ESTABLISHING A BUSINESS PRESENCE IN QATAR - K&L Gates
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ESTABLISHING A BUSINESS PRESENCE IN QATAR
This guide provides an overview of the legal and regulatory issues relating to types of businesses. Only banking, finance,
the establishment of a business presence in the State of Qatar. It describes the insurance, and other related businesses can
be formed within the QFC; and the QSTP
differences between establishing in the State, the Qatar Financial Centre and the is limited to businesses involved mainly in
Qatar Science & Technology Park, and compares some of the more commonly research and development, technology,
used establishment vehicles. education, training, and other related
activities. Other types of businesses must,
Qatar’s economy is one of the fastest growing for its business, that all legal requirements therefore, generally be established under the
in the world. Its ambitious National Vision are met, and that it adequately protects its Commercial Companies Law and, as such,
2030 provides for substantial investment of commercial interests. they are subject to the ownership restrictions
its wealth in four major areas: human, social, of Qatar’s Foreign Investment Law (Law No.
economic, and environmental development. Foreign Investment in Qatar 13 of 2000, as amended).
The objective is to create a competitive and Businesses can be established in Qatar The Foreign Investment Law only permits
diversified economy and a high standard of under three different legal regimes: foreign investment in the national economy
living for its people. Qatar’s development has with a partner in Qatar who must normally
• The Commercial Companies Law
now been accelerated as a consequence of own at least 51 percent of the business.
(Law No. 11 of 2015, as amended)
its successful bid to host the FIFA World Cup This majority ownership requirement can,
in 2022. • The Qatar Financial Centre (QFC) however, be waived in certain specific
Companies Regulations instances set out in the law.
Because of the rapid growth of its economy
and the focus on diversification, international • The Qatar Science & Technology Park Foreign investment is further restricted in
businesses are increasingly seeking to (QSTP) Free Zone Regulations the following instances:
establish a presence in Qatar. This guide In addition, foreign businesses can operate • Foreign investors are not permitted
is intended to give potential investors a in Qatar through a branch, a commercial to invest in commercial agencies or
brief overview of the issues that a foreign agent, or as a representative office in the real estate, although exemptions are
investor should consider when looking to do limited circumstances described below. sometimes granted on a case by
business in Qatar. A business considering
Companies established under the QFC case basis.
establishing a presence in Qatar should
consult its legal and tax advisors to ensure and QSTP regimes can be 100 percent • Investment in the banking and
that the appropriate structure is chosen owned by a foreign investor. However, insurance industry can only be
both regimes are available only to certain made with the approval of the
Council of Ministers.
• No more than 25 percent of the floated
share capital of a company listed on
Qatar’s development has accelerated as a consequence the Qatar Exchange may be owned by
foreigners unless approval has been
of its successful bid to host the FIFA World Cup in 2022. granted for a higher percentage by the
Council of Ministers.
The Investment Vehicle Single Person Company
Foreign investors who wish to conduct This type of company can be used by
business in Qatar on a regular basis must investors who have obtained a waiver to
establish a legal presence within Qatar the 49 percent ownership cap because, for
through one of the following means: example, they are investing in one of the
priority sectors referred to in the Foreign
• Incorporating a company.
Investment Law. Minimum paid up capital
• Establishing a branch office. is QR 200,000.
• Entering into a commercial agency
relationship with a local agent. Shareholding Company
• Registering a trade Shareholding companies can be established
representative office. with a minimum of five shareholders and
may be either privately or publicly held.
• Incorporating or registering through
Privately held companies require a minimum
either the Qatar Financial Centre or
paid-up capital of QR 2 million. Publicly
the Qatar Science & Technology Park.
held companies, which are typically listed
The type of establishment that will most on the Qatar Exchange, require a minimum
Qatar pursuant to the Commercial Agents
closely match the commercial objectives paid-up capital of QR 10 million. The
Law (Law No. 8 of 2002, as amended).
of the entrant will depend on a number of foreign investment restrictions applicable
This law, which permits commercial agency
factors, including, most importantly, the to both types of companies apply, that is a
contracts to be registered, provides the
nature of the business and the commercial maximum foreign ownership of 49 percent
commercial agent with various protections,
objectives of the business owners. for privately held companies and 25 percent
including the exclusive right to import the
for listed companies, unless an exemption
goods that are subject to the contract,
has been granted.
