Company Capitalisation and Limitation of Liability
Type
E-journal
Date
5 Feb 2013
Jurisdiction
Qatar
Taxonomy
General Commercial Law, Companies & Corporate Bodies
Copyright
LexisNexis
Relevant company
Clyde & Co
Legal reference
Qatar Law No. 5/2002
Analysis
The most common vehicle available to foreigners (personal or corporate) wishing to conduct business in Qatar is through the incorporation of a limited liability company (LLC) established pursuant to Qatar Law No 5/2002 as amended (Companies Law). The general principle in relation to LLCs is that the liability of the shareholders is limited, but in certain circumstances, Article (290) of the Companies Law (Article 290) allows the "lifting of the corporate veil" of a LLC, i.e. to look beyond its limited liability, and the imposition of the LLC's liabilities on its shareholders, and potentially its general manager or equivalent.
Law
Article 290 provides that if the losses of a LLC reach 50% of its capital, the shareholders must resolve, by the majority required to amend the articles as defined therein, within thirty days either to (a) recapitalise the LLC's debts or (b) dissolve the LLC. If the managers fail to call for a Shareholders' General Assembly and/or if such a resolution is not passed, the shareholders and/or the managers as the case may be, will be jointly liable for all of the LLC's debts.