Off-market trades are trades that require prior agreement between a buyer and a seller to execute the transaction on a listed security at an agreed price and quantity.
There are several requirements to executing off-market trades, such as a two-party limit and the use of a broker licensed by the exchange. To view these controls and conditions, please see the Boursa Kuwait Rulebook.
In the case of an off-market trade leading to the acquisition of less than 5% of a company’s capital, Boursa Kuwait will mention the details of the trade without mentioning the involved parties. Only a trade of more than 5% of the company’s capital requires that the exchange mention the parties involved. Furthermore, the execution of an off-market trade that leads to a direct or indirect acquisition of 30% or more of the traded shares of a listed company must comply with the mandatory acquisition provisions set forth in the Capital Markets Authority’s (CMA) Executive Bylaws.
Any person or group may acquire 5% or more of the total issued share capital of a listed company from an existing shareholder, such an acquisition may be concluded through public auction, which was formerly referred to as a block trade.
In order to carry out a sale by public auction, there must be an initial agreement at a fixed price with a buyer. The person selling the shares is required to apply to Boursa Kuwait requesting a sale of securities through public auction. The buyer of the securities is also required to provide a certified cheque, through the broker, representing a payment of a non-refundable advance of 10% of the total trade value. There is a 10-day window within which the trade is advertised on Boursa Kuwait and during which a person with a competing bid may apply to purchase the securities and must submit a cheque for the same non-refundable 10% advance referred to above. If, on the 11th day following the advertisement of the trade, no competitive bid is received, the trade shall be executed in favor of the buyer. However, if a competitive bid is received, a public auction of the securities will be held in Boursa Kuwait’s trading hall. This auction will proceed for 15 minutes and if a higher offer is not received, the trade shall be executed in favor of the initial bidder.
These trades must be done in accordance with the procedures and provisions outlined in the Boursa Kuwait Rulebook.