Limited Liability Companies in Qatari law Thursday, 02 December 2010 02:53

Commercial Companies Law No. (5) of 2002 states that the commercial company is a contract obliging two or more natural or corporate persons, for a profitable project, through presenting a share of money or business and sharing the project’s losses and profits. Each company established in Qatar shall be by a Qatari national and its headquarters shall be in Qatar.

The company, which is established in Qatar, shall have one of the types referred to by the Commercial Companies Law No 5/2002. The company which does not fall in any of these categories shall be void and the contracting parties in its name shall be personally and jointly liable for the obligations resulting from this contract.

One of the types is the company with limited liability.

The company with limited liability consists of partners who should not be more than fifty and less than two.

The company with limited liability shall have a name derived from its purpose or a name of one or more partners. The company name shall be annexed with the “WLL” expression. The limited liability company’s objective shall not include the business of banks, insurance or investment of money for third parties personally or through any agency.

The company is established by a memorandum of association signed by all partners. This memorandum of association shall include the following:

1. Company’s type, name, objective and headquarters.

2. Names, nationalities, places and addresses of partners.

3. The company’s capital and the share of each partner and their values.

4. Company duration.

5. Distribution of profits and losses.

In addition to any other conditions the partners desire to mention in accordance with the guide form designed by the Ministry of Economy and Trade.

The company with limited liability is established only if all cash and in kind shares are distributed among all partners and fully paid.

The cash shares of the company shall be deposited with one of the banks accredited by the State and the bank may cash it only for the company directors after they present the evidence of the registration of the company with the commercial register.

The company manager shall apply for registering the company with the commercial register. The application shall be accompanied by the company contract and the documents indicating the distribution of shares among partners and deposit of their total value with any bank accredited by the State in addition to the documents indicating that the company has received in kind shares, if any. The company shall proceed its activity only after registration with the commercial register.

The company capital shall be enough to achieve the company’s objectives and the company memorandum of association should not include a provision depriving any partner of profits and losses.

The partner may waive their share under an official document to another partner or third parties in accordance with the company memorandum of association. This waiver is valid in confrontation of the company or third party only after its registration with commercial register.

Each partner’s share shall be transferred to their successors or entrusted parties.

The company manager shall have the full power to manage the company unless the company’s memorandum of association determines the manager’s authority. The manager’s actions shall be binding to the company, provided that such actions shall be accompanied with the description of the capacity.

Each decision to change directors or execute their powers with third parties shall be valid only after attestation in the commercial register.

The manager shall prepare for each financial year the company’s balance sheet, profits and losses account and a report on the company’s activity, its financial position and their suggestions for distribution of profits within two months of the end of the financial year.

The company shall be committed to the acts done by the company manager within the limits of their authorization and capacity. It is also accountable for the damages resulting from the illegal acts committed by the company manager.

The company directors shall be jointly liable for indemnification of the company, partners and third parties for the damages resulting from cheating, misuse of power, breach of companies law or the articles of association of the company as well as for the mistaken management. Any other provision states otherwise shall be void.

The company with limited liability shall have a general meeting consisting of all partners. The general meeting shall convene through an invitation from the directors at least once a year during the four months following the end of the financial year. The company and each partner shall have the right to attend the general assembly whatever the number of shares held by the partner. Each partner shall have a number of votes equal to shares held or represented by them.

The general meeting discusses the Director-General report on the company’s activity and its financial position during the year in addition to the auditor report, balancesheet, profits and losses account and approve them as well as the determination of dividends distributed among partners.

The general assembly resolutions are valid only if issued under the approval of a number of partners representing at least half of the capital unless the company memorandum of association otherwise provides for.

The company shall deduct every year 10% of its net profits to make a legal reserve. The partners may decide to stop this deduction if the reserve becomes equal the half of the capital.

Legal reserves may be used to cover the company’s losses or to increase the company capital by the general assembly resolution.

First: Company Dissolution:-

The company is dissolves for the following reasons:

1 The expiry of the duration determined in the company memorandum of association or articles of association unless the periods are renewed in accordance with the rules stated therein.

2. The completion or impossibility of completion of the purpose for which the company has been established.

3. Transfer of all shares or stocks to a number of partners or stockholders less than the minimum according to law.

4. Extinction of all or most of the company money, when the remaining cannot be invested.

5. Unanimous agreement among partners to resolve the company before the end of its duration unless the company memorandum of association states to resolve it by a specific majority.

6. Merger of the company in another one.

7. Issuance of a court judgment to resolve the company or announcing bankruptcy.

In cases, the company dissolution decision shall be announced in the commercial register and published in two local daily Arabic newspapers.

Dissolution resolution shall be valid only after announcing it and the company chairman shall follow up the implementation of such resolution as the case may be.

Liquidation:

• Once the company resolved, it shall be under liquidation. During which, it keeps its body corporate for the required liquidation works.

• The company name shall, during this period, include (under liquidation) written clearly.

The company shall be liquidated in accordance with the provisions of its memorandum or article of associations or as per the partner agreement upon the company resolution. If there is no provision or agreement in this regard, the provisions of Commercial Companies Law No. 5/2002 shall apply.