Qatar’s Corporate Legal Framework - Global M&A Toolkit …globalmandatoolkit.cliffordchance.com/downloads/Qatar_corporate... · Qatar corporate legal framework ... Separate legal

Qatar’s Corporate Legal FrameworkDecember 2014

Background .................................................................................................. 3

Qatar corporate legal framework ................................................................... 3

The Qatar Financial Centre (QFC) ............................................................. 3

State of Qatar ............................................................................................3

Foreign investment regulation ..........................................................................4

Other matters ................................................................................................ 3

Schedule 1: Types of Qatar Financial Centre entities.............................. 5

Schedule 2: Types of Commercial Companies Law entities ................... 7

Key contacts .............................................................................................. 10

cont

ents

Background

In October 2008, the State of Qatar launched Qatar National Vision 2030, designed toprovide a framework for sustainable development and high living standards forgenerations to come in Qatar.

Qatar has gone a considerable way to achieving this goal, now ranking as one of thehighest GDP per capita countries in the world based on its oil and gas reserves. AsQatar looks to diversify its State revenue base, it seeks to foster foreign investment ina range of sectors.

Qatar corporate legal frameworkIn Qatar there are two corporate legal systems (the Qatar Financial Centre and the domestic corporate law, primarily governed by theCommercial Companies Law and related regulation). Depending on the nature of business, those looking to establish a presence inQatar may consider either system.

The Qatar Financial Centre (QFC)The QFC is a financial and business centre established by the State of Qatar under the Qatar Financial Centre Law No 7 of 2005, andlocated in Doha.

The QFC legal framework establishes a separate legal jurisdiction, having its own commercial and regulatory environment essentiallyseparate from the State of Qatar. It is operated by the QFC Authority (QFCA) and it has its own financial services regulator, the QFCRegulatory Authority (QFCRA).

Only a limited range of permitted activities are eligible to be carried out from the QFC. These fall into two categories, regulated andunregulated activities.

Regulated Activities (which are regulated by the QFCRA) comprise: financial, banking and investment business; insurance andreinsurance business; money market, stock exchange and commodity market business; money, asset and investment fund business;the provision of project finance and corporate finance and Islamic banking and financing business; funds administration, fund advisoryand fiduciary business; pension fund business and the business of credit companies; insurance broking, stock broking, and all otherfinancial brokerage business; financial agency business and the business of provision of corporate finance and other financial advice,investment advice and investment services; and financial custodian services and the business of acting as legal trustees.

Unregulated Activities comprise ship broking and shipping agents; provision of classification services and investment grading and othergrading services; business activities of company headquarters, management offices and treasury operations and other related functions forall kinds of business, and the administration of companies generally; provision of professional services including but not limited to audit,accounting, tax, consulting and legal services; holding companies, and the provision, formation, operation and administration of trusts andsimilar arrangements; and provision, formation, operation and administration of companies.

Entities established in the QFC may take a number of forms. These are summarised at Schedule 1. Though they are governed by theQFC law and regulations, Qatar domestic criminal laws apply to any QFC entity.

State of QatarAlternatively, corporate entities may be established and run in accordance with Qatari domestic laws, in particular the CommercialCompanies Law No 5 of 2002 (CCL). Potential amendments to the CCL are being considered (2013), but entities that may be establishedunder the current CCL are set out in Schedule 2.

© Clifford Chance, 2014 3

Background continued

Foreign investment regulationGenerally speaking, foreign investors may invest in all sectors of Qatar’s economy provided one or more Qatari shareholders ownat least 51%.

With relevant Ministerial approval foreign investment may exceed 49% and reach 100% in the fields of agriculture, industry, healthcare,development and exploitation of natural resources and certain other sectors.

Foreigners may now own up to 49% of the shares of Qatari companies listed on the Doha Securities Exchange (provided thecompany’s articles enable this). GGC nationals will be treated as Qatari nationals with respect to such companies listed on theQatar Exchange.

Ministerial approval may exempt certain investments from income tax for a period of upto 10 years and foreigners may freely repatriatefunds from the Qatar investments without foreign exchange controls.

