Investment of Non-Qatari Capital

“Foreign Investment”

Introduction

The foreign investment sector in Qatar is experiencing unprecedented growth and development, driven by the economic and developmental strategies outlined in Qatar National Vision 2030 and a firm commitment to positioning the country among the world’s top investment destinations. This progress has been accompanied by legislative reforms aimed at facilitating and encouraging foreign capital investment, culminating in the enactment of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment.

For any investor entering a foreign market, the existence of clear, robust legal frameworks that safeguard their rights and establish their obligations transparently and unequivocally is of paramount importance. Ambiguous or inconsistent regulations can lead to uncertainty and potential financial and legal risks.

A key priority for any investor entering a new market is the presence of a robust legal framework that clearly safeguards their rights and defines their obligations—eliminating any legal ambiguities that could lead to future uncertainties. Given the increasing number of non-Qatari investors and to provide clarity on the provisions of Law No. (1) of 2019, this article offers an overview of the law as a guiding reference for all those seeking insight into its stipulations.

Prior to the enactment of this law, foreign investors were restricted to a maximum ownership cap of 49% in any investment project. However, with the introduction of this legislation, foreign investors are now permitted to hold up to 100% ownership in capital across all economic sectors—except for those expressly excluded under specific provisions of the law.

The Importance of Investment

The significance of investment lies in its direct impact on economic growth, particularly in response to rapid population expansion and the increasing demand to meet essential needs while striving for the highest standards of individual welfare. Investment trends in developing nations differ significantly from those in developed countries due to variations in economic priorities and the specific types of investments required both in the short and long term.

Moreover, investment plays a pivotal role in enhancing national income and economic growth, while also generating new employment opportunities for individuals within the country.

Several key aspects underscore the importance of foreign capital investment, including but not limited to:

1. Accelerating Economic Growth – By increasing productivity and expanding various economic sectors.
2. Job Creation – Generating direct employment through new projects and indirect employment by supporting existing enterprises.
3. Strengthening Foreign Currency Reserves – Through capital inflows resulting from foreign investments in the country.
4. Economic Diversification – By introducing and strengthening sectors that were previously underdeveloped or non-existent.
5. Enhancing Competition and Innovation – Encouraging a more dynamic business environment, fostering improved services and innovation among local companies.

Overview of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activities

The enactment of a comprehensive legal framework governing non-Qatari capital investment has been a long-term priority for Qatar. This commitment dates back to the 1980s, with successive legal updates introduced in response to evolving economic and legal landscapes. Economic growth is invariably accompanied by legislative advancements, ensuring stability, legal certainty, and a structured investment environment.

Law No. (1) of 2019 was issued on January 7, 2019, and was officially published in the Official Gazette on January 24, 2019. Upon its enactment, it repealed and replaced Law No. (13) of 2000, which previously regulated non-Qatari capital investment in economic activities.

This new legislation comprises 27 articles, structured into five chapters as follows:

Chapter One: Definitions

Chapter Two: Regulations Governing Non-Qatari Capital Investment

Chapter Three: Investment Incentives

Chapter Four: General Provisions

Chapter Five: Penalties and Final Provisions

Definitions

Investment is a broad term that carries multiple definitions depending on the context in which it is used, as well as the diverse objectives and activities that fall under its scope.

Investment is commonly defined as:

The allocation of surplus funds into various instruments or sectors with the aim of generating new production, expanding existing production, increasing capital formation, and directing savings toward optimal utilization to satisfy one or more economic needs.

It can also be defined as:

The allocation of funds for the acquisition of assets with the expectation of generating future returns.

As for foreign capital investment, it refers to:

The inflow of capital from an individual (whether natural or legal), a foreign state, or an external entity into another country through the establishment of companies, the initiation of new projects, or the financing of economic ventures with the objective of generating financial returns for the foreign investor while simultaneously fostering economic development in the host country.

