INSIGHTS
Pledging The Shares Of A Listed Company In Qatar
May 29, 2023
By: Ribal Fattal – Senior Associate
Although there are some similarities, the process in Qatar of pledging the shares of a company not listed on the Qatar Stock Exchange (“QSE”) differs from the process of pledging shares of a listed company. This article sets out the procedures and requirements necessary for pledging as security the shares of a company listed on the QSE.
First, the registration of the pledgee (the natural or legal person to whom the shares are pledged) with the Qatar Central Securities Depository (“QCSD”), an entity established by the Qatar Central Bank, is required. Foreign banks are also permitted to register pledges over shares of companies listed on the QSE.
As per the procedural guide issued by QCSD, which sets out the procedures for pledging securities (including shares), a shareholder (pledgor) should submit to the pledgee a pledge application relating to those shares to be pledged. The pledge application should include the following documents:
- For individuals:
a – pledge contract attested by the Attestation Department at the Ministry of Justice;
b- A copy of the ID of the pledgor;
c- In the case of minors, a copy of the minor’s birth certificate and a copy of the guardian’s ID; and
d- Where a power of attorney has been issued, the pledge application should also include a true copy of the valid power of attorney authorising the attorney to pledge the shares, and a copy of the attorney’s ID.
- In the case of companies:
a- A true copy of a valid Commercial Registration (“CR”) and Establishment Card of the pledgor; and
b- A document evidencing the approval of the pledge by all of the partners listed on the CR, or a document authorising a single representative to act on behalf of the partners.
Where the pledgor company is a shareholding company, the pledge contract should be signed by the chairman or all members of the board of directors, or by a representative authorised to act on their behalf.
Further, the pledgee must submit a letter to the QCSD requesting the pledge of those shares that are identified in the pledge contract. The letter should be signed by the authorised signatories, stamped by the seal of the entity, and should include the number of securities to be pledged, the company name if applicable, and the shareholder’s number. The application should be accompanied by the shareholder (pledgor) approval on the pledge, an ID copy, and a copy of the pledge contract, if applicable.
Upon request of the pledgee and with approval of the pledgor, the QCSD will then register the pledge details on the electronic record of the company and will inform the pledgee of the same once the process is completed.
If the shares to be pledged appear in the shareholder’s account that is managed by a QCSD trading member, the trading member should be contacted to arrange for the return of the shares to the shareholder’s account to complete the pledge. If the relevant shares are being traded in the market, the system will only approve the pledge once the trading member cancels the selling order.
The pledged shares will be released upon the pledgee’s request under an official letter signed and sealed by the pledgee, accompanied by the following information:
– The number of shares to be released;
– The name of the shareholder (pledgor);
– The shareholder’s (pledgor) number; and
– The payment of fees for each pledge release.
