The Markets Authority Recommends Offering Oil Companies To Citizens Through Public Subscription

Informed sources revealed to Al-Jarida that the Capital Markets Authority has submitted to the Minister of Trade and Industry a study that includes listing oil companies on the Kuwait Stock Exchange through a special mechanism through which they can benefit from their strength and include them in the stock market.

The sources explained that the proposed scenario includes the inclusion of oil companies, which are not classified within the natural wealth companies, which may not be privatized or sold through the government retaining its 50 percent share of its total capital, and privatizing the remaining part of its capital by specifying the government which makes a decision. Selling a stake ranging from 5 to 49 percent of its capital for the benefit of citizens through public subscription.

She mentioned that the CMA’s ambition and desire to list oil companies came as part of an initial study that concluded that the listing process does not need a special law for it. Rather, the matter is related to submitting a recommendation from the company's board of directors to the board of directors of the Petroleum Corporation approving the sale of part of its capital, and thus it is done Submit it to the Supreme Council for Planning on the grounds that it is the decision maker for the ordinary general assembly of oil companies.

The sources indicated that these companies are not subject to Law No. 37 of 2010 regarding the organization of privatization programs and processes, because they are subject to the provisions of the Companies Law and its implementing regulations, noting that the decision to sell a share of the capital of these companies requires a decision by an ordinary general assembly and not an unusual one, and the share will be presented. Those who wish to go public will be determined by citizens, not by distributing them as bonus shares.

 

She indicated that the offering of the 49 percent quota, or that which will be agreed upon, will be in accordance with the Companies Law, pointing out that this is a preliminary step towards encouraging the government to privatize government companies, which came within the development plan projects, which were published in the Official Gazette on 28 February 2010, and then it is possible to move to fully privatizing these government companies by offering part or all of the government’s share to the private sector at a later stage.

She said that the feasibility that the Market Authority is looking for in listing non-producing oil companies is to give an added value to the Kuwait Stock Exchange, pointing out that the study presented did not address restructuring processes in these companies, given that the body preparing for the study does not have sufficient information. .

She added, “The listing of these companies in their current form will not bring any benefit to the market, and these companies will be attached to the ranks of the inactive companies that represent a burden on it, and thus the proposal included selling a share of their capital to ensure that the benefit derived from the listing process is maximized by having liquid shares of their capital that facilitate trading on them, Especially since the listing conditions on the Kuwait Stock Exchange require a minimum shareholder base, and work must be done to ensure that the desired goal of the listing process is achieved, especially since the entities of these companies are strong and will contribute to the upgrading of the stock market.

The sources pointed out that the listing of government oil companies or not is due to a government decision, stressing that the stock exchange has become ready to incubate them and other family companies, after positive changes were made during the last period in facilitating the conditions for listing on the Kuwait Stock Exchange.

 

Source: Aljarida

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