Important Announcement

With reference to the circular issued by the Central Bank of Kuwait dated April 6, 2004, which enclosed a copy of the Central Bank of Kuwait’s Board of Directors Resolution, adopted at its meeting held on April 4, 2004 concerning the executive procedures regulating the implementation of Clause (2) of Article (57) Law No. (32) of 1968 regarding Currency, the Central Bank of Kuwait, and the Regulation of the Banking Profession, as amended by Law No. (28) of 2004 which provides, under Clause (2), that no single person may own more than 5% of the capital of any Kuwaiti bank without obtaining the prior approval of the Central Bank of Kuwait.

The aforementioned resolution outlined the principles and rules governing the concept of indirect ownership pursuant to Clause (2) of Article (57) of Law No. 32 of 1968 and its amendments. It defined indirect ownership as: "Ownership by parties that are economically or legally related to the investor, whether the investor is a natural or legal person, and whether such relationship arises from joint ownership, joint management, or overlapping interests".

With respect to overlapping interests, the resolution defined such interests as any interest enabling one party to control or exercise significant influence over another party when making financial or operational decisions, or any coalition among a group of parties. Such coalitions include both declared and undeclared alliances between one party and another, or among a group of parties.

Further to the above, and with respect to portfolio management companies (whether the portfolio is managed on a discretionary basis, non‑discretionary basis, or under a custody structure), the relationship between the portfolio manager and the shareholders within the portfolio shall be considered a declared or undeclared alliance in cases where shareholders grant proxies to the portfolio manager authorizing it to vote on their behalf at general assembly meetings of Kuwaiti banks. Accordingly, the aggregate ownership percentage of the portfolio manager and the shareholders who grant such proxies may not exceed 5% of the capital of any Kuwaiti bank without obtaining prior approval from the Central Bank of Kuwait.

For the purpose of obtaining such approval, the portfolio management company must submit an application to the Central Bank of Kuwait at least twenty (20) working days prior to the date on which the right to attend the general assembly is established. The application must include the following:

• Personal and corporate information relating to the portfolio management company and the shareholders within the portfolio (name, address, nationality, legal form, etc.).
• The names of all other parties connected to the portfolio manager or to any shareholder within the portfolio who hold shares in the bank’s capital, whether such connection arises from joint ownership, joint management, or overlapping interests, in accordance with the above‑mentioned Resolution of the Central Bank of Kuwait dated April 4, 2004.
• The number of shares owned by the portfolio manager and related parties, as well as the number of shares owned by each shareholder within the portfolio and their related parties, together with the percentage such shares represent of the bank’s capital.
• Any additional information or data requested by the Central Bank of Kuwait when reviewing each application individually.

Banks are responsible, during their general assembly meetings, for ensuring that the proxy holder does not exceed the aforementioned ownership limit. In cases where such limit is exceeded without the required approval having been granted by the Central Bank of Kuwait, the shareholder shall not benefit from the excess portion of the shares with respect to voting rights in the general assembly or participation in the management of the bank, in compliance with Paragraph (3) of Article (57) of Law No. (32) of 1968 regarding Currency, the Central Bank of Kuwait, and the Regulation of the Banking Profession, and its amendments.