Al Meezan - Qatary Legal Portal | Legislations | Law No. 5 of 2002, promulgating the Law of Commercial Companies

06 March 2021

23 Rajab 1442

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Law No. 5 of 2002, promulgating the Law of Commercial Companies

Law Summary Record Type: LawNumber: 5Date: 25/05/2002 Corresponding to 14/03/1423 HijriNumber of Articles: 348Status: In force

Official Gazette :Issue: 7Offcial Journal Issue Publication Date: 03/08/2002 Corresponding to 25/05/1423 HijriPage from: 17

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Incorporation of the Company

66 Article

A JSC shall be incorporated by a ministerial decision. The number of founders or shareholders may not be less than five persons.
67 Article (Repealed)

Notwithstanding the situations provided for in the aforesaid Law No. 13 of 2000 referred to, all shareholders in the JSC must be Qatari nationals.

68 Article - Amended

1. The government, other public authorities and corporations, and companies in which the State holds a minimum 51 percent of shares or less, may, upon approval of the Council of Ministers,incorporate one or more joint stock companies either by itself or jointly with one or more founders, whether a Qatari national or a foreigner, or a natural, juristic or private person.”

Such companies are subject to the provisions of this Law, except to the extent that they are not in conflict with the agreements or situations concluded thereunder, or upon incorporation and the provisions stipulated in its Memorandum and Articles of Association.

69 Article

The Memorandum and Articles of Association shall be set up by the founders in accordance
70 Article

The founders shall form a committee of not less than three and not more than five members to undertake the procedures of incorporation with the concerned authority.

71 Article

The application for the incorporation of the company shall be submitted to the Ministry attached with a draft copy of the Memorandum and Articles of Association of the company. The Ministry may request any additional information it deems necessary, and the supporting documents and papers. The Ministry may also request to review the feasibility study of the project.

The Ministry may request amendments to the draft Memorandum and Articles of Association so as to be consistent with the provisions of this Law and the two aforementioned forms in Article 65.

72 Article

Where the Ministry approves the application for the incorporation of the company, the founders shall sign the Memorandum and Articles of Association in accordance with the proposals approved by the Ministry. The Memorandum and Articles of Association shall be authenticated at the Notary Public and submitted to the Ministry. Accordingly, the Minister shall issue a decision concerning the company's incorporation in a period not exceeding sixty days from the date of submission of the Memorandum and Articles of Association.

73 Article

Where the application for incorporation is rejected, or the period stated in the previous Article expires without response, the founders may appeal to the Council of Ministers within thirty days, from the date of the rejection notification or the expiry of the period, as the case may be. The decision issued by the Council of Ministers in this respect shall be final.

Where sixty days lapse without the Council of Ministers issues a decision, the appeal shall be deemed rejected.

74 Article

Where the application for the company incorporation is rejected by a final decision, the founders shall not have the right to submit a new application for the incorporation of the same company before the lapse of at least six months from the date of the final rejection decision.

75 Article

The decision of the incorporation of the company shall be published in the Official Gazette appended with the Memorandum and Articles of Association.

The company may only acquire a corporate identity after its declaration which shall be by registration in the Commercial Register and publication in the Official Gazette.

76 Article - Amended

Founders shall subscribe neither less than 20% nor more than 60% of the company's capital. No founder shall subscribe to a higher percentage than what is specified in the Articles of Association. The founders shall, before the publication of the subscription prospectus, deposit the amount equal to the percentage required to be paid up by the public for each share upon subscription.

Before inviting the public for subscription, the founders shall furnish the Ministry with a bank certificate proving that they have subscribed to the company shares with the limits specified by this Article and that they have deposited in the company account the amount equivalent to the percentage due to be paid by the public for each share at the subscription.

Deposit of this amount shall be stated in the subscription prospectus. The bank certificate shall be enclosed with the draft subscription invitation prepared by the founders in accordance with the provisions of the following article. Having satisfied the foregoing, the Minister shall authorize the publication of the invitation prospectus in two local daily newspapers.

77 Article

The invitation for public subscription shall be announced in two local Arabic-language daily newspapers, at least one week before the commencement of subscription. The subscription prospectus shall include the following details:

Names and nationalities of founders.
Name, objects and head office of the company.
Amount of capital; paid capital; type of shares; value and number thereof; percentage of what was offered for public subscription, shares subscribed by the founders and the restrictions imposed on transfer of shares.

Shares in kind and particulars thereof as well as entitlements (if any).
Privileges granted to the founders and others (if any).
Method of dividends distribution.
Estimated statement of the expenses of the company incorporation.
Fulfilment of the founders to the payment of the shares values subscribed by them.
Minimum limit of shares to which a person can subscribe and also the maximum limit without exceeding the percentage prescribed for the founder.
Date, deadline, domicile and terms of subscription.
Date of licence authorizing the incorporation of the company.
Statement of assignment of shares to subscribers when subscription exceeds the number of shares available for sale.
Any other matters which affect the rights or obligations of the shareholders.

The founders or their representatives shall sign the subscription prospectus and shall be jointly liable for the authenticity of the contents thereof as well as fulfilment of the aforesaid requirements.

