Summary ofLegal Regulations regarding the engagement of economic activities, and principal laws relating to business activities in Qatar.
Introduction
Qatar's economic structure has been heavily dependent on oil and gas and has reformed its policies to cope with the effect of declining oil prices, reassure and stimulate the private sector, and continue the efforts to intensify diversification, economy flexibility and liberalization.
The efforts were very successful and resulted in the establishment of many heavy industries such as, iron and steel, petrochemical industries and cement industries. In addition, the inauguration of Ras Laffan industrial city and Qatar Liquefied Natural Gas Company, helped Qatar embark on the gas era in record time.
Qatar has signed a number of agreements with several countries on economic, commercial and technical cooperation, joint venture investment protection and tax duplicity prevention in line with the state efforts to strengthen economic relations with the world and consequently attract foreign investments. The importance of these agreements is reflected in the legal guarantees they provide for the economic activities of national and foreign investors inside Qatar and abroad.
ESTABLISHMENTS OF COMPANIES IN QATAR
The Law No. (11) of the year 1981 regulating the commercial companies and hereinafter summary of the terms of establishment of companies in Qatar.
1. Partnership Company
A partnership company is formed of two or more persons under a specific title, assigned to practice commercial business, partners therein shall be jointly liable in all their assets for the company liabilities.
The memorandum of association of a partnership company shall be made and signed by all partners, otherwise it will be void. The article of association to contain all the items required by the commercial companies law.
The article of association shall be registered and any modification thereof must be recorded in the commercial register, a brief summary of the article of associations and any modification thereof must be published in any of the local newspaper at the company cost and expense.
A partner in the partnership company shall acquire the capacity of a merchant, bankruptcy of the company shall entail the bankruptcy of all partners. Management of the company is a right for all partners, unless memorandum or article of association thereof stipulates otherwise.
2. Partnership in Commendams Company (Joint Partnership)
Partnership in Commendams Company is composed of two categories of partners.
A. Simple partners, those who will manage the company, and will be jointly responsible for all its obligations in their own assets.
B. Sleeping partners, those are partners who subscribe in the company capital, without being liable for the company liabilities except to the extent of amount of money paid or to the extent of what they bind themselves to pay to the company.
Joint partners and limited partners shall have to be stated in the company's memorandum of association, and limited partners may not interfere in the company management otherwise they shall be jointly responsible for liabilities arising from their management.
3. Commandant Partnership by Share Company
This company is formed of one or more partners and stockholder partners the number of whom may not be less than ten.
The company shall not require the legal status except after completion of registration and publication procedure, and it may not assume its functions prior to that.
The management of partnership in shares company shall be entrusted to one or more joint partners, article of association of the company shall indicate names of those who are entrusted with the management and their authorities therein.
Partnership in share companies shall have general assembly formed of all partners- joint and stockholders - also shall have a supervisory council to supervise its activities.
4-The Limited Liability Company
The Limited Liability Company is composed of a number of persons not less than two and not exceeding thirty persons, and will not be allowed to increase its capital or borrow for its account through subscription, it may not issue shares or negotiable stocks.
The company shall not undertake insurance business, banking business, or to invest money on behalf of third parties. The capital of the company will not be less than QRs.200,000/- the commercial law regulates the incorporation of the company, its capital, its management, and expiry of the limited company.
5. Joint Stock Company
Joint Stock Company shall be formed of a number of persons who contribute therein in negotiable shares, they shall not be liable for the company liabilities except to the extent of the value of their shares.
Every joint stock company established in Qatar, shall have Qatar nationality, and all shareholders must be Qatari, non-Qatari may subscribe in capital in the following circumstances:
A. If the shareholders - partners belong to an Arab State on condition of reciprocity, according to agreements which are concluded in this respect.
B. Should need call for the investments of foreign capital or foreign expertise, provided that a license be obtained to this effect from Minister of Finance, Economy and Commerce.
The government and other public enterprises may establish one or more joint stock companies, alone or in association with one or more founders - national or foreigner - natural or legal persons, public or private persons without being subjected to the provisions of companies law, except to the extent which does not conflict with the agreements positions prevailing upon its incorporation and the provisions which the article of association stipulated.