Attracting foreign capital and opening up national markets to non-domestic investors holds significant importance, particularly in light of the growing ambition to expand and enhance economic activities and realize the country's long-term vision. Consequently, it has been essential to establish legislative frameworks that facilitate this direction, ensuring a structured and equitable investment environment.

Definition of Non-Qatari Investor and Non-Qatari Capital

The definitions of non-Qatari investor and non-Qatari capital are set forth in Article (1) of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activity.

A non-Qatari investor is defined as:

A Non-Qatari person who invests in any of the projects in which a direct investment is permitted in accordance with the provisions of this Law.

Upon reviewing this definition, it is notable that the law does not explicitly state that the investor in question must be a foreign (non-Qatari) investor. The definition simply refers to a person, without further clarification. In contrast, the now-repealed Law No. (13) of 2000 provided a more precise definition, stating:

"Non-Qatari investors: Natural or legal persons who are not Qatari nationals and who invest their funds in one of the projects authorized for direct investment by the state in accordance with the provisions of this law."

As for non-Qatari capital, it is defined as:

Any funds, whether in cash or in kind, or rights of financial value, invested in the State of Qatar by a non-Qatari, including but not limited to:

1. Cash funds transferred into the state through licensed banks and financial institutions.
2. Tangible assets imported for investment purposes in accordance with the provisions of this law.
3. Profits, revenues, and reserves generated from non-Qatari capital investment in a project, provided they are reinvested to increase the capital of the same project or invested in other authorized projects under this law.
4. Intangible rights, including licenses, patents, and trademarks registered within the state.

Regulations Governing Non-Qatari Capital Investment

Chapter Two of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment establishes the regulations that must be followed by foreign (non-Qatari) investors. These regulations cover the permissible ownership percentages, eligibility criteria for non-Qatari investors, prohibited investment sectors, and the procedures for submitting applications and filing complaints in the event of rejection. The key provisions are outlined as follows:

Permissible Ownership Percentage for Non-Qatari Investors

Article 2 of Law No. (1) of 2019 stipulates that non-Qatari investors are permitted to invest in all economic sectors with ownership of up to 100% of the capital, provided that they comply with the legislation governing the practice of commercial activities and professions by non-Qataris and adhere to Article 4 of this law. The law also mandates compliance with its Executive Regulations, as set forth in Ministerial Decision No. (44) of 2020 issued by the Minister of Commerce and Industry.

One of the most significant changes introduced by this law is the removal of the previous requirement for a Qatari partner in investment projects. Under the now-repealed Law No. (13) of 2000, non-Qatari investors were required to have a Qatari partner holding at least 51% of the capital, meaning that foreign ownership could not exceed 49% of a project's capital.

The previous law did, however, allow for 100% foreign ownership in specific sectors, but only as an exception and subject to ministerial approval. The sectors eligible for full foreign ownership under the former law included:

• Agriculture
• Industry
• Healthcare
• Education
• Tourism
• Development and exploitation of natural resources
• Energy and mining
• Business consultancy and technical services
• Information technology
• Cultural, sports, and recreational services
• Distribution services

These sectors were exclusively listed in the previous law, meaning that foreign investment was restricted to specific industries. However, the new law represents a significant breakthrough, as it eliminates sectoral restrictions and allows foreign investors to invest in all sectors without limitations—a major step forward in enhancing the foreign investment landscape in Qatar.

Eligibility Criteria for Non-Qatari Investors

The Executive Regulations of Law No. (1) of 2019 (Ministerial Decision No. (44) of 2020 issued by the Minister of Commerce and Industry) set forth the conditions that non-Qatari investors, whether natural persons or legal entities, must fulfill to obtain investment approval or participate in an investment project.

These regulations emphasize key considerations such as good conduct, integrity, honesty, and credibility, which are fundamental in assessing an investor’s eligibility. Additionally, legal entities must be officially registered and operate within a recognized legal framework. These criteria are essential prerequisites for non-Qatari investors seeking to enter the Qatari market.

