By Qatar is a country with some of the most exciting business projects in the world at the moment. In the 2022 FIFA World Cup and the North Field Expansion, it has 2 projects that are certain to generate enormous investment and business opportunities.
If you’re considering setting up a business in Qatar, it is important to know what types of business structures are available and what the laws are around business ownership for foreigners.
Can foreign investors start a business in Qatar?
Generally speaking, for a foreign investor to start a company in Qatar, they must appoint a Qatari national as a local partner to hold 51% of the shares of the company. The foreign investor can then hold the remaining 49%.
The most frequently used business structure in these joint ventures is a Limited Liability Company.
Is 100% foreign ownership possible in Qatar?
The Qatari “Foreign Investment Law” specifies that any foreigner who wants to incorporate a company in the country requires a Qatari partner to have a minimum 51% shareholding in the company. However, under Article [2] of the same law certain exemptions are permitted in certain business sectors. These include:
- Agriculture
- Business consulting and technical services
- Culture, sports, entertainment and distribution services
- Development and exploration of natural resources
- Education
- Health
- Information Technology
- Industry
- Tourism
These sectors are the ones that the Qatari government is prioritising and therefore incentivising foreign investment in.
Other businesses outside of these sectors could potentially be granted 100% foreign ownership. However, they would be subject to approval by the Qatari government’s Council of Ministers.
Generally speaking in the mainland, companies will still need to set up as an LLC, with a 51% local partner. Companies can mitigate the risks by using a 51% local corporate partner and at the same time retaining effective management & operational control and beneficial ownership. PRO Partner Group can assist in this regard and provide security to the foreign party.
A Foreign Branch structure is possible, and this will allow 100% ownership by the foreign company, however a Foreign Branch in Qatar can only be opened up by having a Qatari government contract, and the Branch office can only remain open for the duration of that contract.
There are a number of freezone options in Qatar, that will allow companies to set up in Qatar with 100% ownership. Qatar Freezone (QFZ) is very popular and growing, and provides a good set up option for companies that want to have 100% ownership, although as with all Freezones the companies within that zone can strictly only deal with other Freezone companies or internationally, they are limited to doing work in mainland Qatar.
Qatar Financial Centre (QFC) is also a popular option in Qatar, and does allow companies to set up with 100% foreign ownership.
What business types can be used in Qatar?
The Commercial Companies Law which dictates the structure and governance of companies in Qatar permits the incorporation of different types of companies.
- A Limited Liability Company
The most popular type of corporate structure to set up in Qatar, this type of company is formed with a minimum of two and a maximum of fifty partners, whose liabilities are limited to the value of their shares held in the company.
There is no minimum capital for this type of company.
Limited Liability Companies in Qatar may not conduct business in the sectors of banking, insurance (unless authorized by a decision of the Council of Ministers). - A Partnership Limited by Shares
A partnership limited by shares is a company that consists of two teams, one of them involves one or more active partners jointly liable for all the debts of the company in their own money, and the other involves one or more non-active partners who shall only be liable for the debts of the company to the extent of their share in the capital. For the active partners, the company is deemed to be a joint liability company. All the active partners shall be natural persons. The name of the company shall consist of one or more names of the active partners. The capital of the company shall not be less than QR1,000,000 (one million Qatari Riyals). - A Limited Partnership
This company structure involves two types of partners: Joint Partners, who are responsible for the management of the company and have responsibility for the company’s liabilities, and Silent Partners, who contribute to the company’s capital but whose responsibility for the company’s liabilities is limited to the value of their shares in the company’s capital. All joint partners shall be natural persons. - A Joint Venture Company
Joint Ventures are often used in Qatar as a means for 2 businesses to pursue projects together as a way to improve their possibility of being given a particular contract. By working together, they share the cost and risks associated with carrying out the contract. This structure can either be incorporated (IJV) or unincorporated (UJV), with the former recognised as a legal entity and the latter being seen as a contractual agreement. - A Public Shareholding Company
A Public Shareholding Company must have a minimum of five shareholders, each of which hold an equal share of the company’s capital. They have no liability for the company’s obligations apart from the nominal value of the shares which they hold.
The minimum share capital for this type of company is QR10,000,000 (ten million Qatari Riyals). - A Company
A number of founders not less than five (5) may establish a private shareholding company that does not offer its shares for public subscription and they subscribe to all its shares, but the company’s capital shall not be less than two million (2,000,000) Riyals. Save for the provisions relating to public subscription and trading, the private shareholding company shall be subject to all the provisions set forth regarding public shareholding companies. - A Holding Company
A holding company is a shareholding company or a limited liability company which holds shares in one or more other companies. The objective for creating this type of entity is to control other existing companies. It can own trademarks, real estate and other assets but does not participate in the company’s general activities. - Free Zones
Qatar free zones represent an excellent option for foreign investors. They are considered separate from the domestic state area with regards to legal requirements and customs rules and as such allow 100% foreign ownership as well as other key benefits such as 0% corporate tax and zero customs duties on imports.
There are currently two free zones within Qatar, all of which are governed by the Qatar Free Zone Authority (QFZA) and are within 30 minutes of the country’s capital, Doha.