The commercial companies law regulates the establishment, capital, membership, management, board of directors, the general assembly and the expiry and liquidation of the joint stock company.
6. Closed Stock Company
As an exception to the provisions of the joint stock company, and in companies other than those which have concession or monopoly, it is permissible to incorporate closed joint stock company which do not tender its stocks in public subscription, and the number of the founders must not be less than (5) founders. The article of association must contain the following declarations:
A. That the memorandum and article of associations are in conformity with the provisions of the companies law.
B. That the founders have subscribed with all the stocks and put its value at the company disposal with one of the approved banks.
C. The shares in kind have already been evaluated in accordance with the provisions of law.
D. That the founders have already appointed the required management body of the company.
7. Joint Venture Company
The joint venture company is formed of two or more persons to carry out commercial and civil business. It is a concealed company and does not apply against third party, nor enjoys legal status, and it is not subjected to the registration requiremen
Article of association of the joint venture company shall determine its objects, rights and obligations of the partners, method of distributions of profits and losses between them, process of management of the company and other basic elements.
Investment in Industrial Activity
Qatar adopted new policy aiming to develop the utilization of gas resources in this respect, new policies of economic and commercial liberalization aiming to stimulate and expand the involvement of foreign investments and national private sector in economic activities have been adopted.
Several steps have been taken, foremost, the issuance of new laws serving to attract foreign capitals and stimulate and support the role of private sector.
Qatar issued the Law No. 19 of 1995 to facilitate industrial licensing and unifies executive bodies responsible for granting incentives the most important of which include:-
A. Availability of data and information required by the investors.
B. Investment laws are stable and contain all guarantees required.
C. Exemption from customs duty charges on equipment, machinery, spare parts and raw materials.
D. Freedom to remit capital and revenues.
E. Providing water and electricity at subsidized rates.
F. Easy loan terms from Qatar Industrial Development Bank.
Qatar Industrial Development Bank
Qatar Industrial Development Bank was established in 1997 with a capital of QR.200 million. Its main objects are to stimulate national industries and secure long-range financing for projects particularly intended to satisfy the needs of local and neighboring markets.The bank carries out extensive studies in order to realize the best possible gains for both parties, in particular for the investor. In addition extends technical and financial advice, supplies raw materials and other requirements. The bank is planning to carry out a comprehensive survey and revaluation study of all local industrial and economic activity and sectors. It also works to organize symposia to gather foreign investors to meet with Qatari investors.
INVESTMENT OF NON-QATARI FUNDLaw No. (13)* of the year 2000 for organizing foreign capital investment in economic activity (An unofficial full-text translation)
Unless the text requires otherwise, the following words and phrases shall have the meaning stated against each thereof, for the purpose of executing this law:
The ministry: Shall mean the Ministry of Finance & Commerce.
The minister: Shall mean the Minister of Finance, Economy & Commerce.
Foreign investors: Non-Qatari natural persons or those concerned with investing their capital in one of the projects on which direct investment is permitted in accordance with the provisions of this law.
Foreign capital investment : What foreign investors offer to invest as of liquid money, or money in kind or property with cash value in Qatar including:
Cash transferred into the state through banks and other licensed financial institutions.
Imported material assets for the purpose of investment according to the provisions of this Law.
Profits, revenues and reserves resulting from investing the foreign capital in a project if the capital of this project was increased or if they were invested in one of the authorized projects according to the provisions of this Law.
Incorporeal rights such as licenses, patents and trademarks registered in the State.
The Foreign Investment: The invested foreign capital in one of the authorized projects in accordance to the provisions of this Law.
Investing the Foreign Capital
Article (2)
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Subject to the provisions of paragraph (3) of this Article, foreign investors may invest in all the sectors of the national economy provided that they have one or more Qatari partners whose share is not less than 51% of the capital, and provided that company is properly incorporated in accordance with the provisions of the Law.
