In a stock exchange that never sleeps on a piece of news, information becomes faster than money. That is why the movements of major owners and board members are no longer a private matter, but an open file on every investor’s table. Kuwait’s Capital Markets Authority has made the “immediate disclosures of disclosable holdings” the first line of defence against unequal trading, and has obliged everyone who holds influence in a listed company to announce their move before the share moves.
The aim is clear: there is no room for monopolising material information, and no place for deals done in the shadows at the expense of small shareholders. What happens today is that the whole market sees who is coming in, who is going out, and who is quietly accumulating shares in preparation for a coming round.
What is meant by immediate disclosures of holdings?
They are binding legal notifications that must be submitted within two official working days of any change in ownership occurring, in accordance with the provisions of Book Ten of the Executive Bylaws of the Capital Markets Authority Law No. 7 of 2010. Official holidays are excluded from this.
The disclosure obligation covers:
- The shareholder whose holding reaches or falls below 5% and its multiples of the listed company’s capital.
- Members of the board of directors and senior executives, as insiders with access to the company’s information.
- The ultimate beneficial owner, even if the ownership is registered in the name of companies or investment portfolios.
Since 5 January 2025, the submission of these disclosures has been mandatory electronically through the “Ifsah-2” system using the XBRL language, with the acceptance of paper forms or disclosures by e-mail discontinued, with the aim of raising the level of speed, accuracy and oversight.
The smart shift: artificial intelligence enters the picture
With the Ifsah-2 system and structured XBRL data, disclosures are no longer mere PDF files. Today, analysis platforms use artificial intelligence to track insiders’ movements in real time and to produce “heat maps” of the entry and exit of major owners. The result: the individual investor now sees the same data that used to be the preserve of investment funds, and at almost the same speed.
The main types of disclosure
1 – Disclosure of crossing ownership thresholds
It is made when ownership reaches significant percentages such as 5% or 10% or 15%. This type reveals the entry of a strategic shareholder capable of influencing the company’s decisions and its future direction.
2 – Disclosure of a change in ownership
Insiders are obliged to disclose any purchase or sale of the company’s shares, even if the holding does not exceed 5%. The message here is that every move by an insider is significant.
3 – Disclosure of indirect ownership
This type prevents the use of companies or portfolios as a cover to conceal the real owner. If several entities trace back to a single ultimate beneficiary, their holdings are counted together for disclosure purposes.
4 – Disclosure of insiders’ dealings
It covers the dealings of members of boards of directors and executive management in their companies’ shares. These transactions are often read as a signal from the inside about management’s confidence in the company’s future.
Why does the Authority insist on these disclosures?
The fundamental aim is to protect the market from hidden control and the manipulation of information. Without disclosure, an investor could gradually build up a significant stake without the market’s knowledge, then surprise shareholders with an attempt to take control of the company or to influence its decisions.
Immediate disclosure makes these moves public to all, and gives investors the ability to take their decisions on the basis of equal information. These disclosures are also an important tool in combating money laundering and in uncovering the real beneficiary of the funds invested.
Penalties in practice
Non-compliance does not stop at the financial penalty, which may reach KD 100,000. In 2024 the Markets Authority suspended trading in the share of a listed company for 3 days because of a late insider disclosure, which cost shareholders temporary losses and a decline in confidence.
The importance of disclosures for the investor
- An important investment indicator: the entry of a strategic investor with a significant stake may be a sign of growth opportunities or of a restructuring within the company.
- Understanding the control structure: disclosures reveal the nature of the influential owners, whether they are families, institutions or government bodies.
- Early warning: the exit of a major shareholder may be an indicator of coming changes or challenges that call for a reassessment of the investment position.
The importance of disclosures for companies
- Strengthening confidence: high transparency raises the company’s appeal to investors and to local and foreign financial institutions.
- Protection against hostile takeover: early disclosure gives management an opportunity to deal with any sudden moves and to prepare its response.
- Avoiding penalties: compliance means avoiding fines and trading-suspension measures.
Examples from the Kuwaiti market
1 – Entry of a strategic investor
An announcement by an investment entity that it had raised its holding in a listed bank from 4.9% to 5.1% led to noticeable activity in the share in the following session. The market read the message as confidence in a future value not yet priced in.
2 – Insiders’ dealings
A board member of an investment company announced the purchase of a large quantity of his company’s shares. Weeks later the company announced the award of an important contract, which reinforced investors’ conviction of management’s confidence in the company’s future.
3 – Uncovering investment alliances
In one case, a group of investors announced that their combined holding in a real estate company had reached 12%. A short time later they submitted a request to convene an extraordinary general meeting to change the board of directors, which early disclosure had revealed before the surprise occurred.
Conclusion and practical advice
Immediate disclosures are not merely a legal obligation imposed by the Authority; they are a true measure of the health of governance in the company. With the “Ifsah-2” system coming into force, information now reaches the investor in hours, not weeks.
A quick tip: before you buy any share, open the “Disclosures” section on the stock exchange’s website. Review the last 3 insider disclosures. A single move by an insider is often stronger than 10 analytical reports.
And in the financial market, whoever is first with the information is first with the decision. And whoever has the right information at the right time has an advantage that money cannot buy.