Other mattersThere are several other aspects to consider in terms of investing or establishing a presence in Qatar, such as visa requirements,intellectual property protection, financing, and taxation which are beyond the scope of this paper. We would be happy to assist youwith these and ancillary matters as required.

4 © Clifford Chance, 2014

Schedule 1: Types of QatarFinancial Centre entities


QFC entity type Primary features of the QFC entity General restrictions

Separate legalentity?

Capital Members Reportingobligations

Liability

QFC LLC Yes Minimum capitalrequirementsapply forRegulatedActivities. Nominimum forUnregulatedActivities (butsolvency testapplies)

At least 1 Annual Returnrequirement.Accounts to beaudited and laidbefore AnnualGeneral Meetingand filed with theCompaniesRegistrationOffice (CRO).However, theseaccounts are notavailable forpublic inspection.

Limited Only QFC permittedactivities.

QFC SpecialPurposeCompany(“QFC SPC”)

Yes.

Establishedspecifically for thepurpose of anIslamic finance orconventionalfinance structuredtransaction

Same as for aQFC LLC

One or more whois a nominee,financialtransactioninitiator or anotherSpecial PurposeCompany

Exemption: Notrequired to haveaccounts auditedor filed with CROunless requestedby the QFCA

Limited Only Special PurposeCompany activities:acquisition, holding anddisposal of an assetand obtaining financingin connection with aFinancing Transaction,any Regulated Activitythat is not carrying on abusiness, and anyUnregulated Activitypermitted by the QFCA

QFC HoldingCompany.

Yes Same as for aQFC LLC

At least 1 See QFC LLC Limited Licensed to only carryout holding companyactivities and musthave one or moresubsidiaries (which itmust control and maybe a QFC LLC or QFCSPC or anon-QFC entity)

QFC GeneralPartnership

No.

Is a partnershipwhich is not alimitedpartnership orlimited liabilitypartnership(see below).

Partners oweduties and carryon the business.Governed by apartnershipagreement.


Two or more If registered withCRO, AnnualReturnrequirement andaccounts to beaudited and filedwith the CRO

Joint and severaland unlimited

Only QFC permittedactivities.

Schedule 1: Types of Qatar Financial Centre entitiescontinued


QFC entity type Primary features of the QFC entity General restrictions



Liability

QFC LimitedPartnership

No.

Is a partnershipcomprising of aGeneral Partnerand a LimitedPartner.


One or moreGeneral Partnersand one or moreLimited Partners

Annual Returnrequirement.

Accounts to beaudited and filedwith the CRO

General Partnerhas unlimitedliability, andLimited Partnerhas limited liabilityprovided it doesnot take part inthe managementof the partnershipbusiness or affairs


QFC LimitedLiabilityPartnership

Yes.

Governed by alimited liabilitypartnershipagreement


Two or more See above Limited to amountagreed


QFC ProtectedCell Company

PCC is a singlelegal person (buteach cell is not alegal personseparate fromPCC). Assetsand profits areseparated andcompartmentalised into cells.PCC to notifyparties that theyare dealing witha PCC.

Managed by aboard of directors


At least 1 See above Limited. Butunlike LLC, acell’s creditorsonly haverecourse to theassets of that cell.

PCC may issueshares foreach cell.

Only carrying onRegulated Activities asan Insurer or aCollective InvestmentFund.

Schedule 2: Types of CommercialCompanies Law entities


QFC entity type Primary features of the CCL entity General restrictions



Liability

“Limited liabilitycompany” (LLC),Art 225 of CCL

Yes.

To have a nametaken from itsobjective.

The companymanager has fullauthority tomanage thecompany(equivalent to thepowers of theboard of directorsof a QSC, seebelow). Companyto allot each year,10% of net profitto a legal reserve,which can besuspended if thereserve reaches50% of thecompany’s capital.

Minimum isQAR200,000 orsuch higheramount to meetcompany’sobjectives

Between two and50. If more than20, there is to bean advisorycouncil of at leastthreeshareholders.

Yes, manager toprepare accountsand send a copyto the Ministry ofEconomy andTrade (in realityfiling does nottake place forLLCs). However,not available forpublic inspection.