The eligibility conditions, as stipulated in Article (2) of the Executive Regulations, are as follows:

Without prejudice to existing laws governing the commercial and professional activities of non-Qataris, and in accordance with Article (4) of Law No. (1) of 2019, non-Qatari investors may own up to 100% of capital in all economic sectors, provided they comply with the following conditions:

First: Conditions for a Natural Person (Individual Investor):

• • The investor must not have been convicted by a final judgment for a felony or a crime involving dishonesty or breach of trust, unless their criminal record has been officially cleared.

Second: Conditions for a Legal Entity (Corporate Investor):

1. 1. The entity must be incorporated under the laws of the country in which it has its registered headquarters.
   2. The entity’s investment activity in Qatar must align with its legally authorized business objectives.

In all cases, a non-Qatari investor must submit certified and authenticated documents proving compliance with these conditions. These documents must be verified by the competent authority in the investor’s home country and authenticated by the Qatari Ministry of Foreign Affairs.

Third: Requirements for Non-Qatari Investment Projects

1. 1. The project’s activity must be listed among the approved sectors designated by the Minister, based on recommendations from the competent regulatory body.
   2. The non-Qatari investor must submit a detailed description of the project, including a business plan and financial projections.
   3. The non-Qatari investor must provide a written commitment to assume full responsibility for all obligations arising from the project and must commence operations within the timeframe set by the competent authority. Failure to do so will result in the automatic revocation of the investment approval.

Application Process for Non-Qatari Investors Seeking to Exceed 49% Capital Ownership

Article (3) of Law No. (1) of 2019 specifies the steps that a non-Qatari investor must take if they wish to exceed 49% ownership of the project’s capital, requiring them to submit an application to the competent authority using the designated official form, pay the prescribed fees, and attach all supporting documents in accordance with the requirements set by the competent authority. Once the applicant has submitted all the required documents, the competent authority shall issue its decision within fifteen (15) days and notify the applicant through any means that provide proof of receipt, whether the decision is one of approval or rejection. If the fifteen-day period elapses without a decision being issued, the application shall be deemed implicitly rejected.

This feature marks a significant improvement over the previous legal framework, as the repealed Law No. (13) of 2000 did not specify the application process for non-Qatari investors seeking to exceed the 49% ownership cap, nor did it outline the steps an investor could take in the event of a rejection. The inclusion of explicit provisions on the submission and appeal process in the current law serves as an important legal safeguard, enhancing investor confidence in Qatar’s legal and regulatory framework by ensuring fairness, transparency, and legal protection for investments and projects within the State of Qatar.

The Executive Regulations of this law set forth the mechanism for processing investor applications, as outlined in Article (3) of the Executive Regulations, which details the specific procedures regarding the competent authority to which the non-Qatari investor must submit their application to exceed the 49% capital ownership threshold, the required supporting documents, the payment of prescribed fees, and the registration of the application in a dedicated record. This record must include the date of submission, sequential registration number, name of the applicant, subject of the application, and attached documents. The application is then forwarded to the relevant authorities for review and decision-making within the legally stipulated period.

The text of Article (3) of the Executive Regulations provides as follows:

1. 1. The investor shall submit their application to the competent authority using the designated form, accompanied by all required supporting documents as determined by the competent authority to meet the requirements of the Ministry and other relevant entities, following payment of the prescribed fees.
   2. The competent authority shall register the application in a dedicated record maintained for this purpose, documenting the date of submission, sequential registration number, name of the applicant, subject of the application, and a list of attached documents.
   3. The application shall be forwarded to the relevant authorities for issuance of their respective approvals in accordance with the applicable laws and regulations.
   4. The relevant authorities must respond to the application within the specified timeframe in line with the Key Performance Indicators (KPIs) agreed upon between the competent authority and the relevant entities.
   5. The competent authority must issue its decision regarding the application within fifteen (15) days from the date of submission of all required documents and notify the applicant through registered mail or any other legally recognized means of communication. If this period elapses without a response, the application shall be deemed implicitly rejected.
   6. In the event of approval, the competent authority shall:
   7. a. Record the approval decision in the dedicated application register referenced in Clause (2) of this Article.

b. Notify the relevant administrative unit responsible for the commercial register at the Ministry, attaching the approval decision along with the approvals obtained from the relevant authorities.

c. Inform the applicant of the approval decision as per Clause (5) of this Article, so that they may proceed with the registration of the company responsible for executing the project in the commercial register.

