Valuation of listed securities, stocks, bonds, and sukuk is one of the asset valuation services a CMA-licensed asset valuator renders in the cases specified under law.
What are securities?
Securities are any instruments – irrespective of their legal form – evidencing a share in a tradable financing transaction. Securities are classified based on their issuance criteria, which include transferable stocks, bonds, and sukuk.
What are the cases that require the valuation of listed securities, stocks, bonds, and sukuk?
Insurance companies operating in the State of Kuwait shall appoint a CMA-licensed Asset Valuator to conduct a valuation of the listed securities, stocks, bonds and sukuk in the event of dealing in treasury shares, issuing ordinary shares at par or at premium through Private Placement or Public Offering. Further, a CMA-licensed Asset Valuator is required to conduct a valuation of the listed securities, stocks, bonds and sukuk, if any of these items are deposited in banks as collateral to guarantee the fulfillment of their insurance obligations.
What are the statutory and regulatory requirements in the State of Kuwait that mandate companies to have listed securities, stocks, bonds, and sukuk valuated?
The Capital Markets Authority “CMA” has defined, in the executive bylaws, some cases that require securities valuation as follows:
| Module | Article | Valuation Requirements |
|---|---|---|
| Eleventh | 14-3 | Valuation of securities in the case of dealings in Treasury Shares. |
| Eleventh | 2-8 5-11 5-28 15-10 15-11 |
Valuation of securities in the case of issuing ordinary shares at a premium through Private Placement or Public Offering. |
| Eleventh | 2-8 5-11 5-28 15-10 15-11 |
Valuation of securities in the case of issuing ordinary shares through Private Placement or Public Offering. |
In addition, the valuation of listed securities, stocks, bonds, and sukuk is governed by the provisions set forth in this regard in the Executive Regulations of Law No. 125 of 2019 regarding the Regulation of Insurance.
Article 128 o the Executive Regulations of Law No. 125 of 2019 regarding the Regulation of Insurance sets forth that insurance companies shall place a deposit in one or more banks operating in the State of Kuwait as a guarantee to fulfill their insurance obligations.
Further, Article 130 of the Executive Regulations sets forth that such deposits can take the form of securities, stocks, bonds, or sukuk listed on the local capital markets. In this case, these securities shall be valuated by a licensed Asset Valuator on a semi-annual basis.
What is the liability of the asset valuator in this regard?
Article 3-5 of Module Eleven, Dealing in Securities” of the Executive Bylaw of Law no. 7 of 2010 regarding the Establishment of the Capital Markets Authority and Regulations Securities Activities, as amended, states that:
An Asset Valuator shall be liable for any professional negligence or fault relevant to its conclusions to the extent of the information available to it in this regard.
In light of the above, Baker Tilly Kuwait adopts effective and efficient valuation techniques to ensure the fair valuation of the underlying assets.
What is the added value to business entities from the valuation of listed securities, stocks, bonds, and sukuk services?
- Ensure fair and objective valuation of listed securities, stocks, bonds, and sukuk.
- Ensure compliance with the applicable legislation, including the Insurance Regulation Law and its Executive Regulations.
- Protect business entities against the risks of manipulation and illegal practices in valuation activities.
- Enhance the principles of independence and integrity and prevent conflict of interest while rendering valuation services.
What Baker Tilly Kuwait?
Baker Tilly Kuwait is distinguished by specialist professional experience and offers the following characteristics carrying added value to our clients as follows:
- Baker Tilly has a license as an Asset Valuator from the Capital Markets Authority;
- A global consulting firm with local presence in the State of Kuwait;
- Professional team with in-depth experience in providing investment consultancy services in Kuwait.
What are the services provided by Baker Tilly Kuwait?
Valuation of Listed Securities, Stocks, Bonds and Sukuk