Questions relating to joint stock companies
What are the requirements for establishing a public / private Qatari joint stock company?
Reservation of a trade name.
Draft of the Memorandum of incorporation, and the Constitutive act of the Joint Stock Company (in accordance with the Memorandum of incorporation and the constitutive act adopted by the Ministry).
Minutes of the founders’ meeting, including the selection of their representatives in the establishment procedures.
A copy of the founders’ personal identity documents (not less than five founders) or a copy of the founders’ valid passport and a copy of the valid commercial registration for legal persons.
A bank certificate mentioning a deposit of not less than 20% and not more than 60% of the general contribution capital (not less than 10 million riyals) and the deposit of capital for the special contribution (not less than 2 million riyals) . It is presented after the initial approval of establishment from the administration.
Copy of approvals from the competent authorities for activities requiring prior approvals.
The Memorandum of incorporation including name, nationality, and the headquarters of the company, certified by the Embassy of Qatar abroad and translated into Arabic (if one of the founders was a foreign company).
Evaluation report approved by an expert (in case of in-kind shares).
Feasibility study.
The approval of the Qatar Financial Markets Authority for public joint stock companies.
How to set a date for the General Assembly of the joint stock companies?
For the general assembly:
A copy of the assembly’s action plan, including the topics to be discussed.
A copy of the declaration to be published.
A copy of the auditors’ report, the company’s budget and future plan signed by the external auditor and the chairman of the company’s board of directors.
A copy of the Board of Directors’ report.
In case of electing members of the Board of Directors, then a list of candidates and their approval not to violate the provisions of Articles 97 and 98 of the Companies Act, shall be submitted, accompanied by copies of their personal identity cards.
In case it was a financial institution, then it should submit the approval of Qatar Central Bank.
For public associations:
A copy of the general assembly’s agenda, including matters mentioned in Article 137.
A copy of the declaration to be published.
A copy of the company’s budget signed by the auditor and the chairman of the company’s board of directors.
A statement of the articles to be modified before and after the amendment, in addition to the completion of the required documents for the required amendment depending on the case.
In case it was a financial institution, then it should submit the approval of Qatar Central Bank.
What are the conditions for requesting an amendment to the memorandum of incorporation for a Public/private joint stock Company?
The extraordinary General Assembly’s approval is required for: the amount of increase and price of new shares. The Governing Council must implement this decision.
Auditor’s report of the increase.
Providing the necessary documents proving that the company’s capital is fully paid.
If the Company is a Public joint stock company, it shall submit a copy of the Prospectus, which will then be signed by the Chairman of the Board of Directors, the Auditor, in addition to obtaining the approval of the Capital Markets Authority.
The Department’s approval of the prospectus.
Second: In the case of a capital increase by capitalization of profits:
A copy of the budget is required.
A copy of the minutes of the meeting.
An auditor’s certificate mentioning that the increase was made either through the
The issuance of bonus shares that should be distributed to shareholders according to their respective shares.
Increasing the par value of the share through a capital increase in the capital.
Third: In case of converting bonds into shares:
Bondholders’ approval.
The bond must be transferable, and this must be stated in the terms of the loan.
The conversion of bonds into shares shall be through the redemption and cancellation of bonds and through granting its shareholders shares in return, and the addition of their value to the capital.
Fourth: In the case of issuance of new shares in exchange for shares in kind or rights denominated:
The Extraordinary General Assembly’s initial approval of the increase in capital by an in-kind share, specifying the date.
Expert Evaluation report.
The Extraordinary General Assembly’s approval on the value of the share in kind as determined by the decision.
Fifth: In case of reducing the company’s capital:
The approval of the Extraordinary Assembly to reduce the capital in line with the procedures stipulated in Article (201).
A copy of the company’s budget and a certificate from the auditor regarding the reasons for the reduction.
A certificate from the Board of Directors stating that the debt of the Company’s creditors has been met, in addition to providing the sufficient guarantees to meet the deferred debts.
A copy of the announcement to publish the issued decision to reduce capital in two local daily newspapers, to be issued in Arabic.
Copy of the announcement in two local daily newspapers published in Arabic.
Memos submitted to shareholders offering their shares for sale, if the capital is being reduced through the purchase and cancellation of a number of shares in accordance with the provisions of Article 203.
What are the requirements for converting a limited liability company into a public / private joint stock company?
A copy of the Memorandum of incorporation and the Articles of Association (and a copy of the Official Gazette for the Joint Stock Company).
A copy of the valid commercial registration. It should have been registered for a period of two years in the commercial record.
A copy of the company’s last two budgets, in which the company has achieved through the proposed purpose for which it has established, net distributable profits of not less than ten percent of the capital during the two previous financial years of the conversion request.
