I OVERVIEW OF M&A ACTIVITY

Over the past few years, M&A activity involving Qatari investors has been characterised by a significant number of outbound investments focused on Europe, but also on Asia and the Americas, and by the ever-growing development of inbound M&A. One of the most important transactions this year was the merger between United Arab Shipping Company (formerly a treaty company set up by the governments of Qatar, the Kingdom of Saudi Arabia (which held their respective shares through sovereign wealth funds including Qatar Investment Authority (QIA)) and other Gulf countries, later re-domiciled to a DIFC company limited by shares as part of the transaction), and Hapag-Lloyd (a German-based global leader in container shipping), which represents one of the largest M&A deals to involve a Middle Eastern company in which the state of Qatar is a major shareholder.

Furthermore, the contemplated merger between Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar, which if brought to successful completion would create the largest Islamic bank and the second-largest bank in Qatar, is an example of the increasing magnitude of local M&A.

That said, outbound investment activity remains the cornerstone of M&A in the region. The most recent acquisition by Qatar Holding LLC of a majority stake in Banvit Bandirma Vitaminli Yem Sanayi AS, a Turkish listed company operating in the poultry sector, through a joint venture with BRF GmbH, the relatively recent acquisition of French fashion brand Balmain by Qatari investment fund Mayhoola (which is also the owner of luxury Italian brand Valentino), and the purchase of The St Regis and The Westin Excelsior in Florence (Italy) by private company Nozul Hotels & Resorts (a wholly owned subsidiary of Jaidah Holdings, owner of The Gritti Palace Venice, and the W Doha Hotel) from Starwood Hotels & Resorts Worldwide, are the epitome of Qatar’s continued interest in opportunities in outside markets, particularly western Europe. On the sell side, the US$2.9 billion transfer by Qatar Holding LLC and Kingdom Holding Company of Saudi Arabia of their stakes in global luxury operator Fairmont-Raffles to French publicly listed hotel operator AccorHotels was reported as the largest-sale transaction ever undertaken by QIA.

II GENERAL INTRODUCTION TO THE LEGAL FRAMEWORK FOR M&A

i General overview of the legal system

In accordance with the 2004 Constitution, shariah law is the primary source of Qatari legislation. In addition, legislation is based on the Civil Code2 and the Commercial Law.3 While the Civil Code gives natural and legal persons the freedom to agree on all matters, without limitation, provided that their agreement does not conflict with the law, public order or morality, the Commercial Law regulates commercial activities, business agencies, commercial concerns, trade names and commercial contracts in general. The Commercial Law also regulates banking transactions, bills of exchange, promissory notes and cheques, and provides a first set of substantive provisions regarding bankruptcy under Qatari law.

ii Other legal frameworks

While they see very little M&A activity, the Qatar Financial Centre (QFC), established by Law No. 7 of 2005, and the Qatar Science and Technology Park (QSTP), provide two additional legal frameworks for companies in Qatar with considerable advantages.

The QFC

Companies licensed by the QFC are subject to a separate set of rules and regulations that enable them to enjoy various commercial benefits related to M&A. However, given that most QFC firms are subsidiaries or branches of parent companies, there is rarely any M&A activity at the level of QFC entities.

The QSTP

Similarly, the QSTP, a free zone aiming to attract primarily tech-based companies and entities focusing on applied research, rarely sees any M&A activity, given that its members are largely international companies.

iii Corporate law in Qatar
General overview

M&A activity in Qatar is primarily governed by the new Companies Law.4 M&A activity is also regulated by Qatar Financial Markets Authority’s Law No. 8 of 2012, as amended, as well as by the Investment of Foreign Capital in the Economic Activity Law (Foreign Investment Law).5

Under the Companies Law, a company can have multiple forms. The two most widespread types of companies in Qatar are the limited liability company (LLC) and the joint-stock company (JSC) in the form of a private JSC.

iv Private acquisitions
Mergers

Under Qatari law, a merger occurs where one company is merged into another company or one or more companies are merged into a new company. The merger contract will contain terms providing for, inter alia, an evaluation of the liabilities of the merged company and the number of shares allocated to the capital of the merging entity. The merger shall only be valid if previously approved by the competent corporate bodies of the companies involved, in accordance with the respective articles of association (articles). Mergers in Qatar are rare, and the merger provisions of the Companies Law are consequently infrequently invoked.

