Ministerial Decision No. 69 of 2004 Issuing the Executive Regulations for Law No. 25 of 2002 Regarding Investment Funds

Ministerial Decision No. (69) of 2004
Issuing the Executive Regulations for Law No. (25) of 2002 Regarding Investment Funds*

The Minister of Economy and Commerce,

Having reviewed the amended Basic Law, particularly Articles (33, 34) thereof; Having reviewed the Commercial Companies Law issued by Law No. (5) of 2002; Having reviewed Law No. (25) of 2002 Regarding Investment Funds; Having reviewed the Amir's Decision No. (39) of 1996 Regarding Cabinet Council Decisions Submitted to the Amir for Ratification and Issuance; Having reviewed the proposal of Qatar Central Bank, and the recommendation of Doha Securities Market; Having reviewed the Cabinet Council's approval of this Decision project in its regular session (18) for 2004, held on 12/5/2004,

Has decided the following:

Article (1)
The provisions of the Executive Regulations for the Investment Funds Law attached to this Decision shall be applied.

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Article (2)
All competent authorities shall implement this Decision, each within its respective jurisdiction. It shall take effect from the date of its publication in the Official Gazette.

Mohammed bin Ahmed bin Jassim Al Thani
Minister of Economy and Commerce

Issued in Doha on: 21/4/1425 AH
Corresponding to: 9/6/2004 AD

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Executive Regulations for the Investment Funds Law
Chapter One: Definitions

Article (1)
In applying the provisions of these Regulations, the following words and expressions shall have the meanings indicated alongside them, unless the context dictates otherwise:

(1) The Ministry: The Ministry of Economy and Commerce.
(2) The Minister: The Minister of Economy and Commerce.
(3) The Bank: Qatar Central Bank.
(4) The Governor: The Governor of the Bank.
(5) The Law: Law No. (25) of 2002 Regarding Investment Funds.
(6) Closed-End Fund: An investment fund that issues a fixed number of investment units forming its capital, with a specified number of investors for a specific purpose and duration, as per its basic law. (7) Open-End Fund: An investment fund that issues a variable number of investment units as per its basic law. (8) Investor: A natural or legal person subscribing to the investment units. (9) Public Subscription: The general invitation for subscription in the fund's capital.

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(10) Domestic Investments: Fund investments in financial papers and instruments, or in real estate, projects, or other financial investments, within Qatar.
(11) Foreign Investments: Fund investments in financial papers and instruments, or in real estate, projects, or other financial investments, outside Qatar.

Chapter Two: Licensing Conditions and Procedures

Article (2)
To license the establishment of a fund, the applicant must be a bank or an investment company that has been operating in Qatar for at least three years, and its basic law must permit the management and investment of third-party funds. The Bank may exempt certain banks and investment companies from the duration requirement according to specified controls.

Article (3)
The applicant shall submit a fund establishment application to the Bank on the form prepared by the Bank, accompanied by the fund's basic law and all documents specified by the Bank. The Bank shall review the application for a fund whose activity involves foreign investments, and issue its decision within thirty days from the submission date. If the application concerns a fund investing in domestic investments, or both domestic and foreign investments, the Bank shall refer it to the Minister within thirty days from the submission date, accompanied by its opinion, for a decision within fifteen days at most from the referral date. In all cases, the expiration of the specified period without a decision shall be considered as a rejection. Upon approval, the Minister may, in consultation with the Minister of Finance and the Governor, renew the percentage of non-Qatari participation in funds dealing with Qatari equities, real estate, and projects. The Bank shall issue the license and notify the applicant of the final decision in writing, accompanied by a receipt.

Article (4)
If the Bank rejects an application for foreign investment funds, the applicant may appeal to the Bank within thirty days from receiving the rejection notice or the expiration of the decision period, and the Bank's decision on the appeal shall be final. If the Minister rejects an application for domestic or both domestic and foreign investment funds, the applicant may appeal to the Bank within thirty days from receiving the rejection notice or the expiration of the decision period. The Bank shall refer the appeal to the Minister within seven days from its submission, and the Minister shall decide within fifteen days at most from the referral date. The Minister's decision on the appeal is final. In all cases, the Bank shall notify the appellant of the final decision within fifteen days from its issuance.

Article (5)
The fund shall be registered in the Ministry's Investment Funds Register upon request by the licensed party, accompanied by:

• 1. The license certificate.
• 2. A copy of the fund's basic law.
     The Ministry shall issue a registration certificate, and the fund acquires legal personality from the date of registration.

