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Commerce Law

There are general rules for setting up and operating a company in Qatar. These are laid out clearly in the Commercial Companies Law No. 5 (2002). For example, a company must be Qatari owned; it must be headquartered in Qatar.

The company can take different forms depending on its size, relationship between participating entities, and desired structure – either singular, as part of a larger group, or within a holding company. Accepted types of companies allowed to operate in Qatar include:

  • Joint Company
  • Limited Partnership Company
  • Particular Partnership Company
  • Shareholding Company
  • Equities Partnership Company
  • Limited Liability Company

The Commercial Companies Law outlines all required documentation, procedures and conduct required of the company. In all matters involving written legal contracts, the language used must be Arabic and the Arabic version of a contract will always take precedence over the English translation.

Partnerships

In addition to the types of company mentioned above, there are a number of different commercial partnership arrangements that exist.

A partnership company comprises two or more partners who are jointly responsible for the liabilities of the company. All joint partners must be Qatari national citizens. Each partner possesses the power to conduct commercial business under the name of the company. However, no partner is allowed to practice on his/her own or another's account without first getting approval from the other company partner or partners.

Limited partners, on the other hand, are only liable on debts incurred by the company to the extent of their registered investment. They have no management authority.

An equities partnership company comprises two teams; one includes one or more partners jointly responsible for the debts of the company in all their assets; the other includes shareholders.

Establishment of a Shareholding Company

Companies formed through a shareholding arrangement must first be approved by the Ministry of Commerce and Industry prior to the company being established.

The basic criteria are as follows: the shareholding company's capital should be distributed to negotiable shares of equal value; the number of shareholders cannot be fewer than five; and all shareholders must be Qatari.

In addition, an elected board of directors will be responsible for managing the shareholding company. The number of board members should be between five and 11 members. Each board member can be elected more than once unless stipulated otherwise in the statute of the company. Each board member should not exceed a term of three years in office.

Foreign Ownership

Foreign business owners and investors will almost always form a private limited liability company (L.L.C.) to operate within Qatar. The company must have a minimum authorized share capital of QR200,000 and two shareholders and a maximum of 30 shareholders. Generally, foreign investors can own up to 49% of the share capital, while the other 51% must be held by one or more Qatari partners.

In some instances, the Minister of Economy and Commerce may grant permission for foreign investors’ shareholding to exceed 49% up to 100% within certain sectors (see list below) and provided the business (or project) is compatible with Qatar’s development plans. Other factors taken into consideration are whether the company (or project) adequately exploits available domestic raw materials, provides new products or establishes new technologies, and has the interests of national cadres at heart.

Basically, so long as the business is beneficial to Qatar and in the supported industries, a foreign investor or investors can maintain a controlling stake in the company.

Supported Industries

  • Agriculture
  • Industry
  • Health
  • Education
  • Tourism
  • Developing and exploitation of natural resources, energy and mining
  • Consulting services
  • Technical services
  • IT services

In addition, and as way of an incentive, the Ministry of Commerce and Industry may exempt foreign companies investing in the supported industries through the number of exemptions, including income tax for a period of 10 years, customs with respect to imported equipment and machinery required for setting up the business, and imported raw materials and semi-manufactured products required for production, which are not available in Qatar.