Demergers

With regard to demergers, the Companies Law provides that a company can split into two or more companies, where each company will be deemed an independent legal entity and can take on any of the legal forms mentioned in subsection ii, supra.

A demerger must be approved by a decision issued by the extraordinary general assembly (EGA) of the company with the favourable vote of shareholders representing at least 75 per cent of the share capital. The resolution for demerger should outline the names of the shareholders and their shareholdings, the rights and obligations in respect of all the companies resulting from the demerger, as well as the manner by which assets and liabilities are to be distributed among them.

In the event that the shares of the company to be demerged are traded on Qatar’s main stock exchange, the Qatar Exchange, the shares of the companies resulting from the demerger shall be tradable upon issuance of the demerger decision.

Finally, it is important to note that the Companies Law allows the shareholders that voted against the demerger to exit from the company. However, no further details are provided for in the Companies Law regarding the exit process.

Acquisitions

An acquisition will only be deemed valid if the following requirements are met:

  • a the acquiring company and the target company must each issue a resolution by their respective EGA approving the acquisition, setting out the waiver of the right of first refusal of existing shareholders, such resolutions to be certified by the Ministry of Economy and Commerce;
  • b the acquiring company must issue a resolution to increase its capital and thereafter allocate such increase to the shareholders according to their shareholdings in the company, in accordance with its articles;
  • c completion of the procedures to transfer the ownership of the shares of the target, which will not be opposable until the shares are duly registered in accordance with the provisions in the Companies Law;
  • d if the acquisition is a buyout, the acquiring company must pay the value of the shares and deposit the shares in a special account in order to distribute them to the shareholders that were registered at the time the EGA approved the sale of shares;
  • e if the acquisition was made through share or bond conversion, the acquiring company must submit such shares or bonds to the target for the target to distribute them to the shareholders that were registered at the time the EGA approved the acquisition;
  • f the target must amend its constitutional documents, including the articles, and elect a new board of directors (board) accordingly; and
  • g the acquiring company must take all necessary measures to preserve the rights of the minority shareholders, including offering to purchase the stock or voting rights of such minority shareholders for a value not less than the value of the stocks or shares covered by the acquisition, or the value determined by an expert in accordance with the provisions of the Companies Law.
v Public M&A
Overview of the Securities Market Regulation

The Qatar Financial Markets Authority (QFMA) is governed by Law No. 8 of 2012, which establishes the rights of the QFMA to regulate takeovers and mergers of public companies. The relevant rules and regulations issued by the QFMA are the Mergers and Acquisitions Rules of 2014, discussed in further detail in Section III, infra. Although it is not mandatory, listed companies should also be in compliance with the Corporate Governance Code (CG Code) issued by the QFMA in 2009, which operates a ‘comply or clarify’ principle. In other words, a public company that opts out of certain articles in the CG Code must provide justification for doing so and disclose its non-compliance in the annual corporate governance report, which must be signed by the chair of the board, published and submitted to the QFMA.

The QFMA rules and regulations provide specific listing, disclosure and notification requirements for public companies.

vi M&A in certain regulated industries

While M&A activity is generally conducted in accordance with the above-mentioned steps, certain regulated industries provide for particular processes.

The financial sector

The Qatar Central Bank (QCB) is governed by the QCB Law,6 which details the mechanism for the merger of financial institutions, subject to the thresholds and procedures set out in the Companies Law and the restrictions set out in the Foreign Investment Law.

Under the QCB Law, two or more financial institutions can merge in one of two ways: companies can merge into a new company or the target can merge into the acquirer. In both cases, the following steps must be taken:

  • a the prior approval of the QCB for the merger is required;
  • b a preliminary agreement, or plan of merger, called an ‘initial agreement’ under the QCB Law, must be signed between the parties;
  • c prior to signing such agreement, a fully fledged due diligence review must be undertaken; and
  • d an application for merger containing certain documents and information must be submitted to the QCB, following which the Governor of the QCB has 60 days to issue a decision approving or rejecting the merger, which decision is appealable.

