August 2nd, 2022 Legal Updates



Throughout the GCC, family-owned businesses are looking at various succession planning techniques to ensure survival through their third and fourth generations.  Increasingly, many families in the region are exploring the option of conducting an initial public offering (“IPO”) in their local stock exchanges.  A recent article stated that family-owned businesses contribute about 60 percent of the gross domestic product in the GCC.  Moreover, it also stated that it is estimated that 90% of the private sector in the UAE and Saudi Arabia consists of family-owned businesses.  As a result, the UAE government, in particular, has been encouraging more family-owned businesses to list shares on the country’s exchanges in a move to enable easier succession in companies and provide more liquidity to local bourses.  What about Kuwait family-owned businesses?  Within the GCC, the Kuwaiti families have had some of the oldest and most successful businesses in this region and many of them are contemplating IPOs to continue their success for the next generation.

Within this context, on 06 June 2022, Boursa Kuwait, the local stock exchange (the “Boursa“) witnessed a remarkable and historic event as the first Kuwaiti family-owned business, Ali Al-Ghanem & Sons, listed their automotive distributorship business. Its Chairman, Fahad Al-Ghanim, in the official listing has stated that this comes at a time when Kuwait entities, specifically family-owned entities, are encouraged to have a more transparent approach regarding their financial position. Kuwait has seen a surge in family-owned entities that are now seriously considering IPOs to assure the continuation of their business legacy success. This comes on the heels of KPMG study which identified alarming statistics regarding family-owned Kuwaiti entities and the outlook on their survival. In summary, the KPMG study provided that only 13% of family-owned Kuwaiti entities survive past the family’s third generation.

Laws & Regulations

Against this background, it is helpful to review the Kuwait legal aspects regarding a company going public.  Law No. 7 of 2010 Concerning the Establishment of Capital Markets Authority, and the Regulation of Securities Trading Activity, as amended by Law No. 108 of 2014 and Law No. 22 of 2015 (the “CMA Law”) established the Kuwait Capital Markets Authority (the “CMA”), which in turn issued Resolution No. 72 of 2015, Regarding the Issuance of the Executive Bylaws, as amended (the “CMA Regulations”).

Pursuant to Article 1-6 module 12 of the CMA Regulations and the Boursa Kuwait Rulebook, the general requirements and the application process a Kuwait shareholding company must fulfill in order to list its shares on the Boursa, are as follows:

  • Submit an application to the Boursa for its consideration according to the application conditions and requirements;
  • The application will be submitted to the CMA by the Boursa, accompanied by its recommendation;
  • The CMA will then issue its final decision with respect to the application;
  • If the listing is approved, the Boursa will notify the appropriate clearing agency to temporarily suspend the transfer of ownership processes for the applicant, until the listing date, except for enforcement of court rulings; and
  • The applicant will then announce its listing date in two daily newspapers at least five working days prior to the listing date.

As part of the process of listing shares on the Boursa, it will appoint a listing advisor to submit the application to the Boursa on behalf of the applicant. These listing advisors play a pivotal role in the success of listing any company on the Boursa. Article 7-2-2 of Chapter 7 in the Boursa Kuwait Rulebook has clear instructions and required documents that must be submitted as part of the listing company’s application, which are as follows:

  • Basic data on the company to be listed;
  • A copy of the Articles of Association of the company and any amendment thereto, and a copy of the commercial register and commercial license;
  • A letter from the auditor of the company stating that the company seeking listing complies with the point 3 of Article 7-1-4 or point 3 of Article 7-1-5 of the Boursa Kuwait Rulebook;
  • A copy of the audited financial statements for the last three fiscal years preceding the listing, unless the company was established for a shorter period;
  • A list of names of the members of the Board of Directors, the Chief Executive Officer and the authorized signatories of the company;
  • A list of names of the auditors, Listing Advisor and other advisors;
  • A certified copy of the Ordinary General Assembly resolution approving the listing of the company on the Boursa, provided that its validity did not exceed one year;
  • A copy of the minutes of the Ordinary General Assembly and the Extraordinary General Assembly of the company for the last three years, unless the company was established for a shorter period;
  • A copy of the company’s shareholders register issued by a clearing agency;
  • Proof indicating the appointment of the Listing Advisor;
  • Proof indicating the appointment of a Compliance Officer to follow up on the regulatory bodies’ instructions and rules;
  • Names of the major shareholders of the company wishing to be listed;
  • A list of all informed individuals;
  • An undertaking issued by the Board of Directors of the applicant and members of the executive management and those who are informed to comply with the Boursa Kuwait Rulebook; and
  • A certified check to the order of the CMA to pay the application fees for the listing, as well as a proof indicates the payment of the application fees to the Boursa.

Although these steps might seem daunting, it is worth mentioning that the process of going public in other jurisdictions is fairly comparable. Many who are involved in the world of economics and capital markets see IPOs as the inevitable, or even natural, next step for family-owned Kuwaiti conglomerates to maintain the family business and sustain its growth. Other benefits include the likelihood of getting more bank facilities, ease of investment and liquidating ownership, and open the door to potential better governance.

How can GLA help?

Local law firms are responsible for overseeing the entire offering process from a legal perspective and ensuring that it complies with the applicable laws and regulations. In particular, law firms are responsible for the accuracy and legality of information contained in the application and attached documents, as well as ensuring that the company follows the steps required by the relevant authorities in respect of the offering process. In light of this responsibility, lawyers typically prepare the necessary drafts and documents.

As one of the largest law firms in the State of Kuwait with over 25 fee earners and with the largest number of Kuwaiti nationals who work daily with the main regulatory bodies in Kuwait like the CMA, GLA is in a perfect position to assist Kuwait issuers and their listing advisers who are considering an IPO under the CMA Regulations and Boursa Kuwait Rulebook, specifically with the following work streams:

  • Eligibility Advice – to assess from a legal perspective the eligibility of the issuer to go public;
  • Due Diligence – review of relevant corporate documents in anticipation of submission of the listing application;
  • Drafting and/or reviewing the listing application from a Kuwait law compliance perspective;
  • Preparing the Arabic version of the application submitted to the Boursa and CMA; and
  • Advising on the IPO announcements and applications to the CMA and relevant exchange markets.

Please feel free to reach out and discuss with any of our well-experienced lawyers who regularly advise on the above.

Author:  Mohammed Al Awadhi, Senior Associate, GLA & Company 

For further information, please contact: Alex Saleh at or Mohammed Al Awadhi at .

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