Kuwait’s market watchdog may extend a year-end deadline for listed companies to comply with new corporate governance rules if it finds there are “real obstacles”, the regulator said, after meeting with the commerce minister.
The Capital Markets Authority (CMA) issued the regulations in June 2013, giving companies until the end of 2014 to implement them.
The rules include separating the positions of chairman and chief executive, prompt disclosure of information to the market, and the setting up of internal controls and risk management.
Some corporate executives and investors have welcomed the effort to stamp out suspicious activities and potential conflicts of interest, and several major listed companies have changed their corporate structures accordingly.
Others, however, have complained that the CMA, which began operating in 2011, is leading a heavy-handed crackdown. There are about 200 listed companies in Kuwait.
The CMA said in a statement late on Wednesday that it would review the deadline on March 31, when it is to issue a report on implementation of the rules so far.
“The issue of governance is also subject to monitoring and evaluation. The level of application will be considered, and (we will) consider postponing deadlines for those rules after the report is available,” it said.
CMA officials discussed the issue with Minister of Commerce and Industry Abdulmohsen al-Madaj on Wednesday, the statement said. They told him that the regulator was ready for dialogue on the topic and that its “decisions and deadlines for implementation are subject to flexibility”.
The CMA said it had already held a meeting with over 260 companies to identify any obstacles and that the regulations aimed simply to “enforce the law and protect the national economy and the interests of investors.”
A Reuters survey of a dozen international fund managers last month found they ranked Kuwait lowest among five big Middle Eastern markets for corporate disclosure and enforcement of regulations against improper or illicit trading.
In recent months the CMA has been targeting suspected illicit activity in the market more aggressively, fund managers say, leading to dips in the stock market.
Earlier this month, a Kuwaiti court fined the chairman of Al Ahli Bank KD1.5 million ($5.3 million) over alleged insider trading in the bank’s shares, after the CMA filed a complaint. He denied any wrongdoing and said he would appeal.