Law No. 75 of 1983 Regulating the Settlement of Transactions in Company Shares Concluded on a Deferred Basis

Law No. 75 of 1983
Regulating the Settlement of Transactions in Company Shares Concluded on a Deferred Basis

Article 1

A public corporation having an independent legal personality and attached to the Ministry of Finance shall be established under the name “Corporation for the Settlement of Transactions in Company Shares Concluded on a Deferred Basis”. It shall undertake the settlement of the transactions registered in accordance with Decree-Law No. 57 of 1982 referred to above, the valuation of the assets of the persons referred to it by reason of such transactions, and the administration, liquidation, supervision and implementation of the settlements, bankruptcies and compromises concluded in accordance with the provisions of this Law.
Its formation, the organisation of its work and departments and the designation of its legal representative shall be determined by a resolution of the Council of Ministers.
The Corporation shall have an annexed budget, and the Minister of Finance may draw from the General Reserve an amount not exceeding one million dinars to meet the Corporation’s expenses for the fiscal year 82/1983.
The task of the Corporation shall end upon the completion of the liquidation and implementation of the settlements, compromises and bankruptcies arising from deferred share disputes, provided that this takes place within a period not exceeding five years from the date this Law comes into force, which may be extended by decree. Employees shall be attached to it by way of secondment, loan or temporary contracts.

* The “Office for the Liquidation of Deferred Share Transactions” replaced the Corporation and has all of its competences set out in this Law, pursuant to Article 6 of Decree-Law No. 42 of 1988 (Kuwait Al-Youm, Issue No. 1782), effective as of 27 November 1988. The phrase “the competent circuit” replaced the phrase “the Arbitration Panel” or “the Panel”, and the phrase “the Office for the Liquidation of Deferred Share Transactions” replaced the phrase “the Corporation for the Settlement of Transactions in Company Shares Concluded on a Deferred Basis”, wherever they appear in this Law, pursuant to Articles 1 and 16 of the same Decree-Law.

Article 2

The Corporation shall be served with judicial papers at its seat, and its authorised delegates shall have the right to appear before the courts and to sign judicial papers.
It may summon creditors, debtors and others to hear their statements and to submit the papers they hold.

Article 3

If any amicable settlement or preventive composition is concluded in accordance with the provisions of this Law, the Corporation shall be the statutory representative of the creditors whose debts arise from deferred share transactions in such settlement or composition.
The Corporation shall also be legally subrogated to the creditors referred to in the preceding paragraph in every bankruptcy declared in accordance with the provisions of this Law.
The Corporation shall have the capacity of trustee and supervisor of the bankruptcy and manager of the union of creditors in accordance with the provisions of the Commercial Law in all the bankruptcies referred to in the preceding paragraph, and it shall also have the capacity of supervisor of composition provided for in the Commercial Law in any composition issued in accordance with the provisions of this Law.
The amounts collected from the sale of the bankrupt’s assets shall be deposited in the Corporation’s treasury, by way of exception from Article 725 of the Commercial Law, and the Corporation may invest them until they are distributed.

Article 4

If it becomes apparent to the Arbitration Panel in deferred share disputes that the financial affairs of a debtor have become so disturbed that his assets appear insufficient to pay all his debts, it shall issue a decision prohibiting him from disposing of his assets and referring him to the Corporation for consideration of his affairs, appointing the Corporation as judicial custodian to manage his assets. This decision shall be enforced by compulsory means where necessary.
This decision shall be published in the Official Gazette within a period not exceeding one week from the date of its issuance, and in at least two daily newspapers.

Article 5

The person referred to the Corporation shall, within thirty days from the date of publication of the decision referred to in the preceding Article, submit to it the following documents:
1- A detailed statement of the immovable and movable property he owns inside and outside the country and its approximate value.
2- A statement of the names of his creditors and debtors, their domiciles, the amount of their rights or debts and the securities guaranteeing them.
The creditors and debtors of the person whose bankruptcy is sought shall, within the aforementioned time limit, submit to the Corporation the documents of their debts accompanied by a statement of such debts or rights and any securities or priorities attached to them.
If it is impossible to submit some of the data referred to in the two preceding paragraphs or to complete them, a report stating the reasons therefor shall be submitted.
The person referred to the Corporation and his debtors shall be punished by imprisonment for a term not exceeding one year or by a fine not exceeding five hundred dinars if they fail to submit such data within the aforementioned time limit without an acceptable excuse.
The rights of creditors to participate in the amicable settlement or the bankruptcy shall lapse if they fail, without an acceptable excuse, to submit such data in the aforementioned manner.
Any alteration of the truth in such data shall be deemed forgery of official documents.
The Corporation shall submit a copy of such data to the Arbitration Panel upon their receipt.

