Procedures for setting up limited liability firms Thursday, 03 March 2011 01:26

The Commercial Law No. 5 / 2002 states that the trading company is a contract by which two or more persons contribute in a project designed for profit by providing a share of the money or the work and division of profit or loss arising from the project.

Each company established in Qatar shall be by a Qatari national and its headquarters shall be in Qatar.

The company which is incorporated in the State must take one of the forms provided by the law including “general partnership or limited partnership or joint venture or joint stock or limited by shares or limited liability or a single person or a holding company”. The company which does not comply with one of these forms is considered invalid and the persons who are contracted on its behalf will be personally responsible and jointly liable for the obligations arising from this contract.

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 company’s type, name, objective and headquarters, names, nationalities, places and addresses of partners, the company’s capital and the share of each partner and their values, company duration, and distribution of profits and losses. This is in addition to any other conditions the partners desire to mention in accordance with the guide form designed by the Ministry of Business 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.

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.

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 authorisation and capacity.

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 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, balance sheet, 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 percent 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.