A copy of the company’s decision to approve its conversion according to the rules of conversion to a joint stock company, specifying the date to be used as the basis for evaluation.
A copy of the evaluation report approved by the expert mentioning the net assets of the company and its liabilities and the approximate value thereof.
The founders’ approval of the company’s net assets and liabilities, the determination of the capital, the number of shares and their distribution, in addition to the composition of the board of directors.
A copy of the draft Memorandum of incorporation and Articles of Association, provided that it contains a chronology of the company until the date of conversion.
A copy of the personal identity cards of the founders or the commercial register of legal persons in case of entry of new shareholders.
In case of a financial institution, then it must submit the approval of Qatar Central Bank.
If the name is modified, an approval of a trade name must be obtained.
What are the conditions for applying for merging of a public/private joint stock company?
In the case of merging by annexation:
A copy of the extraordinary general assembly’s decisions of the merged company, to dissolve it, in accordance with the procedures followed for the solution, specifying the date that should serve as a basis for evaluation.
A copy of the evaluation report approved by the expert to assess the net assets of the merged company in accordance with the provisions of the evaluation of the shares in kind.
A copy of the merger company’s decision to approve the merger and the result of the evaluation. in addition to the increase in its capital in accordance with the result of the merged company’s assessment, provided that the distribution of the increase in the capital of the company is made according to the shareholders of the merged company based on their shares.
A copy of the publication of the merger decision in two local daily newspapers published in Arabic.
The draft of the amended Memorandum of incorporation and association, after making the necessary amendments, provided that it contains a prelude to the historical sequence of the merging and integrated company.
In the case of merging by blending:
A copy of the decision of the merged and integrated company to dissolve the company in accordance with the procedures followed for the solution and evaluating it in preparation for merging it, in addition to specifying the date that will be the basis for evaluation.
A copy of the merged and the merger company’s decision to approve the results of the evaluation and to the establish a new company. Each merged company shall be allocated a number of shares equal to its shares in the new company’s capital. These shares should be distributed among the shareholders of according to their shares incorporated in the company.
A copy of the evaluation report approved by the expert to assess the net assets of the merging and integrated companies in accordance with the provisions of the assessment of the shares in kind.
A copy of the publication decision of the merger in two local daily newspapers published in Arabic.
The draft of the amended Memorandum of incorporation and association, after making the necessary amendments, provided that it contains a prelude to the historical sequence of the merging and integrated company.
What are the requirements for splitting a public / private joint stock company?
A copy of the company’s commercial register.
A copy of the contract and the splitting company’s Articles of Association.
A copy of the company’s budget.
A copy of the company’s extraordinary general assembly’s decision, holding the approval of at least three quarters of the shareholders or as stipulated in the Articles of Association to divide the company and evaluate the company, specifying the date to be taken as a basis for evaluation.
Approval of the name for the split company.
A copy of the evaluation report approved by the expert to assess the net assets of the company with a statement of the value of the split company.
A copy of the split company’s decision to approve the product of the company’s valuation, determining the share capital of the company, the number of shareholders and their names, the share of each in the companies arising from the division, in addition to the rights of each of these companies, their obligations, and the distribution of assets and liabilities between them.
A copy of the split company’s draft Memorandum of Association and the amended Articles of Association.
A copy of the draft contract of the splitting company’s incorporation according to the legal form divided into it (based on the models approved by the ministry).
Approval of the name for the split company.
Regarding financial institutions, they should submit the approval of Qatar Central Bank.
What are the activities of public joint stock companies and what are their requirements?
Public joint stock companies can work in all kinds of commercial activities. In case of selecting an activity that needs the approval of a state authority, approval must be attached to the company’s incorporation request.
What are the requirements for changing board members in public and private joint stock companies?
A letter from the company approving the change of the board member.
A copy of the member’s letter of resignation or a copy of the company’s letter to change the representative member.
Application form for registration in the Commercial Register.
Questions relating to joint stock companies.
What are the requirements for the board meeting?
The meeting is not be valid unless attended by at least half of the members, provided that the number of attendees shall not be less than three, unless the company’s Articles of Association stipulate a larger number or percentage.
What percentage is required to issue Board decisions?
Decisions of the Board should be made by a majority vote of those present, in addition to the representatives
How are objections recorded at a board meeting?
Recording objections by members who do not approve the decision of the Board of Directors during the meeting is done in writing in the minutes of the meeting.
What is the procedure followed in case of the absence of a member of the Board of Directors?
In case of the absence of a member of the Board of Directors, a member of the Board may replace him. If the member is absent for three consecutive meetings or four non-consecutive meetings without stating an acceptable excuse to the Board, then the member shall be considered resigned.