Article 6

The Corporation shall prepare a report on the financial position of the debtor referred to it, including in particular an estimate of the following:
1- The value of his assets, whether immovable or movable, inside and outside the country.
2- The value of the debts owed to him and the value of what is expected to be collected from them.
3- The value of the debts he owes by reason of deferred share transactions.
4- The value of the other debts he owes.
5- The value of the preferred or priority debts he owes.
Immediately upon completing this report, the Corporation shall submit a copy of it to the Arbitration Panel and shall publish a notice thereof in the Official Gazette and in at least two daily newspapers. The person in respect of whom the report was issued, his creditors and his debtors shall have the right to inspect this report or obtain a copy of it against the fees determined by the Corporation.

Article 7

Repealed.

* Repealed by Article 18 of Decree-Law No. 42 of 1988 (Kuwait Al-Youm, Issue No. 1782), effective as of 27 November 1988.

Article 8

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.
If the time limit referred to in the preceding paragraph lapses without a settlement being reached, or if the Arbitration Panel refuses to ratify it, the Corporation shall refer the matter to the court competent to declare bankruptcy to consider declaring the bankruptcy of the person referred to it, within fifteen days from the lapse of that time limit or from the Panel’s refusal to ratify the settlement, provided that it deposits the original of the report referred to in Article (6) of this Law and its attachments with the clerk’s office of the court before which the bankruptcy action is pending.
The Corporation may, when necessary, request the Arbitration Panel to extend the time limits referred to in this Article for a period not exceeding thirty days, and the Panel shall have the right to accept or reject this request.

* The first paragraph was replaced by Article 12 of Decree-Law No. 42 of 1988 (Kuwait Al-Youm, Issue No. 1782), effective as of 27 November 1988. Law No. 100 of 1983 had previously amended its time limit to six months (Article 5 thereof).

Article 9

By way of exception from the conditions, provisions and procedures prescribed for preventive composition provided for in the Commercial Law, the person whose bankruptcy is sought or the Corporation may submit to the court before which the bankruptcy application is pending proposals for a preventive composition.
After hearing his statements, the statements of the Corporation and the statements of those of his creditors who so wish, the court shall rule either to continue considering the bankruptcy application or to approve the preventive composition if it is established that its terms are appropriate, provided that it is approved by one quarter of the creditors holding half of the debts.
This judgment shall be deemed equivalent to signature of the composition record by all creditors and ratification thereof by the court.
However, the procedures and provisions provided for in the Commercial Law following the court’s ratification of the preventive composition shall apply to the remaining procedures of the composition signed by the court.

Article 10

The Corporation shall submit to the bankruptcy judge a report on the measures it has taken in inventorying, receiving and managing the debtor’s assets.
The report referred to in Article (6) of this Law shall be deemed the list of debts in accordance with Article (658) of the Commercial Law. The court that issued the bankruptcy judgment, instead of the bankruptcy judge, shall decide the disputed debts, unless the dispute concerns a debt registered in accordance with the provisions of Decree-Law No. 57 of 1982 referred to above, in which case the Arbitration Panel in deferred share disputes shall have jurisdiction over it.

Article 11

Judicial composition and composition with abandonment of assets shall take place by virtue of a judgment of the court that declared the bankruptcy, after the approval of the Corporation and hearing the statements of the bankrupt and those of his creditors who so wish, without following the procedures relating to the composition meeting provided for in the Commercial Law.
The debtor shall be deemed to have become solvent within the meaning of Article (699) of the Commercial Law if his assets become equal to the debts owed by him.

Article 12

If the amicable settlement or composition is concluded, the Corporation’s custodianship over the debtor’s assets shall continue until the settlement or composition is fully implemented or his bankruptcy is declared, and he may not manage or dispose of his assets except within the limits and on the conditions authorised by the Corporation.

Article 13

Without prejudice to the provisions of Articles (10, 11, 12) of Law No. 59 of 1982 referred to above, the Corporation shall issue to the creditors referred to in the preceding Article bonds as follows:
a- If the amicable settlement is concluded in accordance with the provisions of Article (8) of this Law, the bonds shall be for the value agreed in the settlement.
b- If the court ratifies the preventive composition in accordance with the provisions of Article (9) of this Law, the bonds shall be for the value expected to be obtained under that composition.
c- If a judgment declaring bankruptcy is issued, the bonds shall be for the value expected to be obtained upon the closing of the bankruptcy, guided in this respect by the report referred to in Article (6) of this Law.
These bonds may be sold or pledged in accordance with the rules laid down by the Council of Ministers.

Article 14

The Corporation shall receive the rights of creditors holding debts arising from deferred share transactions in accordance with the amicable settlements or the preventive composition, and shall distribute them to them according to the instalments and dates fixed in the settlement or composition.
If the settlement or composition is not implemented, the Corporation shall request the declaration of the debtor’s bankruptcy and shall pay the bondholders their rights in accordance with the following Article.

