Types of Business Entities in Qatar 2019

Qatar is one of the fastest-growing economies in the Middle East with state-of-the-art modern infrastructure, liberal business environment, and stable governance with social & political stability making it an ideal place to invest and start your business.

Qatar offers excellent business opportunities for foreign investors, entrepreneurs and allows them to start their ventures in the country, the government since 2015 has amendedpolicies and regulations that permit 100 percent business ownership for foreigners in certain sectors.While setting up your business in Qatar, one should be aware of the different company structures, categories available for companies, industries and startups in the State of Qatar.

Things to Know Before Starting your Business in Qatar

Before starting a company in Qatar, the investor or entrepreneur must have knowledge of the 

  • Local-business environment
  • Business Vehicles available
  • Types of licenses
  • Rules &Regulations
  • Incentivesoffered by the government for investors in the country

To ensure the smooth & successful operation of the company in Qatar by following the compliances and legal requirements the business.All the company formation, businesses and industries are regulated under the Commercial Companies Law which enforces all the legal requirements, compliances and regulations related to the business formation in Qatar.

Legal Company Structures in the State of Qatar

Several companies, businesses and services that are planning to operate in the State of Qatar must register themselves with the government authorities and obtain permits and licences.

The registration of the businesses in Qatar differs according to the type of industry, business activity, business requirements and facilities needed. Each company shall vary from one another as it has its sector, type of operations and business medium, the businesses must take intelligent decision to register themselves with the appropriate corporate company structure in order to operate and obtain required permits in the State of Qatar.

A company registered in the State of Qatar is a considered to be a legal entity and is permitted by the law to appoint and authorise a group of people, as shareholders, partners, employees, or contractual workers for working or supporting the functions of the organisation.

Dear reader, if you have already have a business in mind. Contact us; we can help you choose the right company structure in Qatar for business you according to your activity and sector.

1.Sole Proprietorship Company (SPC)/One Person Company

The Sole Proprietorship Company or One Person Companyis the most common form business structure formed in Qatar. An SPC follows the Limited Liability Company structure with only one shareholder or investor or corporate entity.

The LLC structure makes the investor or corporate to own the entire share capital, including liabilities and take responsibility for the companies obligations from one's assets, until he/she separates one's interests from that of the company.

It is possible for a foreign company to establish an SPC as a wholly owned subsidiary if it obtains an exemption to the Foreign Investment Law.

The minimum share capital required to start a Sole Proprietorship Company in Qatar is QAR 200,000 (approximately 54,000 USD). Besides, the name of the company should have the name of its Sole Proprietor linked with it, followed by the phrase “Sole Proprietorship Company (S.P.C.)”.

Click here to know more about starting a Sole Proprietorship Company or One Person Company in Qatar.

2.Simple Partnership Company

A Simple Partnership Company structure is formed by two or more legal persons who are personally & jointly responsiblefor the liabilities of the company

  • The name of the company shall be established with reference to the name of the joint shareholders, or the name of one partner followed by the words and Partners.
  • A company may have a unique commercial name, provided it is connected with the fact that it is a simple partnership company
  • All the partners in this kind of company shall be natural persons. The company should also have a memorandum of association

A simple partnership company might contain joint partners who actively work in the company with liability in the company’s obligations with all their assets and silent partners who have invested capital in the company, but shall not be liable for the company's debts save to the extent of their shares in the capital.

3.Limited Liability Company (LLC)

The Limited Liability Company structure is the most popular form of business structure preferred by foreign entrepreneurs and investors for starting their company in Qatar. ALimited Liability Company structure the company formed by the joint partnersin Qatar are liable entirely to thevalue of their shares held in the company’s capital.

  • A limited liability company in a partnership must have joint-partners not less than two partners and not more than fifty
  • This limited liability structureoffers liability protection to the owners and joint shareholders of the company as the individual persons as shareholders are liable only to the extent of their shares held in the company
  • The joint partners are responsible only to the extent of their shareholding in the shared capital. However, the silent partners are not liable to the company’s obligations
  • The LLCs might not issue a company's tradable shares certificates or bonds even if they were freely transferable. Importantly, all of the LLC’s shareholders must be aware of the transfer, and they must all be offered transfer by pre-emption, or they may waive their rights.

