(MENAFN- Arab Times) Kuwaiti economists have interpreted the increasing requests for recalling capital increases for many of the companies listed on the Kuwait Stock Exchange (KSE) as a clear indication of the restoration of confidence between those companies and their existing or new shareholders. They said in separate interviews with Kuwait News Agency (KUNA) that the economic and business environment as well as the overall siutation of the national economy are encouraging and lukrative for many companies that want to finance their expansions through sound financing instruments. They expected an increase in the pace of this tool especially for companies that want to expand their activities, especially that the negative repercussions caused by the global financial crisis in 2008 had dwindled, thus, increasing the standard of trust between the shareholders and their companies.
Capital
For his part, Chairman of the Board and Managing Director of International Financial Advisors (IFA) Saleh Al-Salmi said that recalling the increase of capital of any company is a defined financing tool in the Kuwaiti market, adding it is one of the tools sought by companies wishing to expand their activities, which means that their use came after the economic situation in Kuwait has stabilized. He added that companies' shareholders are always looking to achieve good returns, adding that the recall of capital increase issue is followed in every country in the world. He indicated that Kuwaiti companies possess good expertise and staff that meet the aspirations of their shareholders through local or external projects which is an evidence of the restoration of confidence in these companies. For his part, Advisor to the Board of Directors of Arzaq Capital Co Salah Al-Sultan said that the recall of capital increases is done according to the law, however, this must be associated with a good feasibility study and inform shareholders on the best way to exploit this increase according to a satisfactory methodology.
Activity
He added that the call of capital increases in the Gulf states depends on several requirements, including provision of the actual activity of the company, in addition to determining the revenues expected to be realized from this step to assure the shareholder that their money will revert to them with abundant profits. Director of the Al Arabi Financial Brokerage Company Maythem Al-Shakhs said that among the basic principles in the inclusion of companies in any capital market is to look for expansion of the capital base to obtain new shareholders or cash flows from veteran shareholders. He added that the success depends on the favorable economic conditions, capital market conditions, legal, regulatory and financial solvency conditions carried out by the funding sources such as banks and companies. He said that the success of the move also depends on the company's activities where there are companies which recall the capital increases and have no clear vision how to exploit them.
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