Limited to paid upshare capital

Foreign investmentrestrictions. Subject toproxy law, mayintroduce operationalcontrol in agreements.Cannot undertakebanking, insurancebusiness or makeinvestments on behalfof others (principalor agent).

Cannot offer sharesto public.

Single PersonCompany (SPC)Art 260 of CCL

Yes.

To have a nametaken from itsobjective. Ownermay appoint amanager

QAR200,000 One person Yes, manager toprepare accountsand send a copyto the Ministry (inreality filing doesnot take place forSPC’s). However,not available forpublic inspection.

Limited Can be owned 100% byforeigners if a Ministerialexemption is granted.

“PrivateShareholdingCompany” orprivate joint stockcompany (QSC)Art 203

Yes.

Managed by aboard of directors.Minimum of fivedirectors and maxof 11.

It is to have adefinite period andif its objective is tocarry out aparticularbusiness, thecompany shallexpire at the expiryof that business.

Minimum is QAR2million or suchhigher amount tomeet company’sobjectives

At least 5 Yes, requirementfor annualaccounts to beaudited and filedat the Ministry

Limited Foreign investmentrestrictions.

Excluding staterepresentatives andholders of 10% or more,no person may be aboard member for threeQSC’s or more norChair or Deputy Chair inmore than twocompanies

“Public JointStock Company(QSC) Art 94

Yes.

See privateshareholdingcompany above

See privateshareholdingcompany abovebut able to offershares tothe public

At least 5 Yes, see privateshareholdingcompany above

Limited Yes, see privateshareholding companyabove


Schedule 2: Types of Commercial Companies Lawentities continued




Liability

“Article 68”Company Art 68of CCL

Yes.

A shareholdingcompany at leastone of theCompany’sshareholdersmust be a Qatargovernmentorganisationholding or acompany in whichthe state owns atleast 51% (orsuch loweramount as theCouncil ofMinsters mayapprove) of theshares in thatcompany.

An Article 68Company maythen effectivelycontract out of theprovisions of theQatar CCLthrough itsArticles.

As set out in theArticles ofAssociation

One or moredepending on theconstitution of therelevant company

As above, subjectto contraryprovisions in theArticles

Limited Subject to the provisionsof the CCL unless theArticles provideotherwise.

“PartnershipCompany” Art 19of CCL

No. No requirement At least 2 No requirement Joint and severalliability of thepartners

A partner cannotpractice to his ownaccount or the accountof others, any activity ofthe partnershipcompany or be apartner in a competingpartnership company.

“HoldingCompany” Art261 of CCL

Yes.

It is a QSC or aWLL or SPC.

Has financial andadministrativecontrol over one ormore companiesoperating under it,owning aminimum of 51%of shares in anunderlying QSC ora LLC or SPC.

Not less thanQAR 10 million

As per a QSC ora WLL or SPC asapplicable

As per a QSC ora WLL or SPC asapplicable

Limited It cannot be a partnernor can it own equitiesin other holdingcompanies.





Liability

“LimitedPartnership withShares” Art 206of CCL

Yes.

Has a controlboard of at least 3members but ismanaged by ageneral partner.

QR 1 million At least 1 “joint”partner and atleast 4shareholderpartners

Required to havean auditor

Joint partnershave joint andseveral liabilityand shareholderpartners havelimited liability

Foreign investmentrestrictions.

“ParticularPartnershipCompany” Art 44of CCL

No. Not aseparate legalentity from therelevant partners.

No requirement At least 1 “joint”partner and atleast 1 “silent”partner

No requirement forauditor

“Joint” partnershave joint andseveral liability and“silent” partnershave limited liability

If there is a non-Qataripartner, the particularpartnership companycannot practisebusiness which isprohibited fornon-Qataris by law.