Article (6)
The Bank shall issue a license certificate containing its number, the fund's name, the founder's name, the fund type and duration, its capital, subscription units, non-Qatari participation percentage, and any other data the Bank deems necessary. The license certificate shall be recorded in a special register maintained by the Bank, containing:

• 1. License number, date, and Ministry registration number.
• 2. Founder's name.
• 3. Fund manager's name.
• 4. Investment custodian's name.
• 5. Auditor's name.
• 6. Fund name and duration.
• 7. Fund capital, number, and value of subscription units.
• 8. Any other data the Bank deems necessary, in accordance with the Law and these Regulations.

Chapter Three: Fund Capital and Subscription Procedures

Article (7)
The fund's capital shall be divided into investment units of equal nominal value in Qatari Riyals or any other currency specified by the basic law, and shall be offered for public or private subscription. Subscription to the fund's capital may not be made through in-kind contributions of any kind. The value of subscribed units must be paid in cash, in a single lump sum, unless the fund's basic law provides for installment payments.

Article (8)
The fund shall issue a certificate of subscribed units to each investor, signed by the legal representative of the founder or the fund manager. The certificate may not be issued until the full value of the subscribed investment units is paid in cash, and must include:

• 1. Subscriber's name as per the identity document.
• 2. Fund name, license number, and registration number.
• 3. Number of subscribed investment units and their nominal value.

Article (9)
The fund's basic law shall specify the fixed capital amount for closed-end funds, and the maximum limit for issuing variable capital units for open-end funds.
Capital in either fund may not be increased except within the limits and controls specified in its basic law.

Article (10)
The subscription prospectus shall include:

• 1. Fund name, license number, and registration number.
• 2. Fund manager's name, qualifications, and experience.
• 3. Other data specified in Article (18) of these Regulations.
• 4. Any additional explanatory information regarding the nature and risks of investment, which the founder deems important to disclose to investors.
     The founder shall facilitate investors' access to the subscription prospectus, along with a copy of the fund's basic law.

Article (11)
The founder shall issue a public subscription invitation to the fund through publication in local newspapers, plus any other media deemed appropriate. The invitation shall specify the start date for receiving subscription applications, the closing date, subscription limits and conditions, allocation, and the bank receiving subscription requests and funds. For private subscription, the invitation shall be directed to investors as specified in the fund's basic law. Subscription applications shall be prepared, specifying the investor's name and address, personal data, names of the fund, founder, investment custodian, and fund manager, number and value of units sought by the investor, and any other important conditions or data. The subscription application must also include the investor's confirmation that they have reviewed the fund's basic law and subscription prospectus, and accepted their contents.

Article (12)
The investment custodian, or the entity receiving subscription requests and funds, shall issue a receipt to the investor specifying the amount paid and the number and value of investment units sought. The subscription window may not be closed until the specified period expires, provided all offered units are not fully covered. If not all offered units are covered, the founder may extend this period by a maximum equivalent duration. After the specified period expires, subscription applications are submitted, units are allocated and discounted, and certificates or documents of subscription are delivered within fifteen days from the date the subscription window closes.

Article (13)
If the specified subscription period expires without fully covering the offered investment units, the founder may, with the Bank's approval, reduce the fund's capital to the covered amount, provided the reduction is not less than (50%) of the total value of units offered. The founder must, in case of reduction, update all documents, the fund's statutes, and issued certificates to align with the new status, and notify the Bank and Ministry. Copies of the amended documents shall be provided to them for necessary register adjustments. The fund's license shall be considered void if the subscription period expires without covering (50%) of the value of offered investment units. The founder shall refund investors the amounts paid, plus any returns accrued during the holding period, within fifteen days at most from the date the subscription window closes. The Bank shall notify the Ministry to remove the fund from its Investment Funds Register.

Article (14)
If subscription requests exceed the offered investment units, units shall be allocated to subscribers proportionally to their subscriptions, with fractional allocation amounts accruing to the founder's share unless otherwise specified in the fund's basic law. The founder and fund manager shall refund excess amounts to subscribers within fifteen days at most from the allocation completion date. The founder may, with the Bank's approval in this case, increase the fund's capital by the subscription increase up to a maximum of (10%) of the value of units offered for subscription, unless otherwise specified in the fund's basic law. The founder shall take necessary steps to document the new status, in accordance with the previous article.