A statement signed by the auditor and indicating that the prospectus has been revised and attested by the auditor shall be enclosed with the prospectus.

78 Article - Amended

Subscription shall be undertaken at one or more banks licensed to operate in the State. Payment of instalments due upon subscription shall be made at the bank. The payment shall be credited to a special account opened in the name of the company.

79 Article

Subscription shall be made by a declaration signed by the shareholder stating the number of shares subscribed for, the shareholder's approval of the

Company's the Memorandum and Articles of Association, his address in the State of Qatar and any other information that may be deemed necessary.

Subscription shall be duly made and unconditional. Any condition made by the subscriber in the subscription application shall be deemed null and void.

The subscriber shall submit the subscription application to the bank and pay the due amount upon obtaining a receipt signed by the bank stating the name and address of the subscriber; date of subscription, and number of shares subscribed to and paid-up instalments.

The subscription shall be final when the subscriber receives such receipt.

80 Article

Each subscriber shall be furnished with a hard copy of the Memorandum of Association to be mentioned in the subscription receipt received from the bank.

During the subscription period, stakeholders may obtain the company's Articles of Association in hard copy without or with a reasonable consideration as specified by the subscription prospectus.

81 Article

The bank shall keep all the funds paid up by the shareholders in the account of the company under incorporation. Such funds may only be submitted to the Board of Directors after declaration of the company's incorporation and its registration in the Commercial Register.

82 Article - Amended

The subscription shall remain open for a minimum period of two weeks and a maximum period of four weeks.

Where the shares have not been fully subscribed for during the subscription period, the founders may, after obtaining the approval of the Ministry, extend the subscription period for a maximum period of two weeks.

Where, during the extension period, the shares have not been fully subscribed for, the founders must either relinquish the incorporation of the company or reduce the capital thereof to the extent for which the subscription was achieved, without prejudice to the provisions of Article 64 herein.

83 Article

Where the company is not incorporated, the founders shall be jointly liable for refunding the subscribers the paid-up value of shares during a maximum period of one week from the date specified for closing the subscription pursuant to the provisions of the foregoing Article. The founders shall also be jointly liable for reimbursement of such funds and expenses incurred during the incorporation of the company. The founders shall be jointly liable before third parties for operations and transactions thereby during the incorporation period

84 Article

Where the capital is reduced, the subscribers may opt to withdraw their subscription within a period not less than the period of the initial subscription, otherwise their subscription shall be deemed final.

85 Article - Amended

In case of oversubscription, the shares shall be distributed, to subscribers pro rata to the percentage of their subscriptions.

In all cases, the surplus subscription funds shall be refunded to subscribers by the bank within a maximum period of two weeks from the closing date of the subscription

86 Article

Any concerned party may request an invalidity of a subscription that is contrary to the aforesaid provisions within thirty days from the date of closure of the subscription.

87 Article

The founders shall inform the Ministry within thirty days from the date of closure of the subscription of the subscription results; value of shares paid by the subscribers, their names and number of shares subscribed to by each subscriber.

88 Article

The founders shall, within the period specified in the foregoing Article, invite subscribers to a constituent general assembly meeting. A copy of the invitation shall be sent to the Ministry.

Such constituent general meeting shall only be valid where the quorum present holds at least half of the shares issued capital. The Meeting shall be chaired by one of the founders to be elected by the general assembly.

89 Article

Irrespective of shares held, any subscriber shall have the right to attend the general assembly meeting.

90 Article

The founders shall submit to the constituent general assembly a report including sufficient information as to the incorporation process along with the supporting documents.

In particular, the constituent general assembly shall discuss the following:

Report of the founders regarding the processes of the company incorporation and the expenses it entailed.
Adoption of the Articles of Association.
Election of the first Board of Directors and appointment of auditors as well as determination of their remunerations.
Approval of the evaluation of shares in kind (if any).
Final announcement of the incorporation of the company.

The decisions of the constituent general meeting shall be adopted by absolute majority of the shares duly represented therein according to the provisions of this Law.

91 Article

The first Board of Directors shall take the measures to announce the company in accordance with this Law. Members of the first Board of Directors shall be jointly liable for all damages incurred due to failure to take the aforementioned measures of announcement.

Results of all acts carried out by the founders on behalf of the company prior to its announcement shall be transferred to the company upon its announcement and all expenses incurred by the founders to this effect shall be borne by the company

92 Article

Where any fault has occurred in the procedures of incorporating a JSC, any concerned party may, within five years from its incorporation, warn the company in writing to rectify such fault, within a month from the date of notification.

Failing regularization within the time limit, the concerned party may seek a ruling to nullify the company and it shall be dissolved as a de facto company.

However, the shareholders may not rely on the nullity of the company as a defence against third parties acting in good faith.

93 Article

Where any fault has occurred in the procedures of incorporating a company, the shareholders and the stakeholders may, within a period allowed for submission of a nullity claim pursuant to the previous Article, submit a claim of joint liability against the founders, first members of the Board of Directors and the first auditors

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