New Amendment to the Law on Foreign Investment to Attract a Wider Range of Foreign Investors to Qatar

Under the current foreign investment regime, Qatari partners in local companies have enjoyed a majority stake holding in many businesses and projects. The amount of investment permitted by foreign investors has in the past been restricted by Law No. 13 of 2000 Regulating the Investment of Non-Qatari Capital in Economic Activity (“Foreign Investment Law”), pursuant to which they are permitted to own up to a maximum of 49% of the shareholding or interest in a company. Only in certain exceptional circumstances may foreign partners own more than this percentage in a local company. Such exceptions include where a foreign entity registers a branch office, or where a foreign investor intends to establish a company that operates in one of the defined sectors in which a higher ownership percentage is permissible.

Only until fairly recently have foreign investors in Qatar been permitted full ownership in a company through the Qatar Financial Centre. However, most recently, the Qatari Cabinet has approved a draft law to either replace or amend the provisions of current Foreign Investment Law. Upon enforcing the new draft law, foreign investors may be able to own 100% of their businesses set up in Qatar. Notwithstanding, a foreign investor will continue to be obliged under the law to have a Qatari national serving as an agent in the project or company to be established in Qatar.

The draft law is expected to retain most of the provisions of the current law in relation to the equal treatment of citizens of the GCC and Qatari nationals in terms of ownership in companies listed on the Qatari Exchange, and provisions offering incentives and tax breaks to companies. Furthermore, the draft law appears to support Qatar’s efforts towards diversifying its economy and opening up further opportunities for investments of various types.

That being said, a number of amendments have been introduced to the Foreign Investment Law since its promulgation in 2000, the effect of which have had limited changes. It will therefore be interesting to see the way in which the proposed legislation will affect the foreign investment landscape.

To learn more, contact the author:

Michael Earley

Sarrah El-Jaili