Kuwait Capital Markets Authority disciplinary board imposes KWD 23,000 in fines on Sultan Center for Foodstuffs, directors and auditor over IFRS impairment and disclosure failures

The Kuwait Capital Markets Authority (CMA) issued a Disciplinary Board decision imposing financial penalties on Sultan Center for Foodstuffs Company, its chairman, vice chairman, three other board members, its chief executive officer, its chief financial officer, and its auditor (RSM Al-Bazi & Partners). The action relates to breaches of listing rules, corporate governance, and securities activities and registered persons requirements, tied to non-compliance with International Accounting Standard 36 and IFRS 13 in the company’s impairment assessment and fair value measurement for an investment in an associate in financial statements for the period ended 30 September 2024. The CMA found the impairment study did not deduct disposal costs from estimated fair value when calculating recoverable amount, and that the valuation report’s fair value calculation was inaccurate and contained material observations that did not meet IFRS 13 requirements (including paragraph 9). It also determined the board failed to ensure the accuracy and integrity of information disclosed, senior management failed to discharge their responsibilities prior to issuance of the financial statements, and the auditor removed a reservation on the investment value without a sound basis in reports for the interim period ended 30 September 2024. Penalties were set at KWD 5,000 for the company, KWD 2,000 each for the chairman, vice chairman and three other board members, KWD 3,000 each for the CEO and CFO, and KWD 2,000 for the audit firm.