Sign in Register
Posted On: 28 August 2016 11:30 am
Updated On: 12 November 2020 02:16 pm

Qatar's new commercial company law - Capital requirements change

Khalifa Al Haroon
Khalifa Al Haroon
Your friendly neighborhood Qatari
Discuss here!
Start a discussion
1433087427_QBIC Building_high res

We thought that you'd find this interesting since it will affect startups.

His Highness Sheikh Tamim Bin Hamad Al-Thani issued the new Commercial Companies Law No. 11 of 2015 (New Companies Law) on 16 June 2015. The New Companies Law was published in the Official Gazette on 7 July 2015 and took effect on 6 August 2015. The New Companies Law repeals Law No. 5 of 2002 (Old Companies Law) including any decisions made by the Minister of Economy and Commerce (Minister) to implement it. However, until the Minister issues the new decisions, the current decisions will remain in effect to the extent that they do not contradict the provisions of the New Companies Law. In this article we discuss some of the material amendments introduced by the New Companies Law and consider the effect they may have on the entities currently registered with the Ministry of Economy and Commerce (MEC) and those to be registered in the future.

General Comments

  • There has been a general 'tightening' of the timelines to complete the various registration processes. Existing time periods have been reduced, materially in some instances, and some new time periods have been introduced, e.g. an application to register a limited liability company (LLC) must be considered and a response issued by the MEC within 15 days from the date of submission.
  • References to the Qatar Financial Markets Authority (QFMA), its rules and regulations and its supervisory obligations to public shareholding companies listed on the Qatar Exchange, appear in the New Companies Law.
  • The New Companies Law requires publications to be made in 2 local newspapers one of which must be published in Arabic. In addition entities are directed under the New Companies Law to make publications available on their websites if they have them, such as the publication of the memorandum and articles of association of public shareholding companies.

Compliance with the New Companies Law

Entities/individuals subject to the New Companies Law must comply with its provisions within 6 months of the law taking effect. The Minister has discretion to extend this initial 6 months for one or more similar periods.

Registration Process

The New Companies Law states that the Minister shall issue new decisions to regulate the registration process, including the introduction of a "one stop shop" system. Until the new decisions have been issued the impact on the process and the time frame for registering companies and other entities cannot be quantified.

Limited Liability Companies

  • An LLC can now be established by a single person owning the entire share capital of an LLC. Under the Old Companies Law the minimum number of shareholders for an LLC was 2. This replaces the 'Single Person Company' regime provided for by the Old Companies Law.
  • Under the Old Companies Law the minimum share capital of an LLC was QAR200,000 divided into equal shares, the value of each not to be less than QAR10. Under the New Companies Law the shareholders of an LLC can determine the share capital of an LLC.
  • Shareholders holding 20% of the share capital may now request that an LLC's managers convene a shareholders' general assembly meeting. Under the Old Companies Law the requirement was 25%. An LLC's appointed auditors can still, as before, request that a meeting is convened.

Public Shareholding Companies

  • Companies registered where the Qatar Government or a government entity owns not less than 51% of the share capital are not exempt from the provisions of the New Companies Law as they were under the Old Companies Law, i.e. the old Article 68 exemption regime will no longer exist save for their exemption from having a minimum of 5 promoters on registration.
  • The New Companies Law reduces the basis on which directors' remuneration is calculated from 10% of adjusted net profit to 5%.
  • If a public shareholding company has been established in contravention of the provisions of the New Companies Law, any concerned party may, within 6 months of its establishment, give notice to the company to rectify its status within a one month period failing which the concerned party may, after 6 months, request that the company is confirmed invalidly registered and that it is liquidated. Under the Old Companies Law a concerned party had 5 years from establishment in which to given a company notice.
  • The New Companies Law has introduced a new method of reducing the share capital of a public shareholding company, being a reduction of the nominal value of the shares

There are various matters provided for by the New Companies Law on which the Old Companies Law was silent:

  • members of the board of directors of a public shareholding company are now liable for “gross mistake” when undertaking their duties.
  • a public shareholding company may, after obtaining the approval of the shareholders' general assembly, now issue tradable Islamic Sukuk.
  • the shareholders of a public shareholding company may now waive their pre-emption rights in relation to new share issues with the approval of a shareholders' resolution representing 75% of the share capital of the company passed at an extraordinary general assembly meeting.

Private Shareholding Companies

  • The Qatar Government, government entities or companies in which the State of Qatar owns not less than 51% of its share capital, may after obtaining the approval of the Council of Ministers, establish a private shareholding company with one or more national or foreign shareholders. Such private shareholding companies will be exempt from the provisions of the New Companies Law.
  • Apart from companies that are under the supervision of Qatar Central Bank, the Minster shall be responsible for issuing decisions regulating the corporate governance of private shareholding companies.
  • Private institutions for public benefit may establish private shareholding companies by obtaining the approval of the Council of Ministers.


In the past, a company would have been dissolved if a share transfer resulted in the number of shareholders being less than the minimum number prescribed by law. Under the New Companies Law, the company shall not be dissolved if such a reduction occurs provided the company is converted to a new company in which the correct number of shareholders exists within 6 months of such transfer or if the number of shareholders is brought to the minimum.

Period of Limitation

The period of limitation for certain claims has been reduced from 5 years to 3 years.