Appeal Process in Case of Application Rejection:

A non-Qatari investor's application to exceed 49% capital ownership may be rejected. Recognizing the importance of procedural fairness, the legislator has granted investors the right to appeal such a decision. The law specifies the process and deadlines that an investor must adhere to when filing an appeal, whether the rejection is explicit (through formal notification) or implicit (through the expiration of the legally prescribed response period without a decision).

To appeal a rejection, the investor must follow these steps:

1. 1. Submit the appeal against the decision of the competent authority (whether explicit or implicit due to the expiration of the response period) to the competent Minister within fifteen (15) days from the date the investor was informed of the rejection or from the date the application was deemed rejected by law.
   2. The Minister shall issue a decision on the appeal within thirty (30) days from the date of submission. If this period elapses without a response, the appeal is considered implicitly rejected. The Minister's decision on the appeal is deemed final and binding.

Prohibited Activities and Sectors for Non-Qatari Investors

Although non-Qatari investors are permitted to own up to 100% of capital across all economic sectors, the legislator has imposed restrictions on certain industries for specific policy and regulatory reasons. These restrictions are set as exceptions—some completely prohibiting foreign investment, while others allow for exceptions subject to approval by the Council of Ministers.

Article (4) of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment states:

“Non-Qatari investors are prohibited from investing in the following sectors:

(a) Banking and insurance companies, except those explicitly exempted by a decision of the Council of Ministers.

(b) Commercial agencies.

(c) Any other sectors designated by a decision of the Council of Ministers.”

Similar to the previous law, this legislation prohibits non-Qatari investors from engaging in certain activities to safeguard these sectors from foreign competition. In addition to the banking, insurance, and commercial agency sectors (noting that the Council of Ministers has the authority to grant exemptions for specific banks and insurance companies), the law grants the Council of Ministers the discretion to impose further restrictions on any additional sectors by issuing an official decision. This ensures the protection of national interests and safeguards the economic priorities of the State and its citizens.

Controls of the Operations of Non-Qatari Companies Executing Contracts in Qatar:

The Qatari legislator has established several controls that non-Qatari companies with contracts to execute within the State of Qatar must comply with. These regulations aim to ensure the seriousness and commitment of these companies in fulfilling their contractual obligations, monitoring their performance, and ensuring compliance with Qatari laws. They also facilitate legal recourse in the event of contractual breaches by requiring these companies to establish branches within Qatar, particularly when contracting with government entities, and to comply with commercial registration requirements. These regulations are explicitly set forth in Article (5) of Law No. (1) of 2019, as follows:

1. 1. The contract must be executed through a branch of the company within the State of Qatar.
   2. The contract must be with one of the following entities: a ministry, government agency, public authority, public institution, or a company or institution in which the State holds a share.
   3. The company must register in the commercial register and obtain a commercial license for its branch in Qatar, which will execute the contract. This must be done after the contract award and before signing the contract.
   4. The company must comply with all regulatory requirements set by the competent authorities in Qatar, in accordance with the applicable laws, throughout the duration of the contract.
   5. The company must renew its commercial registration and licenses for its branch for the entire duration of the contract.

The Council of Ministers, upon a proposal by the Minister, may amend these regulations by adding, removing, or merging requirements as necessary.

The introduction of these regulations represents a significant improvement over the previous legal framework, as the repealed Law No. (13) of 2000 did not establish clear guidelines for such companies. Instead, Article (3) of the previous law merely stated:

"The Minister may, after consultation with the competent authority, grant a license to non-Qatari companies engaged in contracts within the State to execute their contracts, provided that such contracts serve a public benefit or facilitate the provision of a public service."

