Protecting Individual Investors under Kuwaiti Securities Law A comparative study

The financial market in Kuwait has existed for longer than the financial markets in the other Gulf countries. However, there has been limited regulation of stock exchange activities. This gap in the legislation was highlighted in the Suq al-Manakh crisis, when the absence of regulation resulted in heavy losses for large and small investors. This led the Government of Kuwait to enact a series of Acts from the late 1970s to 2010. The securities market was built around this legislation, which helped to stimulate the economy by attracting investors. However, the practical application of these laws brought to light some shortcomings in the regulation of the stock exchange and specifically the need for the legal protection of investors against the risk of loss due to market abuse (manipulation and insider dealing) of securities, irresponsible actions or poor corporate governance by firms. This research will trace the historical development of the legislation relating to the stock exchange up to the enactment of the new law (The Kuwait Capital Markets Act 2010 No. 7). The latter will be compared with similar legislation in the other markets of the GCC (as well as those in the USA and the UK when necessary) in order to evaluate its potential effectiveness in averting future problems and failures such as those that impacted Kuwait when it faced a financial crash in the early 1980s. Hence, the main aim of this thesis is to evaluate the extent to which the Kuwaiti securities legislation (the Act) is effective in protecting individual investors in terms of insider dealing, unfair disclosure and poor corporate governance by the issuer of the securities., and to suggest any amendments. Apart from this aim, the thesis will hopefully help to improve the knowledge of the Kuwaiti people about securities and it is also hoped that the research will be a useful addition to the body of literature in this field and will open a new avenue of research for other Kuwaiti students to follow for the improvement and development of the national economy.