Law No. (8) of 2021 Amending Certain Provisions of the Commercial Companies Law Issued by Law No. (11) of 2015

Law No. (8) of 2021 Amending Certain Provisions of the Commercial Companies Law Issued by Law No. (11) of 2015

We Tamim bin Hamad Al Thani, Amir of the State of Qatar, Having reviewed the Constitution, And the Commercial Companies Law issued by Law No. (11) of 2015, And the Anti-Money Laundering and Combating the Financing of Terrorism Law issued by Law No. (20) of 2019, And Law No. (8) of 2020 regulating the profession of auditing, And upon the proposal of the Minister of Commerce and Industry, And upon the draft law submitted by the Council of Ministers, And after taking the opinion of the Shura Council, Have decided the following Law:

Article (1) The phrase "Minister of Commerce and Industry" shall be replaced by the phrase "Minister of Economy and Commerce" contained in Law No. (11) of 2015 issuing the Commercial Companies Law. Furthermore, the phrases "Ministry of Commerce and Industry" and "Minister of Commerce and Industry" and "Auditor" shall be replaced by the phrases "Ministry of Economy and Commerce" and "Minister of Economy and Commerce" and "Accountant Supervisor", respectively, wherever they appear in the aforementioned Commercial Companies Law.

Article (2) The following definitions shall be added to Article (1) of the aforementioned Commercial Companies Law:

• Depository Institution: A company licensed by the Authority to perform deposit and registration tasks for all matters related to securities traded in financial markets.
• Senior Executive Management: The Chief Executive Officer, regardless of title, and other executive officers reporting directly to him.
• Subsidiary Company: Without prejudice to the provisions of the Qatar Central Bank Law and the regulation of financial institutions issued by Law No. (13) of 2012, a company is considered a subsidiary if it is controlled directly or indirectly by the parent company, through the parent company owning more than half of its capital or owning rights or a portion of shares or quotas therein that enables it to control its decisions, form its board of directors, or appoint its managers.
• Minority: A category of shareholders who do not possess the ability to influence the company's decisions.

Article (3) The texts of Articles (18), (76/first paragraph), (97), (103), (108), (109), (121), (122), (124/second paragraph), (128), (129/third paragraph), (152), (159), (160), (184), (195), (206), (233), (258), (264/item 6), (312), (323), (324/first paragraph), (330/first paragraph) of the aforementioned Commercial Companies Law shall be replaced by the following texts:

Article (18): "Except for companies subject to the supervision of the Qatar Central Bank, the Minister shall issue decisions regulating governance for private joint-stock companies, whereas for companies listed on the financial market, the Authority shall issue decisions regulating their governance. In all cases, the company's board of directors is committed to applying the aforementioned governance decisions and ensuring that the company's founding documents do not conflict with those decisions."

Article (76/first paragraph): "Founders must subscribe to shares not less than (20%) and not more than (70%) of the company's capital. No founder may subscribe to shares offered for subscription during the establishment stage. Founders must submit to the management, before inviting the public to subscribe, a certificate from the bank proving that they have deposited in the company's account amounts equivalent to the shares they subscribed to as founding partners, and a draft invitation statement to subscribe which the founders prepare in accordance with the provisions of Article (77) of this Law."

Article (96/first paragraph): "The General Assembly elects members of the board of directors by secret ballot. As an exception, the first board of directors may be appointed by the founders. When voting on the election of board members, each share carries one vote which the shareholder grants to the candidate of their choice. The shareholder may distribute the voting of their shares among more than one candidate, but a single share may not vote for more than one candidate. Voting for the election of board members in companies listed on the financial market shall be in accordance with the governance system established by the Authority."

Article (97): "The following conditions are required for a member of the board of directors:

1. He must be at least twenty-one years old and possess full legal capacity.
2. He must not have previously been convicted of a felony, a crime involving moral turpitude or dishonesty, or a crime specified in Articles (334) and (335) of this Law, or declared bankrupt, unless his reputation has been restored.
3. He must be a shareholder and own a number of shares of the company specified in the Articles of Association, and these shares must be deposited with the Depository Institution or in one of the approved banks within sixty days from the date of assuming office. The deposit must remain non-transferable, non-pledgeable, and non-seizable until the end of the term of office, and the balance sheet of the last financial year in which the member performed his duties must be approved."