Licensing Requirements for Non-Qatari Investors:

Any entity, including a non-Qatari investor, seeking to establish and operate a business within the State of Qatar must adhere to the procedures and licensing requirements prescribed by Qatari laws. The same licensing procedures that apply to Qatari businesses also apply to non-Qatari investors, unless Law No. (1) of 2019 contains specific provisions stating otherwise.

Participation in the Stock Market

The entry of non-Qatari investors into the stock market has a significant impact on economic development and financial stability, which largely depends on market management and state policies in this regard. Recognizing the importance of this sector, Law No. (1) of 2019 dedicates a separate provision to non-Qatari investment in the securities market, distinguishing it from other investment sectors due to its substantial influence on the national economy.

This law has opened the doors for non-Qatari investors to participate in the Qatari securities market (the stock exchange), allowing them to own shares in publicly listed companies on the Qatar Stock Exchange (QSE). Article (7) of the law explicitly grants non-Qatari investors the right to own up to 49% of the capital of Qatari public shareholding companies listed on the stock exchange.

However, this ownership is subject to certain regulatory conditions:

• • The proposed ownership percentage must be approved by the Ministry and must be specified in the company's Articles of Association and constitutional documents.
  • Ownership exceeding the 49% threshold is permitted, but only with the approval of the Council of Ministers, based on a recommendation from the Minister.

Privileges Granted to Non-Qatari Investors

As most countries seek to attract foreign capital, they often grant incentives to foreign investors to support their investment projects and ensure their success. Investment projects require substantial support to be established and grow, as they may encounter various obstacles during the initial stages. Among the major concerns investors face when launching a project are the lack of production inputs, which may necessitate importing materials at high customs duties, and the unavailability of suitable land for project development, both of which lead to increased expenses that could cause the project to fail before it even begins.

Additionally, many investors fear governmental policy instability, the lack of clear legislative provisions safeguarding their assets and investments, and the risk of sudden government decisions leading to the expropriation of their investments without prior notice or fair compensation.

Upon reviewing Law No. (1) of 2019, it becomes evident that this legislation has introduced several privileges aimed at enhancing foreign investment in Qatar. These privileges minimize barriers to launching an investment project and offer strong legal guarantees to reassure non-Qatari investors that their projects will receive state support. The key privileges granted to non-Qatari investors under this law include:

1. 1. Non-Qatari investors may be allocated land for their investment projects either through lease agreements or usufruct rights, in accordance with applicable legislation.

The legislator has made a commendable decision by allowing non-Qatari investors to acquire land for investment projects without a fixed time limit, unlike the previous law, which imposed a maximum duration of fifty (50) years on land use rights.

1. 1. Non-Qatari investors are permitted to import all necessary materials and equipment for the establishment, operation, or expansion of their investment projects, in compliance with applicable Qatari laws. This provision aligns with previous legislation, ensuring continuity of investor rights in this regard.
   2. Non-Qatari investment projects may be granted income tax exemptions in accordance with the procedures, regulations, and timeframes specified in the Income Tax Law.

Unlike the previous law, which limited tax exemptions to a maximum of ten (10) years from the commencement of project operations, the current law does not impose a fixed time limit, instead leaving the matter to the provisions of the Income Tax Law.

1. 1. Non-Qatari investment projects are exempt from customs duties on imports of machinery and equipment necessary for their establishment. Moreover, non-Qatari industrial investment projects are also exempt from customs duties on imports of raw materials and semi-manufactured materials necessary for production, provided these inputs are not available in the local market.

Unlike the previous law, which made customs exemptions discretionary and subject to approval by the relevant ministry, the current law mandates these exemptions unconditionally.

1. 1. Non-Qatari investment projects may be granted additional incentives and privileges beyond those explicitly provided in this law, subject to the approval of the competent authority.
   2. Non-Qatari investments, whether direct or indirect, are not subject to expropriation or any equivalent measure (such as nationalization), except in cases where:
   • The expropriation is for public benefit.
   • The expropriation is not discriminatory.
   • The investor receives fair and adequate compensation.
   • The same procedures applicable to Qatari citizens are followed.

