By: Reeda Halawi – Associate
Law No. 3 of 2023 on Combatting the Concealment of Non-Qataris Practicing Commercial, Economic and Professional Activities in Violation of the Law[1] (“Proxy Law”) entered into force on April 11, 2023, following its publication in the Official Gazette, repealing the previous Law No. 25 of 2004. The aim of this new Proxy Law is to further curb non-Qataris’ undisclosed business and commercial activities, as can be observed from the newly introduced amendments. These amendments also contribute to enhanced monitoring by financial institutions, namely the Central Bank of Qatar, as well as a stronger enforcement of the Proxy Law on the ground.
Articles 2 and 3 of the Proxy Law identify several prohibited activities by non-Qataris that would constitute a violation of the Proxy Law and therefore a crime of concealment. These activities are (a) the practice or engagement in any business activity without an official authorisation and/or license from the relevant authorities; (b) the receiving of dividends exceeding the shares inscribed and agreed upon in the company’s incorporation records, namely the Articles of Association; and (c) the concealment of non-Qataris’ engagement in business activities by breach of applicable laws and regulations in Qatar.
These amendments also introduced, by virtue of Article 8, tougher penalties to be imposed upon the violation of the Proxy Law’s provisions, namely (a) an imprisonment term of up to two years, as well as (b) a maximum fine of QR 500,000. In addition to these penalties, Article 9 of the Proxy Law prescribes, amongst other sanctions, the deportation of non-Qataris found guilty of violating this law, while any colluding Qatari shareholders would be prohibited from conducting business activities for a period of up to three years. Finally, the Proxy Law extends the application of penalties so as to allow a potential criminal prosecution of any natural person associated with the violating companies.
More recently, on December 31, 2023, following the initial review of claims and reports submitted to the Anti-Concealment Committee pertaining to violations of the Proxy Law, as per Article 5, the Ministry of Commerce and Industry referred 5 cases to the Public Prosecution to investigate commercial concealment and to prosecute the perpetrators[2].
This demonstrates that the Proxy Law is actively being enforced in Qatar. It is therefore necessary for businesses to ensure that their corporate structures comply with the provisions of this law, especially in terms of reporting suspicious concealment activities.
[2] MOCI refers 5 cases to the Public Prosecution for breach of Proxy Law
