Page 29

Legal Sales Legal

to foreign investors are Limited Liability Companies (LLCs), Article 68 Companies, Single Shareholder or Person Companies.

An LLC To set up an LLC, a foreign investor has to fulfil the following conditions: A. must have minimum capital of QAR 200,000; B. must have at least 51% Qatari ownership unless an exemption is obtained; C. must have profit shares that do not necessarily have to reflect individual shareholdings; D. 10% of each financial year’s net profits must be kept within an LLC until the cumulative reserve stands at 50% of the share capital; E. may not raise capital by public

Emma Higham

subscription or issue freely transferable shares or bonds; F. shares may only be transferred after they have first been offered to the other shareholders by way of pre-emption unless such rights are waived; and G. may not carry out banking or insurance business or provide investment services to third parties.

The Foreign Investment Law provides that a foreigner may own 100% of an Single Shareholder or Person Company (SPC) in one of a number of market sectors, being agriculture, industry, health, education, tourism, the development of natural resources, energy or mining, consultancy and technical services, information technology, culture, sport and recreation/ entertainment services and distribution services, subject to approval by the Minister of Business & Trade (Minister); such permission is not granted frequently.

Article 68 Company The characteristics include: A. formed between an investor, which may be foreign, and the Government or a company in which the Government holds shares in the share capital of a company; B. the non-Qatari investor’s share of the company can be greater than 51% subject to Council of Ministers’ approval; C. corporate structure is of a “Qatari Shareholding Company with Government Participation”; and D. falls outside the Foreign Investment Law and, to a certain extent, the Commercial Companies Law. Single Shareholder or Person Company (SPC) The Foreign Investment Law provides that a foreigner may own 100% of an Single Shareholder or Person Company (SPC) in one of a number of market sectors, being agriculture, industry, health, education, tourism, the development of natural resources, energy or mining, consultancy and technical services, information technology, culture, sport and recreation/ entertainment services and distribution services, subject to approval by the Minister of Business & Trade (Minister); such permission is not granted frequently. Characteristics include: A. a minimum capital of QR 200,000; the Ministry has indicated that it will prioritise SPC applications if the

share capital of the company is in excess of the minimum and where the company’s activities will add value to the Qatar market; and B. subject to the laws relating to LLCs.

Branch A Branch or a contracting division of a foreign company may be registered in Qatar at the discretion of the Minister. Branches are contract specific and registration will only be given for the duration of the contract. A special regime applies to the branches of foreign engineering consultancy firms.

Commercial Agency Instead of establishing a presence in Qatar, a foreigner can appoint a 100% Qatari entity or individual agent to market and sell goods within Qatar; any provision of services by that Qatari agent should be ancillary to such marketing and selling. Exclusive agencies must be registered and are governed by Qatari agency law. Under a registered agency, commission (up to 5%) is payable on all sales of the products within the territory even if the sales are not a result of the activities of the agent. It is difficult to terminate a registered agency. Compensation is payable upon the termination of the agency, including upon the expiry of a fixed term agency. Similar rules apply to arrangements which do not call themselves agencies, but which have the same effect.

February 2012

29

Private Sector Qatar - Feb2012  

English version - February 2012

Advertisement