Where are minutes of meeting recorded and who is the authorized signatory, and where is the proof of the minutes of the meeting?
The minutes of the meetings of the Board of Directors should be recorded in a special record. The minutes should be signed by the Chairman of the Board, the Managing Director, if any, and the member or officer who serves as the secretary of the Board. The minutes of meetings should be recorded in the record on a regular basis after each session and on successive pages.
What actions are prohibited by the Chairman of the Board of Directors and members of the Board?
The Chairman of the Board of Directors or member of the Board may not participate in any business that would compete with the Company. They could not trade for their own account or for the account of others in one of the company’s activity branches. Otherwise, the Company may claim compensation or consider the operations that he has undertaken for its own account.
The company may not provide a cash loan of any kind to any of its board members or guarantee any loan to be contracted by one of them with a third party, with the exception of banks and other credit companies that may lend any of its board members, in accordance with the conditions determined by Qatar Central Bank. Any act contrary to the provisions of this Article shall be considered null and void, without revoking the right of the company to demand compensation from the violator.
The Chairman and members of the company’s Board of Directors or its employees should be prohibited from exploiting any of the information by virtue of their membership or their job, in order for them, or their wife, or children or any other relatives up to the fourth degree to gain personal interest either directly or indirectly as a result of dealing in the company’s documents.
It is also forbidden for any of them to have a direct or indirect interest with any entity that carries out operations intended to affect the prices of the securities issued by the company. Such prohibition should remain valid for three years after the expiration of the person’s membership in the Board of Directors or the termination of his employment in the Company.
Is the company committed to the work done by the members of the Board of Directors?
The Company is committed to the work carried out by the Board of Directors within the limits of its competence and, and it should ask for compensation over the damages arising from the unlawful acts done by the members of the Board of Directors.
Is absenteeism from the meeting during which a decision was taken a reason for exemption from liability?
Absence from attending the meeting during which a decision was issued should not be regarded as a reason for exemption from responsibility for the decisions made unless the absent member provides proof that he was not aware of the decision or was unable to object to it after being informed of it.
What is the period during which the company may sue the members of the board of directors?
The Company may file a claim of liability against members of the Board of Directors for errors resulting in damages to shareholders within five years from the date of error. The decision should be made by the Ordinary General Assembly, which appoints the person acting on its behalf. The company appoints the person who should initiate the case.
What if the company was under liquidation?
If the company was under liquidation, the liquidator shall take action based on a decision from the General Assembly.
Is the shareholder entitled to file a lawsuit?
Each shareholder may file a lawsuit if the company does not file it and if the mistake is causing damage to him as a shareholder, he shall notify the company of his intention to file the claim. Any condition in the company’s articles of association is null and void it it states otherwise.
What bonus percentage is distributed to the Board of Directors?
Members of the Board of Directors should not be distributed more than 5% of net profits after the deduction of legal expenses and the distribution of profit to shareholders of at least 5% of the company’s capital.
Who prepares the budget and other reports of the company?
In each fiscal year, the Board of Directors prepares the Company’s balance sheet, statement of profit and loss, statement of financial flows and clarifications compared with the previous financial year, all of which are certified by the Company’s auditors, in addition to a report on the company’s activities and financial position during the past fiscal year and future plans for the coming year.
The Board prepares these statements and documents no later than three months after the end of the company’s financial year, in order to present them at the General Assembly Meeting, which should be held within four months at the latest starting from the date of the company’s financial year ending.
Who sends invitations for the General Assembly meeting, how are the announcements made and what are the implications of the Declaration?
The Board of Directors should invite all shareholders to attend the General Assembly Meeting through an announcement in two local daily newspapers, including one in Arabic, and on the Financial Market’s website and the Company’s website, if applicable.
The announcement should be made at least 15 days before the date appointed by the General Assembly to meet.
It should include a full summary of the assembly’s agenda, in addition to all the statements and documents referred to in the preceding article, together with the auditors’ report.
A copy of the announcement is sent to the Department at the same time as it is sent to the press.
Is it allowed for the Board of Directors to convene more than once during the year?
The Board of Directors may invite the Assembly whenever the need arises.
What percentage of shareholders is required to invite the General Assembly to meet?
The Board should also invite the General Assembly to meet when requested to do so by shareholders holding at least 10% of the capital for serious reasons within fifteen days from the date of request. Otherwise, the Department should approve the shareholders’ request through issuing an invitation at the expense of the company within fifteen days from the date of receiving the request, and the agenda is limited to the subject matter of the application.
Should the Chairman of the Board of Directors publish the budget and submit a copy of the budget before the Assembly’s meeting to present it to the Companies Control Department?
