Unlisted securities sales in Kuwait have been temporarily halted due to ongoing legal processes.
Al Imtiaz Investment Group's Shares Remain Unsold Due to Legal Concerns
Of late, the Kuwait Stock Exchange (Boursa Kuwait) has held off approving the sale of unlisted securities belonging to Al Imtiaz Investment Group, citing legal complications.
In a recent announcement, the stock exchange revealed that a formal decision issued by the advisor and Head of the Capital Enforcement Department at the Ministry of Justice denied approval for the sale. The decision reads, "The sale of unlisted securities shall not be endorsed, and the situation reverts to its initial state. The sale's date will be set for June 16. The Capital Markets Authority (CMA), Boursa Kuwait, the Kuwait Clearing Company, and the Gulf Securities Custody Company are mandated to carry out all legally required measures to guarantee the sale's compliance on the stated date."
Essentially, this move has put a halt to any ongoing or premature attempts to sell these non-listed shares until the new auction date.
As per the announcement, the decision stemmed from findings revealing some unlisted shares, held by the Gulf Securities Custody Company, had been pledged as collateral to a creditor, and the mandatory procedures associated with the pledge were overlooked by the custody company. Consequently, authorities intervened, reestablished the status quo, and rescheduled the sale to adhere to legal and financial regulations.
This action serves as a testament to the dedicated efforts of regulatory bodies to preserve transparency, protect creditors' rights, and maintain market integrity, especially when it comes to transactions involving non-listed securities.
Interestingly, the temporary halt in trading on the Kuwait Stock Exchange for the shares of Al Imtiaz Investment Group was initiated by the company on March 7, 2024, in relation to a significant legal development: the Public Prosecutor in Kuwait issued Decision No. 27/2024 to seize and freeze all of the company's monetary assets, such as liquid and illiquid funds, movable and real estate properties, shares, and assets belonging to the defendants in the case, which includes Aayan Gulf Company (a Qatari national). The Capital Markets Authority and other government agencies were ordered to abide by this decision, resulting in the temporary hold on trading of the company's shares.[1][2]
The recent legal concerns surrounding Al Imtiaz Investment Group's shares have also extended to the financing sector, as unlisted shares were discovered to have been used as collateral in a banking-and-insurance transaction. This complicity of the unlisted securities raises questions about the banking-and-insurance industry's adherence to financial regulations.
Given the ongoing issue with the seizure and freezing of Al Imtiaz Investment Group's monetary assets, the industry and financial institutions must ensure they maintain transparency and follow legal guidelines in all their operations, particularly when dealing with unlisted securities and Qatari national companies like Aayan Gulf Company.