The shares mentioned in the preceding paragraph are designated to guarantee the rights of the company, shareholders, creditors, and third parties regarding the liability incurred by board members. If the member does not provide the guarantee as mentioned, his membership shall be void. One-third of the board of directors of a public joint-stock company must be independent, and the majority of its members must be non-executive or not receiving remuneration from the company. The company's Articles of Association may include one or more board seats to represent the minority shareholders and one to represent its employees. The governance system issued by the Authority or the Qatar Central Bank, as applicable, shall determine the circumstances incompatible with independence. Independent members and members representing employees are exempt from the condition of shareholding or ownership of company shares stipulated in item (3) of this Article. If a board member loses any of these conditions, his membership status ceases from the date of losing that condition."

Article (103): "The Chairman of the Board is the President of the company and represents it before third parties and in court. He must implement the Board's decisions and adhere to its recommendations. He may delegate some of his powers to other board members or a member of the Senior Executive Management, and such delegation must be specific in duration and subject matter. The Vice Chairman replaces the Chairman in his absence."

Article (108): "Neither the Chairman nor any board member or member of the Senior Executive Management may participate in any activity that competes with the company, or trade on their own behalf or on behalf of others in any branch of the activity in which the company operates, unless they obtain approval from the General Assembly. Otherwise, the company may claim compensation or consider the operations conducted on its behalf."

Article (109): "1. Each of the Chairman, board members, and members of the Senior Executive Management must disclose to the Board any direct or indirect interest they have in transactions and deals conducted on behalf of the company. The disclosure must include the type, value, and details of those transactions and deals, the nature and extent of the interest returned to them, and a statement of the beneficiaries. 2. If the total value of the transactions and deals mentioned in the previous item equals or exceeds (10%) of the company's market value or the value of its net assets according to the last published financial statements, whichever is lower, and unless the Articles of Association stipulate a lower percentage, prior approval from the General Assembly must be obtained after those transactions and deals are evaluated by the Accountant Supervisor. The Accountant Supervisor's report must be submitted to the General Assembly, including the type, details, value, nature, and extent of the interest, the interested party, and a statement on whether the prices are market-based and purely commercial. This approval must be renewed annually if those transactions and deals are of a periodic nature.

3. Any interested persons mentioned in item (1) of this Article are prohibited from attending General Assembly or Board meetings where the subject concerning them is discussed or voted upon.

4. In case of violation by any of the persons mentioned in item (1) of this Article, they shall be dismissed from their position in the company and shall not be eligible to run for membership on the board of directors of any other company or hold any position or function in the Senior Executive Management thereof, for a period of one year from the date of the dismissal decision.

5. Without prejudice to the rights of bona fide third parties, violating the provisions of this Article also allows shareholders to petition the competent court to annul the transactions or deals and compel the violator to pay compensation determined by the court in case of non-disclosure. They may also claim compensation for mismanagement or violation of board members' obligations regardless of the annulment of transactions or deals if the terms are unfair or harm shareholders' interests. In all cases, the violator is compelled to pay any profit or benefit accrued to them from this to the company.

6. Shareholders holding no less than (5%) of the company's capital may inspect the documents and papers related to transactions or deals subject to the provisions of this Article and obtain copies or extracts. The Board must enable them to inspect such documents and papers or obtain copies and extracts, as applicable.

7. Companies listed on the financial market must disclose to the Authority the transactions and deals mentioned in item (2) of this Article, and the details, nature, and extent of the interest returned to the persons mentioned in item (1) of this Article, in accordance with the procedures followed by the Authority."

Article (121): "The Board of Directors must electronically invite all shareholders to attend the General Assembly meeting, via the financial market's website and the company's website, if available, and by publishing an announcement in a local daily newspaper issued in Arabic or by any other means ensuring knowledge. The announcement must be made at least twenty-one days before the scheduled date of the General Assembly. It must include the provisions of Article (128) of this Law, a comprehensive summary of the agenda, all data and papers mentioned in the previous Article, along with the Accountant Supervisors' report. A copy of the announcement must be sent to the Management at the same time it is sent to the newspapers."

