Companies Incorporated Under The FIFA World Cup Enabling Law
December 28, 2022
By: Michael Earley, Legal Manager
The State of Qatar introduced many significant legislative changes facilitating its hosting of one of the largest sporting events in the world, namely the FIFA World Cup Qatar 2022TM (“World Cup”). One of the most significant pieces of World Cup legislation was Law No. 10 of 2021 Concerning the Measures for Hosting the World Cup (“Enabling Law”). The Enabling Law provided important concessions and exemptions from existing laws, including exemptions from the Commercial Companies Law (Law No. 11 of 2015) and Foreign Investment Law (Law No. 1 of 2019) for certain companies incorporated under the Enabling Law.
World Cup Companies
According to Article 23 of the Enabling Law, FIFA, its affiliated organisations, its commercial partners, contractors it engages, suppliers of goods, works contractors, service providers, event host broadcasters and their sub-contractors operating in areas related to the World Cup (“WC Companies”) were permitted to establish wholly foreign-owned companies. This exemption from the Commercial Companies Law and the Foreign Investment Law assisted in quickly incorporating World Cup-related businesses. However, Article 23 also provides that such companies will expire within 90 days from the end of the tournament period (i.e. from December 23, 2022), or they must comply with the laws in force in Qatar, including the Commercial Companies Law and the Foreign Investment Law.
Compliance With Qatari Laws
Compliance with the Commercial Companies Law and the Foreign Investment Law requires WC Companies seeking to continue doing business in Qatar after the 90 day period to either find a local business partner who, in most cases, would become a shareholder owning not less than 51% of the company’s shares, or seek special dispensation from the competent department at the Ministry of Commerce and Industry (“MoCI”). Applications to approve foreign shareholding of over 49% are submitted to the competent department at the MoCI along with supporting documentation as set out in the application form. The MoCI then has 15 days to decide on the application, and if no decision is made then the application is deemed rejected. An appeal of the decision may be made to the Minister of the MoCI, who has 30 days in which to finally decide on the appeal. If no decision is made then the appeal is deemed rejected.
Alternatively, a WC Company may elect to expire. Article 4 of MoCI Ministerial Decision No. 39 of 2022 (“Ministerial Decision”) provides that WC Companies will automatically expire and their commercial registration will be struck off by the competent department at the MoCI on the expiry of 90 days from the end of the tournament if their status has not changed to comply with Qatari laws.
Although these options seem straightforward, some of the requirements set out in the Ministerial Decision are ambiguous. As noted above, both the Enabling Law and the Ministerial Decision provide that WC Companies will automatically expire after 90 days from the end of the tournament period. However, Article 5 of the Ministerial Decision provides instructions for liquidating such companies which seems unnecessary if their registration is automatically struck off, including a copy of an audited financial statement that must be provided with the liquidation application, even though many of these companies have existed for less than a year. Article 5 also requires a no-objection certificate from the General Tax Authority, even though WC Companies are eligible for a tax exemption according to Article 8 of the Enabling Law.
Given that the countdown for compliance or expiration has started, it will be interesting to see which WC Companies elect to continue operating in Qatar, and for those taking the expiration route to see how the expiration process will actually function.