The inclusion of these investor-friendly provisions in Law No. (1) of 2019 serves as a major attraction for foreign investment, as it establishes a legislative framework that supports foreign capital inflows by offering comprehensive legal protections, incentives, and facilitation measures across various sectors.

The absence of time restrictions on land allocation for investment projects and income tax exemptions is particularly commendable, as certain projects require a long period to become profitable. The imposition of a time limit could deter investors from pursuing long-term projects, making the current approach more favorable.

Additionally, the law has codified strong protections against the expropriation of non-Qatari investments, ensuring that such actions:

1. 1. Are only carried out for public benefit.
   2. Are not applied in a discriminatory manner.
   3. Provide just and appropriate compensation.
   4. Follow the same legal procedures applicable to Qatari citizens.

In this regard, Article (2) of Law No. (8) of 2022 on Expropriation and Temporary Seizure of Property for Public Benefit states:

“No property may be expropriated or temporarily seized except for public benefit, and fair compensation must be determined in accordance with the provisions of this law and paid in full to the rightful owners in a single payment.”

Financial Transfers, Investment Ownership Transfers, and Dispute Resolution

First: Financial Transfers

The issue of financial transfers to and from the host country can pose a significant challenge for investors, particularly in countries where exchange rates are unstable or where banking transactions are difficult. In such cases, foreign investors may even be forced to halt their investment projects due to financial transfer restrictions.

However, the Qatari legislator has proactively addressed these concerns by ensuring that financial transfers and investment proceeds can be made easily and without restrictions. To eliminate any financial barriers that foreign investors might face, Article (14) of Law No. (1) of 2019 explicitly guarantees non-Qatari investors the freedom to transfer their capital and profits in any currency of their choice. The key provisions are as follows:

1. 1. Non-Qatari investors have the unrestricted right to transfer funds related to their investments to and from Qatar without delay. These transfers include:
   2. Investment returns and profits.
   3. Proceeds from the sale or liquidation of all or part of the investment.
   4. Settlement amounts resulting from investment-related disputes.
   5. Compensation provided under Article (13) of this law.
   6. All transfers must be executed in a freely convertible currency at the exchange rate prevailing on the date of transfer.

Second: Transfer of Investment Ownership

There may be circumstances requiring an investor to transfer ownership of their investment project to another party. Regardless of the reason for such a transfer, Law No. (1) of 2019 grants foreign investors the right to transfer ownership of their investments to another foreign investor or to relinquish ownership to a Qatari partner in cases of joint ventures. However, such transfers must be conducted in accordance with the laws and regulations in force in the State of Qatar. In such cases, the investment project remains subject to the provisions of this law, provided that the new investor continues to operate the same investment project and assumes all rights and obligations of the previous investor. This provision ensures that the transfer of ownership does not affect the project’s status or its legal protections under Qatari investment law. The continuity of the project is the primary legal consideration, regardless of any change in ownership.

Third: Dispute Resolution Mechanism

Disputes are an inevitable aspect of any investment project, and various types of disputes may arise throughout the investment process. Recognizing this possibility, the Qatari legislator has granted investors the freedom to choose the mechanism through which they wish to resolve disputes related to their investment projects, regardless of the nature of such disputes.

Law No. (1) of 2019 does not impose any mandatory dispute resolution method on investors. Instead, it allows them to select from various options, including:

• • Mediation
  • Arbitration through global or regional arbitration centers
  • Litigation before Qatari national courts
  • Litigation before international courts

However, an exception has been made for labor disputes, which must be resolved exclusively by Qatari national courts due to their unique nature.

This approach differs significantly from the previous legal framework, particularly Law No. (13) of 2000 on the Regulation of Foreign Capital Investment in Economic Activity, which restricted dispute resolution options by only allowing parties to agree to arbitration. Article 11 of the previous law specifically stated:

“The parties may agree to resolve any dispute arising between a non-Qatari investor and another party through a local or international arbitration panel.”

