Kuwaiti newspaper newspaper | Voluntary withdrawal from the stock exchange and the Authority’s authority to reject it

Listing on the stock exchange is to select the company and also to withdraw from it, and the company’s management is responsible for implementing the decision to list in the stock exchange or to withdraw from it.

All this is based on the desire of the general meeting of the company, which is the source of the powers and has the highest say, and the management implements its decisions as long as it does not violate the provisions of the law.

But what if the general meeting decided, with a majority of 75 percent of the participants, to withdraw from the stock exchange for reasons he considers to be in the interests of the company, and there was an objection from a minority of shareholders, or a lack of government approval?

With reference to the executive regulations of the Capital Markets Authority Act, and in particular, Book Twelfth (Listing Rules), it is clear that under the conditions for voluntary withdrawal is the approval of the Capital Markets Authority, in addition to the suitability of shareholders no less as 5% and not more than 30% by objecting to the decisions of the ordinary or extraordinary general meeting before the Authority.

In view of this, the voluntary withdrawal from the Stock Exchange is no longer merely a decision of the General Assembly, but rather a joint decision between the Assembly and the Capital Markets Authority, as the regulation included the latter’s right to reject the withdrawal request. , without specifying which cases it is entitled to, if available, Refusal of the withdrawal request, in addition to the authority’s right to reject the withdrawal request in the event that shareholders holding not less than 5% and not more than 30% against it do not object, on the grounds that they are a minority and the government imposes more protection on them if it considers that the withdrawal decision infringes on their rights.

In fact, the Commission’s interference in the decisions of the General Assembly under the pretext of protecting the minority in the aforementioned manner leads to many problems in practice, including the following:

1 – The Executive Regulations of the Capital Markets Authority Act provide that the Authority approves the request to withdraw from the stock exchange without imposing restrictions on the Authority to determine the reasons for the rejection of the withdrawal request, which gives the Authority absolute authority to reject or accept the withdrawal request.

2 – Often the decisions to withdraw from the Stock Exchange are related to the Authority itself, as many companies have decided to withdraw from the Stock Exchange to get rid of the submission to the Authority’s controls, which has become a heavy burden on them. has. , the Authority became the opponent and judge in the decision on the company’s suitability to withdraw from the Stock Exchange.

3 – Overlapping powers between the Capital Markets Authority and the court competent to hear appeals against the decisions of the General Assembly in accordance with the provisions of the Companies Act No. capital – the right to appeal against the decisions of the General Assembly, and the court may In this case cancel the decisions of the meeting, support them, or postpone their implementation until an appropriate settlement is reached to the shares of the objectors for sale.

The aforementioned shareholders have the right to appeal against the decision of the general meeting before the court, and they are also entitled to file a grievance against the decision of the general meeting before the authority.

It is clear from the foregoing that there is an overlap in the powers, in addition to the possibility of conflicting judgments in the event that a decision is accepted by the Authority to reject the grievance and support it in the event of an appeal. before the court, and another decision is issued by the competent court in accordance with Section 220 of the Companies Act to cancel the decision of the General Assembly.

4 – The difference in determining the percentage that the minority of shareholders represents between Companies Act No. 1 of 2016, which considers shareholders who own less than 15 percent to be a minority, and the executive regulations of the Capital Markets Authority Act, who have considered shareholders who do not own more than 30 percent a minority, and they are Those who has the right to appeal against the decisions of the General Assembly.

What has been previously offered requires the intervention of the government to amend the executive regulations of the Capital Markets Act to establish mechanisms consistent with the powers of the company’s general meeting to determine its fate by specifying clear controls, reasons and cases for the rejection of the general meeting’s decision to withdraw from the stock exchange without fleeing for loose and unclear reasons, such as the protection of minority rights, or the protection of the market, and other reasons giving the government absolute authority in this regard give.

In addition to the need to cancel the grievance before the Authority against the decisions of the General Assembly contained in the ninth book (merger and acquisition) of the executive regulations of the Capital Markets Act, due to its overlap with the provisions of the Companies Law, and in the particular set out in section 220, which made an objection to the decisions of the General Assembly an important jurisdiction of the Court.

Finally, it is important to consider the criterion for determining the minority and its unification between the Companies Act and the Executive Regulations of the Capital Markets Authority Act, taking into account that the decisions of the General Assembly passed by an absolute majority under the pretext of protection of the rights of the minority who unilaterally chose to join the company as shareholders should not be exceeded.

● Tarek Diab

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