Qatar has come out with unified definitions on small and medium enterprises (SMEs), enabling investment funds and venture capital to fund them, a move that could greatly benefit the SME sector and further enhance the country’s economic growth.
The Ministry of Commerce and Industry (MCI) highlighted Ministerial Decision No (250) of 2018 on the unified broad definition of SMEs, which are established in accordance with Qatari laws.
SMEs are classified into three categories as micro-sized with headcount of not more than 10 employees and whose annual turnover does not exceed QR1mn; small sized with headcount of 11-50 employees and turnover of more than QR1mn and medium sized with headcount of 51-250 employees and turnover of more than QR20mn but less than QR100mn.
The unified definition of SMEs is limited to autonomous private and profit-seeking enterprises and excludes ministries, public bodies and institutions, diplomatic bodies, public welfare institutions and establishments owned by public bodies and corporations and companies in which the state is a shareholder.
A private, profit-seeking entity shall not be considered a mixed enterprise, and shall maintain an independent status within the scope of the definition set out in the preceding article, even if the percentage of equities or voting powers of investors such as public investment companies, venture capital companies, business enterprise financiers, universities and non-profit research centres, and institutional investors (including regional development funds) is up to 50%.
The MCI said the Qatar Stock Exchange’s Venture Market is excluded from the definition of SMEs when applying the rules of listing to companies. However, the Venture Market may decide to use it as a guiding definition.
The unified definition of SMEs will ensure equal treatment for SMEs on the national level and help establish a unified framework to determine the eligibility of both current and foreseen enterprises to join SMEs sector, and benefit from available programmes and initiatives.
It (the unified definition) will not only contribute to drawing a clear map for the structure of business institutions in Qatar (micro, small, medium and large), thus helping analyse the sector and formulate future plans; but also “facilitate access to capital by providing preferential treatment to SMEs to enable investment entities such as investment funds and venture capital companies to participate in financing SMEs.
The definition will also help formulate a consolidated framework and guiding rules necessary for collecting, processing, and publishing data and information, which leads to producing high-quality statistics in addition to monitoring SMEs evolution through time, in terms of their growth, continuity, and capability to ensure their progression from one category to another.
The decision also stipulates that the MCI shall co-ordinate and co-operate with all relevant authorities to introduce any amendments to this definition by reviewing the outcome of applying this definition and evaluating its suitability to the needs of SMEs in the country and its compatibility with the state strategic plans.
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