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Mon 1 Oct 2007 07:04 PM

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Kuwait clamps down on market manipulation

Kuwait Stock Exchange unveils listing rules for mergers to impose more transparency.

The Kuwait Stock Exchange (KSE) unveiled on Monday new listing rules for company mergers as part of plans to impose more transparency on the Arab world's second-largest bourse and improve its efficency.

Under the new regulations, shares in firms merging with another company will be halted for 12 months if the exchange previously rejected an application of the merging parter to list its stock. The suspension will start when the merger becomes effective.

Trading in those shares will only resume after approval by the exchange's market committee, and after the firm meets all rules set by the committee. The stock's suspension can be extended beyond the initial 12 months.

The move has met with mixed reaction from investors, with some claiming the decision is a sign of KSE management's inflexibility against companies that only want to be listed, reported state news agency Kuna.

However, others said the decision would curb manipulations by boards of some companies looking to enter the KSE under an umbrella, putting the bourse system in jeopardy, according to Kuna.

Monday's announcement was the second raft of measures unveiled this year aimed at increasing transparency.

In July the exchange announced that companies must hold annual general meetings no more than 45 days after the bourse approves full-year financial statements.

It said companies must also pay out cash dividends within 10 days of approval by the general assembly of shareholders.

For firms that violate either of the rules, the bourse said trading will be halted in shares of firms

It said trading will be halted for a year if a company with a capital of up to 10 million dinars ($35.8 million) increases its share capital by 300% or more.

The exchange also asked firms to follow procedures outlined by its companies department when selling 30% of their shares to qualify for a listing. It gave no details.

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