Obligations and Penalties

As domestic investors are subject to obligations and penalties in the event of violations, this law also sets forth clear obligations for foreign investors and specifies the penalties they may face in cases of non-compliance.

First: Obligations

The Qatari society with its own distinctive customs, traditions, and social fabric, which it takes great pride in preserving. To protect these values, anyone entering the country is expected to respect and uphold them. This expectation extends equally to foreign investors seeking to conduct business and invest in Qatar.

Additionally, Qatar imposes strict regulations on safety, security, public health, and environmental protection, which apply universally to all businesses without exception. These regulations must be fully observed and diligently implemented by all investors.

Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activities clearly outlines the specific obligations imposed on foreign investors, which include the following:

1. 1. Non-Qatari investors must ensure the preservation of the environment and prevent pollution.
   2. All investments must adhere to the laws, regulations, and directives concerning security and public health.
   3. Foreign investors must refrain from engaging in any activities that may disrupt public order or offend public morality.

Second: Penalties

A violation results in a penalty, and to ensure compliance with the rules and conditions set forth under Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment, the law also prescribes penalties for breaches of these regulations. These penalties apply regardless of whether the violator is a natural or legal person and whether the violation was committed personally or by an employee acting on behalf of or for the benefit of the investor.

The law holds investors accountable for violations committed by their employees, ensuring that delegation of authority does not exempt them from responsibility.

Articles 19, 20, and 21 of Law No. (1) of 2019 outline a range of penalties depending on the nature and severity of the violation, including revocation of the investment project license; deregistration of the company; and financial penalties

However, in cases where the license revocation penalty is applied, the law grants the foreign investor the right to appeal the decision, as outlined below:

1. Revocation of the License

The issuance of a foreign investor license is preceded by a series of regulatory and procedural steps, ensuring that the investor meets all legal and sector-specific requirements. Likewise, the revocation of a license is not an arbitrary action but a legal consequence of a violation.

Before revoking a license, the competent authority follows a formal procedure, beginning with an official notification of the violation and allowing the investor three months to rectify the issue. This grace period provides sufficient time for corrective action. If the investor fails to rectify the violation within this timeframe, the revocation of the investment project license follows.

Article (19) of Law No. (1) of 2019 explicitly outlines the license revocation process as follows:

1. 1. The competent authority must notify the non-Qatari investor of any violation of the provisions of Law No. (1) of 2019.
   2. The investor is granted a period of up to three months from the date of notification to rectify the violation.
   3. If the violation remains uncorrected, the competent authority shall:
   • Revoke the investment project license, and
   • Deregister the company or branch from the commercial registry, as applicable.
   1. Relevant government authorities are notified upon license revocation to take appropriate actions concerning the investment project.

This provision is new and has no equivalent in the repealed law. Under the previous legislation, license revocation was not prescribed; rather, the only measure was the issuance of a formal violation notice, granting the investor three months to rectify the breach.

Specifically, Article (5) of the repealed Law No. (13) of 2000 on Regulating Foreign Capital Investment in Economic Activities provided only for a financial penalty and stated:

"The Ministry shall notify the non-Qatari investor of any violation of the provisions of this law and grant a period not exceeding three months from the date of notification to correct the violation."

Appeal Against the License Revocation Decision

If a non-Qatari investor fails to rectify the violation within the granted grace period, the consequences include:

• • Revocation of the investment project license
  • Deregistration of the company or branch

However, Article (19) of Law No. (1) of 2019 provides the foreign investor with the right to appeal the decision of the competent authority to the Minister regarding:

• • The revocation of the license
  • The deregistration of the company or branch

The appeal process follows the same rules and procedures set forth in Article (3) of the law, as previously outlined.

