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In today’s globally integrated economy, converting an existing company to a 100% foreign ownership LLC is widespread at the corporate and individual levels. With the amendments in the laws, Qatar now allows the expats to convert their 100% Sole Proprietorship or a With Limited Liability(W.L.L) Company to a 100% foreign investment company. A share transfer from the existing 49-51 to 100% helps expats in company formation without any local shares. Providing full ownership to foreign investors in Qatar benefits the agriculture, manufacturing, health, education and tourism businesses to flourish and transform its faces with greater flexibility, control and quick decision-making.
Earlier, foreign companies had to follow the 49-51 rule in Qatar. According to this rule, a foreign company established in Qatar must have 49% expatriate shareholders and 51% resident shareholders or entities wholly led by Qatar which prevented the expats from setting up a 100% foreign-owned company in Qatar. However, with the changes made in the new Foreign Investment Law– Article 2 on 24 January 2019, Qatar was able to create 100% ownership for expatriates for most of the business activities such as agriculture, manufacturing, health, education and tourism.
Scope of Forming a 100% Foreign Ownership LLC
An LLC is a limited liability structure with shareholders’ liability limited to the value of the share capital. The idea of limited liability prevents individuals from being liable for the company’s financial losses and debt liabilities if the company is in loss. Thus, liability is only met with the company’s assets alone and not with the partner’s or shareholder’s assets. The clients can confidently choose a Limited Liability Company over other types of entity, including Establishment, Civil Business, and Foreign Branch, which have unlimited liability due to which the individual or the mother company might face a huge risk of loss. Therefore, this can be one of the many reasons the clients are ready to convert their current Establishment, Civil Business, and Foreign Branch structure to an LLC.
Benefits of Converting an Existing Company to 100% Foreign Ownership LLC
For the country:
⭐ Foreign investments: Helps attract
⭐ New investments, with more companies being encouraged to invest in Qatar.
⭐ Economic Stability: Helps maintain economic stability by providing opportunities to set up new businesses and create talented profess
For the Partners or shareholders:
⭐ Limited Liability: In an LLC, the owner’s liability is limited to the business’s assets.
⭐ Reduced Risk: An LLC helps reduce the risk of loss with its limited liability structure other than any other type of entity.
⭐ Company formation without local shares.
Procedure for Converting an Existing Foreign Branch to 100% Foreign Owned LLC
⭐ Apply for a new company name: The conversation of an existing company to a 100% foreign-owned LLC starts with applying for a new name. The name should reflect the new entity type. For example, if the name was ‘Aroma Spices Sole Establishment’, you can change it to ‘Aroma Spices LLC’.
⭐ Updation of the company documents: Updating the company’s documents is crucial once you change the type of legal entity. This includes amendments to MOA, Trade Licence, Immigration Cards, E-Signature Card and Labour Cards.
⭐ Share transfer and updation of licenses: The next step is to undertake a share transfer and update the license to establish the 100% foreign-owned LLC. In the case of a Civil Company, the Partnership Agreement will be submitted, and an MOA will be established.
⭐ Updating the bank details: The company can continue using the same bank account and government department files as the trade license number remains the same but with the updated name and company form.