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Nevertheless, the Minister may issue a decree allowing foreign investors' share to exceed 49% up to 100% of the project's capital, in the sectors of agriculture, industry, healthcare, education, tourism, exploitation and development of natural resources, energy or mining provided that these projects are compatible with the development plans in the State and taking into account preference of projects that achieve optimal exploitation of the available domestic raw materials, export industries or industries that provide new products or use modern technology, projects that settle globally well-known industries, and projects that take interest in national cadres and their rehabilitation.
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The foreign investments referred to in paragraphs (1) and (2) are not allowed to invest in the banking sector, insurance companies, commercial agencies and the purchase of real estate.
Article (3)
After consultation with the competent authorities, the Minister may authorize the foreign companies involved in business contracts in the State to execute these contracts if this would facilitate the performance of public service or utility.
Article (4)
For matters not dealt with under this Law, the provisions of the laws in force in the State pertaining to the concerned activity, shall be applied with regard to obtaining the necessary licenses and permits by the foreign investor to invest in any of the authorized activities.
Chapter Three
Investment Incentives
Article (5)
Required real estate may be leased to the foreign investor to establish his investment project, for a period not exceeding 50 years renewable.
Article (6)
The foreign investor may import whatever is needed to establish, operate, or expand his project in accordance with laws and procedures in force in the State.
Article (7)
The Ministry may:
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Exempt the foreign capital invested in sectors referred to in Article 2 of this Law from income tax for a period not exceeding 10 years starting from the date of operating the investment project.
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Exempt the foreign investment projects from customs with respect to the needed imported equipment and machinery for its establishment.
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Exempt the foreign investment projects in industry from customs with respect to imported raw materials and semi-manufactured products necessary for the production, which are not available in the domestic markets.
Article (8)
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The foreign investments shall not be subject, either directly or indirectly, to expropriation or any measure with similar effect, unless it is done in the public interest and in a non- discriminatory manner, and in return for a speedy and appropriate compensation in accordance with legal procedures and the general principle referred to in paragraph 2 of this Article.
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Compensation shall be equivalent to the real economic value of the expropriated investment at the time of expropriation or of its announcement. Such compensation shall be assessed on the basis of normal economic situation and prior to any threat of expropriation. The due compensation shall be paid without delay and shall enjoy free transfer. This compensation shall be subject to interest, calculated on the basis of the prevailing rate in the State until date of payment.
Article (9)
Foreign investors are free to make all transfers related to their investment, into and out of the country without any delay. These transfers include:
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Investment returns.
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Proceeds resulting from selling or liquidating the whole or part of the investment.
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Proceeds resulting from the settlement of investment disputes.
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Compensation referred to in Article 8 of this Law.
Transfers are effected in any convertible currency at the rates prevailing on the date of the transfer.
Article (10)
The foreign investor may transfer the ownership of his investment to another foreign or domestic investor or even relinquish his investment in favor of his domestic partner in case of partnership, provided that this transfer is made in accordance with the laws and procedures in force.
In these cases, the investment will still be governed by the provisions of this Law, provided that the new investor continues to operate the investment, and that he succeeds the former investor with respect to rights and obligations.
Article (11)
Agreement may be reached on the settlement of any dispute between the foreign investor and others by means of domestic or international arbitration panels.
Chapter Four
General Provisions
Article (12)
The provisions of this Law shall not apply to:
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Companies and individuals assigned by the State to extract, exploit, or manage natural resources by virtue of a particular concession or agreement except to the extent it does not contradict the provisions of the special agreement or concession contract.
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Companies incorporated by the Government, or in which the Government participates, and other public corporations and associations, in participation with foreign investors in accordance with Article (90) of the Law on Commercial Companies.
Article (13)
The foreign investor must preserve the safety of the environment against pollution, abide by all laws, regulations, and instructions relating to public health and security. Moreover, the foreign investor must not take any action that jeopardizes the public policy and morality of the State.
Article (14)
The provisions of this Law shall not prejudice advantages and tax exemptions and other guarantees and incentives, enjoyed by the existing companies and projects at the date of entry into force of this Law. These companies and projects shall continue to enjoy these advantages, exemptions, guarantees and incentives, in accordance with the legislation, agreements and contracts derived there form.
