Beneficial Owner Identity Required For Commercial Registration
April 28, 2021
On April 18, 2021 Qatar’s Ministry of Commerce and Industry (“Ministry”) announced that applications for new commercial registration certificates (“CR”), or any applications for renewal or amendment of existing CRs, will not be processed unless the applicant identifies the beneficial owners of the entity, in line with Law No.1 of 2020.
Law No.1 of 2020 (“UERL”) was promulgated last year introducing the Unified Economic Registry to support transactional transparency by collecting certain information relating to entities licensed to operate in Qatar. Among other registries, the UERL created a register of the beneficial owners in licensed entities (i.e. natural persons who exercise certain levels of control over the entity). A beneficial owner is:
- A natural person who directly or indirectly owns an effective controlling share of at least 20% of the legal entity’s capital or voting rights; or
- A natural person who exercises, whether directly or indirectly, actual or legal control over the executive bodies or the general assembly of a legal entity; or
- If a beneficial owner cannot be identified based on the foregoing paragraphs, then the beneficial owner may be identified as the individual who legally represents the legal entity such as a general manager or CEO.
This definition of beneficial owner is similar to the definition found in Council of Minsters Decision No. 41 of 2019 promulgating the implementing regulations of the Anti-Money Laundering and Combatting Terrorist Financing Law. Requiring the identification of beneficial owners will therefore not only assist in supporting transactional transparency, but it should also assist in preventing money laundering and terrorist financing.
The requirement to disclose the identities of beneficial owners applies to all commercial companies except:
- Joint stock companies listed on the Qatar Stock Exchange;
- Companies owned by the State or by public corporations and authorities, or in which the State owns a controlling share; and
- Branches of foreign companies.
Failing to disclose the identity of beneficial owners to the Ministry could result in imprisonment of up to two years and/or a fine of not more than QR 500,000. Managers and board members may also be suspended and the company could be deregistered.