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Supervision and Inspection Department – Corporate Affairs Management

Section Overview:

The Supervision and Inspection Department is responsible for the following:

Implementing the provisions of laws and regulations governing the control of commercial companies.
Supervising and inspecting joint-stock companies to ensure compliance with the provisions stipulated in the Commercial Companies Law or their association contract, including inspecting and auditing their accounts.
Control and prove crimes that occur in violation of the provisions of the Commercial Companies Law, or the decisions issued for its implementation.
Approving the convening of ordinary and extraordinary general meetings for joint-stock companies and limited partnership companies with shares, in accordance with the provisions of the Commercial Companies Law.
Supervising the establishment of joint-stock companies, reviewing their association contract and bylaws, certifying them, and preparing the necessary ministerial decree for the company’s establishment, in accordance with the provisions of the Commercial Companies Law.
Supervising cases of transformation, merger, acquisition, division, or liquidation of joint-stock companies in accordance with the provisions of the Commercial Companies Law.
Reviewing requests to amend the contracts or bylaws of joint-stock companies and the agendas of their general assembly meetings.
Reviewing requests related to increasing or decreasing the capital of joint stock companies, in accordance with the provisions of the Commercial Companies Law.
Implementing the provisions of laws and regulations related to investment funds.
Reviewing and processing requests related to investment funds.

Laws and regulations governing the operations of the department:

Differences between limited liability companies and private joint stock companies.

Private Joint-Stock Company	Limited Liability Company (LLC)
It must consist of no fewer than five founding members.	It consists of one or more individuals, and the number of partners does not exceed fifty.	Number of Founding Partners
The capital must be no less than two million Qatari Riyals.	The partners determine the company’s capital at the required value.	Capital at incorporation
The company does not offer its shares for public subscription.	The company is not allowed to issue tradable shares or bonds.	Trading shares or stocks
It is allowed to resort to public subscription or issue financing instruments after obtaining the necessary approvals.	Shares paid in full by partners upon establishment	Company Financing
The Articles of Incorporation and the Bylaws are amended by a decision of the Extraordinary General Assembly.	The founding document can only be amended with the approval of shareholders representing three-quarters of the capital.	Amendment of the Articles of Incorporation or the Bylaws.
Amending the shareholders’ register prepared by the company requires entering heirs in place of their deceased.	The share of each partner is transferred to his heirs or legatees.	In case of death of the partner
The capital may be increased by a decision of the Extraordinary General Assembly and after obtaining approval from the Companies Affairs Department.	Approval must be obtained from shareholders representing three-quarters of the capital.	Increase in capital
The shareholder has the right of priority in subscribing to new shares, and this right may be waived in Favor of others by a decision of the Extraordinary General Assembly, with a majority of three-quarters of the company’s capital.	The company is not allowed to resort to public subscription to form or increase its capital, nor is it allowed to issue tradable shares or bonds.	The right of priority in the shares or stakes of the capital increase.
The management of the joint-stock company is handled by an elected board of directors.	The company manager has full authority in its management.	Management of the company
If the quorum for the meeting is not met, the General Assembly must be called to a second meeting, which shall be held within 15 days from the first meeting.	The invitation to attend the General Assembly is sent to each shareholder at least 21 days before the scheduled meeting. If the General Assembly does not convene within this period, the management may issue a new invitation within 15 days from the expiration of the mentioned period.	Failure to achieve the quorum for the General Assembly.

What are the advantages of a joint-stock company?

Joint-stock companies are not exposed to risk due to disputes among partners.
The company is managed by an elected board of directors with greater administrative expertise.
Continuity and sustainability of joint-stock companies.
High trust from those dealing with the joint-stock company.
The company can offer its shares in the financial market.

Definition of an Investment Fund:
An investment fund is a structured program through which a specialized and authorized entity manages and invests third-party funds. Its primary objective is to provide investors the opportunity to collectively benefit from the program’s performance, under the supervision and regulation of another competent and authorized authority.