Click here to know more about starting a Limited Liability Company in Qatar.

Important Information about Limited Liability Companies

  • The LLC Company should have a Memorandum and Articles of Association signed by all the partners
  • The LLCs can be established relatively quickly with relatively few formalities
  • The LLC company is no longer required to have a minimum shared capital of QAR 200,000 to be registered, according to the latest Commercial Company laws passed on 2017
  • The minimum share capital requirement for registration is QAR 1000
  • One or more managers can conduct the management of a Limited Liability Company  conducted by one or more managers without being partners in the company
  • Both the Qatari nationals and foreign investors may set up an LLC in the country
  • The Limited Liability Company is not allowed to engage in financial businesses including banking, insurance, and investment
  • The name of the established LLC Company in all cases must have the words “Limited Liability Company” added to the name of the company’s titleat the end

4.Public Shareholding Company

In a Public Shareholding Company structure, the shared capital by the shareholders is separated according to their value. This company structure has a minimum of five shareholders with foreign shareholder allowed into this partnership. The permission of foreign shareholders entirely depends upon the type of business activity, sector of operation and the final decision regarding licensing is subject to the Qatar Financial Markets Authority’s approval.

  • A Publically held shareholding company is required to be listed on the Qatar Stock Exchange within 12 months of incorporation
  • A Public shareholding companyregistered on the QSE (public), it must have at least 30 shareholders
  • The public shareholding company must have a shared capital of QAR10 million(USD 2,746,574) before registration at the QSE under Article 9 of the Companies Law. For an unlisted company and QAR40 million (USD10,986,295) for a companylisted on the Qatar Stock Exchange
  • The number of shareholders must not be less than five (or not less than 30 if listed on the Qatar StockExchange
  • The Memorandum and Articles of Association for the public Shareholding must be submitted in the prescribed form, and any deviations from suchform are subject to the approval of the Commercial Companies Department at the Ministry ofEconomy and Commerce

Click here to know more about starting a Public Shareholding Company in Qatar.

5.Private Shareholding Company/Limited Share Partnership

A Private Shareholding company has a number of founding shareholders, not less than five persons may establish a private shareholding company. The private shareholding company shall not be publicly listed in the Qatar Stock Exchange.

The shareholders shall subscribe to all the shares of this company. The capital of the company shall not be less than two million Qatari Riyals. Except for provisions governing public subscription, listing and trading, private shareholding companies are regulated by provisions applicable to shareholding companies.

6.Joint Venture

A joint venture with a Qatari is the most common approach for forming a company in Qatar where certain sectors are not permitted for foreign investors. Foreign investors choose this partnership to perform business activities that are not allowed without Qatari partners in the country.The joint venture will usually contain 51 percent Qatari ownership or partnership and 49 percent foreign partnership.

The government, other public authorities and corporations, or companies in which the state holds at least 51% of the shares (or less on prior approval of the Council of Ministers) can establish public joint ventures. This can be either be established individually, or jointly with one or more founders, whether such founders are Qatari nationals or foreigners, or natural, public or private legal persons. Such Join Ventures are exempted from the minimum requirement of five founders.

7.Holding Company

A holding company in Qatar is a shareholding, limited liability or sole proprietorship company that is allowed to handle the finances and managerially control another one or more companies. The controlled companies, when owned by at least (51%) in share or stakes by the holding company, shall become subsidiaries of the holding company in Qatar.

8.Branch of a Foreign Company

The Branch office of a foreign company can be set up in Qatar by registering them with the Ministry of Economy and Commerce. It is one of the common ways to do business in Qatar. A branch can generally only be established for the purposes of completing one or more contracts with the government or a governmental or quasi-governmental entity to facilitate the performance of a public service or utility.

  • A Qatari partner is not required for a branch office. However, it must be government qualified by the Ministry of Economy and Commerce
  • The activities of the branch office are limited to carrying out the specific contract(s) on which the registration is based, and further approval is required to add or renew contracts
  • The registration of the branch is valid for the term of the agreement (s) on which registration is based, and the branch must be dissolved once it has completed all such contracts, although it can extend its life by entering into new governmental contracts
  • Branch offices are fully taxable unless granted a special exemption by the Ministry which is a pretty rare scenario, exceptions are allowed according to the business sector in which the company operates and type of business activity. Also, there is no share capital requirement for a Branch office

Click here to know more about starting a Branch Office in Qatar.

