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Mon 25 Jun 2007 12:43 AM

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Court lifts Kharafi trading curbs

A Kuwaiti court has lifted the last stock exchange trading restrictions on the Kharafi Group.

 Kuwaiti court lifted the last stock exchange trading restrictions on the Kharafi Group on Sunday, opening the way for the family-owned conglomerate to seek compensation from the bourse, a Kharafi lawyer said.

The bourse banned the Kharafi Group in November from using the exchange to
trade shares in 10 firms for violating a rule that requires investors to disclose holdings of 5 % or more.

A court overturned the bans in respect of eight firms on April 2, leaving restrictions in place only for shares of al-Mal Investment Co. and Heavy Engineering Industries and Shipbuilding Co.

An appeal court decided to allow the Kharafi Group to trade shares in both those companies on Sunday, lifting the ban completely, Jamal al-Kandari of Loai al-Kharafi law firm said.

"This ruling says the bourse was wrong to ban Kharafi Group from the beginning. There will be compensation for all the losses suffered in and out of Kuwait," Kandari told Reuters.

"The court has already awarded 5001 dinars in damages to the firm. It is possible that we seek compensation in the millions of dinars."

Kharafi owns nearly 39 % of al-Mal and 42.6 % of Shipbuilding through subsidiaries, according to Kuwait stock exchange data. The bourse ban also meant Kharafi could not exercise voting rights in the companies in question for two consecutive general meetings of shareholders.

The row between Kharafi, a household name in the Gulf Arab state, and the exchange dragged on for months and initially triggered a selloff on the bourse late last year.

Several Kharafi affiliates called shareholder meetings in quick succession to elect new boards and evade the ban. The restrictions were meant to have been in force for six years, if the boards had served their usual tenure.

Although the Kharafis could not use the exchange to sell shares, they could trade them over the counter.

The Kharafi group ban was part of a wider probe of disclosure violations, which the bourse announced later in November, triggering the sharpest decline on the benchmark index in four months.

In December it barred shareholders in 13 listed firms including Gulf Bank and Ahli Bank from selling shares on the bourse for six years for breaking disclosure rules.

The trade ministry named 25 other companies in February for breaking disclosure rules.

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