Company Structures the right to receive commission on all
The Commercial Companies Law also sales of the goods within the designated
The Commercial Companies Law provides
permits general and limited partnerships, territory even if the sales are not due to the
for businesses to be established in Qatar in
unincorporated joint ventures, and holding activities of the agent, and compensation
a variety of corporate forms. The ones most
companies to be formed in Qatar, but these for termination of the agency unless for
commonly used by foreign investors are
types of entities may not be appropriate for justifiable cause.
the following:
foreign investment in most instances.
Limited Liability Company Representative Offices
The LLC is the most commonly used corp-
Branch Offices Currently, a foreign company can register
orate entity because it can be formed rela- The Foreign Investment Law provides for a representative office in Qatar in order to
tively quickly and requires a relatively small the issuance of a branch license to foreign market and promote its business in Qatar
amount of capitalisation (QR 200,000). companies for “government qualified” pursuant to Decision No. 142 of 2006 issued
Notwithstanding the 49 percent cap on projects pursuant to contracts with the by the Ministry of Business and Trade.
foreign ownership, which will apply unless government or a quasi-government entity. Although the representative office may be
an exemption is granted, the law currently A local partner is not needed for the conduct registered in the Commercial Registry and
permits LLC formation documents to provide of such projects. These licenses are limited employ staff in its own name, it is akin to
for a disproportionate distribution of profits to the conduct of business in Qatar for the a “shop window” and is not permitted to
(and losses). Other key features of the specific project and they expire once the engage in selling or entering into contracts
LLC are: contract is completed. in Qatar.
• Ten percent of the net annual profit Other types of companies (for example,
must be retained by the company until engineering and auditing firms) are also Qatar Financial Centre
the legal reserve capital requirement is permitted to register branches in Qatar
although the requirements are quite strict The QFC is established by the Government
met (50 percent of share capital).
and need to be examined carefully before of Qatar to provide a platform for investment
• The company may not raise additional in Qatar and in other expanding economies
attempting to proceed.
capital by public subscription and it in the region with a particular focus on
may not issue freely transferable shares financial services, asset management,
or bonds. Commercial Agencies insurance and reinsurance. It is intended
• Existing shareholders enjoy pre-emptive Foreign businesses that wish to sell their to create a world class legal and business
rights in respect of any shares offered goods in Qatar but do not wish to establish a infrastructure for firms licensed and
for sale, unless that right has been presence in the country may appoint a local authorised to do business by the QFC.
waived by the other shareholders. agent to market their goods and services inABOUT K&L GATES of technology. Contributing activities include
applied research, development and testing
Our lawyers based in Qatar advise international clients doing business in the country and in the of products and services, and technology-
wider Middle East and North Africa region, as well as clients in Qatar both domestically and related training, which should represent
abroad, with particular emphasis on projects, energy and infrastructure (including transporta- an investment in the company’s corporate
tion), banking and finance (including Islamic finance), telecoms, media and technology, real technology portfolio.
estate and construction, intellectual property, and dispute resolution.
The QSTP allows foreign entities to incor-
They have considerable experience and industry connections in Doha and internationally and can porate within it or to set up a branch office.
leverage the proven capabilities of K&L Gates throughout our network of offices in the Middle Both registered branches and QSTP compa-
East, the United States, Europe, Asia, and Latin America to provide our clients with high quality, nies require a license. The QSTP provides
fully integrated and seamless service wherever they happen to be doing business. three tiers of license:
• Standard License, which is issued
to businesses that incorporate in the
The QFC is operated by the Qatar Financial licensed, including limited liability compa- free zone as a QSTP LLC or register
Centre Authority (QFCA) which provides nies, general and limited partnerships, and a branch office. The QSTP LLC must
administrative functions for the QFC and protected cell companies. have at least two shareholders and
for the firms licensed within it. The Qatar a minimum capital of QR 200,000.
