CmaBoardReleases
Title: Announcement regarding issuance of Disciplinary Board Resolution No. (29/2024 Disciplinary Board) (11/2024 Authority) and imposition of a fine against:1- Acico Industrial Company. 2- Three Members of the Board of Directors 3- A Former Member of the Board of Directors 4- The Former Chairman of the Board of Directors 5- Kuwait Financial Centre Company-Markaz 6- Albazie & Co. Office (RSM) Company’s Auditor, for violating the rules of Listing, Conduct of Business, Corporate Governance, Market Conduct and Securities Activities and Registered Persons
Announcement regarding issuance of Disciplinary Board Resolution No. (29/2024 Disciplinary Board) (11/2024 Authority) and imposition of a fine against:1- Acico Industrial Company. 2- (3) Board Members 3- Former Board Member 4- Former Chairman of the Board of Directors 5- Kuwait Financial Centre Company-Markaz 6- Albazie & Co. Office (RSM) Company’s Auditor, for violating the rules of Listing, Conduct of Business, Corporate Governance, Market Conduct and Securities Activities and Registered Persons
For the following reasons:
First: Acico Industrial Company, for being proven to have violated the following:
1) The provision of Article (1-14) of Module Twelve (Listing Rules) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, as it was definitively proven to the CMA that the transactions carried out by Acico Industries Company during 2018 and 2019, specifically the sale of a substantial stake in ..... Company (subsidiary), which resulted in profits of approximately KWD 40,000,000 in the financial statements ending in 2018, were a fictitious and not real transactions, as it was shown that its purpose was to re-evaluate .... Company (subsidiary) in order to improve and raise the financial position of Acico Industrial Company, in addition to the fact that the nature of the transaction carried out by the Company is considered a financing operation rather than a sale, as the final outcome of this transaction became clear during 2019 after Acico Industrial Company exercised the right to repurchase without complying with the following International Accounting Standards (IAS):
1. Paragraph (15) of IAS 1 (Presentation of Financial Statements).
2. Paragraph (2-a) of International Financial Reporting Standard (IFRS) 10.
3. Paragraph (6) of International Financial Reporting Standard (IFRS) 10.
4. Paragraph (8) of International Financial Reporting Standard (IFRS) 10.
Second: Each of:
- Member of the Board of Directors of Acico Industrial Company.
- Member of the Board of Directors of Acico Industrial Company.
- Member of the Board of Directors of Acico Industrial Company.
For being proven to have violated the provisions of Item (5) of Article (3-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, as the CMA has conclusively proven that they did not perform their duty to comply with International Accounting Standards following the transactions carried out by Acico Industrial Company during 2018 and 2019, specifically the sale of substantial stake on 8/7/2018 of its ownership in shares of ..... Company (subsidiary) numbering 30,225,000 shares in favor of …. (the purchasing party), which resulted in profits of approximately KWD 40,000,000 within the financial statements ending in 2018, as it was proven to be fictious and not real transactions aimed at re-evaluating .... Company (subsidiary), in order to improve and raise the financial position of Acico Industrial Company, in addition to the fact that the nature of the transaction carried out by the Company is considered a financing operation rather than a sale, as the final outcome of this transaction became clear during 2019 after Acico Industrial Company exercised the right to repurchase the sold stake in the share of …..(subsidiary) without complying with the following International Accounting Standards (IAS):
- 1. Paragraph (15) of IAS1 (Presentation of Financial Statements).
- 2. Paragraph (2-a) of International Financial Reporting Standard (IFS) 10.
- 3. Paragraph (6) of International Financial Reporting Standard (IFRS) 10.
- 4. Paragraph (8) of International Financial Reporting Standard (IFRS) 10.
4) Chairman of the Board of Directors of Acico Industrial Company (formerly), it was proven that he violated the provisions of Item (5) of Article (3-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, it was proven to the CMA conclusively that they did not perform their duty to comply with International Accounting Standards as a result of the transactions carried out by Acico Industries Company during 2018 and 2019, specifically a sale of a substantial stake on 8/7/2018 of its ownership in the shares of ..... Company (subsidiary) numbering 30,225,000 shares in favor of … (the purchasing party), which resulted in profits of approximately KWD 40,000,000 in the financial statements ending in 2018, as it was proven to be fictious and not real transactions aimed at re-evaluating .... Company (subsidiary), in order to improve and raise the financial position of Acico Industrial Company, in addition to the fact that the nature of the transaction carried out by the Company is considered a financing operation rather than a sale, as the final outcome of this transaction became clear during 2019 after Acico Industrial Company exercised the right to repurchase without complying with the following IAS:
- 1. Paragraph (15) of IAS 1 (Presentation of Financial Statements).