Chapter Five
Penalties and Final provisions
Article (15)
When the foreign investor violates any provision of this Law, the Ministry shall advice the foreign investor of the need to rectify the violation within three months from the date of notification.
Article (16)
Without prejudice to any more severe penalty stipulated in other Laws, any foreigner engaging in an economic activity in contravention to this Law, shall be liable to pay a fine of not less than fifty thousand Qatari Riyals and not more than one hundred thousand Qatari Riyals. Furthermore, any Qatari national partaking in such activity shall be subject to the same fine.
Article (17)
The Ministry's technical staff delegated by the Minister shall have the capacity of legal seizure officers to investigate and identify the crimes committed in violation of provisions of this Law and its implementing decisions. They have, in this respect, the right of access to premises and projects subject to this Law and to inspect and examine their documents and records.
Article (18)
The Law Decree No. (25) of 1990 referred to shall be abolished and any provision in contradiction to this Law shall also be cancelled.
Article (19)
The Minister shall issue all regulations and decisions necessary for the implementation of this Law including the determination of fees.
Article (20)
All parties concerned, each within its own competence, shall execute this Law, and it will enter into force upon its publication in the Official Gazette.
LAW NO. (4) OF THE YEAR 1986
REGULATING THE COMMERCIAL AGENTS BUSINESS
Article (1)
In the implementation of the Law, everyone who is solely licensed - but no others -to distribute commodities and products, display for sale or circulation, or discharge certain services within the scope of Agency on behalf of his Principal, against profit or commission shall be considered a Commercial Agent.
Article (2)
Agency contract shall be affirmed in writing and must comprise the following statements:
(a) Name of Agent and Principal and nationality of either of them.
(b) Commodities, products and services which the agency includes.
(c) Rights and obligations of each of the Agent and the Principal: nature of liabilities of the Principal towards the Agent within the scope of representation thereof: also stating percentage of commission or amount of profit which the Agent earns against his Agency.
(d) Business territory of the Agent.
(e) Terms of Agency, should the period be limited.
(f) Trade name of the commodity.
(g) Obligations of the Agent and Principal to provide spare parts in an adequate manner, and the obligation by the Agent to carry out maintenance required for the repair of cars, machines, engines and equipment, or electrical and electronic appliances covered by the Commercial Agency.
(h) Obligation of either of the Principal and the Agent to compensate the other for any detriment which he sustains by reason of dismissal or relinquishment from Agency in an inappropriate time or without an acceptable excuse.
(i) Any other conditions agreed upon between the Agent and the Assignor, which do not contradict with the provisions of this Law.
Article (3)
The Principal may not seek services assistance of more than one Agent in a specified territory of activity for the same commercial business included in the Agency.
No commercial agency business may be allowed to be practiced for a Principal who has in the same territory a commercial agent executing the same business.
Commercial Agent shall be entitled to receive a profit or commission for transactions concluded by the Principal himself or through others in the territory designated for the agents activity, even if such transactions are not concluded as a result of the agent's efforts.
Article (5)
Neither of the contracting parties may not be allowed to terminate the agency contract of an indefinite period, unless one of the parties committed a fault which justifies termination of the contract.
Article (6)
The Principal shall be obliged to compensate the commercial agent for the damage incurred thereby by reason of dismissing him in an inappropriate time or without acceptable excuse.
The commercial agent may, on the expiry of the agency term; claim compensation to be estimated by the court - even though there was an agreement contradictory to that - should his activeness have resulted discernible success in promoting the Principal products or increase the number of his customer, but could not acquire the profit attributable from that success, due to non-acceptance of his Principal to renew the agency contract without strong reason justifying that.
Article (7)
The Commercial Agent shall be obliged to compensate the Principal for the damage incurred thereby; by reason of relinquishing from the agency in an inappropriate time or without an acceptable excuse.