Yes, the Chairman of the Board of Directors must publish the balance sheet and profit and loss account and a summary of the Board of Directors’ report and the auditor’s report. A copy of these documents should be submitted to the Department prior to publication to determine the mechanism and method of publication.
What items should be included in the agenda of the General Assembly’s regular annual meeting?
Listening to the report of the Board of Directors on the company’s activity and its financial position during the year and the auditor’s report before ratifying them.
Discussing and approving the company’s budget and profit and loss account.
Discussing and approving the Governance Report.
Considering the proposals of the Governing Council on the distribution and approval of dividends.
Considering releasing the members of the Board of Directors and determining their remuneration.
Presenting the tender for the appointment of auditors and the determination of their fees.
Electing members of the Governing Council, when needed.
Who should lead the General Assembly and act in case of the President’s absence?
The General Assembly should be chaired by the Chairman of the Board of Directors or his deputy or by the Board of Directors. In case the aforementioned fail to attend the meeting, the Assembly should appoint from among the members of the Board of Directors or shareholders a chairman. The Assembly should also appoint a rapporteur for the meeting. The assembly should also choose a meeting location. If the Assembly was discussing a matter related to the head of the assembly, then it should choose who shall preside from among the shareholders.
Does every shareholder have the right to discuss the topics on the assembly’s agenda?
Each shareholder should have the right to discuss matters on the general assembly’s agenda, and to ask questions to the members of the Board of Directors. Members of the Board are obliged to answer questions to the extent that they do not jeopardize the Company’s interest.
Where are the minutes of the meeting recorded, and what is the deadline for the company to submit a copy of the minutes of the meeting to the Companies control department?
The minutes of the meetings of the General Assembly should be recorded in a special register and the minutes should be signed by the Chairman and the Managing Director.
What are the issues that are presented in the Extraordinary General Assembly?
Matters that may be decided only through an extraordinary general assembly:
Amendment of the company’s memorandum or incorporation or its statutes.
Increasing or decreasing the company’s capital.
Extending the duration of the company.
Dissolving, liquidating, converting, or merging into another company or acquiring it.
Selling the entire project for which the company was established or disposing it in any other manner.
When does the Extraordinary General Assembly’s meeting take place, and what it is the quorum?
The Extraordinary General Meeting shall not be valid unless attended by shareholders representing at least 75% of the Company’s capital.
If this quorum is not reached, then the Assembly should be invited to a second meeting to be held within thirty days following the first meeting.
The second meeting is valid if it was attended by shareholders representing (50%) of the company’s capital.
If attendance for the second meeting falls short of the quorum, a third meeting should be convened after thirty days have elapsed from the date set for the second meeting. The third meeting is considered valid regardless of the number of attendees.
In case of a decision to dissolve, liquidate, convert, or merge into another company or to acquire or sell the entire project for which the company has been formed or to otherwise dispose of it, the meeting should require the presence of shareholders representing at least 75% of the company’s capital.
The Board of Directors should announce the Extraordinary General Assembly Resolutions if they include amendments to the Articles of incorporation of the Company.
Are the provisions of the ordinary general assembly applicable to the extraordinary general assembly?
The provisions of the extraordinary general Assembly are applicable to the ordinary general assembly.
Is the auditor allowed to invite the General Assembly?
The board may call the assembly at the request of the auditor. If the board does not issue the invitation within fifteen days from the date of the request, the auditor may issue the invitation immediately after the management’s approval. The management should decide on the application within fifteen days from the date of receiving it.
Should each public joint stock company have an external auditor and how long is the auditor’s term?
Each public shareholding company should have one or more auditors appointed by the General Assembly for a period of one year. The General Assembly determines the auditor’s fees, and may reappoint him, provided that his term does not exceed five consecutive years.
What acts is the auditor prohibited from practicing?
The auditor of the company is not allowed to participate in any way in its incorporation, be a member of its board of directors or engage in any technical, administrative, or consultative work. He is also not allowed to be a partner, agent, or employee to one of the company’s founders or relatives up to fourth degree. Each appointment made otherwise is considered null and void.
What if there is more than one auditor, are they all responsible?
In the case of multiple auditors, they would be jointly responsible for auditing accounts
Is it allowed for each shareholder during the General Assembly’s meeting to hold discussions with the auditor?
Yes, during the General Assembly, each shareholder may discuss and ask the auditor to clarify what is stated in the report.
Is the auditor prohibited from trading in shares of the same company?
It is prohibited for the auditor and his employees to trade in shares of the company whose accounts he is auditing, whether directly or indirectly. Otherwise, he must be held accountable and dismissed. He will also be liable for any damages because of violating the provisions of this article.
