By Santhosh V Perumal/Business Reporter


The Qatar Financial Centre (QFC) has strengthened its insolvency regime to enhance certainty in the financial landscape in a bid to woo more foreign investments, a move that would also see the advent of a new breed of Qatar-based insolvency practitioners.
This has been made possible with the QFC Authority (QFCA) amending its insolvency legislation as part of modernising the financial infrastructure of the country.
“The bigger picture is that it (new insolvency legislation) will bring in more certainty, which in turn will attract more foreign investments,” a senior QFCA official told Gulf Times.
The move to amend insolvency legislations comes at a time when the corporate sector of Qatar - which has embarked on a mammoth capital expenditure drive for infrastructure upgrade ahead of the 2022 World Cup - needs funding on predictable and transparent terms.
Creditors would also look for certainty for the money they have invested, the official said; adding insolvency regime across the Gulf region has been at a nascent stage.
A well-designed insolvency system helps businesses obtain financing more easily and at a lower cost, a chartered accountant said.
Amongst several other provisions, the new insolvency rules provide for the creation of a register of insolvency practitioners and sets out how insolvency practitioners can qualify to appear on the register, a QFCA spokesman said.
Insolvency practitioners are those licensed and authorised to act in relation to an insolvent individual, partnership or company.
“There are no specific Qatar-based insolvency practitioners, although there are liquidators,” the chartered accountant said.
As of now two London-based insolvency practitioners – Joanne Kim Rolls and Steven John Parker - have been registered and approved by the QFCA, but they are not based out of Qatar.
Dealing with a number of specific and substantive enhancements, more straightforward amendments have also been made to update the terms and phrases in the existing insolvency regulations, the QFCA spokesman said.
The rules also allow a company to voluntarily apply to be struck off the register of companies under certain conditions, he said.
The QFCA has also amended single family office (SFO) and special company (SC) regulations as part of broad efforts to make the legal environment more appealing with simplified procedures as well as allowing more flexibility to QFC firms’ operations.
“An attractive legal environment is fundamental to the QFC’s standing as a world-class financial centre. The new regulations and rules underline our commitment to offer firms a highly competitive platform from which to conduct business in Qatar, the region and internationally,” Shashank Srivastava, CEO and board member, QFCA, said.
An SFO is a private company dedicated exclusively to the investment, legacy and financial needs of one wealthy family. The amendments to the SFO regulations contain a number of clarifications including, but not limited to, the definition of a single family. They also set out the requirements for establishing an SFO and distinguish between the requirements which relate to the licensing of SFOs and those which relate to the incorporation of a company as an SFO.
The SFO rules contain further detail about the operation, provide for their licensing and registration, address the criteria for recognition of an eligible firm and describe the procedures and requirements for amending the Articles of Association or transferring the shares in a SFO.
The SC regulations provide the legislative framework for special purpose companies and holding companies. Special purpose companies are entities created to fulfil specific objectives or purposes.
A holding company usually refers to one that does not produce goods or undertake trading services itself; rather, its purpose is to hold and otherwise deal with both tangible and intangible property including shares and a variety of assets in other companies.
The amendments to the SC regulations include a number of clarifications to definitions, such as transaction, special purpose companies, holding companies, holding company activities and the entities which can hold shares in SPCs as nominees.
The new rules detail further the operation of the SC regulations and in particular provide for the incorporation, licensing and registration of special companies; the approval of support service providers; the application of various aspects of the companies regulations and insolvency regulations to special companies and various notification requirements placed upon special companies by the QFCA and the companies registration office.
“We keep our legal environment under constant review, draw on best practice from around the world and respond promptly to client and practitioner commentary on existing and new legislation,” according to David Dhanoo, chief legal officer and board secretary, QFCA.