Article (122): "The Board of Directors must annually make available to shareholders, for their review at least one week before the General Assembly convened to consider the company's budget and the Board's report, a detailed statement containing the following data:

1. All amounts received by the Chairman of the Board and each member of this Board in the financial year, including compensation for attending Board meetings, expense allowances, and any other amounts in any capacity.
2. The in-kind and cash benefits enjoyed by the Chairman and each board member in the financial year.
3. Bonuses proposed by the Board of Directors for distribution among board members.
4. Amounts allocated to each current board member.
5. Transactions and deals in which any of the Chairman, board members, or Senior Executive Management members have an interest conflicting with the company's interest, requiring disclosure or prior approval in accordance with Article (109) of this Law, along with details of those transactions and deals.
6. Amounts actually spent on advertising in any form, with specific details for each amount.
7. Donations, with a statement of the recipient, the justification for the donation, and its details.
8. Allowances paid to any members of the Senior Executive Management in the company. For banks and other financial institutions, a report from the Accountant Supervisor must be attached to this statement confirming that cash loans, credits, or guarantees provided by any of them to the Chairman or board members during the financial year were conducted without violating the provisions of Article (110) of this Law."

The detailed statement mentioned above must be signed by the Chairman of the Board and one member. The Chairman and board members are responsible for implementing the provisions of this Article and for the accuracy of the data contained in all papers required to be prepared."

Article (124/second paragraph): "The Board must also convene the General Assembly if requested by one or more shareholders owning no less than (10%) of the capital, within fifteen days from the date of the request. Otherwise, the Management shall approve the request to convene the meeting at the company's expense within fifteen days from receiving the request. The agenda in these two cases is limited to the subject of the request."

Article (128): "1. Each shareholder has the right to attend General Assembly meetings and has a number of votes equal to their number of shares. Decisions are issued by an absolute majority of shares represented at the meeting. 2. Minors and persons under guardianship are represented by their legal representatives. 3. Proxy attendance at General Assembly meetings is permitted provided the proxy is a shareholder and the proxy is specific and fixed in writing. A shareholder may not proxy a board member to attend General Assembly meetings on their behalf. In all cases, the number of shares held by the proxy in this capacity must not exceed (5%) of the company's capital."

Article (129/third paragraph): "If a number of shareholders representing at least (5%) of the company's capital request to include certain matters in the agenda, the Board of Directors must include them. Otherwise, the General Assembly has the right to decide to discuss these matters at the meeting."

Article (133): "Voting in the General Assembly shall be by the method determined by the Articles of Association. Shareholder participation in the deliberations of the General Assembly and voting therein may be electronic, in accordance with the controls determined by the Ministry, in coordination with the Authority. Voting must be by secret ballot if the decision relates to the election or dismissal of board members, or bringing a liability lawsuit against them, or if requested by the Chairman of the Board or a number of shareholders representing at least one-tenth of the votes present at the meeting. Board members may not participate in voting on General Assembly decisions related to their discharge from liability. Decisions issued by the General Assembly in accordance with the provisions of this Law and the company's Articles of Association are binding on all shareholders, whether present at the meeting where they were issued or absent, and whether they agreed or disagreed. The Board of Directors must implement them immediately upon issuance."

Article (137/third paragraph): "However, this General Assembly may not make amendments to the company's Articles of Association that would increase the burdens on shareholders or change the company's nationality, or transfer the headquarters of the company established in the State to another country. Any decision to the contrary is void."

Article (152): "The company's capital is divided into equal shares, the nominal value of each of which must not be less than one Qatari Riyal and not more than one hundred Qatari Riyals. Issuance expenses must not exceed (1%) of the nominal value of the shares. The company's Articles may stipulate certain privileges for a category of shares in voting, profits, liquidation proceeds, or otherwise, provided that shares of the same category are equal in rights, privileges, and restrictions. Rights, privileges, or restrictions related to a category of shares may not be amended except by a resolution of the Extraordinary General Assembly, with the approval of two-thirds of the holders of the share category to which the amendment relates. A decision by the Minister shall be issued regarding the controls and conditions for preferred shares, and the rules and procedures for their conversion to ordinary shares and their redemption by the company."

Article (159): "The company shall keep a special register called the 'Shareholders Register', recording the names, nationalities, citizenship, and ownership of each shareholder, and the amount paid for the share value. The Management and the Authority have the right to access this data and obtain a copy. The company must, immediately upon listing its shares on the financial market, deposit a copy of this register with the Depository Institution and authorize that institution to maintain and organize this register. Each shareholder has the right to inspect this register free of charge regarding their shareholding, in accordance with the controls determined by the Authority and the Depository Institution in this regard. Any interested party has the right to request the correction of data in the register, especially if a person has been recorded or deleted from it without justification. Except for companies listed on the financial market, a copy of the data in the register and any changes thereto must be sent to the Management no later than two weeks from the date scheduled for the Annual General Assembly meeting, or from the date the modification was made."

