LLC: Limited Liability Company in Qatar (also called WLL)
The practice of company formation in Qatar has Limited Liability Company in Qatar (LLC Qatar) as one of the most common practices. Forming a Limited Liability Company in Qatar is one of the most convenient and highly preferred practices in Qatar for businessmen who wish to invest in Qatar.
Now let us begin with understanding what exactly is a Limited Liability Company. A Limited Liability Company is a type of partnership which is basically a hybrid of a legal entity having some characteristics of each – a corporation and a partnership or sole proprietorship (depending on the number of owners).
An LLC is a type of unincorporated association which is different from a corporation. The main characteristic of an LLC that is common with a corporation is that it has a limited liability. The Limited Liability Company partnership is often considered to be more flexible than a corporation and it is more apt for individually owned companies.
The ground rule for company formation in Qatar is that a non-Qatari can invest in Qatar only through a joint venture company incorporated in Qatar. The partners of the company must include one or more residents of Qatar or must have 100 percent Qatari-owned entities holding no less than 51% of the share capital.
The Qatari partner holds 51% of the company share whereas the foreign investor owns the remaining 49% shares of the WLL company. However, a new law amended, known as The Foreign Investment Law No.13 of 2000 permits 100% foreign ownership of WLL company related to agriculture, manufacturing, health, education, and tourism business.
It also offered the foreign investors a number of substantial incentives, including the freedom to repatriate all profits to the investor’s country of origin. A separated company profit share is arranged by the authorized figures of the company which does not reflect the shareholding agreements.
The concept of joint venture companies with Qatar residents as partners is allowed in all sectors of the economy excluding commercial agencies and real estate.
The foreign partners in partnerships must pay the full amount against their share of share capital to an authorized financial institution in cash prior to obtaining the Companies’ Commercial Registration. There is a minimum share capital for a Limited Liability Company should be there at the time of registering a company in Qatar.
However, the amount may change with time. As per the rules, the Company needs to put aside a sum of 10 percent of its net profit until the reserve stands at 50 percent of the total share capital amount.
However, it must be noted that the company’s profit shares do not do not necessarily have to reflect their shareholdings. This implies to the fact that since this a Limited Liability Company, the profit sharing and the loss sharing may vary in percentages. There may be contractual partnerships wherein the partners only share the profits and not the losses.
If you are a foreign investor who is looking forward to invest in Qatar, we suggest you to invest through a joint venture company in a Limited Liability Company format. The LLC format having the basic ground rules of having Qatar residents as partners must be adhered to.