Types of Investment Funds Based on Capital Structure:

Open-End Investment Funds:
Open-end funds are so named because their capital is not fixed or limited; instead, it increases with the sale of new investment units and decreases when some units are redeemed. Any increase or decrease in the capital of these funds is mirrored by a corresponding change in the value of the fund’s portfolio of securities. Open-end funds are established for a specific term, which may be renewed with the approval of the unit holders and in accordance with the percentages determined by the relevant authorities.
Closed-End Investment Funds:
Closed-end funds are characterized by having a predetermined and fixed capital size and value that does not change. Units of a closed-end fund are traded on the stock exchange. The value of a fund’s units is periodically evaluated by specialized entities authorized by official regulatory bodies, and the results are publicly announced on scheduled dates, forming the basis for trading these units.

Advantages of Investment Funds:

The diversification of investment funds in terms of their objectives provides a wide range of investors the opportunity to invest in these funds according to their individual investment goals.
Investment funds contribute to reducing the level of risk faced by investors through the diversification of their financial securities portfolios.
Investment funds offer liquidity to investors, allowing them to redeem the value of their purchased units at any time or upon the fund’s maturity.
Investment funds provide flexibility to investors, enabling them to switch their investments from one fund to another if their investment goals change.
Investment funds serve as a large platform that brings together a significant number of investors, allowing them to benefit from shared expertise and experience.

Steps for Applying for a License to Establish an Investment Fund:

Applications for establishment are submitted to the bank on a form prepared by the bank, accompanied by the articles of association and all documents specified by the bank.
The bank reviews the application if the activity involves foreign investments and decides within 30 days from the application date.
Applicants seeking to establish a domestic investment fund or a fund combining domestic and foreign investments must obtain approval from the Minister of Commerce and Industry and the Central Bank.
If approved by the Minister of Commerce and Industry, the minister, in consultation with the Minister of Finance and the Governor, may determine the percentage of non-Qatari participation in Qatari projects and investments.
In case of rejection, the applicant may file a grievance within 30 days of receiving the notification.

Public Offering of Investment Units:
Investment units are offered for public subscription through media channels, with the start and closing dates and the designated bank receiving applications specified.
Private Subscription:
Invitations are extended to investors as specified in the articles of association. Non-Qatari Natural and legal persons may participate in the funds with the approval of the Minister of Commerce and Industry, in consultation with the Minister of Finance and the Central Bank Governor. The subscription period for the fund cannot be closed before the expiration of the specified period mentioned in the subscription invitation. The founder may extend this period for a similar maximum duration if al subscription units are not covered.

Obligations and Responsibilities of the Investment Fund Founder:

Obtaining a license from the Central Bank and registering the fund with the Ministry of Commerce and Industry in a designated register.
Establishing the fund’s articles of association, investment policy, and risk management policies.
Appointing the fund manager, Investment Custodian, auditor, and any experts or consultants engaged by the fund, along with determining their fees.
Organizing the fund’s subscription process, allocating investment units, issuing documentation, and ensuring compliance with the fund’s rules, regulations, and articles of association.
Supervising and directing the activities of the fund manager and the Investment Custodian.
Taking necessary actions regarding any violations by the fund manager or Investment Custodian.
Overseeing the evaluation process of the fund’s investment units and ensuring their timely disclosure.
Supervising and approving financial reports, data, and information issued by the fund manager.
Providing the Central Bank with periodic reports on oversight and monitoring results, as well as reporting any violations.
Initiating the liquidation process of the fund.

Required Information in the Fund’s Articles of Association:

Fund name.
Founder’s name and address.
Custodian’s name and address.
Type of fund (open-ended or closed-ended).
Purpose of the fund and the nature of its activities.
Fund duration.
Fund capital value, along with the conditions and regulations for its increase or decrease.
Limits on the issuance of investment units.
Number of investment units in the subscription and the nominal value per unit.
Minimum and maximum subscription limits for a single investor
Qualifications required for the fund manager
Type of subscription (public or private) and its procedures
System, timing, and conditions for redeeming the value of investment units
Methods and schedules for evaluating investment units, and the calculation of net asset value
Policies for calculating and distributing capital gains, losses, and investment returns
Investment policies and risk management strategies
Mechanism for guaranteeing the invested capital or returns
Rights, duties, and responsibilities of the founder, fund manager, and Investment Custodian, along with their fees
Rights and obligations of investment unit holders
Methods for periodic disclosure of the fund’s activities, financial position, and performance results
The financial year of the fund
Financial statements and reports to be prepared and disclosed
Procedures for amending the fund’s articles of association
Cases in which the fund may be liquidated and the liquidation procedures
Process for appointing and removing the auditor, determining their tenure, fees, and responsibilities
Any additional information the Central Bank deems necessary in accordance with the law

Requirements for the Fund Manager:

Must possess expertise, competence, and experience in the field of investment.
Must not be a member of the founder’s board of directors or one of its executive managers.
Must not have a final conviction for a crime involving dishonesty or breach of trust, unless their legal status has been restored.
Must not have declared bankruptcy.
Must not have been dismissed for disciplinary reasons or barred from practicing the profession.
Must have a good reputation and commendable conduct.
If the manager is a legal entity, the management of investment funds must be one of its activities as stipulated in its articles of association.

