Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Kuwait- Balancing Between Regulatory & Developmental Roles Of CMA: KES  Join our daily free Newsletter

MENAFN - Arab Times - 31/03/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Arab Times) Kuwait Economic Society (KES) released a commentary on the discussion of Capital Markets Authority's (CMA) decision to apply corporate governance controls to CMA regulated companies, calling for the necessity of exploiting this discussion to enrich CMA's role and add a further strategic dimension to its role through balancing between its regulatory mandate and the functions related to its role in the development and deepening the capital market through the adoption of innovative investment and financing instruments



At the outset, it must be emphasized that KES has always been and is still in the forefront calling for the adoption of various practices that are capable of enhancing transparency in all sectors, and the deployment of state of the art management concepts. We therefore renew our emphasis on the importance of implementing governance rules as they represent the first steps to be taken to develop the economic environment and enhance corporate transparency. We find that CMA's Resolution No. (25) of 2013 on the implementation of corporate governance rules, is truly an example to be followed, and we are calling for its adoption and implementation in the other sectors of the State of Kuwait, not only to CMA regulated joint stock companies



Regulatory vs Market Development Role



As much as these concepts and articles, including governance, gain particular importance and contribute to the consolidation of CMA's regulatory role, we at the same time, call on CMA to add a further strategic dimension to its role by balancing between the fulfillment of its regulatory role and the necessary endeavor to take critical steps towards the development and deepening of the local capital market by introducing investment instruments and products similar to those used in international markets, and cater to the requirements of investors and companies in the local market. Thus it can also benefit from the accumulated expertise amassed by these companies



In the same context, the implementation of these rules must be flexible enough to enable financial institutions to create investment and financing products and solutions, instead of subjecting them to a form of strict regulation causing them to refrain from performing their natural role and functions in this field. Therefore, we propose to adopt the concept of regulation of companies with flexible rules, not by adopting strict rules which adversely affect the spirit of innovation



The development of capital market performance as part of CMA's mandate, giving its activity a further strategic dimension, must take into account that it is necessary to reformulate indicators to measure performance related to the implementation of CMA's strategic vision for the quantitative and qualitative development of capital markets in the State of Kuwait, whether a stock market or a market for other instruments, such as bonds, sukuk and investment funds



It is unanimously accepted that the adoption of the governance rules is an inevitable course of action to develop the performance of joint stock companies and underscore the importance of their role from a technical and financial perspective, not the least of which is, for example, reducing the cost of capital in the long term and consolidating investor confidence. However, this must be accompanied by a roadmap guided by some of the experiences of the world markets, including regional markets such as Saudi Arabia, and thus adopting the concept of gradual implementation



Procedural Step

On the other hand, we call for the reassessment of certain procedural steps based on the experience gained during the implementation of these procedures, to allow for overcoming some of the obstacles which were encountered during implementation. This prompts us to pause at the following points



* Firstly, and in an aspect related to governance rules, we find that the important and essential role of the boards of directors of companies may lose some of its luster, and decline in importance particularly due to a certain exaggeration of the technical role of the independent directors. Although we totally believe in the importance and necessity of such members of the board, however, assigning to them expanded roles transcends the purpose of their appointment, and at the same time yields adverse effects.



* Of the other procedures steps we are calling for, timelines or time periods allowed for disclosing material information should be more flexible, particularly because some joint stock companies are actively involved with institutions in the public sector. Those institutions are known to be bureaucratic and slow to act in some instances. This is a reality which may entail the imposition of fines on companies as penalty for delayed disclosure, while they in fact are not responsible for such delay



* We also find that the CMA is required to prepare ongoing follow up reviews to assess the effects of regulatory requirements on the efficiency of companies, and the impact of the implementation of those requirements on the performance of companies. The follow up studies should allow for reassessment of those requirements and to what extent they should be maintained or amended in the future, to promote the spirit of renovation and creativity



* On the other hand, we call for reconsideration of the high compliance costs. This call is based on the fact that family companies, as is known, whether in Kuwait or the GCC as a whole, form the largest segment of various categories of companies. We believe that the reconsideration of this item will encourage those companies to move towards listing their shares in the stock market. This would contribute to the enhancement of transparency and provides more added value, whether for the company itself, or to the stock market and investors



