Posted on February 09, 2014

Amendments maintain commitment to operate first class legal environment for firms in the QFC. The Qatar Financial Centre Authority (QFC Authority) has issued amendments in three important areas of the QFC legal environment for which the QFC Authority is responsible.

These changes aim to make QFC’s legal environment more appealing, simplify procedures and structures, give QFC firms more flexibility in their operations, improve legislative certainty and align QFC Regulations with best practice jurisdictions elsewhere in the world.

The amendments are to the Insolvency Regulations, the Single Family Office Regulations and Special Company Regulations (“Regulations”). New Insolvency Rules, Single Family Office Rules and Special Company Rules (“Rules”) have also been issued to support the Regulations by providing further details and guidance about the operation of the Regulations.

The issuing of the Amendments and Rules follows a public consultation process in which a number of QFC Firms and other relevant organisations locally and internationally participated.

The Insolvency Regulations and Rules:

The Insolvency Regulations deal with debtors who are unable to pay their debts or find that their liabilities exceed their assets.  As well as dealing with a number of specific and substantive enhancements, more straightforward amendments have also been made to update the terms and the phrases in the existing Insolvency Regulations.

Amongst a number of other provisions the new Insolvency Rules provide for the creation of a register of Insolvency Practitioners and sets out how Insolvency Practitioners can qualify to appear on the register. The Rules also allow a company to voluntarily apply to be struck off the Register of companies under certain conditions.  

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Single Family Office (SFO) Regulations and Rules:

An SFO is a private company dedicated exclusively to the investment, legacy and financial needs of one wealthy family.

The amendments to the SFO Regulations contain a number of clarifications including, but not limited to, the definition of a Single Family. They also set out the requirements for establishing an SFO and distinguish between the requirements which relate to the licensing of Single Family Offices and those which relate to the incorporation of a company as an SFO.

The SFO Rules contain further detail about the operation of the SFO, provide for the licensing and registration of Single Family Offices, address the criteria for recognition of an Eligible Firm and describe the procedures and requirements for amending the Articles of Association or transferring the shares in a SFO.

Special Company (SC) Regulations and Rules:

The SC Regulations provide the legislative framework for special purpose companies and holding companies. Special purpose companies (``”SPCs”) are entities created to fulfill specific objectives or purposes.  A holding company usually refers to a company that does not produce goods or undertake trading services itself; rather, its purpose is to hold and otherwise deal with both tangible and intangible property including shares and a variety of assets in other companies.

The amendments to the SC Regulations include a number of clarifications to definitions, such as Transaction, Special Purpose Companies, Holding Companies, Holding Company Activities and the entities which can hold shares in SPCs as nominees. The new Rules detail further the operation of the SC Regulations and in particular provide for the incorporation, licensing and registration of Special Companies; the approval of Support Service Providers; the application of various aspects of the Companies Regulations and Insolvency Regulations to Special Companies and various notification requirements placed upon Special Companies by the QFC Authority and the Companies Registration Office.

Shashank Srivastava, CEO and Board Member, QFC Authority, said: “An attractive legal environment is fundamental to the QFC’s standing as a world-class financial centre. The new Regulations and Rules underline our commitment to offer firms a highly competitive platform from which to conduct business in Qatar, the region and internationally.”

David Dhanoo, Chief Legal Officer and Board Secretary, QFC Authority, said: “We keep our legal environment under constant review, draw on best practice from around the world and respond promptly to client and practitioner commentary on existing and new legislation. These amended Regulations and accompanying new Rules are just some more examples of the legislative responsiveness of the QFC Authority. They aim to clarify many aspects of QFC legislation and give QFC-licensed firms more certainty and flexibility in their operations.”