Qatar: MEC directives on private firm shareholding
This is an initiative intended to streamline the function of private shareholding companies
MEC issues directives on private shareholding firms.
The Ministry of Economy and Commerce (MEC) has issued directives relating to the eligibility of members on their board of directors, bonuses and rewards and rules on the conduct of shareholders' general assembly.
This is an initiative intended to streamline the function of private shareholding companies, the Gulf Times reported.
These directives will be relevant to private shareholding companies that do not fall under the control of Qatar Financial Markets Authority or the Qatar Central Bank.
According to the guidelines, a board member should be at least 21 years of age without a criminal record, specifically around crimes stated in Articles 334 and 335 of the Commercial Companies Law.
An additional criteria is that he should also be a stakeholder and own a portion of shares as per the company’s establishment rules. An independent member however, is exempted from this regulation.
Such shares should be deposited at any of the accredited banks within 60 days of the commencement of the membership, where it will remain and cannot be transferred, mortgaged, or seized during membership.
In addition, a director’s remuneration should not exceed 5% of the company’s profit.
The MEC directive states that independent members must be entirely independent and have suitable experience.
The board of directors is required to hold at least six board meetings within a financial year of the company concerned, unless company rules specify more such meetings. A meeting should be held every three months.
The MEC authorised that neither the chairman nor the board members should participate in any business that competes with that of the company.
A further directive bars the company from offering financial loans of any sort to its board members, while banks however, may give loans or financial services to their board members.
If a member has been removed from the board he can only be re-elected after five years from the time the decision was taken to remove him.
Also outlined by the MEC were the procedures for organising a general assembly meeting, selection for the board and the authority for proxy representation.
More details on these regulations are available on the MEC website.