It has been an interesting time recently in Qatar with regards to the introduction of new laws and the further development of draft laws. Of particular interest to participants in the education sector will be some of the provisions of Law No.(11) of 2015, the new Commercial Companies Law, which took effect on 6 August, Law No.(1) of 2015 which amended Law No.(14) of 2004, the Labour Law, the progress of the draft law regulating private schools through Qatar›s constitutional approval process, and Law No.(18) of 2015, the Educational Service Law.
Commercial Companies Law
The new Companies Law repealed Law No.(5) of 2002 and any decisions previously made by the Minister of Economy and Commerce (Minister) to implement it. However, until the Minister issues new decisions under the new law, the current decisions will remain in effect to the extent that they are not contradictory.
- There has been a general «tightening» of the timelines to complete the various registration processes. Existing time periods have been reduced, materially in some instances, and some new time periods have been introduced, eg. an application to register a limited liability company must be considered and a response issued by the MEC within 15 days from the date of submission.
- References to the Qatar Financial Markets Authority (QFMA), its rules and regulations and its supervisory obligations to public shareholding companies listed on the Qatar Exchange, appear in the new law.
- The new law requires publications to be made in 2 local newspapers one of which must be published in Arabic. In addition entities are directed to make publications available on their websites if they have them, eg. the publication of the memorandum and articles of association of Public Shareholding Companies.
Compliance with the New Companies Law:
- Entities/individuals subject to the new law must comply with its provisions within 6 months of the law taking effect, ie. 2 February 2016. The Minister will have discretion to extend this initial 6 months for one or more similar periods.
- The new law states that the Minister shall issue new decisions to regulate the registration process, including the introduction of a «one stop shop» system. Until the new decisions have been issued the impact on the process and the time frame for registering companies and other entities cannot be quantified.
Limited liability companies:
NOTE: We have only considered the provisions in the new law which are pertinent to limited liability companies (LLC) given the majority of foreign investors in Qatar›s education sector will register an LLC in which they can own 49% of the share capital unless they have received approval from the Minister to own more, ie. up to 100%.
- An LLC can now be established by a single person owning the entire share capital of an LLC. Under the old law the minimum number of shareholders for an LLC was 2. This replaces the Single Person Company regime provided for by the old law.
- Under the old law the minimum share capital of an LLC was QAR200,000 divided into equal shares, the value of each is not be less than QAR10. Under the new law the shareholders of an LLC can determine the share capital of an LLC. It is unclear at this stage how this new provision will be applied in practice, ie. whether all shareholders may determine their own share capital values or if minimum values will be introduced depending on the activities the LLC is licensed to undertake. We are aware however that the Ministry of Economy and Commerce has indicated that it will consider applications where the share capital of the LLC will be QAR1,000.
- Shareholders holding 20% of the share capital may now request that an LLC›s managers convene a shareholders› general assembly meeting. Under the old law the requirement was 25%. An LLC›s appointed auditors can still, as before, request that a meeting is convened.
The majority of employees working in Qatar’s education sector will have their employment terms governed by the Labour Law. Article 66 of the Labour Law was recently amended by Law No.(1) of 2015 (the Amendment). Whereas the article previously required that salaries (Salaries) and any other sums to which an employee is entitled under his/her contract of employment were paid to an employee’s account at a bank agreed upon between the parties, or to an agent appointed by the employee, payment will now need to be made directly from the employer’s local Qatari account into a Qatari account in the name of the employee. The new system effectively creates a Qatar to Qatar based transaction between the employer and employee. The Amendment only applies to employees whose employment is governed by the Qatar Labour Law.
The substantive body of Article 66 remains the same under the Amendment such that Salaries must continue to be paid in Qatari currency. Further, Salaries of employees employed on an annual or monthly basis must be paid at least once in every month; Salaries of all other employees must be paid at least every 2 weeks. The material change is that once the Amendment takes effect, an employer will be obliged to transfer the Salaries directly into employees’ Qatari accounts within the designated time periods. The Amendment came into force on 2 November, we note that the Labour Department is already requesting evidence of compliant Salary payments when undertaking site visits.
Law regulating private schools
In November 2015, the Emir of Qatar approved the coming into force of Law No.(23) of 2015, the New Private Schools Law which regulates all privately run schools in the State; the New Private Schools Law aims to update the previous legislation which dates back 35 years.
We note below some of the key points from the New Private Schools Law below:
- There are 36 Articles which are divided into 7 Chapters being: Definitions and General Provisions, Licensing and Approval Procedures, Conditions for Ownership and Management, Buildings and Facilities Requirements, School and Study System, Investigations and Discipline and General Closing Provisions.
- The New Law has introduced a series of penalties for private schools found to be operating without the proper licenses and approvals from the Supreme Education Council (SEC), including jail terms and fines up to QAR 100,000.
- Schools cannot operate without a licence or make any changes to their existing licence without the pre-approval of the SEC.
- All schools have one year to comply with the changes introduced by the legislation; the Minister may extend this period by one year.
- Any materials, tools and/or curriculum that does not meet the standards of the SEC may be withdrawn or ordered to be changed.
- Schools are prohibited from receiving funding or donations without approval from the SEC and face fines for violation of this rule
In parallel with the coming into force of the New Private Schools Law, we note that the director of the Private Schools Office in the SEC has appointed a private financial company to review requests for school fee increase; all fee increases will now need to be initially reviewed by this company before being considered by the Private Schools Office and the SEC.
Educational service law
The Education Service Law governs any individual or entity which provides education services and/or training in the fields of languages, computing, secretarial, accounting and/or business administration; such services and/or training to be provided in centres. The law will come into effect when it is published in the Gazette.
- Educational centres must now have a specific licence to operate.
- Educational centres cannot advertise/announce that they are opening or accept any students until a licence is approved.
- Educational centres should have separate premises in which they operate; the licence will be issued for that premises.
- Licences cannot be assigned to third parties unless a prior approval is obtained
- A bank guarantee must be provided, and will be deducted if a violation occurs; the law is silent as to value which will be confirmed by a Ministerial decree.
- 6 months for existing educational centres to comply with the new law.
- Penalties for violation of the law include imprisonment of up to 6 months and/or a penalty of QAR100,000 and/or cancellation of the licence.
Note: Qatari laws (saved for those issued by the Qatar Financial Centre to regulate internal business) are issued in Arabic and there are no official translations, therefore for the purposes of drafting this article we have used our own translations and interpreted the same in the context of Qatari regulations and current market practice.