Key contacts


Richard ParrisOffice Managing PartnerDoha, QatarT: +974 4491 7041E: [email protected]

Tim PlewsPartnerDubai & RiyadhT: +971 4 362 0689E: [email protected]

Jason MendensPartnerDoha, QatarT: +974 4491 7049E: [email protected]

Worldwide Contact Information

Abu DhabiClifford Chance9th Floor, Al Sila TowerSowwah SquarePO Box 26492Abu DhabiUnited Arab EmiratesT +971 2 613 2300F +971 2 613 2400

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BarcelonaClifford ChanceAv. Diagonal 68208034 Barcelona Spain T +34 93 344 22 00F +34 93 344 22 22

BeijingClifford Chance33/F, China World Office Building 1No. 1 Jianguomenwai DajieBeijing 100004ChinaT +86 10 6505 9018F +86 10 6505 9028

BrusselsClifford ChanceAvenue Louise 65Box 2, 1050 BrusselsBelgium T +32 2 533 5911F +32 2 533 5959

BucharestClifford Chance BadeaExcelsior Center 28-30 Academiei Street12th Floor, Sector 1,Bucharest, 010016RomaniaT +40 21 66 66 100F +40 21 66 66 111

CasablancaClifford Chance169 boulevard Hassan 1er20000 CasablancaMorrocoT +212 520 132 080F +212 520 132 079

DohaClifford ChanceSuite B30th floorTornado TowerAl Funduq StreetWest BayP.O. Box 32110Doha, Qatar T +974 4 491 7040F +974 4 491 7050

DubaiClifford ChanceBuilding 6, Level 2The Gate PrecinctDubai International Financial CentrePO Box 9380Dubai, United Arab EmiratesT +971 4 362 0444F +971 4 362 0445

DüsseldorfClifford Chance Königsallee 5940215 DüsseldorfGermanyT +49 211 43 55-0 F +49 211 43 55-5600

FrankfurtClifford Chance Mainzer Landstraße 4660325 Frankfurt am Main GermanyT +49 69 71 99-01F +49 69 71 99-4000

Hong KongClifford Chance27th FloorJardine House One Connaught PlaceHong KongT +852 2825 8888F +852 2825 8800

IstanbulClifford ChanceKanyon Ofis Binasi Kat. 10Büyükdere Cad. No. 18534394 Levent, IstanbulTurkeyT +90 212 339 0000F +90 212 339 0099

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KyivClifford Chance75 Zhylyanska Street 01032 Kyiv, UkraineT +38 (044) 390 5885F +38 (044) 390 5886

LondonClifford Chance10 Upper Bank Street London E14 5JJUnited KingdomT +44 20 7006 1000F +44 20 7006 5555

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MilanClifford ChancePiazzetta M. Bossi, 320121 Milan ItalyT +39 02 806 341F +39 02 806 34200

MoscowClifford ChanceUl. Gasheka 6125047 MoscowRussiaT +7 495 258 5050 F +7 495 258 5051

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SeoulClifford Chance21st Floor, Ferrum Tower19, Eulji-ro 5-gil, Jung-guSeoul 100-210KoreaT +82 2 6353 8100F +82 2 6353 8101

ShanghaiClifford Chance40th Floor, Bund Centre 222 Yan An East RoadShanghai 200002China T +86 21 2320 7288F +86 21 2320 7256

SingaporeClifford ChanceMarina Bay Financial Centre25th Floor, Tower 312 Marina BoulevardSingapore 018982T +65 6410 2200F +65 6410 2288

SydneyClifford ChanceLevel 16, No. 1 O’Connell StreetSydney NSW 2000AustraliaT +612 8922 8000F +612 8922 8088

TokyoClifford ChanceAkasaka Tameike Tower7th Floor2-17-7, AkasakaMinato-kuTokyo 107-0052JapanT +81 3 5561 6600F +81 3 5561 6699

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Abu Dhabi Amsterdam Bangkok Barcelona Beijing Brussels Bucharest Casablanca Doha Dubai Düsseldorf Frankfurt Hong Kong Istanbul Jakarta* Kyiv London LuxembourgMadrid Milan Moscow Munich New York Paris Perth Prague Riyadh Rome São Paulo Seoul Shanghai Singapore Sydney Tokyo Warsaw Washington, D.C.*Linda Widyati and Partners in association with Clifford Chance.

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© Clifford Chance 2014

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