Quick QFC Brief:
The Qatar Financial Center economic zone permits a range of business activities that may be conducted within it and through it. Albeit those activities are not the subject of this article, for those who are interested, they are located in Schedule 3 of the QFC Law.
Permitted activities are further dissected into regulated and non-regulated activities. The former includes banking, insurance, securities, and so forth. While the latter includes audit, accounting, tax, consulting and legal services and the like.
Usually, entities looking to set up a QFC based company to conduct of any permitted activities in or from the QFC do so through the establishment of a legal presence in the QFC either by way of incorporating a limited liability company (an LLC) or branch. Of course, there are other options such as single family offices, or limited liability partnerships and the list goes on.
The Headline – LLC(G)
On April 05, 2015, the QFC introduced another applicable form of establishment: an LLC by guarantee or otherwise referred to as an LLC(G). In brief, this is the same form as an LLC except that it cannot be formed with a share capital. Notably, most of the provisions that apply to an LLC, from processing fees to mandates on Directors, apply in the same manner to an LLC(G).
Unlike the LLC which has separate legal personality from its shareholders whose liability is limited to paying to the LLC the amount, if any, unpaid on the shares held by them; the LLC(G) limits the liabilities of its founders to the amounts the founders undertake to contribute to the assets of the LLC(G) in the event of its being wound up.
The fact that an LLC(G) cannot have a share capital limits its capital raising capacity, simply because it cannot issue shares to those who back it and join it.
A way around this is that companies could impose subscriptions and/or a joining fees for new owning members.
As there are no shareholders, it is not possible to own an LLC(G) in the way that a company with a share capital is owned by its shareholders. The members of the guarantee company control it, in the same way as shareholders control a share company, but they do not have any shares or other security in the company that they can sell to another.
Generally, companies limited by guarantee are widely used for charities, community projects, clubs, societies and other similar bodies. Most guarantee companies are not-for-profit companies – that is, they do not distribute their profits to their members but either retain them within the company or use them for some other purpose.
The questions as to whether the QFC intends for this corporate form to be used for non-profit purposes strictly, or is it also an optional form for profit making investors.