9.Representative Trade Office (RTO)

A Representative Trade Office can be formed in Qatar by the decision of the Minister of Economy andCommerce Decision No. 142 of 2006 regulating Trade Representative Offices.According to the regulations, the RTO May only be used to promote a foreign company in Qatar to introduce it to Qataricompanies and projects, through marketing and promotions.

  • The RTO is forbidden to conduct any financial transactions or commercial activities in Qatar
  • The RTO is not permitted to engage in selling or entering into contracts in Qatar
  • Business must be carried outby the foreign entity (where the contract can be performed substantially outside Qatar) or by acompany or branch authorised to do business in Qatar
  • An RTO registration and established in Qatar for an unlimited duration must renew its registration yearly

Click here to know more about starting a Representative TradeOffice in Qatar.

According to the Qatari laws, all theregulations relating to the company structure and governance of companies are established and governedunder the Commercial Companies Law No. (11) Of 2015 (Companies Law), byreplacing the Commercial Companies Lawfrom 2012. Except for branches and representative trade offices (RTO) of foreign companies, and vehicles established in the Qatar Financial Centre (QFC) and the Qatar Science and Technology Park (QSTP).

Limitations for Companies in Qatar

  • Foreign investors are not permitted to invest in commercial agencies and real estate in Qatar. However, approval from the Council of Ministers is required for foreign investment in banking or insurance
  • Foreign investment restrictions according to the Commercial Company Law No. (13) Of 2000, regulates the Non-Qatari Capital Investment in Economic Activity (Foreign Investment Law) requires a Qatari citizen to hold at least 51% of the share capital of an LLC. The Minister of Economy and Commerce may grant an exemption from this rule and allow up to 100% foreign ownership where the company operates in certain sectors of the economy
  • When the representative company formation in Qatar is 100% foreign owned and controlled, it is not allowed to run in the local Qatar market. Representative office will only engage in permitted activities such as promoting the business of the parent company and market research
  • The Ministry of Economy and Commerce must authorise a subsidiary company in Qatar

Types of Licenses in the State of Qatar

  • Auditing Company License
  • Commercial License
  • Contracting Companies License
  • Contracting Companies License
  • Clinic License
  • Engineering Consultancy License
  • Industrial License
  • Restaurant License
  • Signage License
  • Shipping Agency License
  • School and Institute License
  • Trade License (According to the type of business activity)
  • Travel and Tourism Agency License
  • Tourism Company License
  • Trading Company License

Relevant Authorities for License Approval

  • Tourism companies—approval from National Tourism Council
  • Engineering consultancy office—approval from Ministry of Municipal Affairs and Agriculture
  • Industrial companies—permission from the Ministry of Energy and Industry
  • Healthcare entities—grant from the Ministry of Health
  • Law firms—approval from the Ministry of Justice
  • Education institutions—approval from the Ministry of Education

Effective economic policies have offered support for several sectors of the economy and accelerated their contribution to Qatar’s economic growth, by formulating effective strategies and business-friendly regulations, thereby strengthening and giving a boost to the investor’s confidence in Qatar’s national economy.

The State of Qatar has been keen on creating a promising and expanding investment environment in priority sectors of the national economy, buttressed by an administrative and legislative system that is conductive in enablinga business environment through an efficient and appropriate legal framework for industrial development and investments. If you are interested in starting your business venture in Qatar feel free to Contact Us, our Qatar team would be happy to guide you in the process according to the local rules and regulations.

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About the Author

narayanan@bsworldwide.com's picture

Narayanan has been a ghostwriter for the past 4 years. As an undergrad in Electrical & Electronics Engineering, he has a well-founded interest in developing sustainable solutions with innovative technology. Intellectually curious, he has a wide range of interests ranging from Renewable Energy, Electronics, Technology, Military Science, Geopolitics, International Relations, and world history.