Among the Qatari Legislator’s well-established approach to continuous efforts to keep the laws and regulations of the State of Qatar modern, in line with international best practices and up-to-date in a manner that enhances the continuous development aimed by the state to achieve the Qatar 2030 vision and be ready to host macro – universal events taking place in one of the smallest countries in the region, the Qatari legislator introduced new amendments (law number 8 of 2021 modifying the law issue 11 of 2015 on commercial companies).
The above changes entered into force on 7and of September 2021, as published in the official journal of 8and of August 2021.
After considering the amendments in detail, we will divide them into two parts, the first part is the part where the legislator amended the current articles existing in the Commercial Companies Law (CCL), and the second part is where the legislator added new articles to the current CCL. On a brief statistical explanation, the changes added 10 new items and changed 28 items, which is about 11% of the CCL, a calculation that can show the significance of these new changes.
The amendments revolved around different subjects, broadening the scope of some existing articles, regulating new subjects and giving more powers to the Autorité des marchés financiers (AQFM), these and many others will be discussed in depth in the following article.
Part One: Changes to Existing Articles
The first article of the amendments states that the expression “Minister of Commerce and Industry” is replaced by the expression “Minister of Economy and Commerce” wherever it is mentioned in the CCL, in addition to the replacement of Expressions such as “Ministry of Trade and Industry” “auditor” becomes “Ministry of Economy and Trade” and “account controller”.
The second article of the amendments added 4 new terms to the first article of the CCL, the 4 new terms are imported from the AQFMA Code of Governance for companies and legal persons listed on the main market and are defined in this article as following :
- Custodian: The company approved by the Authority to carry out the functions of deposit and registration for all matters relating to transferable securities traded on the financial markets (QCSD)
- senior managers: Chief Executive Officer (CEO) and other executive managers who report directly to him, including the heads of the Company’s internal control units.
- Subsidiary: According to Law number 13 of 2012, controlled companies that are owned by at least (50%) in shares or participations by a parent company.
- Minority: Shareholders who represent a class of shareholders that does not control the Company so that they cannot influence the Company.
Article 18 has been amended to open the door to the listing of private joint-stock companies on the financial market. In addition, the AQFM assumes responsibility for publishing relevant governance rules and regulations for all listed companies. Article 76 has been amended to raise the limit of shares authorized for the founders to subscribe from 60% to 70% of the company’s share capital. Furthermore, and in parallel with other amendments allowing companies with private participation to be listed on the financial market, the word “public” has been deleted in order to broaden the scope of application of Article 96 to companies with private involvement. In addition to the previous amendments, Article 96 introduces one of the roles of the depositary mentioned in Article 1 as an alternative to the term bank in the deposit of the amount of share capital held by the shareholder. In addition, it specifies that at least one third of the members of the board must be independent and that there is a majority of members who do not receive any payment from the company, therefore the board must include seats for the minority and seats representing the workers of the company. . Finally, the article stipulates that the governance rules and regulations issued by the AQFQ or the QCB are binding in terms of integrity and independence.
Sections 103 and 108 both introduce the new term ‘general management’, adding to its powers; the general management can obtain the approval of the general meeting in the event that one of the members exercises any activity competing with the company or negotiates for himself or for his own account or for the account of others in the one of the divisions of the activities practiced by the company.
Articles 109, 121 and 122 allow the presidents, directors and managers of private joint-stock companies to associate themselves with companies competing with their company, subject to the authorization of the general meeting.
The amending law also requires chairmen, board members and senior management to disclose to the board any direct or indirect interest in the company’s transactions. If the transactions are equal to or greater than 10% of the market value of the company or of the value of its net assets, if the latter is lower, and unless the articles of association provide for a lower proportion, the prior authorization of the general meeting is required.
In terms of compensation, board members of private joint-stock companies can receive a lump sum payment if the companies fail to make a profit, according to the amending law. However, this must be specified in the articles of association and the prior authorization of the general meeting is required. The ministry may issue a directive establishing a ceiling for these payments.
In addition, article 133 stipulates that notices of general meetings of public limited companies must now be sent to shareholders 21 days before the meeting (instead of 15 days earlier) and that publication in two daily newspapers is no longer required. However, invitations must be published on the Qatar Exchange website and the company’s website (if applicable), as well as published in a daily newspaper or emailed to shareholders in any way confirming knowledge of the meeting .
General meetings can also be held using online tools. Voting can also be done electronically. The ministry will publish guidelines governing electronic communications. Shareholders who control 5% of the capital can now add items to the agenda of the general meeting in accordance with the amending law. Previously, the inclusion of new items on the agenda was only authorized for shareholders holding 10% of the capital; an invitation to hold a general meeting was linked to serious grounds for the request which must be determined by the applicant and approved by the board of directors; this condition was deleted by the legislator, in particular in article 124 paragraph 2. Moreover, article 137 in its 3rd paragraph prohibits the transfer of the registered office of the company, the former condition of changing the main object of the company has also been removed.
Article 160 now includes both public and private stock companies. In addition, Article 184 obliges the company to publish a semi-annual financial report in Arabic language and on the company’s website after being reviewed by the auditor (legal accountant), new shares are always excluded from this publication.
Sections 264 and 288 both came with alternating requested ownership ratios, as 264 is changed to be 50% instead of 51% and Section 288 – in the case of an acquisition – is now greater than 50 % instead of 51%
Article 323 clearly clarifies the competence of the AFQM by conferring on it expanded powers with a view to regulating and organizing the field. Additionally, Section 324 sets out the penalties and actions that will be taken for violations of this law in what can be called an upgrade in line with the new amendments. Finally, article 330 in its first article reduced the requested ration to 10% instead of 20%.
Part two: new items introduced.
10 new articles have been introduced to the CCL, the first is article 18 (reiterated) which has been modified in order to adapt to the authorization of companies with private participation to be listed on the financial market.
Article 18, repeated, revolves around CCL’s compliance with the AML/CTF law which provides that the Minister of Economy and Trade (the “Minister”) will make regulatory decisions to meet the criteria for combating money laundering and terrorist financing from Qatar. Law. The regulatory decisions will establish the records and information that companies must keep and how these records must be provided to the Ministry of Trade and Industry (the “Ministry”).
Article 98 (repeated) stipulates and identifies the integrity of the board of directors and the conditions to be met to guarantee its integrity, while article 107 (repeated) obliges the board to constitute an audit committee in accordance with the AQFM law.
Article 161 (repeated), 265 2n/a paragraph and 329 2n/a paragraph, state that the shareholding used to identify a holding company has been changed under the amending law from “51%” to “more than 50%”. A holding company is now defined as a limited liability company or a joint-stock company that owns more than 50% of its controlled subsidiaries. The amending law provides that the subsidiaries of a holding company cannot hold shares in this holding company.
To conclude, modifications of this nature are an essential step for the developing market of Qatar, while the modifications are new and not yet practiced, the practical implementation still needs to be tested, more topics and procedures need to be explained. , clarified and disputed.