Chapter Four: Founder's Obligations and Responsibilities

Article (15)
The founder shall perform the following:

• 1. Obtain the necessary license from the Bank to establish the fund, and register the fund with the Ministry.
• 2. Draft the fund's basic law, investment policies, and risk management policies.
• 3. Appoint the fund manager, investment custodian, and auditor, as well as any consultants or experts engaged by the fund, and contract with them, specifying their fees, commissions, and other benefits as determined by the fund's basic law.
• 4. Supervise the fund manager and investment custodian, guide them, and verify their compliance with the Law, these Regulations, and Bank directives. Ensure fund operations and investment management proceed properly and in accordance with the basic law and investment policies.
• 5. Organize the fund's subscription process, allocate investment units, issue and supervise documents, and verify their compliance with the Law, these Regulations, and the fund's basic law.
• 6. Take necessary actions regarding any violations by the fund manager or investment custodian, within the limits permitted by the fund's basic law, subscription prospectus, and their contract, as well as Bank directives issued under the Law and these Regulations.
• 7. Monitor the valuation process of the fund's investment units, verify their publication according to specified standards, in accordance with these Regulations and the fund's basic law and subscription prospectus.
• 8. Supervise financial reports, data, and information issued by the fund manager and certify them.
• 9. Provide the Bank with periodic reports on supervision results, promptly notifying the Bank of any violations of the Law, these Regulations, and Bank directives (including anti-money laundering directives), and actions taken by the founder regarding such violations.
• 10. Directly handle fund liquidation procedures in accordance with the Law, these Regulations, and the fund's basic law.

Article (16)
A founder wishing to list the fund's investment units in the market must obtain prior approval from the Market and the Bank, as specified by laws and regulations. A fund whose investment units are registered for trading in the Market is subject to prevailing rules, controls, and directives issued by the Market.

Article (17)
The founder, or one of its directors or employees, is prohibited from obtaining any benefit, profit, or advantage through managing and supervising fund operations and formulating policies, except for the fees or commissions specified in the basic law. The founder is liable to the Ministry, the Bank, and the Market for the fund's performance, financial status, and investors' rights, in accordance with the Law, these Regulations, the fund's basic law, and the subscription prospectus.

Chapter Five: Fund's Basic Law (Statutes)

Article (18)
The fund shall have a basic law specifically including:

• 1. Fund name.
• 2. Founder's name and address.
• 3. Investment custodian's name and address.
• 4. Fund type (open or closed).
• 5. Fund objective and nature of activity.
• 6. Fund duration.
• 7. Fund capital value and conditions/controls for increase or decrease.
• 8. Limits on issued investment units.
• 9. Number of subscription units and nominal unit value.
• 10. Minimum and maximum subscription limits per investor.
• 11. Conditions required for the fund manager.
• 12. Subscription type (public or private) and procedures.
• 13. System, timing, and conditions for unit redemption.
• 14. Method and timing of unit valuation, and net asset value calculation method.
• 15. Policies for calculating and distributing dividends or capital risks, and investment returns.
• 16. Investment and risk management policies.
• 17. Capital/investment guarantee mechanism for funds guaranteeing capital or returns.
• 18. Rights, obligations, and responsibilities of the founder, fund manager, and investment custodian, including fixed fees and commissions.
• 19. Rights and obligations of unit holders.
• 20. Periodic disclosure mechanism for fund activities, financial status, and performance results.
• 21. Fund's fiscal year.
• 22. Financial data and statements the fund is obligated to prepare and disclose.
• 23. Method for amending the fund's basic law.
• 24. Circumstances and procedures for fund liquidation.
• 25. Method for appointing the auditor, specifying term, fees, and duties.
• 26. Any other data the Bank deems necessary to add according to the Law.

Chapter Six: Fund Management

Article (19)
The fund shall be managed by a manager appointed by the founder with the Bank's approval, and coordinated with the Market if fund units are to be listed. The manager must meet:

• 1. Specialization, competence, and experience in investment.
• 2. Not be among the founder's board of directors or executive managers.
• 3. No final conviction for an offense involving honor and trust, unless restored.
• 4. Not declared bankrupt or suspended from debt payments.
• 5. Not dismissed disciplinarily or barred from practicing the profession.
• 6. Good reputation and conduct.
     If the manager is a legal entity, managing investment funds must be among its objectives per its basic law.

