By Nizar Kochery /Doha
Question: I have been working for a company for three years. Last year I got a loan from a bank based on a letter issued by the company. Now the company is planning to terminate me and will not give NOC or release. If the company fires me or I want to resign who will be responsible for the loan repayment in my absence?
RH, Doha
Answer: Loans offered by banks to salaried employees are usually of two types: guaranteed and non-guaranteed. In a guaranteed loan the employer agrees with the bank to provide its employees with loans and the employer then acts as a guarantor that the loan will be repaid. In this case if the borrower employee fails to repay the loan, it is the employer’s responsibility to fully pay on his or her behalf.
A non-guaranteed loan is one where the employer does not act as a guarantor that the loan will be repaid. If the employee fails to repay the loan, the bank can take the necessary steps to recover the loan from the employee including legal action.
Briefly in commercial law terms, a guarantor is a person who guarantees to pay for someone else’s debt if he or she should default on a loan obligation. A guarantor acts as a co-signor of sorts, in that they pledge their own security or services if a situation arises in which the original debtor cannot perform their obligations.
No personal taxes in Qatar
Q: Is there a personal tax for expatriates in Qatar? Will there be any legal deductions from the salary of an employee? Does any activity in Qatar Science and Technology Park attract any tax other than the normal tax?
TR, Doha
A: There are no personal taxes or social insurance in Qatar. Also there are no statutory deductions from salaries and wages paid. The QSTP promotes research and commercialisation of technology projects and training; its occupants enjoy a zero tax rate. The QSTP is a centre of research and commercial excellence for scientific development and regionally produced intellectual property for both Qatari and international partners.
Judgment issued by foreign court
Q: We have obtained a judgment (from a court outside the country) against a company in Qatar. The transaction was of material supply and the jurisdiction agreed was that of the country of supply. The court awarded the judgment in our favour and we wanted to enforce the judgment. How is this possible? Please advise.
FRC, Doha
A: According to Article 379, judgments and orders issued in a foreign country may be enforced in Qatar on the conditions determined by the law of that country regarding the execution of the judgments and orders of the State of Qatar therein. However the order of execution shall not be issued except ascertainment that the Qatar courts are not the sole competent body to determine the dispute on which the judgment or order was issued, and that the foreign court that issued such a judgment or order are competent pursuant to the rules of the international juridical rules determined under their law; the litigants in the action upon which the judgment was issued were duly summoned to appear and were represented properly; the judgment or the order has possessed the force of the executed order pursuant to the law of the issuing court; and that the judgment or order does not conflict a judgment or order that had been previously issued by a Qatari court, and that it does not contradict the public order and morals therein.
Company capital and shareholders
Q: How far can a foreign investor safeguard his rights in terms of dividends and assets in the company where the local partner is only for legal compliance? What minimum capital should a limited liability company possess?
TU, Doha
A: According to Article 232 of the Commercial Companies Law, the company capital shall be sufficient enough to realise its objects. The profits and losses shall be distributed among the shareholders as per the company’s memorandum and Articles of Association provided the provisions of Article 13 of the Company Law are observed.
Under Article 308, company assets in kind shall be divided among the shareholders by way of separation, provided the rules governing the division of common assets shall be followed, unless the company Memorandum and Articles of Association otherwise provides.
Accordingly shareholders may agree to distribute assets in kind upon dissolution different from the default rule. Article 13 stipulates that the company memorandum shall not include a provision excluding any partner from his rights in the profits or absolving him from the loss, otherwise such a memorandum shall be void. The capital shall not be less than QR200,000, divided into shares of equal value each of which shall not be less than QR10.
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LEGAL SYSTEM IN QATAR
Payment, renewal, set off, joint liability or discharge of the pledged debt shall not be effective against the Pledgee except with his approval. Amendment of the debt that may cause damage to him shall not be effective against him unless he accepts it. The debtor of a debt given in pledge may set up against the Pledgee the defences relative to the validity of the debt secured by the pledge as well as those defences he may have against his own creditor, to the extent that an assigned debtor may set up defences against the assignee in the case of an assignment of debt.
If a pledged debt falls due for payment before the actual debt secured by the Pledgee, the debtor must discharge his debt to the Pledgee and the Pledgor jointly. The Pledgee and the Pledgor may each demand the debtor to deposit the amount paid by him, in which case the pledge is transferred to the amount so deposited. If the Pledgor and the Pledgee fail to agree on the investment method of the amount paid by the debtor, the court shall pass a decision that benefits the Pledgor without causing any damage to the Pledgee. If the pledged debt and the secured debt fall due, the Pledgee may collect the debt pledged up to the amount due to him and demand that the debt be sold or be allocated to him in accordance with Article 1024.
According to Article 1165, no right is privileged except by virtue of a provision of the law; accordingly the rank of a privilege is fixed by law. In the absence of a formal provision of the law fixing the preferential rank of a privileged right, it ranks after any other privilege. In the absence of a provision of the law to the contrary, privileged rights of the same rank will be paid rateably. General privileges extend to all movable and immovable property of the debtor. Special privileges are limited to a specific movable or immovable only.
General privileges, however, even over immovable are not subject to publication. Privileges over immovable securing sums due to the Public Treasury are also not subject to publication. All these privileges rank prior to any other privilege over immovable or mortgages, whatever may be the date of their inscription. As between each other, the privilege securing sums due to the Public Treasury ranks prior to general privileges. General privileges shall not be subject to the right to commence proceedings subject to the provisions of the law with respect to the privilege over sums of money due to the Public Treasury.
Provisions of the law relating to mortgages are applicable to privileged rights over immovable property in so far as they are not incompatible with the nature of these rights. The provisions relating purge, to make an inscription and the effects of inscription, are in particular applicable to prove immovables.