MoCI Requires Beneficial Ownership Disclosure

Qatar’s Ministry of Commerce and Industry (“MoCI”) announced on 18 April 2021 that it will no longer process any applications for registration in the Commercial Register or for renewal or amendment of commercial registration certificates without the applicants submitting a beneficial ownership disclosure.

This new requirement comes in line with the Unified Economic Register Law (the “Law”) promulgated in January last year. We answer below some fundamental questions about the Unified Economic Register and beneficial ownership.

What is the Unified Economic Register?

The Unified Economic Register is a register intended to promote transparency of economic and financial transactions by collating the basic information and documents of economic establishments, legal arrangements, non-profit organizations and liberal professionals as well as collating the required information and documents of beneficial owners and making such information and documents available to the public and concerned authorities subject to certain requirements.

The Unified Economic Register is an umbrella register comprised of different registers, including a unified register of beneficial owners, the Commercial Register, registers of liberal professions and register of non-profit organizations.

Why will MoCI be collecting beneficial ownership disclosures?

The Law requires any Competent Authority (which is any authority responsible for licensing or registration of economic establishments, legal arrangements, non-profit organizations or liberal professionals) to collect information of license and registration applicants and information of beneficial owners.

Since MoCI is the Competent Authority regulating the licensing and registration of economic establishments (commercial companies, sole proprietorships, etc.), MoCI began implementing the Law effective 18 April 2021 and required applicants to submit a beneficial ownership disclosure.

Other Competent Authorities will require a beneficial ownership disclosure as well.

How will the beneficial owner disclosure be made?

The disclosure will be made on the designated form prepared by MoCI. It will be submitted with the applications made for the registration in the Commercial Register or for the renewal or amendment of commercial registration certificates. Applications will not be accepted without the disclosures.

Who is a beneficial owner of an economic establishment?

A beneficial owner is the individual who ultimately owns or effectively controls a legal entity and/or the individual on whose behalf a transaction is being conducted. It also includes those individuals who exercise ultimate effective control over a legal entity.

An economic establishment may have more than one beneficial owner.

The criteria to identify a beneficial owner are as follows:

1. A beneficial owner is the individual who owns a controlling share of 20% or more of the economic establishment. This can be directly (such as through shareholdings) or indirectly (such as through a chain of ownership when an individual owns an economic establishment that has ultimate effective control over the reporting economic establishment).
2. If no individual exercises control through a controlling share or if there is doubt that the individual who owns a controlling share is not the actual beneficial owner, a beneficial owner would be the individual who exercises effective or legal control in any way, directly or indirectly, over the executive bodies or the general assembly.
3. If a beneficial owner cannot be determined based on paragraphs 1 and 2 above, a beneficial owner would be the individual who legally represents the economic establishment.

What companies are required to submit the disclosure?

This includes all companies incorporated under the Commercial Companies Law except:

1. Listed public joint stock companies or any of its subsidiaries in which the listed joint stock companies own a controlling share;
2. Companies owned by the State or by public corporations and authorities;
3. Companies in which the State or public corporations and authorities own a controlling share;
4. Branches of foreign companies; and
5. Secret partnerships entered into under Article 53 of the Commercial Companies Law.

What obligations do companies have to comply with MoCI’s directives and the Unified Economic Register Law?

1. Companies must submit the beneficial ownership disclosure upon application for registration in the Commercial Register or upon renewal or amendment of the commercial registration certificate;
2. Companies must maintain an electronic and paper register containing the required information and documents of beneficial owners and submit such register to MoCI within 10 days from the date of making the registration, renewal or amendment applications;
3. Companies must inform MoCI of the place where the register is maintained, protect its confidentiality and make it available to MoCI upon request;
4. In the event of any change to the required information of beneficial owners, companies must inform MoCI of such change using the designated form prepared by MoCI and submit an updated register within no later than 30 days of the date of obtaining the documents supporting such change. If the supporting documents cannot be obtained, MoCI must be informed of such change within no later than 90 days;
5. At least one contact person resident in Qatar (a manager, a shareholder, a board member or an employee) must be appointed to provide MoCI with any information it requests about beneficial owners. MoCI must be informed of such contact person once he/she is appointed; and
6. Beneficial owners registers and their supporting documents must be kept for 10 years following dissolution or liquidation of the company.

What information should the beneficial owners register include?

Companies are required to maintain a register of beneficial owners and provide it to MoCI as explained above. The Law sets out the minimum information that the beneficial owner register must have. Such information includes place, date of birth, nationality and ID numbers of beneficial owners. The register must also include the shareholding of the beneficial owner and how he/she exercises control.

What penalties can you be exposed to for violations of the Law?

Failure to maintain the beneficial owners register or to submit it to MoCI is punishable by a sentence of imprisonment of up to two years and/or a fine of not more than QR500,000.

Other penalties under the Law include suspension of managers or board members, suspension of licensed activity and deregistration.