The Ministry of Commerce and Industry has called on auditors of publicly listed joint-stock companies, and their board of directors to comply with the provisions of the Qatar Financial Markets Authority (QFMA)’s circular dated July 11, 2023, regarding the remuneration of board members of companies listed on the Qatar Stock Exchange.
The circular aims to enhance transparency and protect the rights of shareholders in publicly-listed companies, the Ministry said.
The Ministry urged compliance with the provisions of Article No. (119) of Commercial Companies Law No. (11) of 2015 and its amendments under Law No. (8) of 2021 as well as the provisions of Article (18) on corporate governance and legal entities listed on the main exchange as per the QFMA’s Decision No. (5) of 2016, when reviewing and auditing the remuneration of board members of listed companies.
The Ministry said the remuneration shall be determined based on two conditions. The first relates to the subtraction of legal reserves and deductions as per the provisions of the Commercial Companies Law, while the second requires the distribution of dividends amounting to no less than 5 percent of the company’s paid-up capital to shareholders.
Remunerations to the board of directors shall not be distributed before fulfilling both conditions, provided that the total does not exceed 5% of the company’s net profit, the Ministry added.
The Ministry explained that the total remuneration value shall be derived from net profits after subtracting reserves, legal deductions, and 5 percent of the company’s paid-up capital to shareholders, rather than being derived from gross profits before the aforementioned deductions.
For instance, the board’s remuneration for a company with a capital of 800,000,000 riyals, profits of 100,000,000 riyals, and a deduction rate of 10% (10,000,000 riyals) are calculated as follows: 5% of the capital that shall be distributed to shareholders amounts to 40,000,000 riyals leaving 50,000,000 riyals in profits after the deductions. Accordingly, 5% of the total board remunerations shall not exceed (2,500,000 riyals) when calculated based on profits of 50,000,000 riyals rather than 100,000,000 riyals.
The QFMA circular also touched on attendance compensation and wages received by the board members.
The circular stipulated that remunerations shall include all payments that the chairman or board members receive in the form of an attendance compensation or a percentage of profits or other forms of compensation for sitting on the board and shall be subject to the maximum limit specified in Article (119) of the Commercial Companies Law and Article (18) of the Corporate Governance System. The remunerations can then be disbursed provided they are calculated based on net profits as indicated in the circular. If the remuneration exceeds the maximum limit, the chairman and members must return the difference, the Ministry said.
The Ministry also noted that the remuneration statement form shall be completed and attached to the minutes of the annual general assembly when submitted to the Corporate Affairs Department at the Ministry of Commerce and Industry. The form can be downloaded from the Ministry’s website:
نموذج بيان مكافآت أعضاء مجلس إدارة (moci.gov.qa)
تعميم-مكافآت-أعضاء-مجلس-إدارة-الشركاتtwitter.pdf (moci.gov.qa)
