Title: Announcement Regarding Issuance of Disciplinary Board Resolution on Violation No. (41/2017 Disciplinary Board) (100/2017 Authority)

The Capital Markets Authority announces issuance of a Disciplinary Board Resolution passed in its meeting held on Thursday 03/08/2017 on violation No. (41/2017 Disciplinary Board) (100/2017 Authority) filed against:
 
1) Kuwait Capital Investment Company 
2) Abdullatif Mohammed Al-Aiban (Grant Thornton - Al Qatami, Al Aiban & Partners)
3) Fahad Ahmad Al-Kandari

That is by:

First: The first violating Company shall pay a fine of KWD 20,000 for violating Islamic Sharia rules in some of its trades, while its license and articles of association states that its trades shall be in accordance with Islamic Sharia.

Second: Warning to the second defendant because he, in his capacity as the external auditor, did not notify the Capital Markets Authority and the general assembly of the Company’s violation of Islamic Sharia by obtaining a conventional loan.

Third: The third defendant shall pay a fine of KWD 2000 because he, in his capacity as Sharia Audit Officer, did not seek to confirm the compliance of the Company’s trades, which led to its execution of trades that violate the Islamic Sharia.

This punishment is due to the following violations:

First: Kuwait Capital Investment Company 

Violating the provisions of clause (3) of Article (2-2-3) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, for the following: 
1. Obtaining a usurious loan from Al Ahli Bank of Kuwait (a conventional bank) of KWD 14 million during 2016.
2. Establishing a deposit in a conventional bank (International Bank of Qatar) and obtaining a usurious interest from the deposit.
3. Purchasing the shares of Al Deera Holding Company and Sultan Center Company which do not work in accordance with Islamic Sharia.
4. Controlling Arabi Financial Brokerage Company, which trades in different shares in the Kuwait Exchange.

Second: Abdullatif Mohammed Al-Aiban (Grant Thornton - Al Qatami, Al Aiban & Partners) -  the Company’s external auditor:

Violating the provision of clause (7) of Article (3-4-6) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, for not notifying the Authority and the general assembly of the Company’s previously mentioned acts which are considered a violation of the provisions of the Company’s articles of association, in spite of addressing the Company on 14/11/2016, and notifying it that the Company does not practice its activity in accordance with Islamic Sharia, in addition to not mentioning this in the financial statements report for the period that ended on 31/12/2016. On the contrary, he stated that the articles of association were not violated. 

Third: Fahad Ahmad Al-Kandari – Sharia Audit Officer in the Company:

Violating the provision of Article (2-2-6) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, for not carrying out his duty as Sharia Audit Officer in the Company; he did not ensure compliance with Sharia controls in the trades, and did not submit his report to the Sharia Audit Committee in the Licensed Person’s board.     

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.