In addition, the QCB Law imposes the creation of committees at the level of the companies intending to merge, on which the QCB must be represented. The exchange of information between the merging companies is also strictly regulated: any exchange requires the prior approval of the Governor of the QCB, and the content of such exchange as well as the identity of its recipients are restricted.

A merger can be imposed by the QCB on any financial institution facing problems that have a ‘fundamental effect’ on its financial condition.

The QCB Law does not shed much light on the legal framework governing acquisitions of financial institutions, but addresses the issue in a single provision requiring the approval of the QCB on any acquisition, pursuant to the terms and conditions set by the QCB, and applying the benefits and privileges granted under the merger provisions to any such acquisition.

The telecommunications sector

The legislation in the telecommunications market sector consists of various laws and regulations. The main governing act is the Telecommunications Law (Telecom Law).7 As the regulator of that sector, ictQATAR plays a key role.

The Executive By-Law for the Telecommunications Law (Executive By-Law)8 and various ictQATAR notices and instructions, including the 2011 instruction regarding the calculation and payment of the licence fee and industry fee, and the 2012 Radio Spectrum Policy, have helped shape the sector.

The Telecom Law grants discretionary power to ictQATAR regarding changes of control. Under Article 13, the Executive By-Law also requires the approval of ictQATAR if an individual licence is assigned to another person, where the term ‘assignment’ includes a transfer of the licence or a change of control of a licensee.

Finally, the target company must deliver to ictQATAR a written notification of an intended transaction no later than 60 days prior to the intended completion date of the transaction.

III DEVELOPMENTS IN CORPORATE AND TAKEOVER LAW AND THEIR IMPACT

Until recently, the regulations on securities in Qatar contained little more than basic provisions on tender offers for shares traded on the Qatar Stock Exchange. Consequently, the offer structure and content were primarily based on the contractual arrangements of the parties, which were often subject to considerable amendments resulting from a rather ‘heavy’ (but necessary) interaction with the QFMA to obtain guidance throughout the stages of the process. On 9 March 2014, the QFMA published the Merger & Acquisition Rules (M&A Rules), thereby providing a more comprehensive, albeit complex, legal framework for public takeovers.

i The M&A Rules
Scope

The M&A Rules have a wide scope of application since they generally apply to all acquisitions or mergers where one of the parties is a listed company in Qatar (direct acquisitions) or a subsidiary of such listed company (indirect acquisitions).

Exceptions

With the exception of a few provisions, including certain disclosure obligations, the M&A Rules do not apply to:

  • a acquisitions or mergers performed outside the state of Qatar; and
  • b indirect acquisitions provided that the subsidiary of the listed company (1) has conducted business activities in the past three years; or (2) where there was no conflict of interest between the listed company (or its subsidiary) and the counterparty to the acquisition or merger.

It is unclear from the M&A Rules if the above conditions are mutually exclusive, or whether the ‘or’ should rather be read as ‘and’, thus rendering both conditions required for the purposes of the exemption. A literal approach to interpretation would militate against considering the conditions cumulative. Furthermore, there is no guidance in the M&A Rules as to what exactly would constitute a ‘conflict of interest’ relevant in this context.

Notwithstanding this exemption, listed companies are required to comply with certain (rather substantial) disclosure obligations, both prior to an acquisition or merger, with respect to indirect acquisitions, and immediately upon the granting of the approval by the regulators of the offeree company with respect to acquisitions or mergers implemented outside the state, and at completion of the transaction in both cases.

