KUWAIT CITY, Jan 24: In a significant development, the Court of First Instance – Commercial Capital Markets has issued a ruling emphasizing the paramount importance of corporate transparency and disclosure. The ruling underscores the obligation of companies to adhere to a transparent approach and commit to disclosing comprehensive information to stakeholders, particularly shareholders. This encompasses financial and non-financial details related to the company’s financial position, performance, and ownership.
The court ruling signals a departure from conventional practices, challenging the sporadic nature of companies’ disclosure to the stock exchange or selective communication when seeking essential information. It firmly establishes that transparency is indivisible and mandates the disclosure of all information in a timely and unbiased manner, ensuring accuracy and reliability.
Moreover, the ruling advocates for structured disclosure processes that categorize information based on its nature and periodicity. This includes essential information crucial for stakeholders’ understanding of the company’s situation. The court stresses the importance of companies periodically reviewing their disclosure and transparency mechanisms to align with international best practices and local regulations.
Legal sources highlight the foundational principle that trust in financial markets hinges on transparency and comprehensive engagement with officially or unofficially circulated information. The court emphasizes the negative repercussions of companies remaining silent on crucial information, affecting a broad spectrum of small investors who form a significant portion of the stock market.
The ruling addresses the imperative nature of disclosure in cases of market decline, emphasizing that companies cannot evade accountability, especially during noticeable and substantial movements in share prices. The court’s decision underscores the need for companies to provide financial statements, including reports from the board of directors and auditors to stakeholders promptly.
In the contemporary digital landscape, holding companies accountable and facilitating communication has become more flexible and accessible. The ruling affirms the shareholder’s right to request disclosure, even after trading sessions, as transactions involve winners and losers. The court underscores that companies must not neglect their responsibilities toward shareholders, emphasizing the pivotal role of the stock exchange in ensuring accountability within the financial ecosystem.
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