Article (20)
The fund manager must comply with investment and risk management policies specified in the basic law, acting with honesty and care to protect fund interests and assets. The manager must hedge risks related to the fund's activity and comply with all supervisory directives from the founder or Bank. Specifically, the manager shall:

• 1. Prepare periodic reports on fund activity, financial position, performance results, and subscription, plus any other reports specified by these Regulations or requested by the Bank/Market.
• 2. Disclose to investors, as needed, data, information, or developments materially affecting investment values or fund activity risks.
• 3. Maintain organized accounting records and books per prevailing laws/customs to record/verify transactions, retaining supporting documents.
• 4. Implement accounting policies conforming to International Accounting Standards, fulfilling obligations and duties under the audit agreement and contract with the founder.

Article (21)
The fund manager is prohibited from:

• 1. Using fund assets in activities contrary to the fund's purpose.
• 2. Obtaining for himself or a fund employee any benefit, profit, or advantage from operations conducted on behalf of the fund, beyond specified fees/commissions in the contract with the founder or basic law.
• 3. Directly or indirectly participating, or allowing a fund employee to participate, in investing in the fund beyond the permitted share.
• 4. Engaging in activities that the basic law does not permit for non-fund accounts.
• 5. Investing fund assets in other investment funds managed by or under the custody of the manager/custodian.
• 6. Investing fund assets in the founder's or fund manager's capital contribution.
• 7. Publishing inaccurate/incomplete data, concealing important information regarding fund activity and financial data.

Article (22)
The fund manager is liable for any damages incurred by investors due to violations of the Law, these Regulations, the fund's basic law, or Bank directives, or due to misuse of authorized powers, negligence, or carelessness in performing duties.

Chapter Seven: Investment Custody

Article (23)
The fund's investment custody shall be undertaken by a bank appointed by the founder, in coordination with the Bank. The custodian shall:

• 1. Safeguard fund assets, supervise them, open accounts, and maintain appropriate records.
• 2. Execute transactions and obligations arising from the fund manager's management and investment of assets.
• 3. Periodically review all transactions conducted by the fund manager, and changes in unit holders' rights and investor records, as specified by the basic law.
• 4. Value investment units according to specified standards, per the Law, these Regulations, and basic law.
• 5. Notify the founder of any violations by the fund manager discovered during performance.

Article (24)
The investment custodian is prohibited from:

• 1. Combining investment custody with fund management.
• 2. Directly or indirectly owning any investment units in the fund under custody.
• 3. Having joint interests with the fund manager, unless disclosed to the founder and not affecting performance/independence.
• 4. Obtaining benefits, profits, or advantages from performing duties, beyond agreed fees/commissions in the contract with the founder or basic law.
• 5. Publishing data/information on fund activity, performance results, and investors' rights, beyond those authorized by specified duties per the Law and these Regulations.

Chapter Eight: Financial Statements, Final Accounts, and Investors' Rights

Article (26)
Each fund shall have a fiscal year of twelve months, with start and end dates specified by the basic law.

Article (27)
After the fund's annual report, at least every three months per basic law schedules, the auditor shall review it, including the fund's activity statement and financial data. An annual report certified by the auditor regarding financial statements and final accounts shall be prepared as specified in the basic law, according to International Accounting Standards, within a period not exceeding two months from the fiscal year-end date. Annual financial statements shall be published in at least one local daily newspaper during this period.

Article (28)
The fund manager shall provide the Bank with copies of all financial reports prepared by the fund, sufficiently before disclosure or publication as specified by the Bank. The Bank may request the founder or fund manager to reprepare financial data if found inaccurate or insufficiently disclosing the fund's financial position and performance results.

Article (29)
Redemption of subscription units, whether at the fund's maturity or during its operation, is subject to conditions, controls, and timing specified in the basic law. Redeemed units are valued according to the valuation specified in the subscription prospectus. The investment custodian, founder, or designated party shall value units (during operation or at maturity) using one of the valuation methods per basic law and prospectus, on periodic intervals not exceeding three months. Valuation prices shall be published in two local newspapers, one in English. The fund's auditor must review the valuation method and procedures, verifying compliance with International Accounting Standards and the basic law.

Article (30)
Unit holders in the fund shall have equal rights regarding profit and investment loss distribution, and receiving a proportionate share of net assets.