Pre-completion obligations

In particular, with regard to pre-completion obligations, listed companies are required to disclose to the QFMA and the market certain information, including:

  • a details of the offeror, the offeree company (i.e., the target), the major shareholders (i.e., shareholders owning 5 per cent or more of the share capital of a company), and the directors and senior executives;
  • b with respect to indirect acquisitions only, details of the subsidiary, its business and the degree of dependency on the listed company;
  • c details of the minimum and maximum number of shares that can be acquired under the offer;
  • d the offer price;
  • e the purpose of the acquisition or merger;
  • f the envisaged timetable;
  • g an indication of the consequences that the offer may have on the financial position of the listed company and its shareholders;
  • h the advantages and disadvantages possibly arising from the acquisition or merger; and
  • i the disclosure of any conflict of interest situations among the offeror, the offeree, their independent advisers and ‘any person having a relationship with the acquisition or merger’ (collectively, concerned persons), the members of their respective board of directors or major shareholders.
Completion obligations

Immediately upon completion of an acquisition or a merger, listed companies are required to provide the QFMA and the market with a statement setting out the outcome of the transaction, including an indication of the actual percentage and value of the shares that have been acquired (to rectify any differences or discrepancies with the information disclosed in the previous communication mentioned above), and the impact of such difference on the content of any such previous disclosure. In addition, listed companies have to submit to the QFMA the execution copy of the merger or acquisition agreement.

Finally, the M&A Rules provide that if the procedures for the implementation of the acquisition or merger are not completed (it is not clear whether partial completion would be carved out), presumably within the timeline indicated within the timetable outlined below, a listed company is required to notify both the QFMA and the market of the reasons for this, and provide information as to whether it is expected that the situation will be temporary or final. Again, the M&A Rules appear incomplete, as they do not offer guidance on the triggering event of this disclosure obligation, nor specify the timeline within which such obligation must be complied.

Intention to launch an offer, application, timetable and offer document

The M&A Rules require listed companies to ‘immediately disclose’ to the QFMA and the market the intention to submit an offer, as well as any ‘initial understandings’ with relevant parties concerning such offer. We believe that such a disclosure could not efficiently be made (without otherwise adversely affecting the outcome of the offer) prior to having reached a fair degree of certainty in respect of the actual intention to launch an offer.

Further to the above notification, the offeror is required to submit to the QFMA the following main documents: an application for the acquisition or merger, an ‘offer’ document and a timetable for the implementation of the acquisition or merger (collectively, documentation).

Timetable

The M&A Rules require the offeror to submit to the QFMA a proposal of a timetable for the acquisition or merger within two weeks from the date of the notification regarding the intention to launch an offer. The timetable must include, inter alia:

  • a the final offer document;
  • b an opinion issued by the board of directors of the offeree company; and
  • c proposals with respect to relevant dates, including:

• the first permitted closing date of the offer;

• the date when the offeree company may announce its profits or dividends forecast, asset evaluation or proposal for dividend payments;

• the date for the public announcement of the offer;

• the final date to meet all conditions; and

• the final date within which to pay the relevant consideration to the shareholders of the offeree.

The M&A Rules do not provide guidance or further details in respect of the above-mentioned dates, and their actual meaning in this context is therefore unclear. The QFMA must be notified immediately if it becomes apparent that the offeror or the offeree are unable to comply with the timetable.

Applicable time periods

The offeror is required to provide the QFMA with the documentation at least 30 days prior to the date of the meeting of the EGA held to approve the offer, and the shareholders with the offer document within three days of the QFMA’s approval of such document and at least 15 days before the date of the EGA meeting.

Unless the QFMA extends this period, the offeror must implement the offer within one month of the date on which the offer has been approved by the EGA, or of the date of approval of the offer document by the QFMA if the EGA has not been held.

Additional disclosures

During the offer period, listed companies are required to disclose (presumably to the QFMA and the market) any dealings of major shareholders concerning the securities that are the object of the offer, including details of any person who, individually or jointly with minor children, a spouse ‘or with others’ owns or becomes the owner of 5 per cent or more of the shares in the offeror or the offeree.

Post-completion obligations

A listed company is required to notify an acknowledgment to the QFMA confirming that completion of the acquisition or merger has occurred.