Article (8)
Subject to the provision of chapter four of Law No. (3) of the year 1985, referred to, concerning records of registration of those who practice certain business, an applicant for registration in Commercial Agent record, must enclose with his application which he will submit to the Ministry of Economy and Commerce, a copy of agency contract along with Arabic translation thereof:
Article (9)
The Principal may not be allowed to withdraw the agency from the Commercial Agent and grant it to another merchant, except in the following circumstances:
1. If the specified term of agency has expired.
2. If the Commercial Agent and the Principal agreed to cancel the agency.
* If substantial reasons exist compelling the Principal to cancel the agency and such reasons are approved by the Ministry of Economy and Commerce.
The name of the new agent shall be registered in Commercial Agent records, except in one of the former circumstances.
Should the Principal withdraw the agency from his part in circumstance other than those stipulated in the former article, Minister of Economy and Commerce may decide to ban the importation of commodity subject to the agency.
Article (11)
The agent to whom the commercial agency has been transferred shall be obliged to purchase from the first agent whatever commodities comprised by the agency available thereof, at its market price. The new agent and the principal shall be jointly liable for all obligations undertaken by the first agent to third parties, arising from the agency contract.
Article (12)
The Commercial Agents should keep available, in all circumstances, enough spare parts for consumers and maintenance required for repairing cars, engines, machineries, equipment or electric and electronic devices included in the agency.
Without prejudice to the provisions of the articles of civil and commercial law, commercial agents shall be obliged to compensate owner of machineries and equipments which its value exceed OR 15,000 for no availability of spare parts thereof for a period exceeding 30 days; compensation for a period in excess shall be estimated on the basis of rental charge for such machineries and equipments.
Article (13)
No one other than the commercial agent shall be allowed to import commodities comprised in the agency unless after obtaining a special permission to do so from the Import Section, Ministry of Economy and Commerce, pursuant to an application to be submitted by the person concerned, to the aforementioned section.
Article (14)
The granting of import permit referred to in the former article, is provided with fulfillment of one of the following conditions:
A. That the commercial agent who practice wholesale business refrains from selling commodities comprised in the agency to the merchants, or the commercial agent who practice wholesale and retail business refrain from selling commodities to the merchants or consumers.
B. That the commercial agent fixes a price sale for the commodity exceed the price known in trade custom in an unacceptable manner.
C. That the agent commits a fault or default result to non-availability of the principal commodity in the market, or non-availability of spare parts of maintenance required thereof.
The Import Section, Ministry of Economy and Commerce, shall ascertain the fulfillment of any of the former conditions, by all means before granting the import permit to someone other than the agent.
Article (15)
On expiry of the Agency for any reason, the Commercial Agent or his legal inheritors in case of his death, must submit a legitimate application along with supporting documents thereof, to the Ministry of Economy and Commerce to cancel the name of the Agent from the record within 30 days from the date of ascertaining the reason of the expiry of contract.
PENALTIES AND FINAL PROVISIONS
Article (16)
Without prejudice to any more severe punishment stipulated in any other law, everyone who violates provisions of Articles (12) paragraph (1), 13 and 15, shall be punished with imprisonment for a period not exceeding six months and with a fine not more than OR 10,000 or either punishment.
In the event of recurrence, the penalty shall be doubled, in addition to the possibility of ruling the closure of places whereby the agency conducts its business.
Article (17)
In case of judgment with conviction for violating the provision of Article 13, the court may, upon request by the commercial agent, order delivery of commodity in possession of the importer to the agent against payment of commodities cost price to violator.
Article (18)
Without prejudice to any more severe punishment stipulated in other law, every person who had mentioned, contrary to the true fact, in correspondence or publication related to his commercial business, or any other means of publication that he is a commercial agent, shall be punished with imprisonment for a period not exceeding three months and with a fine not exceeding QR 5,000 or either punishment.
Article (19)
Minister of Economy and Commerce shall issue bills and decisions necessary for the implementation of this Law.
Article (20)
Employees of the Ministry of Economy and Commerce delegated by the Minister shall have the right to legal seizure officers in seizing and affirming offences perpetrated in contradiction with provisions of Article 12, paragraph (1), 13, 15 and 18 of this Law; they have in this respect the right to access into commercial establishment and installations, inspection and perusal of its documentations and records.
Article (21)
All parties concerned, each within its own competence, shall execute this law and will come into force after 90 days from its publication in the official Gazette