- 2. Paragraph (2-a) of International Financial Reporting Standard (IFRS) 10.
- 3. Paragraph (6) of International Financial Reporting Standard (IFRS) 10.
- 4. Paragraph (8) of International Financial Reporting Standard(IFRS) 10.
5) Board Member of Accico Industrial Company (formerly), it was proven that he violated the provisions of Item (5) of Article (3-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, it was proven to the CMA conclusively that they did not perform their duty to comply with International Accounting Standards as a result of the transactions carried out by Acico Industrial Company during 2018 and 2019, specifically a sale of a substantial stake on 8/7/2018 of its ownership in the shares of ..... Company (subsidiary) numbering 30,225,000 shares in favor of …. (the purchasing party) which resulted in profits of approximately KWD 40,000,000 in the financial statements ending in 2018, as was proven to be fictious and not real transactions aimed at re-evaluating .... Company (subsidiary), in order to improve and raise the financial position of Acico Industrial Company, in addition to the fact that the transaction carried out by the Company is considered a financing operation rather than a sale, as the final outcome of that transaction became clear during 2019 after Acico Industrial Company exercised the right to repurchase without complying with the following IAS:
- 1. Paragraph (15) of IAS1 (Presentation of Financial Statements).
- 2. Paragraph (2-a) of International Financial Reporting Standard (IFRS) 10.
- 3. Paragraph (6) of International Financial Reporting Standard (IFRS) 10.
- 4. Paragraph (8) of International Financial Reporting Standard (IFRS) 10.
Third: Kuwait Financial Centre Company-Markaz, it was proven that it violated the following:
1- The provision of Item No. (4) of Article (3-2) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, it was proven to the CMA conclusively that Kuwait Financial Centre Company on 8/7/2018 arranged a transaction for its client, Acico Industrial Company (the seller), and that the other party to the transaction was a subsidiary of Kuwait Financial Centre Company,..... Company (the purchasing party). The transaction involved the sale of a stake in .... Company (a subsidiary of Acico Industrial Company) to .... Company (a subsidiary of Kuwait Financial Centre Company).
2- The provision of Item (2) of Article (8-2) of Module Eight (Conduct of Business) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, it was proven to the CMA conclusively that Kuwait Financial Centre Company, acting as an Investment Advisor of Acico Industrial Company, arranged a transaction to sell a stake in ……Company ( subsidiary) to …….Company (the purchasing party), which included a condition that a portfolio be opened with Kuwait Financial Centre Company and that management fees of KWD 50, 000 be collected annually. This is considered a benefit obtained by the licensed person from arranging the transaction, through which profits and gains are realized in addition to the basic advisory fees.
Fourth: Albazie & Co. Office (RSM) has been proven to have violated the provision of Article (3-4-5) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. It was proven to the CMA conclusively that, in its capacity as the Auditor of Acico Industrial Company, it did not include any remarks in its report prepared on the financial statements of Acico Industrial Company for the financial year ending on 2018 and 2019 regarding the incorrect recording of the financial impact of the sale of a stake in the shares of ... Company (subsidiary) on 8/7/2018 in favor of ... Company (the purchasing party), due to Acico Industrial Company’s continued control over the sold stake after the completion of the transaction, especially in light of the existence of the right to repurchase the sold stake mentioned in Item Four of the contract on 8/7/2018.
The Resolution included the infliction of the following penalty: -
“First: Levying a fine against Acico Industrial Company in the amount of KWD 50,000 (fifty thousand Dinars) for the first violation.
Second: Levying a fine against each of:
1. Member of the Board of Directors of Acico Industrial Company.
2. Member of the Board of Directors of Acico Industrial Company.
3. Member of the Board of Directors of Acico Industrial Company.
4. Chairman of the Board of Directors of Acico Industrial Company (Formerly).
5. Member of the Board of Directors of Acico Industrial Company (Formerly).
In the amount of KWD 5000 (five thousand Dinars) on each one of them for the attributed violation.
Third: Levying a fine against Kuwait Financial Centre Company in the amount of KWD 50,000 (fifty thousand Dinars) for the first and second attributed violations due to correlation.
Fourth: Levying a fine against Albazie & Co. Office– in his capacity as Acico Industrial Company’s Auditor in the amount of KWD 20,000 (twenty thousand Dinars) for the attributed violation”.
In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these rules in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.
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