Prohibitions for the Fund Manager:
Using the fund’s assets for activities that contradict its articles of association.
Deriving personal benefits for themselves or any employees.
Directly or indirectly participating or allowing fund employees to invest beyond the limit permitted by the articles of association.
Borrowing from third parties on behalf of the fund.
Investing the fund’s assets in other investment funds.
Using the fund’s assets to contribute to the capital of the founder, the fund manager, or their affiliated companies.
Publishing false, incomplete, or misleading information or concealing details about the fund’s activities and financial statements.

The Investment Custodian of the fund’s assets shall be the bank appointed by the founder in coordination with the Central Bank, and it shall be responsible for the following:

Safeguarding the fund’s assets and properties, supervising them, opening accounts, and maintaining appropriate records.
Executing transactions and fulfilling obligations arising from the fund manager’s management and investment of the fund’s assets.
Conducting periodic reviews of all transactions carried out by the fund manager on behalf of the fund, including changes in the rights of investment unit holders and the investor registry, in accordance with the fund’s articles of association.
Valuing investment units on scheduled dates.
Informing the founder of any violations by the fund manager discovered during the execution of their duties.

The Investment Custodian is Prohibited from the Following:

Combining the roles of Investment Custodian and fund manager.
Directly or indirectly owning any investment units in the fund they are responsible for safeguarding.
Having any shared interests with the fund manager.
Receiving any benefits, gains, or advantages for themselves or their employees from their assigned duties, other than the agreed-upon commission.
Publishing any information or data about the fund’s activities, performance, or investors’ rights other than what they are authorized to disclose.

Reports Prepared by the Fund Manager:

Quarterly Report: At least once every three months (as stipulated in the articles of association), reviewed by the auditor, including the fund’s activities and financial data.
Annual Report: An audited annual report prepared in accordance with the articles of association and international accounting standards, covering the fund’s financial statements and final accounts, to be submitted within two months of the end of the financial year.
The annual financial statements must be published in a local newspaper within this period.
The fund manager must provide the Central Bank with copies of all financial reports prepared by the fund well in advance of their disclosure and publication.
The Central Bank reserves the right to request the revision of financial statements if they are found to be inaccurate or insufficiently reflective of the fund’s financial position and activities.

The Minister of Commerce and Industry or the Central Bank, as applicable, may terminate the license granted to the founder in the following cases:

At the request of the founder, in accordance with the fund’s articles of association.
Failure of the fund to commence operations within 60 days from the date of licensing or failure to achieve a subscription coverage of at least 50% of the value of investment units during the subscription period.
Violation by the fund of the provisions of the law, the executive regulations, or its articles of association.

Reasons for the Termination of a Fund:

Expiration of its specified duration.
Fulfilment of the purpose for which it was established.
Issuance of a judicial ruling to dissolve it.
Occurrence of a liquidation condition stipulated in its articles of association.
Dissolution or bankruptcy of the founder, unless the management of the fund is assumed by another entity with the approval of the Central Bank.
In all cases, the Central Bank notifies the Ministry of Commerce and Industry of the decision to cancel the license to take the necessary steps for removing the fund from the registry of funds at the Ministry.
The founder must register the decision of the fund’s termination in the Ministry’s registry of funds and publish it in at least two local daily newspapers, one of which must be in English.
Upon its termination, the fund enters liquidation and retains its legal personality during the liquidation period, with the addition of the term “Under Liquidation” to its name.
The authority of the founder and manager ceases upon the fund’s termination. However, they remain responsible for managing and supervising the fund in dealings with third parties until a liquidator is appointed.
In cases where the fund is liquidated based on a judicial ruling, the court appoints the liquidator, determines their fees, and outlines the liquidation process.