The Philosophy of the Kuwaiti Legislator Regarding the Shareholders’ Rights Plan as a Defensive Mechanism Against Takeovers: A Comparative Study with French Law.

Authors

Athbi Alenezi

 

Abstract

This study examines the shareholders’ rights plan, emphasizing its significance and function within the framework of contractual freedom and its connection to the role of the general assembly in managing the company. It further explores the similarities between the shareholders’ rights plan and the mandatory takeover offer, as both mechanisms increase the cost for the offer or potentially restricting contractual freedom. The core issue of the research lies in assessing whether the shareholders’ rights plan aligns with general legal principles and fits within the Kuwaiti legislative system, particularly given its adoption of the board neutrality rule for target companies. To address this problem, the study adopts a comparative and critical methodology, analyzing the approaches of both the French and Kuwaiti legislators and identifying the legislative rationales behind their differing regulatory choices regarding takeover defenses. Specifically, emphasis will be placed on the French model which includes a new way to implement shareholder’s right plans through the issuing of new share capital called Bons Breton. As such, this mechanism can serve as a useful defensive measure, balancing the protection of shareholders’ interests with fairness and transparency in the financial market. The research concludes that the issuance of new shares under the shareholders’ rights plan neither contradicts the principle of contractual freedom nor undermines the principle of equal treatment among shareholders. It also finds that the mandatory takeover offer performs a similar defensive function but operates under a legal obligation rather than managerial discretion. Moreover, the French approach successfully integrates both mechanisms, achieving a balanced framework that protects companies while preserving market integrity. Finally, based upon its findings, this study calls for an amendment to Article 5 of Book IX (Takeover and Merger) of the 2015 Executive Regulations to better incorporate the shareholders’ rights plan into the Kuwaiti legal framework in a manner that ensures greater flexibility, fairness, and alignment with international best practices.

DOI: 10.51958/AAUJBL2026V10I2P7