* As for cases which may require companies to outsource, and given the high costs of audit and compliance incurred by companies, we propose the adoption of a mechanism taking the form of a dedicated fund providing for cost sharing between regulators and companies, similar to the fund used by the Securities and Exchange Commission (SEC) in the United States



* Past experience has confirmed the importance of achieving integration between policies issued by regulatory authorities. Although several committees were created in certain areas for this purpose, however, we propose to create a mechanism for coordinating the formulation of policies between various agencies concerned, including the CMA, Ministry of Commerce and Industry and Kuwait Stock Exchange, to avoid duplication or conflict of resolution, which may adversely affect companies themselves



Communication with other stakeholder

Finally, it must be emphasized that, given the exact and profound nature of CMA's functions, and the extent to which its decisions affect a wide variety of economic sectors, we call for the deepening of the culture of communication with specialized and relevant agencies. We therefore propose as follows



* It is necessary to adopt an institutional program launched by the CMA in collaboration with economy-oriented professional associations to develop human competencies in all regulatory authorities concerned with corporate interests under the umbrella of the CMA.



* In compliance with best international practices, to develop clear and transparent mechanism for consulting with entities concerned, technical experts and professional associations and federations when drafting laws and regulations



* To ensure the flow of information between companies and regulators, we propose that the governance rules incorporate a well-defined mechanism for communication with regulatory authorities

 


Arab Times




  MENA News Headlines
 Dec 21 2014 - Saudi- Muhammad Ali hospitalized with mild pneumoniaArab News
(MENAFN - Arab News) LOUISVILLE: Boxing legend Muhammad Ali was in stable condition after being hospitalized with a "mild" case of pneumonia his spokesman Bob Gunnell said.The 72-year-old Ali was ...

 Dec 21 2014 - Al-Naimi is 'confident' oil prices will improveArab News
(MENAFN - Arab News) ABU DHABI: Petroleum and Mineral Resources Minister Ali Al-Naimi said he was confident world prices would improve after a slide he blamed partly on 'lack of cooperation' by ...

 Dec 21 2014 - Irresponsible non-OPEC output behind oil price plunge: UAEArab News
(MENAFN - Arab News) ABU DHABI: "Irresponsible" levels of output by producers from outside the OPEC oil cartel is among the main causes of the slump in prices the UAE energy minister charged ...

 Dec 21 2014 - Gulf oil producers stand firm on OPEC outputAFP
(MENAFN - AFP) Oil-rich Arab Gulf countries stood firm against non-OPEC crude producers on Sunday, vowing they will not cut output nor hold an emergency cartel meeting to support slumping ...

 Dec 21 2014 - Saudi produces 74 percent of GCC polymer capacityMENAFN
(MENAFN) The National Petrochemical Industrial Co. (NATPET), a Saudi joint stock company, has revealed that 74 percent of the GCC's polymer capacity, totaling 17.6 million tons, was produced in the ...

 Dec 21 2014 - Algeria worried on falling oil pricesMENAFN
(MENAFN) Algeria, which oil revenues make up 97 percent of its hard currency earnings and 60 percent of the government's budget, is beginning to feel the impact of the fall in oil prices that led it ...

 Dec 21 2014 - UAE's non-oil trade hits USD142b in H1MENAFN
(MENAFN) The UAE's Federal Customs Authority (FCA) said that the value of direct total foreign non-oil trade has reached USD142.8 billion during the January-June period of 2014, Arabian Business ...

 Dec 21 2014 - UAE slams non-OPEC members on rising oil productionMENAFN
(MENAFN) The UAE's Ministry of Energy said that the decision made by the Organization of the Petroleum Countries (OPEC) not to cut production was correct despite the prices continuing with their drop ...

 Dec 21 2014 - Oman's OLC, Spanish CLH sign USD320m contractMENAFN
(MENAFN) Orpic Logistics Company (OLC), a joint venture between Oman Oil Refineries and Petroleum Industries (Orpic), announced it has signed an engineering, procurement and construction (EPC) ...

 Dec 21 2014 - UAE's Hakkasan acquires USD36m The Light GroupMENAFN
(MENAFN) Hakkasan Group, the hospitality and entertainment company owned by Abu Dhabi-based Tasameem Real Estate, announced it has acquired The Light Group from Morgans Hotel Group (MHG), Arabian ...

more...


 






Google

Click to Apply

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help