Qatar Financial Markets Authority (QFMA) Regulations

Official Gazette – No. 1 – 21 January 2009
Qatar Financial Markets Authority Board of Directors Resolution No. (1) of the Year 2008 Issuing the QFMA Regulations The Board:
Having reviewed Law No. (33) of 2005 concerning the Qatar Financial Markets Authority and the Qatar Securities Company, amended by Law Decree No. (14) of 2007; And the Emiri Resolution No. (29) of 1996 concerning Cabinet resolutions submitted to the Emir for approval and issuance; And upon the recommendation of the Authority's Chief Executive Officer; And upon the Cabinet's approval of this Resolution draft at its regular fifth meeting for 2008 held on 30/1/2008; Decided as follows:
Article (1):
The provisions of the attached QFMA Regulations shall apply.

Article (2):
All competent authorities shall implement this Resolution according to their respective jurisdictions. It takes effect from the date of issuance and is published in the Official Gazette.
Yusuf Hussein Kamal
Minister of Finance and Acting Minister of Economy and Commerce Chairman of the QFMA Board Issued on: 24/03/1429 (corresponding to: 01/04/2008)

QFMA Regulations
Chapter One: Definitions
Article (1):
For the purpose of applying these Regulations, the following words and expressions shall have the meanings indicated alongside each of them, unless the context dictates otherwise:
Notification to the Controlling Authority: A notification concerning a change in control over a licensed company or an entity owning a licensed company.
Investment Management: Making decisions regarding the purchase and sale of financial assets on behalf of, or by delegation from, another person.
Promotion (Exception): Any communication by any means contained in an issuance prospectus is considered promotion if its purpose or effect is:
(a) Promoting or advertising:

1. Listed securities instruments, or securities instruments for which a listing application has been submitted to trade in one of the financial markets.
2. Any regulated activity or an activity that will be regulated if conducted in the State.
   (b) Inviting or encouraging any person to:
3. Enter into an agreement with any person regarding listed securities instruments, or securities instruments for which a listing application has been submitted to trade in one of the financial markets.
4. Engage in a regulated activity or an activity that will be regulated if conducted in the State.
   Listing: The authorization to list securities instruments in one of the markets supervised by the Authority or others.
   Relatives: The spouse and minor children.

Protected Matters: Information exchanged between a legal advisor and their client, or any person representing the client, conducted either regarding legal advice to the client or concerning legal proceedings (including exercising the Authority's powers under these Regulations and procedures before the Committee of Appeals, for the purposes of those proceedings). Financial Crime: Using the financial system for criminal, fraudulent, or unlawful purposes, including trading based on inside information, market abuse, and trading in proceeds of crime. Supervision: The intervention of the supervisory authority in market operations by issuing conduct rules that require or prohibit specific actions, and overseeing compliance with those rules while holding violators accountable and imposing penalties. Close Links: A licensed company has close links with another person if:
(a) The other person is an entity owning the licensed company.
(b) The other person is a subsidiary of the licensed company.
(c) The other person is an entity owning a subsidiary of the licensed company.
(d) The other person is a subsidiary of an entity owning the licensed company.
(e) The other person owns or controls 20% or more of voting rights or capital in the licensed company.
(f) The licensed company owns or controls 20% or more of voting rights or capital in that other person.
Parent Entity: An entity that:

1. Owns, directly or indirectly, alone or in concert with others, a majority of voting rights in another entity, or benefits from that entity.
2. Has the right to exercise controlling influence over the management and operation of another entity according to its articles of association or any other agreement.
   Issuer/Issuing Body: An issuer of securities instruments offered in the primary market or listed for trading in the secondary market.
   Publication: Publication in printed or electronic form.

