Chapter One

Supervision Rules  

Having seen article (60) of the Decree Law No.(15) of year 1993 establishing Qatar Central Bank;

And the approval of the Council of Ministers on QCB Notice No.(1) of year 1997;

The following have been decided:

Article 1  

Definitions  

The Board: The Board of Directors of Qatar Central Bank.

The Governor: The Governor of Qatar Central Bank

The Bank: Qatar Central Bank (QCB)

The Year: The Gregorian year.

Financial Institution: Any company or establishment licensed to grant credits or invest funds with no right to accept deposits.

Banking Business: Acceptance of deposits for use in banking operations, such as discounting, purchase or sale of negotiable instruments, granting loans, trading in foreign currencies and precious metals.  And generally all that is considered as such by commercial laws or by custom.

Money Changing Business: Changing of foreign currencies in the form of banknotes, purchase or sale of travelers’ cheques, coins, precious metals and gold bullions, handling of personal remittance business with licensed correspondence agents abroad.

The Company: The investment company.

Investment Company: Any financial company licensed to operate as an investment company conforming to article No.(2) of this Resolution.

Finance Companies Business: Grant various consumption facilities and all that is stated in the commercial laws or the banking customs and the Resolutions issued by QCB as so, defined and approved by the QCB.

Securities and Financial Instruments: Stocks, bonds, securities and other financial instruments, inside and outside Qatar, and all that is considered so by law or by custom, and approved by  QCB as such.

Article 2  

The Investment Companies Business    

1- The business of these companies is constituted of one business or more of the following main businesses:  

1.1- Investment for others: Managing investment accounts, establishing and managing investment portfolios and funds for others, whether for individuals or sole and joint institutions.

1.2- Financial mediation: Deal in mediation of securities through sale and purchase transactions, ownership transfer and registration in securities and local and international instruments.

1.3- Finance: Grant credit for the investment activities purposes of the company and for financing investment projects.

1.4- Underwriting: Organize and market shares, bonds and other securities for companies and other projects.

1.5- Corporate Finance: Organize the financing structure necessary for private and public institutions in addition to organizing companies’ sale and purchase of investment.

1.6- Investment Consultation: Offer investment consultancies for the investors and make financial and economic studies for the projects and institutions.

1.7- Custody: Offer custody services for the various securities of the local and international investors.  

2- Any other investment businesses defined and approved by QCB are to be considered within the investment companies businesses.

3- The companies business is to be based on conventional or Islamic basis, allowed by the Commercial Law in Qatar and approved by QCB.

4- Companies are forbidden from accepting deposits.

5- Companies are forbidden from exercising the businesses of the finance companies, the exchange houses and the banking business, except the investment activities mentioned in this article.  

Article 3

Licensing  

1- No company is allowed to practice the investment businesses or represent foreign investment companies or any branch of them in Qatar unless licensed by the QCB, registered in the Commercial Register and in the Register of the Investment Companies of QCB.  Exception is made for the investment consultation businesses that are not accompanied by any other investment business determined in article (2).

2- Any company wishing to practice investment activities in Qatar, or any local or foreign investment company wishing to open a branch or an office in Qatar has to submit a licensing application conforming to the form prepared by QCB.  This form contains the required information and all documents supporting it and required in the form should be enclosed thereto, with the fee of the application, five thousand Qatari riyals for the company or the branch and ten thousand Qatari riyals for the representative office. These fees are non-refundable.

3- All provisions of Resolution No.(1) of year 1995 clarified in the Executive Instructions of the banks issued by QCB, regulating the licensing and the business of the banks representative offices and the foreign financial institutions in Qatar are to be applied on the foreign financial institutions wishing to operate in Qatar.

4- QCB studies the license application and checks whether the requirements and statements are fulfilled.  Then the application is sent to the Minister of Finance, Economics and Trade, with the QCB recommendation, as a prelude to the Council of Ministers to issue a resolution in its regard.

5- Companies have to obtain the license of QCB to exercise investment companies activities, and a license from Doha Securities Market if it wishes to exercise financial brokerage in Qatar.

