The executive regulations of the foreign investment law have been issued

Following the issuance of Law no. (1) of 2019 regulating the Investment of Non-Qatari Capital in the Economic Activity (the “Law”), the Executive Regulations of the Law were issued on 8 June 2020 by virtue of the Minister’s Commerce and Industry’s resolution number 44 of 2020 (the “ER”).

Summary

The ER provides guidance on the requirements for 100% foreign ownership eligibility by foreign investors to benefit from the Law. These requirements cover natural persons, juridical persons and the non-Qatari investment project as follows:

• For natural persons, the sole requirement is not being sentenced with a final judgement of imprisonment in relation to a crime involving moral turpitude or dishonesty, unless duly rehabilitated.

• For juridical persons:
  • the company should be incorporated in accordance with the laws of the country of its headquarters.
  • the activities intended to pursued should match the company’s activities.
  • Legalised and supralegalised documents evidencing the above should be submitted by the juridical person.

• For the investment project:
  • the project’s activity should fall under the list of economic activities issued by the Minister upon the recommendation of the Competent Department at the Ministry of Commerce and Industry (the “CDMCI”).
  • the foreign investor must submit a description of the activity, action plan and a financial plan for the project.
  • the foreign investor should undertake in writing to bear all liabilities arising out of the project, and get the project started within the timeline specified  by the CDMCI otherwise the approval granted will be deemed to be cancelled.

The ER further expands on the mechanism related to the application to be made to the CDMCI.

Foreign investors are required to apply to the CDMCI for an approval to exceed the 49% share capital ownership threshold by filing a form to be issued by the CDMCI along with the appropriate documentation determined by the CDMCI and other concerned authorities as well as the settlement of a fee. The application is then referred to the concerned authorities to be approved in line with their internal procedures. The CDMCI has 15 days to approve or refuse the application and notify the concerned party. The absence of response following the period shall be deemed to be an implicit refusal.

Key highlights

The release of the ER is a step forward towards the actual implementation of the long-awaited Law and showcases the willingness to investments by foreign investors in Qatar.

However, the “list of approved economic activities” still needs to be released by the Minister. This means that the full implementation of the Law awaits a further resolution.

Eversheds Sutherland is closely monitoring these important developments and we will issue a further update as soon as additional information is made available.

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