Depository Institution: The entity responsible for clearing, settlement, deposit, and registration for one of the organized markets.
External Supervisory Authority: A government body, organization, or other entity possessing supervisory or oversight authority located outside the State (whether headquartered in the State or otherwise). Year: The Gregorian year. Investment Market: An entity providing instruments for purchasing and selling investments from participants using those instruments, including a multi-party trading facility or managing such a facility. Month: The Gregorian month. Sukuk (Islamic Bonds): Certificates issued by an issuing body that create or acknowledge the issuing body's indebtedness to the certificate holder(s) under terms stipulating that the issuing body must pay the holder(s) payments calculated based on specific investments, but do not stipulate that the issuing body pays interest or any other fixed return in relation thereto. Court: The competent court in the State of Qatar. Listed: A securities instrument licensed by the Authority for acceptance to trade in one of the financial markets. Controlling Person: A person having a controlling unit over a licensed company, or with others, or in the process of obtaining it. Participant: Regarding a person:
(a) The spouse of the person.
(b) A child of the person.
(c) A trustee over any settlement (including an arrangement whereby assets are held in trust or subject to a similar obligation) under which that person has a beneficial interest for life.
(d) An entity of which that person acts as a manager.
(e) An entity in the same group to which that person belongs.
(f) A person who acts as an employee or partner of that person.
(g) If that person is an entity:

1. A manager to that person.
2. A subsidiary of that person.
3. A manager or employee of that subsidiary.
   (h) Any person with whom that person has an agreement or arrangement to act together regarding each of them acquiring, holding, or disposing of shares or interests in a specific entity, or concerning the exercise of their voting rights regarding that entity. Issuance Prospectus: A document prepared by the issuer containing a comprehensive, accurate, and sufficient disclosure of all information relevant to investors regarding the securities instruments subject to issuance. Licensed Securities Instrument: A securities instrument authorized by the competent supervisory authority for issuance in the primary market or listing for trading in the secondary market in one of the financial markets. Supervised Function: A function exercised within activities licensed by the Authority, requiring the officeholder to be approved by the Authority.

Chapter Two: General Provisions
Article (2):
The Authority exercises its powers under Law No. (33) of 2005 referenced in these Regulations and the bylaws it issues to achieve its supervisory objectives, operating according to the best global standards ensuring the establishment of financial markets in the State as leading financial markets, and enhancing understanding of their objectives among participants and other interested persons. To achieve this, the Authority may consider the following:

1. Organized market licensing requirements set forth in Annex III attached to these Regulations.
2. The financial soundness and adequate financial resources of licensed companies, and the existence of effective internal control systems.
3. Appropriate customer protection levels at licensed companies, and the different information levels that may be appropriate to provide them.
4. Risk levels related to different types of investments or transactions.
5. Licensed company customers' responsibility for their own decisions.

Article (3):
The Authority considers the following when exercising its powers:

1. Utilizing resources in the most efficient manner.
2. Encouraging innovation and enhancing competitiveness in financial markets.
3. Enhancing competition among persons supervised by the Authority.
4. Fairness, transparency, and objectivity when exercising the Authority's functions and powers.
5. Adherence to agreed good governance principles, as deemed appropriate for its objectives and functions.
6. Balancing burdens and obligations on companies with supervisory benefits.

Article (4):
The Authority determines conflict of interest situations and how to handle them regarding directors, officers, employees, and agents during their duties, ensuring these persons have no role in decisions concerning matters materially conflicting with their interests.

Article (5):

