Business Structures in Qatar
In Qatar the Commercial Register Law (Law 25 of 2005) requires any person undertaking business activities or establishing a commercial shop to be registered in the Commercial Register administered by the Ministry of Business and Trade. Businesses may be structured as an establishment owned by an individual or a company owned by one or more persons.
What type of structure should I use?
If you are starting a small enterprise and do not envisage running up a high level of debt then using an establishment may be the most cost-effective and simple mechanism to use to get started. It can be established in a short period of time and does not require minimum capital contributions.
If you are going in to business with someone else then you may consider the partnership company as the quickest and simplest means to establish but entering into any business with a partner is not to be decided lightly. If things go wrong then both of you will face liability to third persons, even if the problem was a mistake of just one of the partners.
If your business expands or if there are significant debt levels envisaged then the limited liability company is the best structure to use. Its capital levels are small compared to shareholding companies, but shareholders get the same protection, all you can lose is your contribution to the capital. You will, in most circumstances, not be personally liable for company debts.
In making a decision about the structure that is best for you, speaking to legal and financial advisers is always a good approach to ensure the structure suits your needs and your financial position.
A business establishment is defined as a location where business is conducted, goods are made or stored or processed or where services are rendered. It is fairly simple to register in Qatar. You will need to complete the Ministry of Business and Trade’s Commercial Registration Application form (available on the Ministry’s website) and provide evidence of your identity, a copy of your passport or ID card will suffice. Before you can lodge your application, you will need to attend the Ministry and obtain approval for the name you intend to use for your business from the Trade Marks Department of the Ministry. This approval is done on the spot, so that the whole process can be completed in a day. The fee for registering an establishment depends on the activities proposed to be carried out, but generally falls between 500 QR and 10,000 QR. Some activities may require special approvals from other government authorities so it is wise to ask the Ministry of Business and Trade if this is the case for your proposed business activities. Some of the more common external approvals are detailed below.
An establishment can only be registered by Qataris or GCC nationals resident in Qatar.
Registering an establishment offers no protection for owners for personal liability for business debts. So if your establishment incurs any debts that it cannot pay, your creditors will be able to pursue you personally and claim their debts against your personal property. If this is of particular concern, you may wish to consider starting a business through a company structure as some of these structures allow you to limit your liability.
A company is a separate legal entity established by a written contract between its partners, often called a memorandum of association. It is treated as a separate legal identity from the identity of its partners, often referred to as a legal person and has its own name. Each partner contributes a sum of money or assets or provide specific services (capable of being valued) to the company as the time of incorporation. This contribution is known as the capital of the company.
In Qatar, there are eight types of companies recognised by the Commercial Companies Law (Law 5 of 2002). To read about the type of companies that can be established in Qatar, click here.