Commercial Bank of Kuwait - Fireworks at Annual Shareholders' Meeting - Directors Not Released from Responsibility for Fiscal Year 2009

AlQabas has a report on CBK's Annual General Meeting of Shareholders ("AGM") 7 April.  (Also sometimes referred to as an Ordinary General Meeting to distinguish from an Extraordinary General Meeting.  The difference between the two arises from the entity's articles of association which set forth the powers of each.  For example, an amendment of the Articles generally requires an EGM).

Some 85.49% of shareholders were at the meeting which proceeded calmly until the 9th Agenda item - the release of the Board of Directors and the Managing Director from responsibility for their conduct during the last fiscal year (2009).  Generally, not a contentious issue.  Usually approved quickly.

This time was different.   As the AGM moved to Item #9, Ali Musa Al Musa, Chairman and Managing Director of Securities Group,  made two proposals.

1. To delay voting on releasing the old board and the previous Chairman/Managing Director, Dr. Abdul Majid AlShatty from responsibility for their conduct during fiscal year 2009 until a future AGM  (While these are generally scheduled once a year, there is no reason one couldn't be called sooner).  In the interim the new board would conduct a legal, management and accounting review of the conduct of the previous board and managing director to determine if they had taken any salary, benefit, compensation or other perk during 2009 and the period up to the date of the AGM (when they were still in control of the bank).
2. And that in line with sound corporate governance, the principles of disclosure, transparency etc the AGM vote that no member of the board or the managing director can receive any salary, benefit, compensation or other perk without the prior agreement of an AGM with full disclosures of the package. 

Mr. AlMusa's proposals passed with 79% of the vote.

There is a transcript of the exchange between Mr. AlShatti and Mr. AlMusa.  As you might expect, AlShatti took AlMusa's proposals as a personal attack.  So there is some interesting back and forth.  AlShatti saying that he and Jamal AlMutawa had taken at 15% salary cut noting that whatever the AGM said, or did not legally the Board was not released for its conduct until after 5 years.  He also noted that the board had served loyally for 12 years.  For his part AlMusa denied that he was accusing anyone, but fighting for fundamental principle of shareholders' rights.

Buried in the third paragraph from the end of the article is a statement that the Central Bank of Kuwait supposedly ruled that any profit from the sale of Boubyan Bank shares by CBK belongs to CBK's shareholders not the creditors of TID.   This is an important point to watch in view of the current market value of BB being roughly twice the amount of the repo between CBK and TID.

CBK's new board comprises Darar Al-Ribah as Chairman, Ali A-Awadi, Anud AlHatharan, Ahmad AlMishari, Badr AlAhmad, Tariq AlUthman, and Mahdi AlJazaaf.   

Note:  AlShatti had objected to the election of AlMishari saying he had not been cleared of his responsibility for 2009 and that it was nothing personal.   AlMishari apparently was a director in 2009 but resigned prior to the AGM.   In responseAlMishari said he had resigned for "lack of fit" with the board.

Alternate Directors (in case one of the above leaves the board) are Ali AlMusa, Abdul Rahman AlAli,  and Mohammad AlShatti.