1. The Authority issues necessary bylaws for all supervised activities, specifically:
   (a) Its responsibilities as a listing authority, including:
2. Procedures and requirements for listing securities instruments and/or registering them for trading in an organized market, including any fees due for listing applications and continued listing of related securities instruments.
3. Conditions that issuers must meet to qualify for trading in organized markets.
4. Reporting obligations and requirements for issuers.
5. Requirements related to corporate governance practices and adherence to best practices by issuers, including provisions on executing transactions between controlling members and the issuer, and control disclosure.
6. Conditions related to mergers and acquisitions of issuers listed in an organized market.
7. Circumstances under which the Authority may suspend or cancel the listing of any or more related securities instruments or categories thereof.
   (b) Application of any temporary or interim regulations regarding the implementation of these Regulations and any bylaws issued thereunder.
   (c) The manner in which licensed companies conduct regulated activities, including restrictions on activity types that licensed companies or categories thereof may conduct, and any conditions or requirements to be met when conducting certain activities. (d) Procedures and requirements for individual licensing by the Authority, including procedures and requirements for modification or cancellation. (e) Standard conduct standards applicable to a category of licensed companies and approved individuals, including standards that apply only when these persons deal with specific categories of current or potential clients, or conduct certain types of work. (f) Resource levels and types (including financial and human resources) that licensed companies must maintain. (g) Infrastructure, systems, controls, and procedures that licensed companies must apply and maintain. (h) Licensed companies' protection and custody of customer funds and other assets. (i) Licensing fees, annual membership subscriptions, and any other authorized fees due to the Authority. (j) Procedures, requirements, and standard conduct standards applicable to licensed companies and approved individuals. (k) The Authority's conduct and that of its officers, employees, and agents regarding the exercise of their powers. (l) Procedures and requirements applicable to licensed companies concerning the discovery and prevention of financial crimes. (m) The Authority's powers regarding the Dispute Resolution Committee as specified in the Dispute Resolution Regulations.
8. The Authority may issue standards or approve principles that serve as rules for the purposes of these Regulations, unless such standards provide otherwise.
9. The Authority may publish proposed rules on its website or by other appropriate means, provided the publication includes:
   (a) Draft of the proposed rules.
   (b) The date on which the proposed rules will take effect.
   (c) An invitation to submit views, with a specified deadline.
10. The Authority may issue advisory documents, open letters, policy statements, information notices, and consultation papers, and conduct other types of consultations as deemed appropriate.

Article (6):
The Authority may, upon request or on its own initiative, approve in exceptional cases that any rule it issues applies or does not apply to specific persons if it finds the compliance burden on that person significantly outweighs the intended benefits, or that compliance with the rule will not achieve its purpose. The Authority ensures the decision does not create unavoidable risks for persons whose interests the measure aims to protect, and publishes the decision in a manner ensuring notification of those likely affected and others likely subject to similar notifications.

Article (7):

1. The Authority may issue general or specific circulars containing information and advice regarding the application of law, regulations, bylaws, or concerning the Authority's powers, supervisory objectives, or other matters the Authority deems appropriate to provide information or advice on. Such circulars reflect the Authority's opinion at the time and circumstances of issuance only.
2. General circulars with specific rules follow consultation procedures before enforcement, and the Authority publishes the general circular to notify likely affected parties and others likely subject to a similar circular, unless the Authority is convinced it is inappropriate or unnecessary to do so.

Article (8):

1. The Authority makes available to the public: issued regulations and bylaws, proposed rules it deems appropriate for publication, general circulars, statements of the depository institution and organized markets, advisory documents, licensed company and licensed activity data, approved individuals' data (including their approved functions and work addresses), disciplinary decisions, licensing or cancellation decisions, the Authority's penalty policy, the Authority's annual report, periodic financial reports, and other necessary disclosures filed by issuers with the Authority, and any other information the Authority deems appropriate for public access.
2. The Authority is not obliged to make information available to the public if it deems it contrary to public interest or financial system stability, or unfair to any person (other than the Authority) concerned by that information (wholly or partially), provided the Authority publishes quarterly details of regulations and rules issued during the preceding quarter, with or without a fee.

Article (9):
The Authority takes necessary steps to protect information confidentiality. Disclosure of any confidential information obtained during or through exercising functions is prohibited, whether by the Authority, its officers, employees, agents, contractors, persons appointed for reporting, inspection, investigation, or audit, persons designated under Annex I attached to these Regulations for review, handling complaints against the Authority, conducting systemic investigations, or recipients of such confidential information. Confidential information may be disclosed by the Authority or the aforementioned persons if the concerned person consents, law permits, these Regulations permit, any bylaws issued thereunder permit, or for exercising the Authority's powers, the Committee of Appeals' powers, the Dispute Resolution Committee's powers, any anti-money laundering authority, or external supervisory bodies.

