INTRODUCTION
The Ministry of Commerce and Industry (“MOCI”) announced on 18 April 2021 that it will no longer accept registration of newly established companies in the Commercial Register (“CR”) nor it will approve the introduction of any amendments or notations to the existing companies’ commercial registration certificates nor renewals thereof unless the company discloses the ultimate/beneficial ownership of the respective company.
This new requirement is an application to the mandatory legal provisions provided under the recently enacted Unified Economic Register Law No. (1) of 2020 (“Law”) which requires economic establishments including companies, liberal professions and sole proprietorships operating in Qatar to submit a disclosure to the MOCI regarding its ultimate beneficial ownership.
Who Is the Beneficial Owner?
According to Article (1) of the Law as well as the announcement made by the MOCI on 18 April 2021, an ultimate beneficial owner is the individual who ultimately owns or effectively controls a legal entity and/or the individual on whose behalf a transaction is taken place.
The MOCI provided certain criteria to assist legal entities to effectively identify who might be a beneficial owner of the respective legal entity. These criteria are as follows:
- The natural person who directly or indirectly owns an effective controlling share of at least 20% of the legal entity’s capital or voting rights.
- The natural person who exercises, whether directly or indirectly, actual or legal control over the executive bodies or the general assembly of a legal entity.
- If a beneficial owner cannot be identified based on items 1 or 2 above, the beneficial owner is the individual who legally represents the legal entity according to its governing law (e.g., the manager in a limited liability company).
How Will the Disclosure Be Made to the MOCI?
The disclosure will be made on the adopted application/form designated by the MOCI. It will be submitted with the applications made for the new registration in the CR or if the legal entity is renewing, amending, or notating its commercial registration certificate.
The MOCI will not accept the applications to issue a new commercial registration certificate nor to renew, amend or notate an existing certificate without the disclosure.
What Obligations Do Companies Have in This Regard?
Legal entities including companies are required to maintain a physical and electronic register of beneficial owners and provide it to the MOCI. The Law sets out the minimum information that the beneficial owner register must have. Such information includes place, date of birth, nationality, ID numbers, or passport number of foreigners, of beneficial owners. The register must also include the ownership interest of the beneficial owner and how beneficial owner exercises control over the legal entity.
Which Companies Are Required to Disclose?
As per the MOCI announcement, in the meantime all commercial companies are required to disclose its ultimate owners except the following entities:
- Public joint stock companies listed on the Qatar Exchange.
- Companies owned and/or effectively controlled by the government.
Penalties
The Law provides a penalty of imprisonment sentence of a period does not exceed two years and/or a monetary fine does not exceed QAR 500,000 for the failure to maintain the beneficial owners register or failure to submit it to the MOCI as per the Law.
Despite the above, the legal entity may be exposed to other alleviated penalties if the violation is not related to the entity’s failure to maintain or submit the register. These penalties include the following:
- Suspension of managers or board members.
- Issuing a written warning to the violating entity.
- Temporarily suspending the registration of the entity for a period not exceeding one year.
- Deregistering the entity permanently.
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