Article (160): "The procedures and rules stipulated in the laws and systems regulating the listing and trading of securities in the State shall be followed regarding the listing of shares of a joint-stock company on the financial market, particularly those related to delivering the register mentioned in the previous Article to the entity specified by these laws, systems, and instructions."

Article (184): "Except for companies listed on the financial market, the company must publish semi-annual financial reports in local daily newspapers issued in Arabic and on the company's website, if available, for the information of shareholders. These reports must be reviewed by the Accountant Supervisor and may not be published except with the Management's approval."

Article (195): "Shareholders have the right of first refusal in subscribing to new shares. The right of first refusal may be waived in favor of others by a resolution of the company's Extraordinary General Assembly with a majority of three-quarters of the company's capital, provided that this waiver is obtained after Management approval. This provision does not apply to new shares in the company's capital issued in exchange for in-kind contributions, subject to the provisions of the Extraordinary General Assembly stipulated in Article (139) of this Law."

Article (206): "Except for the provisions of public subscription, all provisions of this Law regarding public joint-stock companies shall apply to private joint-stock companies."

Article (233): "The company's manager must submit a request to register the company in the Commercial Register. The request must be accompanied by the company's founding document and documents demonstrating the distribution of quotas among partners and their full payment, as well as documents demonstrating the company's receipt of in-kind contributions, if any. The request shall be decided upon within fifteen days from the date of submission, accompanied by the necessary documents. The company may not conduct any of its activities until it is registered in the Commercial Register."

Article (258): "The company's founding document may not be amended, nor its capital increased or decreased, except with the approval of partners representing three-quarters of the capital, unless the founding document stipulates a higher percentage or a numerical majority of partners in addition to this quorum. However, the partners' obligations may not be increased except by their unanimous consent. The General Assembly may, by the same majority, authorize the Manager to sign the amendment to the founding document."

Article (264): "A holding company is a joint-stock company or a limited liability company that exercises financial and administrative control over one or more other companies that become its subsidiaries, through owning more than (50%) of the shares or quotas of those companies, whether they are joint-stock companies or limited liability companies."

Article (288/item 6): "6. The acquiring company must take the necessary measures to protect the rights of the minority, including making offers lasting no less than thirty days to purchase the remaining shares or quotas for a consideration not less than the value of the shares or quotas subject to the acquisition, or the value determined by the expert appointed in accordance with the provisions of Article (158) of this Law, in the case of acquiring (50%) or more of the shares."

Article (312): "All debts owed by the company become due immediately upon its dissolution. The liquidator must notify all creditors by registered letter of the opening of liquidation and invite them to submit their claims. Notification may be made by publishing in two local daily newspapers, at least one of which must be in Arabic, and on the company's website, if available, if the creditors are unknown or their citizenship is unknown. In all cases, the notification for submitting claims must include a deadline for creditors of no less than forty-five days from the date of notification of their claims. The notification must be republished after twenty days have elapsed from the commencement of this period. If some creditors do not submit their claims, the value of their debts must be deposited in the treasury of the competent court until their owners appear or they become time-barred."

Article (323): "The Authority shall, in accordance with its legislation, have the following competencies regarding companies listed or to be listed in financial markets:

1. Approve the subscription prospectus issued by the company and endorsed by the Ministry, whether at establishment or upon capital increase.
2. Determine the dates for offering shares for public subscription and monitor the progress of subscription during those dates.
3. Monitor the implementation of resolutions issued by the company's General Assembly after endorsement by the Ministry, regarding capital increase or decrease, splitting the company's share value, or procedures for issuing other securities, or any decisions related to the Authority's competencies.
4. Establish procedures regulating the trading of subscription rights due to shareholders upon capital increase.
5. Establish conditions and controls for disclosing financial reports and publishing them, governance reports, and the company's status during the financial year, monitor their application, and provide comments on them, if any.
6. Establish controls for control, acquisition, merger, and division of the company, and controls for conversion to a public joint-stock company.
7. Establish procedures for evaluating in-kind contributions of the company, whether at establishment, upon capital increase, or upon conversion to a public joint-stock company listed on the financial market. Appeals against the Authority's decisions in this regard shall be in accordance with the procedures followed by the Authority's legislation."

