Decree-Law No. 42 of 1988 on the Liquidation of the Situations Arising from Deferred Share Transactions

Decree-Law No. 42 of 1988
on the Liquidation of the Situations Arising from Deferred Share Transactions

Article 1

A circuit of the Court of First Instance composed of three judges shall assume the competences of the Arbitration Panel in deferred share disputes provided for in Decree-Law No. 57 of 1982 and Laws No. 59 of 1982, 75 of 1983 and 100 of 1983 referred to above.

Article 2

The disputes and applications provided for in the laws referred to in the preceding Article shall be brought before the competent circuit in accordance with the ordinary rules and procedures of litigation, and it shall decide them in accordance with the substantive rules set out in those laws, having regard to the procedures provided for in the Civil and Commercial Procedures Law.
The judgments issued by this circuit shall be final.

Article 3

All disputes and applications pending before the Arbitration Panel shall be referred, free of fees, to the competent circuit in the state in which they stand, and the president of the competent circuit shall set a hearing for their consideration, of which the persons concerned shall be notified in accordance with the law.

Article 4

The provisions of this Law shall not prejudice judgments issued by the Arbitration Panel before it comes into force or the amicable settlements it has ratified.

Article 5

All decisions previously issued by the Arbitration Panel, or which are issued by the competent circuit, ordering the attachment of assets, the prohibition of their disposal or the imposition of judicial custodianship over them, a travel ban, or referral to the body entrusted by law with considering the debtor’s affairs, and other decisions involving precautionary measures, shall remain valid and in force until the amicable settlement or composition is completed or the bankruptcy is closed in accordance with the provisions of Law No. 75 of 1983 referred to above.
The competent circuit may revoke these decisions with respect to a debtor whose amicable settlement has been implemented. As for a debtor whose case has been brought before the bankruptcy circuit provided for in Article (21) of Law No. 75 of 1983, that circuit shall have jurisdiction to revoke the said decisions with respect to him.

Article 6

An office having an independent legal personality, named “Office for the Liquidation of Deferred Share Transactions”, shall be established and attached to the Ministry of Finance. It shall replace the Corporation for the Settlement of Transactions in Company Shares Concluded on a Deferred Basis and shall have all of its competences set out in Law No. 75 of 1983 or in any other law. Its employees shall be transferred to the Office, and its rights and obligations shall devolve to the Office. The Office shall be bound by the duties of a custodian provided for in the Civil Law, as well as the special duties established by the judgment imposing custodianship or declaring bankruptcy in each individual case.

Article 7

The financial appropriations necessary for the Office for the Liquidation of Deferred Share Transactions shall be included within the appropriations allocated to the Ministry of Finance in the budget of the ministries and government departments.

* Replaced by Article 1 of Law No. 52 of 1993 (Kuwait Al-Youm, Issue No. 135, Year 40), effective as of 1 July 1994.

Article 8

The Office shall have a supervisor who shall represent it before third parties and before the courts, and he may delegate whomever he deems fit to exercise some of his competences.
The supervisor shall be appointed by a decision of the Minister of Finance. In the absence of the supervisor, the Minister shall assign whomever he deems fit to exercise the supervisor’s competences.
The supervisor shall be assisted by a sufficient number of employees attached to the Office by way of secondment, loan or temporary contracts.
The allowances of the supervisor and the employees of the Office shall be determined by a decision of the Civil Service Council.

Article 9

The employees of the Office delegated by the supervisor may appear on behalf of the Office in cases brought by or against the Office before the courts of all types and levels and before other bodies vested by law with judicial competence, and they may sign judicial papers. The seat of the Office shall be deemed its legal domicile at which it shall be served with judicial papers.

Article 10

In pursuit of its objectives, the Office may seek the assistance of any public institution or any governmental or non-governmental body.

