What does Voluntary Delisting Tell us about Corporate Governance in Kuwait?

Abstract

Despite the adoption of the mixed approach in the application of corporate governance (CG), largely based on the ‘comply or explain’ principle, the Kuwaiti corporate governance system still faces major limitations that have become particularly noticeable from the event of voluntary delisting by a slew of companies after the new Kuwaiti Code of Corporate Governance (KCCG) came into force in 2015. One apparent limitation is caused by the widespread culture of non-compliance, an observation supported by the Capital Market Authority Report on Voluntary Delisting from 2010 to 2016. Empirical analysis was conducted on a sample of 29 companies, all of which were delisted during application of the new KCCG of 2015 until April 2020. This voluntary delisting also indicates other salient limitations such as deficiencies in the CG legal framework, the asymmetrical concentration of share ownership in the hands of larger shareholders, and the passivity of shareholders in Kuwaiti-listed shareholding companies.