All QFC licensed firms are subject to
Financial Centre Regulatory Authority Holders of a standard license are
oversight by and reporting to the QFCA and,
(QFCRA) serves as the independent entitled to all of the free zone benefits.
in the case of firms conducting regulated
regulator of the QFC, with power to • Restricted License, which is issued
activities, by and to the QFCRA. All firms
authorise, supervise, and discipline to individuals and business entities
are subject to the QFC’s strict anti-money
QFC licensed firms. There is also a QFC that do not qualify for a Standard
laundering regime and QFCRA regulated
Companies Registration Office (CRO) which License. The free zone benefits are
firms are subject to the QFCRA’s financial
registers firms established within the QFC. limited and granted at the discretion
services regulatory regime which is based on
Organisations that conduct activities that international standards. of QSTP management.
are commonly recognised as constituting • Service License, which is issued to
financial services, or activities in support of
financial services business, can be estab-
Qatar Science & entities providing services to the QSTP.
Holders of this type of license are not
lished within the QFC with 100 percent Technology Park entitled to any of the free zone benefits.
foreign ownership. The types of activities The QSTP is a science and technology free
that can be conducted by QFC licensed zone located in the Education City. It is a
firms (referred to as “permitted activities”) part of the Qatar Foundation and is intended
Finally
are divided into two categories. They are: to be a home for technology based compa- The structure to be used by a business
• Regulated activities, which are those nies from around the world. Its location and seeking to establish a presence in Qatar
undertaken by financial and insurance status as a free zone provide companies is dependant upon a number of legal,
firms for which pre-authorisation by with a number of incentives to establish licensing and tax considerations, and upon
the QFCRA is required and which are a presence in the QSTP. These incentives the level and location of the business that is
subject to close ongoing supervision. include 100 percent foreign ownership, no likely to be transacted in the region. In addi-
tax, the ability to trade directly in the Qatar tion to the legal considerations described in
• Non-regulated activities, which are
economy, duty-free import of goods and this brief overview, businesses considering
those undertaken by firms such as
services, unrestricted repatriation of capital establishing a presence in Qatar should
legal, accounting, audit and tax firms
and profits, and close access to premier also discuss all issues relating to import,
for which no QFCRA authorisation
universities at Qatar Foundation. tax, real estate, procurement, immigration,
is required.
employment, intellectual property, dispute
Companies must meet certain criteria before
Entities wishing to conduct permitted resolution, anti-money laundering, and local
they can incorporate or register in the QSTP.
activities within the QFC can do so by either customs with their legal and tax advisors.
As a science park, the focus of the QSTP
incorporating a company or partnership We are happy to provide more specific
is research, design and training. Therefore,
within the QFC or by registering a branch advice on request.
a majority of a company’s activities in the
of a non-QFC entity with the CRO. The QFC
QSTP must contribute to the advancement
permits various types of legal entities to be
Learn more about our Qatar business practice at klgates.com.
Contact:
Amjad Hussain Pawel Chudzicki
Partner, Doha Partner, Doha
+974 4424 6119 +974 4424 6108
16835
amjad.hussain@klgates.com pawel.chudzicki@klgates.comAnchorage Austin Beijing Berlin Boston Brisbane Brussels Charleston Charlotte Chicago Dallas Doha Dubai Fort Worth Frankfurt Harrisburg Hong Kong Houston London Los Angeles Melbourne Miami Milan Munich Newark New York Orange County Palo Alto Paris Perth Pittsburgh Portland Raleigh Research Triangle Park San Francisco São Paulo Seattle Seoul Shanghai Singapore Sydney Taipei Tokyo Warsaw Washington, D.C. Wilmington K&L Gates comprises approximately 2,000 lawyers globally who practice in fully integrated offices located on five continents. The firm represents leading multinational corporations, growth and middle-market companies, capital markets participants and entrepreneurs in every major industry group as well as public sector entities, educational institutions, philanthropic organizations and individuals. For more information about K&L Gates or its locations, practices and registrations, visit klgates.com. This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. ©2017 K&L Gates LLP. All Rights Reserved.
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