Article 15

If the bankruptcy is closed for insufficiency of its assets, or if provisional distributions of it are made, and if amounts are obtained as a result of judicial composition or composition with abandonment of assets, and upon the closing of the bankruptcy and in all cases in which provisional or final distributions are made in accordance with the provisions of the Commercial Law, the Corporation shall receive such funds on behalf of the creditors holding debts arising from deferred share transactions and shall distribute them to them according to their share in the bankruptcy, without prejudice to their rights provided for in Articles 666 and 732 of the Commercial Law and without regard to the estimated value of the bonds issued in accordance with Article (13) of this Law.

Article 16

All creditors and debtors, whatever the causes of their debts, shall be notified of all hearings, time limits and procedures relating to the settlement, the bankruptcy declaration proceedings and the preventive composition in accordance with the provisions of this Law, and of all proceedings and actions arising from the bankruptcy and the verification of debts, by publication in the Official Gazette and in at least two daily newspapers.

Article 17

A new Article numbered (2) bis shall be added to Law No. (59) of 1982 referred to above, with the following text:
(Debts arising from transactions in company shares concluded on a deferred basis and registered in accordance with the provisions of Decree-Law No. (57) of 1982 referred to above shall fall due at the end of December 1983 if they have not fallen due by that date. Such debts shall be settled on the basis of the spot price on the day of contracting plus a percentage of profit representing the difference between the agreed forward purchase price and the spot price, in proportion to the period elapsed until the date on which such debts fall due.
Set-off shall take place between the rights and the obligations of the parties to such transactions arising therefrom and registered in accordance with the provisions of Decree-Law No. (57) of 1982 referred to above, even if one or both parties are bankrupt, taking into account the reduction of debts by the percentage of the deficit expected in the assets of the debtors as estimated by the Corporation for the Settlement of Transactions in Company Shares Concluded on a Deferred Basis.
The debtor may defer payment of the debt to a date not exceeding one year from its due date, provided that he pays at least half of the debt within six months.
In the event of non-payment on the due date of such debts, delay compensation shall be calculated on the amounts not paid, and the rate of such compensation shall be determined by a resolution of the Council of Ministers).

* The text of Article 2 bis is incorporated in the page of Law No. 59 of 1982. The due date of these debts was brought forward to the date Law No. 100 of 1983 came into force, with a profit cap of 25% per annum of the spot price, pursuant to Article 1 of Law No. 100 of 1983 (Kuwait Al-Youm, Issue No. 1492).

Article 18

The Corporation shall act as the statutory representative of the Creditors’ Rights Guarantee Fund in claiming the rights to which it has been subrogated in accordance with Article (12) of Law No. (59) of 1982.

Article 19

The condition of the issuance of a decision by the Arbitration Panel referring the debtor to the Public Prosecution to take bankruptcy proceedings against him, set out in Law No. (59) of 1982 referred to above for the payment of debts by the Creditors’ Rights Guarantee Fund, shall be replaced by the condition of referring the debtor to the Debt Settlement Corporation in accordance with Article (4) of this Law.

Article 20

Article (3) of Law No. (59) of 1982 referred to above is hereby repealed.

Article 21

Bankruptcy cases and the disputes provided for in this Law and the actions arising therefrom and related thereto shall be heard by one or more circuits of the Court of First Instance composed of three judges, having regard to the provisions of Article (10) of this Law.
All judgments issued by this circuit shall not be subject to any form of appeal.

* The circuit may order the taking of precautionary measures, including prohibiting the bankrupt from travelling and from disposing of his assets, pursuant to Article 13 of Decree-Law No. 42 of 1988 (Kuwait Al-Youm, Issue No. 1782), effective as of 27 November 1988.

Article 22

Persons whom the Arbitration Panel in deferred share disputes has referred to the Public Prosecution in accordance with the provision of Article (3) of Law No. (59) of 1982 referred to above shall be referred to the Corporation, even if they have been referred to the competent court, and in this case the Corporation shall be deemed custodian of their assets.
The time limit referred to in Article (5) of this Law shall apply to them from the date this Law comes into force.

Article 23

The application of the provisions of this Law shall not prejudice any penalty prescribed in the Penal Code, the Commercial Law or any other law.
If at any time the Corporation suspects that any of the crimes provided for in Part Five of Book Four of the Commercial Law has been committed, it shall submit a report thereon to the court before which the bankruptcy action is pending or to the bankruptcy judge.
The bankruptcy judge shall – whether on his own initiative or upon notification by the Corporation, one of the creditors or any person concerned – conduct a preliminary investigation into any of the crimes referred to in the preceding paragraph, and if it appears to him from this investigation that the occurrence of the offence is likely to be proven, he shall refer the matter to the Public Prosecution.

Article 24

Repealed.

* Repealed by Article 18 of Decree-Law No. 42 of 1988 (Kuwait Al-Youm, Issue No. 1782), effective as of 27 November 1988.

Article 25

The Prime Minister and the Ministers, each within his own competence, shall implement this Law, which shall come into force from the date of its publication in the Official Gazette.

Issued on 20 April 1983 and published in the Official Gazette Kuwait Al-Youm on 24 April 1983.