Title: Press Release: The Regulatory On-Site Role of the CMA

Kuwait – June 3, 2023, Within the framework of the continuous pursuit of the Capital Markets Authority (CMA) to promote integrity of the capital market, in order to strengthen CMA’s principal of transparency, publicity, and complete disclosure, based on its responsibilities to achieve one of its main regulatory objectives included in Article 3 of its establishment Law, particularly paragraph 3 and paragraph 6 that stipulate “Enhance investor protection” and “Ensure compliance with the rules and regulations related to Securities activities”., In enforcement of the aforementioned, the On-Site Supervision Department at the Supervision Sector performed several on-site inspection tasks over the persons subject to CMA’s supervision in order to monitor their compliance with Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws and their amendments, as well as the resolutions and circulars issued by the CMA. The competences of the On-Site Supervision Department are based on analyzing and studying the risks that the persons subject to CMA’s supervision may face through analyzing their financial statements and studying the percentages of the financial indicators that indicate such risks in order to limit them. Additionally,  the reports of their internal audit systems are reviewed and evaluated. The number of the work teams, the number of clients for the auditors and sharia auditing offices and the procedures they follow toward their clients are also reviewed to verify the veracity of financial statements in compliance with the international accounting standards and the regulating principles. The on-site inspection processes vary between comprehensive on-site inspection, specific and  unannounced on-site inspection, and on-site inspection for ensuring compliance with the laws and regulations of anti-money laundering and combating financing of terrorism.

Accordingly, during the period from the beginning of the financial year 2019 to the end of the financial year 2022, the On-Site Supervision Department performed various  on-site supervision tasks that totaled 260 including comprehensive on-site inspection, on-site inspection regarding anti-money laundering and combating financing of terrorism, and specific on-site inspection. They involved inspection tasks on persons subject to CMA’s supervision and inspection tasks on companies listed on Boursa Kuwait Securities Exchange that are not persons subject to CMA’s supervision, in addition to several unannounced on-site inspection tasks that are related to examining and ensuring specific matters. Such tasks resulted in monitoring approximately 1590 remarks on the inspected entities, which the concerned parties at the CMA have studied and analyzed including evidence and related documents. The necessary procedures were taken on nearly 650 serious remarks and they were referred to the Disciplinary Board after conducting the necessary investigation on their regard and reviewing the defenses of the related parties. Several disciplinary resolutions and fines were later issued for such proven serious notices, and the CMA has followed up the correction of the remaining remarks with the concerned parties to avoid their repetition and ensure those entities’ compliance with the provisions of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws and their amendments.

Moreover, it is worth noting that the mentioned inspection tasks that were performed during the period from the beginning of the financial year 2019 to the end of the financial year 2022 included a number of special nature and specific tasks, which was during the period of suspending the work of the government entities due to the spread of the novel coronavirus to ensure the availability of all the requirements that are necessary for ensuring the compliance of those entities with the provisions of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws and their amendments in general and ensuring the following in particular:

- The availability of risk management systems at all the entities that are subject to CMA’s supervision as well as the measures they have taken to ensure their business continuity.
- Examining and evaluating all the transactions that took place during the mentioned period, whether they were financial transactions or services offered to clients, in addition to selecting segments of the mentioned transactions after obtaining the approval of the Director of the Department thereon.
- Examining the procedures of anti-money laundering and combating financing of terrorism to ensure the compliance of the licensed persons with the provisions of Modul Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments and Law No. 106 of 2013 Regarding Anti-Money Laundering and Combating Financing of Terrorism and its Executive Bylaws.

In conclusion, the CMA confirms its continuous practice of its regulatory role in order to ensure protection of the persons dealing in securities activities and ensure compliance with the provisions of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws and their amendments.

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
Tel: 22903062
Fax: 22903505
Email: pr-media@cma.gov.kw