The Central Bank of Kuwait’s supervision of finance companies

The Central Bank of Kuwait has powers over finance companies, which are to set the necessary systems and instructions to organize their work, to monitor statements and statistical data to ensure their validity, as well as to exclude any of the company’s board members in case he loses one of the conditions for assuming the position, in addition to imposing appropriate penalties on them when they violate the instructions that imposed by the bank.

The concept of finance companies

They are joint stock companies that aim to grant financing to individuals, companies and institutions for various purposes, as well as providing advisory services to clients in the field of granting financing.

Central Bank of Kuwait powers over finance companies

Central Bank control over the company’s board of directors

The Central Bank of Kuwait may request the finance company’s board of directors to exclude any of its board members or whoever occupies one of the positions of the senior executive management in it, because he has lost one of the conditions for assuming the position during the exercise of his position, which is that he has not been previously convicted of a breaching crime honorable or trustworthy, and not have been declared bankrupt, be of good reputation, and have experience in financial or economic affairs in accordance with the rules and regulations issued by a decision of the Board of Directors of the Central Bank, in order to preserve the interests of shareholders or the general interest of the company. He has been removed from the company to be nominated for membership in the Board of Directors or to occupy a position in one of the senior management positions in another finance company, and this is done by a reasoned decision from the Board of Directors of the Central Bank of Kuwait.

Laying down systems, information and control over the company

Finance companies shall abide by the necessary systems, rules, and instructions set by the Central Bank of Kuwait with regard to the provisions system, inspection system, the company’s solvency and financial liquidity, in order to prevent the risks of its activities, to organize its work, to achieve the objectives of the credit and monetary policy that the bank follows, and to ensure the integrity of its financial conditions and the correctness of the information and data it sends mechanism.

View company statements, information and amendments

In the event that the members of the board of directors of finance companies and investment companies wish to introduce amendments to their articles of incorporation or articles of association, they must notify the Central Bank of Kuwait of these amendments, and if the bank approves them, it will begin to take the necessary measures to implement them in accordance with the provisions of the Companies Law, and these amendments may only be implemented after annotation In the register of finance and investment companies, by a decision issued by the Governor of the Central Bank.

Finance companies are also required to submit to the Central Bank the financial statements within three months from the end of its fiscal year, in addition to statements, information and statistical data for review.

Determining the maximum permissible amount of financing offered by financing companies

The Board of Directors of the Central Bank of Kuwait may set special conditions for financing operations and loans provided by finance companies, and it may also specify for these companies the maximum permissible amount of financing they provide, whether to a legal or natural person according to their capital, as well as the financing provided to the various sectors of economic activity.

Sanctions signed

In the event of a violation of the provisions of the articles of association or the articles of incorporation of the finance company with the instructions or measures imposed by the Central Bank of Kuwait, or in the event that the information and documents required to be submitted were not submitted, or false data were provided, the Central Bank may impose on them one of the following penalties:

  • Alert
  • Reducing the credit facilities granted to it
  • Preventing her from performing some operations
  • De-registration
  • Removing or changing the employee responsible for the violation
  • Imposing financial penalties of a maximum of fifty thousand Kuwaiti dinars
  • Temporary suspension of the company’s business
  • The member of the board of directors responsible for the violation is deemed to have lost his membership in the company’s board of directors
  • Appointment of a temporary observer to follow up on the progress of the worker in the company, and the Board of Directors of the Central Bank determines his powers and competencies
  • Dissolving the company’s board of directors and appointing a delegate to manage the company until a new board of directors is elected

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