Article (10):
The Authority enhances relations with external supervisory authorities and international regulatory organizations outside the State to promote the highest local and international supervision standards and provide mutual assistance ensuring international market integrity. The Authority may sign memoranda of understanding considering reciprocity, public interest, and prevailing laws and legislation. The Authority maintains confidentiality of cooperation requests and confidential information exchanged with other external supervisory authorities, unless consented otherwise or used for stated cooperation purposes, civil/administrative enforcement proceedings, criminal appendices, investigations of any violation, or response to a legally enforceable request, provided the Authority notifies the providing external supervisory authority before responding. The Authority may request cost-sharing for cooperation requests or assistance.

Article (11):
A Dispute Resolution Committee is established through arbitration and other dispute resolution mechanisms, exercising jurisdiction according to the rules, conditions, and terms specified in the Resolution establishing it.

Article (12):

1. The Authority may establish rules regarding what must be notified or information provided to the Authority by depository institutions, markets, licensed companies, approved individuals, issuers, or other persons, including the form and content of such notifications and information, submission means and deadlines, approval procedures by these entities, and enforcement methods.
2. Any person providing information or documents to the Authority under law, these Regulations, any rules, or bylaws issued thereunder, or voluntarily, shall not be subject to any liability for doing so, provided that person acted in good faith believing the information or documents relate to any of the Authority's powers under law, these Regulations, or other bylaws.

Chapter Three: Supervised Activities
Article (13):
Financial market activities in or from the State may not be conducted, except by supervised markets and depositories, and licensed companies.

Article (14):
Work is considered supervised if it operates as a licensed market or depository, falls under one or more activities specified in Annex II attached to these Regulations related to one or more licensed securities instruments, or is conducted on a professional basis.

Article (15):
An activity is considered professional if the person performing it represents itself as conducting such activity, or seeks to persuade non-licensed companies to participate in transactions constituting this activity, or is subject to any rules the Authority establishes regarding it. The Authority may issue rules on cases considered professional activities and exceptional cases where a person is not participating/seeking participation or is considered a market client.

Article (16):

1. Activities not considered within activities conducted in/from the State are deemed so if:
   (a) The registered office of the performing person is in the State, and daily management of those activities is its responsibility, even if wholly/partially performed outside the State.
   (b) The registered office of that person is outside Qatar but activities are performed through a branch in the State.
   (c) Activities considered conducted in/from the State under Authority rules.
2. The Authority may issue bylaws on cases where activities potentially affecting financial markets, conducted in/from the State, are deemed so.

Article (17):
No person may purchase, sell, or participate in listed securities instruments or invest in investments directly/indirectly related to listed securities instruments, unless:

1. In a market supervised by the Authority.
2. According to rules of a supervised market.
3. When a transaction in the listed securities instrument/investment occurs in an external market, the listed securities instrument has been listed for trading there with Authority approval.
4. Permitted by Authority rules.

Chapter Four: Licensing Companies to Conduct Supervised Activities
Article (18):
Persons registered in the State or having a branch therein may apply to the Authority for licensing to conduct supervised activities. A licensed person may apply to modify the license by adding/removing activities, modifying/revoking imposed conditions/terms, or fully revoking the license. The applicant may withdraw the application by notifying the Authority before a decision is issued.

Article (19):
The license application, modification, or cancellation must include data/information specified by the Authority. The Authority may request additional information deemed necessary to decide on the application. The applicant must notify the Authority of any significant related changes occurring before the Authority's decision.

Article (20):

1. The Authority decides on the submitted application within ninety days from receiving all required documents, and failure to issue a decision within this period is deemed a rejection unless the Authority notifies the applicant of an extension, and issues approval (with/without conditions) or rejection.
2. The applicant may appeal the Authority's rejection decision to the Committee of Appeals within three weeks from notification by registered mail with acknowledgment of receipt.
3. If the license application is rejected, the applicant may not submit a new application until one year has passed from the rejection decision date.

Article (21):

1. The applicant must meet the following criteria:
   (a) Competence and suitability for the activity conducted/sought.
   (b) Compliance with legal form specified by the Authority.
   (c) Adequate financial and human resources, and other resources.
   (d) Systems used by the applicant and supervision means.
   (e) Suitable premises.
   (f) Licensed company customers' interests, and effective financial system supervision in case of license cancellation.
   (g) The Authority's ability to effectively supervise the applicant/licensed company.
2. The Authority may consider the applicant's contractual/potential relationships, close links with others, or compliance with foreign jurisdiction obligations likely to prevent effective supervision.