Mandatory offer

Every person who owns or intends to own, whether individually or together with other persons, more than 75 per cent of the shares of the offeree company (relevant stake) is required to notify the QFMA thereof and submit a mandatory offer to buy all the remaining securities (mandatory offer). The mandatory offer must be launched within 30 days of the date on which the holding of the relevant stake is achieved. It is therefore unclear how (if at all) the obligations in relation to the mandatory offer apply to the mere intention or willingness to acquire a relevant stake.

Exemption from mandatory offer

The QFMA may grant a temporary exemption from the obligation to launch a mandatory offer provided that the relevant person owns a stake not exceeding 78 per cent of the share capital, and the 3 per cent in excess of the 75 per cent threshold set out above is disposed of within three months from the date on which such excess percentage was acquired by such person.

IV FOREIGN INVOLVEMENT IN M&A TRANSACTIONS

While the two most widespread types of companies in Qatar are the LLC and the JSC, most foreign investors choose to do business in Qatar through an LLC form because of its lighter framework.

Through the establishment of the QFC, Qatar has been able to promote the country as a regional hub for international finance aiming at attracting, inter alia, banking, financial services, insurance and corporate head office function businesses. As mentioned earlier, companies licensed by the QFC enjoy an array of commercial benefits, such as 100 per cent foreign ownership and a low corporation tax rate of 10 per cent on all locally sourced profits. As a result, the QFC has seen a large number of international and regional banks, financial institutions and insurance companies open under the umbrella of the QFC Regulatory Authority.

Similarly, the QSTP allows 100 per cent foreign ownership and its members to sponsor foreign employees, ultimately attracting major international companies.

Foreign involvement in M&A transactions is largely governed by the Foreign Investment Law. Under the Foreign Investment Law, a foreign investor is a non-Qatari national, where a Qatari national is a physical person holding a Qatari passport or a legal entity fully owned by Qataris. In general, foreign investors may invest a maximum of 49 per cent of the share capital of a Qatari company in ‘all sectors of the national economy’, so long as the remaining 51 per cent of the share capital is owned by at least one Qatari partner.

The Foreign Investment Law also provides for exceptions to further favour overseas involvement: foreign investors may own up to 100 per cent of the share capital in certain exempted sectors, and upon approval from the Minister of Economy and Commerce. Exempted sectors include agriculture, industry, health, education, tourism, energy, mining, consulting, information technology, cultural services, sports, entertainment and distribution services.

On the other hand, the Foreign Investment Law prohibits foreign investment in the banking and insurance sectors unless a special approval is obtained from the Council of Ministers.

Moreover, commercial agencies can only be undertaken by Qatari nationals, and freehold property can only be purchased and held by Qatari nationals or GCC nationals, except in a very limited number of designated areas. More generally, foreign investors may purchase a leasehold property in certain designated areas in Qatar, but only up to a term of 99 years.

Further exclusion from the scope of the Foreign Investment Law applies to companies that have been awarded their contract through concessions or special agreements for mining, exploiting or management of natural resources, unless the terms of the concession or special agreement specify otherwise.

Finally, the Foreign Investment Law does not apply to companies established or funded by the government, public institutions or organisations that are associated with foreign investors.

Foreign companies can operate in Qatar without the need to incorporate a fully fledged entity if it is only for a specific project, and if they contribute to ‘the performance of a public service or utility’, upon approval from the Minister of Economy and Commerce. The meaning of ‘public service’ is interpreted broadly by the Minister, leaving much room for discretion and flexibility as to what can be pursued in the view of ‘public service’.

Other benefits offered to foreign investors include the freedom to repatriate profits as the foreign investors deem fit, and tax exemptions. Foreign capital that has been invested in exempted sectors, where a foreign investor can own up to 100 per cent of the share capital of a company, and can be exempt from income tax for a period of up to 10 years from the date the newly established Qatari company starts its operations. Customs duties can also be exempted in relation to the import of necessary equipment and materials.

Foreign involvement in publicly listed companies is governed by a different set of regulations. As a general rule, foreign investors can own up to 49 per cent of the shares listed on the Qatar Exchange upon approval by the Ministry of Economy and Commerce on the specific foreign ownership threshold set in the articles of that company.