Article (324/first paragraph): "In case a company violates the provisions of this Law or the implementing decisions thereof, the Management shall notify the violator and investigate with them. If the violator does not appear at the scheduled time for investigation, the Management shall set another date for investigation and notify the violator. If they do not appear on the new date, the Management may take the prescribed disciplinary sanctions. In all cases, the Management may take all or some of the following sanctions:

1. Warning.
2. Reprimand.
3. Prohibiting the violator from working as a board member or manager of any company permanently or for a specified period.
4. Imposing a financial penalty not exceeding an amount of (10,000) ten thousand Qatari Riyals daily for the continuing violation.
5. Imposing a financial penalty not exceeding an amount of (1,000,000) one million Qatari Riyals."

Article (330/first paragraph): "Shareholders or partners holding (10%) of the capital of a joint-stock company, limited liability company, or limited partnership by shares may request the Minister to order an inspection of the company regarding serious violations in the performance of duties attributed to board members and Accountant Supervisors, as determined by the Law or Articles of Association, whenever there are grounds suggesting the existence of such violations."

Article (4) The following texts shall be added to the aforementioned Commercial Companies Law:

Article (18/Repeated): "For the purpose of meeting the requirements of anti-money laundering and combating the financing of terrorism stipulated in the aforementioned Anti-Money Laundering and Combating the Financing of Terrorism Law, the Minister shall issue regulatory decisions determining the following:

1. Data, documents, and commercial register records that must be kept, how to access them at the company's premises, and the mechanism for submitting them to the Ministry and registering or endorsing them in the Commercial Register.
2. Procedures and deadlines for keeping records, documents, and papers related to the commercial company or its liquidation activities, with the company or the liquidator, as applicable, and the Ministry.
3. Mechanisms and controls for publishing data and documents related to commercial companies.
4. Procedures for disclosure by the proxy partner and proxy manager regarding whom they represent to the commercial company and the Ministry."

Article (98/Repeated): "Each of the Chairman, board members, and members of the Senior Executive Management must disclose to the General Assembly the positions they hold and the offices they assume personally or as representatives of legal persons, on a periodic basis. Combining the chairmanship of the Board with any executive position in the company is prohibited."

The Chairman in companies listed on the financial market may not be a member of any of the Board committees stipulated in the governance system issued by the Authority."

Article (107/Repeated): "The Board of Directors shall form an audit committee from among its members. The governance system issued by the Authority shall determine the controls for its formation, competencies, working system, and members' remuneration. The provisions of this Article apply to companies listed on the financial market only."

Article (116/second paragraph): "The company must compensate the shareholder for expenses and litigation costs incurred in case a judgment is issued in their favor."

Article (119/second paragraph): "The company's Articles of Association may stipulate that board members receive a lump sum in case the company does not achieve profits. In this case, the General Assembly's approval is required, and the Ministry may set a maximum limit for this amount."

Article (123/third paragraph): "The General Assembly may be convened through modern technology means, in accordance with the controls determined by the Ministry."

Article (133/Repeated): "No transaction or deal, or several transactions or deals connected, may be conducted within one year from the date of the first transaction or deal, aiming to sell the company's assets or take any other action on those assets, or the assets the company will acquire,

if the total value of the transaction or deal or connected transactions or deals equals in aggregate (51%) or more of the company's market value or the value of its net assets according to the last published financial statements, except with the approval of the Extraordinary General Assembly. For the purpose of this paragraph, the company's assets include the assets of any of its subsidiaries. The invitation papers for the Extraordinary General Assembly meeting must contain sufficient details about the action, its terms, and provisions."

Article (161/Repeated): "It is prohibited for any subsidiary company to own shares of its parent joint-stock company."

Article (265/second paragraph): "Subsidiary companies of a holding company may not own shares in that holding company."

Article (329/second paragraph): "As an exception to any other law, the plaintiff shareholder, in lawsuits related to violating the provisions of Article (109) of this Law, has the right to request all documents related to the transactions and deals mentioned in that Article, regardless of the nature of the documents, whether held by the company, any of its board members, members of the Senior Executive Management, the company, the person with whom the transaction was conducted, or any third party related to the deals. The plaintiff shareholder has the right to interrogate the defendants, witnesses, and parties joined in the lawsuit."

Article (5) All competent authorities shall, each within their respective scope, implement this Law. It shall be published in the Official Gazette.

Tamim bin Hamad Al Thani Amir of the State of Qatar

Issued at the Amir's Diwan on: 19 / 12 / 1442 AH Corresponding to: 29 / 7 / 2021 AD