The Capital Markets Authority (CMA) has decided to impose a financial penalty on the following individuals: the former Chairman of the Board of Directors of OTC 129 Investors Holding Group Company, the Vice Chairman of the Board, a former Board Member, and another Board Member, with each of them fined KWD 20,000 (twenty thousand Kuwaiti dinars) for the violations attributed to them.

The Capital Markets Authority issued Disciplinary Board Decision No. (83/2024 Disciplinary Board) (114/2024 Authority) to impose this financial penalty for the following reasons:

Investors Group Holding Company established three subsidiaries.

Upon reviewing the documents, the following was determined:

No resolutions have been issued by the company's Board of Directors approving the establishment of the companies listed above.

No feasibility studies related to the establishment of these companies were found.

Two of the companies mentioned do not have bank accounts.

No capital balance exists in any of the companies indicated.

The company did not provide the Authority with an explanation regarding the emergence of the debt that led to the settlement related to the establishment of the company.

The technical report issued by the competent technical department of the Authority noted that during the field inspection conducted on Investors Group Holding Company from April 4, 2021, to April 22, 2021, some serious observations were reported by the inspection team regarding the company’s non-compliance with certain provisions of Law No. 7 of 2010 concerning the establishment of the Capital Markets Authority and the regulation of securities activities and their executive regulations and amendments, as follows:

The company intentionally refrained from providing the inspection team with the requested documents, including bank account statements from banks and correspondence related to financial transfers with the company, and only provided these documents after the inspection period had ended, which constitutes a clear violation of the provisions of Article (126/3) of the mentioned law.

The company provided contradictory statements regarding the reason other affiliated companies were paying their employees’ salaries. While it claimed a liquidity shortage due to seizures on its bank accounts, it turned out it had signed a contract with a non-banking company to process salary payments for a fee, which misled the Authority and hindered its supervisory work, in violation of Article (127/3) of the same law.

Violations Related to the Establishment of Subsidiaries:

The company established three subsidiaries representing approximately 87% of its total assets without any approved resolutions from the Board of Directors for their establishment and without conducting feasibility studies for these companies.

It did not open bank accounts for two of the established companies and failed to deposit their capital balances against regulatory requirements, despite the expiration of the legal establishment period for some of them.

The company did not provide documents to prove the origin of the debt that led to settlements resulting in the establishment of the company, relying solely on rights transfer contracts without attaching original documents or providing evidence of the origin of the debt.

Violation of Disclosure and Transparency Requirements:

The company failed to disclose the establishment of two subsidiaries representing a total of 87% of their total assets, contrary to the provisions of Article (4-1-1) of the Tenth Book of the executive regulations.

It did not disclose a significant decrease in the value of one of its assets (land in Egypt) exceeding 30% of total assets.

It delayed the disclosure of material information related to changes in the Board of Directors and the date of filing a formal complaint, violating the provisions of Article (4-2-1) of the same book.

Violation of Governance Requirements:

It was found that the company’s Board of Directors was not aware of the establishment of the subsidiaries and had not issued any resolutions regarding them, in violation of Article (3-1) of the Fifteenth Book of the executive regulations, which relates to the Board’s role in shaping strategic direction and monitoring executive performance.

The company provided contradictory justifications for establishing these companies without a clear vision or investment framework, indicating poor management and a lack of effective oversight by the Board of Directors.