Article 11

The text of Article (4) of Law 59 of 1982 referred to above shall be replaced by the following text:
“If it is established to the Public Prosecution – upon the request of the Office for the Liquidation of Deferred Share Transactions – that the debtor referred to the Office has concealed any of his assets or transferred them abroad, it shall instruct him to return such assets within a period it sets for him – if that period lapses without their return, it shall refer him to trial.”
Without prejudice to any more severe penalty provided for by another law, a debtor who has concealed any of his assets or transferred them abroad shall be punished by imprisonment for a term not exceeding five years, and he shall also be banned from leaving the country after serving the term of the penalty for a further period of five years.
The debtor shall be exempted from this ban if he proves that he has paid the rights of all creditors. The debtor shall be punished by imprisonment for a term not exceeding five years if he absconds during the period set for him by the Public Prosecution to return the assets or during the period of his travel ban.

Article 12

The first paragraph of Article (8) of Law No. 75 of 1983 referred to above shall be replaced by the following paragraph:
“The Office for the Liquidation of Deferred Share Transactions shall seek to make an amicable settlement between the referred person and his creditors within a time limit not exceeding six months from the date of expiry of the time limit referred to in Article (5) of this Law. The settlement shall be concluded if approved by one third of the creditors holding three quarters of the debts. If the settlement is concluded, the competent circuit shall ratify it upon the request of the Office for the Liquidation of Deferred Share Transactions after reviewing the papers and hearing the statements of those parties to the settlement who attend, and after notifying them in accordance with the provisions of Article (16) of this Law. The settlement shall become enforceable upon its ratification, unless something subsequently occurs that changes the financial position of the debtor.”

Article 13

The circuit formed in accordance with the provisions of Article (21) of Law No. 75 of 1983 may order the taking of precautionary measures, including prohibiting the bankrupt from travelling and from disposing of the assets which there are serious grounds to believe he has smuggled, disposed of fictitiously or assigned to third parties to the detriment of his creditors, in whosesoever hands they may be found.
A grievance against orders issued for precautionary measures may be filed before the same circuit in accordance with the ordinary methods of filing an action.

Article 14

The capital of the Fund for guaranteeing creditors’ rights relating to transactions in company shares concluded on a deferred basis, provided for in Article (8) of Law No. 59 of 1982, shall be increased by an amount of (KD 670,000,000), and this increase shall be covered from the State General Reserve after deducting the return on investment of the Fund’s assets pursuant to Paragraph (b) of Article (10) of Law No. 59 of 1982 referred to above.
The proceeds of the percentage prescribed by law of the value of each transaction registered in accordance with Decree-Law No. 57 of 1982 shall devolve to the State General Reserve, as shall the Fund’s revenues from its dues from the Corporation for the Settlement of Transactions in Company Shares Concluded on a Deferred Basis in accordance with the provisions of Article (12) of Law No. 59 of 1982 referred to above.

Article 15

Actions and applications filed by the Office for the Liquidation of Deferred Share Transactions before all judicial and enforcement authorities shall be exempt from court fees, provided that if the action or application is decided against the other party, that party shall be liable to pay the prescribed fees.

Article 16

The phrase “the competent circuit” shall replace the phrase “the Arbitration Panel” or “the Panel”, and the phrase “Office for the Liquidation of Deferred Share Transactions” shall replace the phrase “Corporation for the Settlement of Transactions in Company Shares Concluded on a Deferred Basis”, wherever either of them appears in the texts of the laws referred to in Article (1) of this Law and their executive decisions.

Article 17

The regulations and decisions issued in implementation of the provisions of Decree-Law No. 57/1982 and Laws No. 59/1982, 75/1983 and 100/1983 shall remain in force insofar as they do not conflict with the provisions of this Law, until they are amended or repealed in accordance with its provisions.

Article 18

Article (6) of Law No. 59 of 1982, Articles 7 and 24 of Law No. 75/1983 and Article (6) of Law No. 100/1983 are hereby repealed, as is any provision that conflicts with the provisions of this Law.

Article 19

The Ministers, each within his own competence, shall implement this Law, which shall be published in the Official Gazette and shall come into force as of 27 November 1988.