Article (22):
The license may not be assigned to others, and the licensed entity's license is unaffected by changes in its partners, considering control rules specified in Chapter Five.

Article (23):
The Authority may impose/modify conditions/restrictions on any license, or oblige specified persons to do/refrain from doing an act, or suspend/cancel/modify the granted license by striking out one or more activities when deemed appropriate for supervisory objectives:

1. If the licensed company fails/will likely fail to meet accepted application criteria.
2. If the licensed company fails, for at least six consecutive months, to conduct its licensed activity.
3. If exercising such powers is necessary to protect customers' interests or the financial system.
4. If the licensed company violates one or more applicable license conditions/restrictions.
5. If the licensed company violates Law/Regulations/bylaws/other related legislation.
6. If a request is received from an external supervisory authority.

Article (24):

1. Any agreement entered into during supervised activities by a person not considered a licensed company is unenforceable against the other party.
2. The other party may apply to the Dispute Resolution Committee to recover any paid funds or transferred assets under the agreement, claim compensation for losses resulting from such payments/transfers, and return any funds/assets delivered under the agreement.
3. When transferred assets are transferred to a third party, references in this article to such assets shall be construed as references to the asset value at the time of transfer under the agreement.
4. If the Dispute Resolution Committee finds the unlicensed person reasonably believed they did not violate licensing requirements, it may issue a decision enforcing the agreement, and paid funds/transferred assets under that agreement shall be retained or dealt with as determined by the Committee.

Chapter Five: Control Related to Licensed Companies
Article (25):
Provisions of this Chapter apply to persons acquiring or changing the level/type of their control over a licensed company, or the licensed company subject to acquisition/control change.

Article (26):
No person individually or jointly with others may control a licensed company, or increase their control level, without prior approval from the Authority.

Article (27):

1. The licensed company must notify the Authority when a person intends to control, increase, decrease, change the level/type of, or terminate their control over it, thirty days before the proposed acquisition/change. If impossible, they must notify the Authority immediately upon knowledge with all available information, and inform the concerned person of their obligations.
2. If the licensed company is unaware of the acquisition/control change, or unable to obtain sufficient information to notify, the notification must be provided by the person intending/having acquired control, within the period specified in the preceding paragraph.
3. The licensed company must apply systems and controls aimed at ensuring it is notified of any control acquisition or change.

Article (28):

1. For this Chapter, a person is considered to have acquired control over a licensed company if:
   (a) They own 10% or more of shares/voting rights in the licensed company.
   (b) They own 10% or more of shares/voting rights in a parent entity of the licensed company.
   (c) They can exercise significant influence over the management of the licensed company or a controlling entity by virtue of share/voting rights ownership, or contractual arrangements.
2. The Authority may issue rules determining control levels/types and changes in control that trigger notification requirements.
3. For this article, the following terms mean:
   (a) Shares:
4. Regarding a licensed/related parent company with share capital, means allocated shares.
5. Regarding a licensed/related parent company without share capital, means participation rights in the company's capital.
6. Regarding a licensed/related parent company without capital, means interests granting any right to share in profits, or responsibility for sharing losses, in the licensed/related parent company, or arising from any obligation to contribute to bearing debts/expenses of the licensed/parent company upon liquidation.
   (b) Voting rights:
   Regarding a licensed/related parent company without general meetings making decisions by voting, means the right under the articles of association to direct the general policy or amend the articles.

Article (29):

1. The Authority issues its decisions within thirty days from receiving all required information – after consulting with relevant parties including foreign competent authorities – and notifies the concerned licensed company. When a control notification is submitted by another person, it notifies both the licensed company and that other person. Failure to issue a decision within the specified period is deemed a rejection unless the period is extended.
2. The Authority may cancel approval or attach/modify conditions if all criteria for granting approval are not met, or justified reasons appear.

Article (30):
If a person acquires or continues to hold shares in violation of a provision or decision, the Authority may cancel the licensed company's license unless this person disposes of the shareholding...