Investors in Qatar have numerous choices when selecting the type of business entity they wish to incorporate. The choice is contingent on the number of hareholders/founders, the accessible capital and, in some cases, on the plans to expand said capital. The available business structures meet numerous business demands, from small legal entities to larger businesses that can also trade their stocks. The below is the different types of companies most commonly used in Qatar and supported by the Companies Law1 and the Ministerial Decree.
The Limited Liability Company (“LLC”) is the most popular option for incorporating a company in the State of Qatar. Incorporating in the form of LLC is allowed in nearly all segments of the economy. The liability of the shareholders is limited to the sum of their individual percentage of ownership in the
In Qatar an individual with a non-Qatari nationality, may invest only through the medium of a company incorporated in Qatar, in which one or more Qatari nationals or 100% Qatari national owned company, hold no less than 51% of the share capital. Foreign investors can therefore, not own more than 49%. Nevertheless, even though the law only permits the foreign shareholder to hold up to 49% of the shares, they can still have an alternative distribution of profits. This means that it is between the Local Qatari Partner and the Foreign Partner, to discuss the terms and conditions as to how the profits will be allocated between each other.
An LLC is recognised by virtue of Articles of Association (AoA), which sets forth its terms of governance and related matters. The AoA must be drawn up in Arabic, with or without a parallel English version and accordingly must be approved by the Ministry of Commerce and Industry (MoCI) and legalized before the Ministry of Justice.
An LLC does not have the capability to raise capital by public subscription and is not capable to issue transferable shares freely. Existing shareholders enjoy pre-emptive rights to buy and secure any shares presented for sale except if the right is explicitly renounced.