2. Financial Penalties

A foreign investor may commit violations or offenses that warrant the imposition of financial penalties, whether such violations are committed personally or by an employee acting on their behalf or for their benefit, in cases where the investor is a legal entity.

Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activities provides for financial penalties in Articles 20 and 21, as follows:

Article (20) states:

“Without prejudice to any stricter penalty prescribed by another law, a fine not exceeding five hundred thousand (500,000) Qatari riyals shall be imposed on any person who engages in or participates in an economic activity in violation of the provisions of this law.”

Article (21) states:

“A legal entity shall be subject to the penalty prescribed in the preceding article for any acts committed in violation of this law, if such offenses were committed by any of its employees in its name or for its benefit, without prejudice to the criminal liability of the natural person responsible.”

Law No. (1) of 2019 establishes a maximum financial penalty of 500,000 Qatari riyals for violations of any of its provisions, particularly those governing the practice and participation in economic activities, without prejudice to any stricter penalties prescribed under other laws.

This law also does not differentiate between Qatari and non-Qatari investors when imposing financial penalties.

Under the previous legislation, the financial penalty for the same violation ranged between 50,000 and 100,000 Qatari riyals. Additionally, Article 21 of the new law is an entirely new provision, with no equivalent in the repealed law.

Persons Exempted from the Application of This Law

As with every legal principle, there are exceptions. Certain natural and legal persons are exempt from the application of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activities due to special considerations determined by the legislator. These exemptions are exclusively limited to the following categories:

1. 1. Companies and individuals granted a concession or special agreement by the State for the extraction, exploitation, or management of natural resources, except to the extent that the provisions of such concession or special agreement are not contradicted.
   2. Companies established or participated in by the government, public institutions, or public authorities, as well as companies in which the State holds no less than 51% ownership, or a lower percentage, provided that the Council of Ministers grants approval, in partnership with non-Qatari investors, in accordance with the provisions of the Commercial Companies Law.
   3. Companies and individuals licensed by Qatar Petroleum to conduct petroleum operations or to invest in the oil, gas, and petrochemical sectors.

Certain strategic and nationally significant sectors, particularly those related to natural resources, oil, gas, and petrochemicals, are excluded from the scope of this law. The legislation explicitly states that Qatari investors operating in these sectors under State-awarded concessions or special agreements are not subject to its provisions, as these relationships are governed by special legislative frameworks.

Additionally, this exemption extends to companies established or participated in by the government or its institutions, where the State owns at least 51% of the company. However, a lower percentage of State ownership may still qualify for exemption, subject to the approval of the Council of Ministers, if the company is jointly owned with non-Qatari investors.

A review of the previous legislation reveals that it did not specify a minimum percentage of State participation required for an exemption from the law’s provisions. Instead, it left State participation open-ended, suggesting that any company in which the government or one of its institutions held any share was entirely excluded from the application of the law.

Conclusion

Qatar is considered one of the safest and most attractive investment destinations. The country is witnessing unparalleled progress across all sectors, whether through its abundant natural resources or its remarkable economic advancements in various industrial fields.

To support and facilitate foreign investment, Qatar has enacted progressive laws that eliminate obstacles, protect investors’ rights, and serve as a powerful mechanism for attracting foreign capital. Additionally, the processes for registering and owning investment projects in the sectors covered under this law are notably streamlined and efficient.

The ease and speed of investment project registration, coupled with comprehensive guarantees ensuring continuity and prosperity, make Qatar a highly competitive destination for global investors. By granting exceptional privileges and benefits to foreign capital, Qatar offers investment incentives rarely provided by other countries, fostering unprecedented opportunities across diverse sectors.

References

1. 1. Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activities.
   2. Law No. (13) of 2000 on the Regulation of Foreign Capital Investment in Economic Activities.
   3. Ministerial Decision No. (44) of 2020 issuing the Executive Regulations of Law No. (1) of 2019 on the Regulation of Non-Qatari Capital Investment in Economic Activities.
   4. Law No. (8) of 2022 on the Expropriation and Temporary Seizure of Property for Public Benefit.