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Central Bank Regulations Regarding Restrictions on Shareholding Interest in a Local Bank Set Forth in Article 57 of the Central Bank Law
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The Central Bank of Kuwait recently issued Resolution No. 92/306/2004 (the "Resolution") pursuant to Article 57(2) of Law No. 32 of 1968 (the "Central Bank Law"), as amended by Law No. 28 of 2004. Article 57(2) restricts any direct or indirect shareholding interest in Kuwaiti banks by one natural person or a legal entity to five per cent (5%) unless the approval of the Central Bank of Kuwait has been obtained.
The Resolution classifies shareholders in Kuwaiti banks into three categories based on their percentage of ownership of issued shares of banks as follows:
First Category 5% to 10%
Second Category 10% to 25%
Third Category 25% plus
Shareholders in the First Category who acquired their shareholdings in the bank prior or (with the approval of the Central Bank) subsequent to the implementation of Law No. 28 of 2004 and have their percentage shareholding interest reduced by not more than 1% of the bank's capital may later increase their shareholding interest to its former level without the need to obtain the Central Bank of Kuwait's approval. If such shareholders reduce their percentage interest by more than 1% of the capital of the bank, the prior approval of the Central Bank would be required before the shareholders are allowed to increase their percentage ownership. Similar rules apply to shareholders under the Second and Third Categories. Second Category shareholders who have reduced their percentage shareholding interest in a bank by not more than 2% of the bank's capital may increase their shareholding percentage to the shareholder's previous level of interest without need of Central Bank of Kuwait approval. Shareholders in the Third Category who have reduced their percentage shareholding interest in a bank by not more than 3% of the bank's capital may increase their shareholding interest to its former level without need of Central Bank of Kuwait's approval. Government bodies and agencies are exempt from the restrictions on percentage ownership in Kuwaiti Banks. For further information, please contact Sam Habbas or Hossam Abdullah at: Telephone No. (965) 240-0061/2/3 Fax No. (965) 240-0064 E-mail: asar@asarlegal.com
Posted on January 26, 2005 |
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Central Bank Regulations Regarding Restrictions on Shareholding Interest in a Local Bank Set Forth in Article 57 of the Central Bank Law
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