6- The applicant may submit a complaint about the refusal of his application to the Ministers Council within thirty days after having received the refusal notification.  The Resolution of the Ministers Council will be final with no right to appeal to any other authority.

7- Terminating the license:

7.1- The license given to the company by a Ministers Council resolution and conforming to the QCB recommendation, may be revoked in the following cases:

7.1.1- Upon the request of the company.

7.1.2- The company violates explicitly or repeatedly any of this resolution’s provisions or the instructions concerning it.

7.1.3- The company does not initiate business after one year of the issuance of the license.

7.1.4- The company stops operating in Qatar or its solvency or liquidity is endangered.

7.1.5- A Resolution terminating the company or liquidating it for any other reason.

7.2- No company’s license can be revoked conforming to the provisions of the items (7.1.2) to (7.1.5) of paragraph (7.1) of this article before having notified the company with the QCB recommendation and given it the time to submit its remarks.

7.3- In the case of revocation the license, QCB gives the company a period to finish its business, so that it won’t exercises any investment businesses after the final Resolution is issued.

7.4- Every license company being revoked, the company is then liquidated. The Resolution decides the how.

8- Any company wishing to stop its business in Qatar has to notify QCB within a period not less than six months. QCB may approve reducing this period if convinced that the rights of the investors and customers are well preserved. QCB has to make sure that the company has fulfilled all its duties towards the investors, the borrowers and other creditors. QCB follows the rules and procedures it sets for this operation.

9- QCB prepares a file of the following information for the company:

9.1- Number and date of registration.

9.2- Name and address of the company.

9.3- Legal status.

9.4- Capital and reserves of the company.

9.5- Names of the Board of Directors members and the executive managers.

9.6- The auditor’s name.

9.7- Address of the headquarters and of the branches.

9.8- Any other important information.

10- The license is renewed yearly, upon the request of the company and after the approval of QCB.

11- The license issuance and renewal fees of the companies are collected as follows:

11.1- Fee of license issuance: Twenty thousand Qatari riyals.

11.2- Fee of the headoffice annual license renewal: Twenty thousand Qatari riyals.

11.3- Fee of the branch license: Five thousand Qatari riyals.

11.4- Fee of the branch annual license renewal: Five thousand Qatari riyals.  

Article (4)

Capital and Reserves    

1- Granting the license is conditioned to a paid-up capital not less than twenty million Qatari riyals if the company is Qatari and the allocated capital for business in Qatar not less than twenty million riyals if the company is a branch of a foreign one.

2- Each company has to maintain a reserve for its capital, and an amount not less then 20% of its net profit is to be added annually to the reserve, until the accumulated reserve is 100% of the paid-up capital.

3- The subordinated loans of the company may be included as a rate of the capital adequacy after the approval of QCB and conforming to the conditions it sets.

4- A company may not change the balance of its capital and reserves without prior approval of QCB.

5- The capital adequacy of these companies is determined by QCB conforming to instructions it issues in this regard.  

Article (5)

The Board of Directors and the Executive Management 

1- No one, without the approval of QCB, is allowed to be member of the board of directors of any company or to have any direct or indirect relation in its management in the following situations:

1.1- If he has been a member of the board of directors of a bank, an exchange house or an investment or finance company, the license of which is revoked by the Decree Law No. (15) of year 1993 establishing Qatar Central Bank, article (46) paragraph (1), by article (3), item (7) of this Resolution has been liquidated by a Resolution of the court.

1.2- If a court verdict of imprisonment has been issued against him in any country for having committed a breach of trust.  Except if it has been five years since the issuance of the verdict or three years since having executed the sentence.

1.3- If he declared bankruptcy, stopped settling his debts or some of his debt interests.

1.4- If he is member of the board of directors of any company with similar activities or an employee in any entity related to organizing and supervising the company’s businesses or any other relation implying conflict of interests.

2- Approval of the QCB is to be obtained before nominating members for the board of directors or appointing the senior executive officers of the company.

3- Anyone violating the provisions of the previous paragraph is penalized with a fine not exceeding five thousand riyals.

4- The members of the board of directors and the managers are personally questioned about the losses and damages that attain the company or others due to their negligence in work.  The company is responsible with them for the losses and damages that others suffer.

