMA has conducted a comprehensive review of the regulating provisions based on the course of practical application during the period that followed the issuance of the Executive Bylaws in 2015, which confirms that the CMA prioritize the review and continuous development of the regulatory environment, in order to raise the attractiveness of the assets management industry in the Kuwaiti capital market.

It should be noted that these amendments are considered one of the largest amendments that have been made to the Executive Bylaws of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments, since the comprehensive amendment that took place in 2015. The current amendments affect three Modules of the Executive Bylaws. More than 215 articles and definitions were added or amended, and a total of 17 appendices and attachments, that were either amended or added.

These amendments came in a way that achieves high legal security and a high degree of regulatory clarity, achieving, in this regard, support for the principle of investment in investment funds, raising the level of governance, transparency, disclosure and protection of investors, as well as achieving a solid infrastructure for investment funds in the State of Kuwait.

The amendments also considered the facilitation of some of the procedures related to the management of investment funds and their services without prejudice to the CMA’s right in supervision and its implementation, ensuring that the investment fund industry be highly robust in performance with a good financial solvency, which in turn encourages the investor to invest in this type of securities activities.

New types of investment funds have also been introduced, such as the hedge fund and the venture capital fund, which are among the funds that we hope will witness a turnout from fund managers to apply for their establishment, given the good potential of Kuwaiti companies in these investment fields.

The CMA was keen to take into consideration the opinions of stakeholders. It looked into their observations on the draft amendments, which were presented on the CMA’s website for a period of 15 days to solicit opinions. The comments amounted to nearly 200 comments submitted by more than 24 institutions and specialists that were carefully reviewed by a legal and technical work team. Some of these observations were adopted, in light of the CMA’s vision and best international practice, before the final approval. Among the most prominent points adopted by the CMA after reviewing the results of the opinion poll are the following:
• Adding cases to combine the functions of service providers such as the fund manager, the subscription agent (selling), the investment advisor and the real estate management company.
• Opening up the field of dealing on fund units for some service providers, such as the subscription agent (selling), the investment advisor and the real estate management company.
• Limiting the purchase of securities by the subscription agent (selling) or the underwriter within the subscription or pledge period only.
• Adding a margin of 3% above the market value to exceed the securities fund's investments in listed companies issued by a single source.
• Excluding real estate income-generating funds (traded) that include real estate with a value of no less than 30 million Kuwaiti Dinars from the requirement that the investment in any real estate does not exceed 30% of the fund's net asset value. 

The CMA would like - on this occasion - to thank everyone who contributed with their views and observations, which had a great impact on the quality of the final legislation to be in an integrated manner that achieves the interests of the various related parties, and enables the CMA to achieve its goals, particularly in terms of protecting clients, keeping pace with international standards, and opening new investment horizons.

As part of the CMA’s consideration of the impact of the new rules included in the Bylaws’ amendments on the market and on the legal positions taken, it was decided to grant a sufficient transitional period needed by fund managers and collective investment schemes, in a way that enables them to benefit from the new provisions included in the Bylaws as soon as they are issued. Moreover, a transitional period has been granted until 29/09/2022 to meet any new requirements or additional obligations that did not exist previously, and to update the articles of association and contracts in accordance with the amended provisions.

Accordingly, the CMA invites fund managers and managers of other contractual collective investment schemes to promptly update their articles of association or contracts in accordance with the amended provisions. The deadline for amending the articles of association and contracts will be 31/05/2022.

On the other hand, the CMA draws the attention of unit holders investing in local funds, or unit holders intending to invest, to review the amended Bylaws to be aware of their rights and obligations in those funds. They are encouraged to review and obtain an amended copy of the fund's articles of association whenever available from the fund manager.

In conclusion, the CMA invites all relevant parties to view the final version of the amendments and implement the provisions by visiting the following link:

www.cma.gov.kw

Ends-
Notes to Editors:
The Capital Markets Authority was established pursuant to Law No. 7/2010, approved by the Kuwaiti Parliament in February 2010. Pursuant to the Law, the CMA shall regulate and supervise the securities activities, achieve transparency and fairness, observe listed companies’ execution of Corporate Governance regulations, and protect investors from unfair practices which violate the CMA's Law.
Furthermore, the Law's provisions stipulate the supervision of mergers, acquisitions, and disclosure operations. The CMA also aims to provide awareness programs related to securities activities.
For further information, please contact:
Public Relations & Media Office
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