V SIGNIFICANT TRANSACTIONS, KEY TRENDS AND HOT INDUSTRIES

The key trend in M&A activity in Qatar has been to focus on the myriad opportunities for Qatari investors in the global market. Qatar’s most prominent investors, such as QIA, Ooredoo, Qatar Petroleum, Qatari Diar and Katara Hospitality, have been acquiring assets in both stable economies and emerging markets, such as South-East Asia and Africa. With the end of the financial crisis, investing in the United States, the United Kingdom and western Europe has become more competitive. However, with Qatar trying to diversify its economy and gradually reduce its dependence on hydrocarbons, institutions have been taking advantage of the fact that many institutional investors and private equity firms abroad have recovered from the crisis. Qatari institutions are particularly benefiting from investments in the European and UK markets, whether in the real estate, finance, industry, hospitality, energy or sports sectors. These investor-friendly markets provide both predictability and proximity for Qatari companies. In parallel, Qatari investors continue to invest in emerging markets, with a particular focus on real estate.

VI EMPLOYMENT LAW

The Labour Law9 provides the main framework for employment law in Qatar, and applies to the country’s employers and workers. The Labour Law does not apply to the following individuals:

  • a employees and workers of corporations and companies established by Qatar Petroleum;
  • b employees and workers for government and public bodies, including the ministries;
  • c officers and members of the armed forces, the police and maritime forces;
  • d temporary workers; and
  • e individuals working in domestic employment (including, without limitation, drivers, cooks and gardeners).

The main government body responsible for individuals working in Qatar is the Ministry of Labour.

With regard to business transactions, the main applicable provision of the Labour Law provides that employees of a target company, and their employment-related rights, obligations and benefits under the relevant employment relationships, transfer to the acquiring company. In turn, and given that the approval of the Ministry of Labour is required to transfer the sponsorship of individual employees, the acquiring company and the target company must coordinate with the Ministry of Labour to transfer the employees to the acquiring company. Where approval is given, employment relations between the employee and the acquiring company (or the new company) continue without interruption, and the transferor and the transferee are jointly and severally liable for an employee’s pay or other claims deriving from the employment relationship that have fallen due before the transfer. Finally, under the Labour Law, a transfer of business does not, in itself, constitute a legal ground to terminate any employment relationship.

i Trade unions

Although the Labour Law permits a single employees’ committee to be formed by more than 100 Qatari employees employed by the same entity, trade unions remain practically non-existent in Qatar. The Labour Law requires minimum employee entitlements by which employers must abide, but can otherwise amend these if in favour of the employee.

ii Qatarisation

Because of ‘Qatarisation,’ whereby priority in employment is given to Qatari nationals in Qatar, non-Qatari employees must demonstrate a need for their skills and the unavailability of a Qatari national to carry out the work, and acquire approval from the Ministry of Labour prior to the commencement of the work.

iii Pension arrangements and social security

Pension arrangements and social security are also regulated by the Labour Law: certain insurance and social security contributions for Qatari national employees are required. Moreover, pension schemes are allowed for foreign employees, and may be elected by Qatari employees if they are more beneficial to them than the minimum benefits provided for by law.

iv Sponsorship

Individuals require a valid residency permit and work permit, which may be applied for by an individual or an entity. In either case, the applicant is known as the worker’s sponsor. Employees who hold a valid work permit must only perform work for their sponsors. Secondment of an employee to a third party requires approval from the Ministry of Labour, and is often restricted in duration.

v Immigration law

On 13 December 2016, the New Immigration Law10 regulating the entry, exit and residency of expatriates in Qatar entered into force, replacing the previous Immigration Law.11 The New Immigration Law provides noteworthy changes, including the right for an expatriate working in Qatar to move between employers in Qatar without the need for a non-objection letter from their existing employer (subject to the satisfaction of certain conditions), and appeals to a special committee, the Foreign Nationals Exit Grievances Council, in the event that the conduct of a current employer hinders or impedes the exit of an expatriate from the country.