5- Members of the board, the main shareholders and the members of the executive management of the company have no rights to any special privileges in their dealing and investments at the company.  All their dealing with the company must abide to the same policies, conditions and procedures applied to the other customers.

Article (6)  

Control on Investment Companies  

1- QCB issues instructions for the companies determining the conditions and rates that all companies should abide to, in order to guarantee its liquidity and adequacy, particularly the rates that should be available in the following elements:

1.1- The interest, commission and profit rates that QCB sees appropriate.

1.2- The types and terms of credits allowed to the investment companies to grant their customers.

1.3- The maximum volume of credit that a company can grant to a person, whether natural or juridical, regarding the owners equity.

1.4- The maximum of what the company can grant as credit to members of the board of directors or the senior officers, in addition to the types and rates of the required collaterals.

1.5- The adequacy of liquidity ratio and the way of its calculation.

1.6- Any other rates QCB finds necessary to protect the investors’ funds and to maintain the stability of the financial standing of the company.  

2-   The instructions issued in item (1) are applied on all the companies and have effective force thirty days after the date of notification in writing.  

3-   Any company has to have the prior approval of QCB to any amendment in its legal form or charter.  

4-   The company has to provide QCB occasionally with the list of the banks or financial institutions and brokers that it wishes to deal with, whether in deposits, investments or circulating a part of its assets, or for the account of its customers.   

5-   The company has to abide to the instructions issued by QCB regarding the use of the company’s funds and the funds it manages for others.  The QCB is to be notified with the signatures of the persons in charge, 48 hours after their issue.

6-   No company may open or close a branch or change its location without the prior approval of QCB.

7-   No licensed company has the right to merge with any financial or commercial institution, company or bank or acquire it without the prior approval of QCB.

8-   After obtaining the approval of QCB, the companies determine the hours of dealing with the public.  In exceptional conditions, QCB may issue a declaration stopping the companies from operating for a period to be determined in the declaration.

9-   Each company has to provide the QCB with any information or documents that are necessary for its work in the way and time the QCB determines.

10- The QCB may publish the information provided by the companies partly or completely, provided that it does not include financial affairs of any customer, unless the company and the customer agree upon it.

11- The company undertakes to keep organized files and accounting books, conforming to the accounting laws and customs.  The company should also set accounting policies and procedures that would match the international standards of accounting and disclosure.

12- QCB may at any time inspect any company if necessity calls, to check the soundness of its financial standing, its abidance to the provisions of this Resolution, and the executive instructions and any instructions issued afterwards by QCB regulating the companies business.

13- Any company has to show the inspector appointed by QCB all the books, accounts and documents related to its business in Qatar and abroad, and provide him with the information related to this business upon his request and on the dates he determines.

14- QCB may request the company to provide it with a copy of the reports submitted by the auditor.

15- If QCB finds out that the business of a company is illegal, that its liquidity and adequacy is in danger that might damage the rights of the investors and customers, or that it is repeatedly violating its instructions, the QCB may request the company to take the necessary procedures that it determines to adjust the situation. QCB may also take directly one procedure or more of the following:

15.1- Forbid the company from performing certain operations or put restrictions on its business.

15.2- Suspend any member of the board of directors or any of the senior officers of the administration.

15.3- Issue guidelines to the company to adjust its situation through appointing one auditor or more at its own expenses.

15.4- Take charge of the management of the company for a determined period – may be extended – in the way that it sees appropriate. QCB decides thus if the company may undertake the management of its business by itself or recommend the cancellation of its license and its liquidation conforming to the provisions of article (46) of the Decree Law No.(15) of year 1993, establishing Qatar Central Bank or article (3), item (7) of this Resolution.

16- Financial fines: Any company violating the following items of   article (6) will be penalized with financial fines: Provisions of item (1): Pay a fine not exceeding five thousand Qatari riyals for every day that the violation continues.  Are effective in this regard the provisions of paragraph (6) article (39) of the Decree Law No.(15) of year 1993 establishing Qatar Central Bank.        Provisions of items (4,5 & 7): Pay a fine not less than ten thousand Qatari riyals.

Article (7)