The New Immigration Law has been recently amended by Law No. 21 of 2017. The amendments include expatriates’ right to exit the country for holiday and emergency reasons, as well as to permanently leave Qatar prior to the expiry of a employment contract, in each case subject to giving prior notice to the employer.

VII TAX LAW

Several taxes are worth mentioning in relation to the Qatari system: corporate income tax, withholding tax, capital gains and dividend tax, personal income tax, sales tax and double taxation.

The income tax system in Qatar is subject to the Income Tax Law.12 Under the Income Tax Law, a legal entity is considered a ‘tax resident’ for tax purposes if the company is incorporated under Qatari law, is mainly located in Qatar or has its headquarters in Qatar.

A general flat tax rate of 10 per cent applies to profits arising out of taxable activity in Qatar, with a tax rate of at least 35 per cent applying to oil and gas operations.

Currently, withholding tax at a rate of 5 per cent is levied on certain payments made to non-residents in relation to royalties and technical services. A tax rate of 7 per cent is levied on interest, commissions, brokerage fees, directors’ compensation, chairperson and board members’ coupons, and any other payments for services carried out wholly or partly in Qatar.

It is worth noting that there is no capital gains tax or dividend tax on Qatari companies.

Similarly, no personal income tax or sales or VAT are imposed on operations in Qatar.

Qatar is a party to treaties for the avoidance of double taxation with several countries, which provides an important incentive for foreign investors operating in Qatar.

Entities licensed under the QFC are subject to a flat rate of 10 per cent on local-source profit, but are not subject to withholding taxes. Wholly owned government entities incorporated in the QFC are exempt from taxes.

In the same way, entities licensed by the QSTP are fully exempt from Qatari corporate income tax.

Finally, with regard to the financial sector, a preferential tax treatment may be granted by the QCB to the merging company or the new company resulting from the merger.

viii COMPETITION LAW

Under the current legislative framework, there are no antitrust or merger control laws applicable to M&A transactions in Qatar. However, it seems that an antitrust culture is starting to emerge in Qatar with the establishment of a ‘ De-monopolisation and Competition Protection Committee’ at the Ministry of Economy and Commerce which has recently issued notices to large Qatari companies in relation to exclusivity and pricing matters.

IX DATA PROTECTION LAW

On 3 November 2016, the state of Qatar passed the Data Protection Law,13 which entered into force on 3 May 2017. The Data Protection Law aims to establish a certain degree of protection for the processing of personal data by granting individuals the right to withdraw consent to such processing, the right to access and review information previously provided to the data controller, and to request deletions, modifications, or both to such information. Moreover, data controllers will be required to put in place appropriate systems and procedures for the processing of personal data to avoid any leaks or unauthorised disclosure of information. Particular information (e.g., relating to race, religious beliefs, health and criminal records) will only be processed with the prior approval of the relevant administrative unit at the Ministry of Transport and Communications. Finally, the Data Protection Law imposes high financial penalties for non-compliance ranging between 1 million Qatari riyals to 5 million Qatari riyals.

X OUTLOOK

Despite the fall in oil and gas prices in recent years, a heavy flow of investments into the infrastructure sector, as well as ongoing preparations for the FIFA World Cup in 2022, have continued apace. Moreover, there has been a significant boost in the media, retail and food industries. Other sectors that are expected to continue to grow steadily include construction, real estate, hospitality, fashion and technology.

1 Michiel Visser is a partner, Charbel Abou Charaf is a senior associate and Eugenia Greco is an associate at White & Case LLP.

2 Law No. 22 of 2004.

3 Law No. 27 of 2006.

4 Law No. 11/2015.

5 Law No. 13 of 2000, as amended.

6 Law No. 13 of 2012.

7 Decree-Law No. 34 of 2006.

8 ictQATAR Decision No.1 of 2009.

9 Law No. 14 of 2004.

10 Law No. 21 of 2015.

11 Law No. 4 of 2009.

12 Law No. 21 of 2009.

13 Law No. 13 of 2016.