Since the accession of His Highness the Emir Hamad Bin Khalifa Al-Thani in 1995, Qatar has experienced unprecedented and dramatic economic growth and reform. While its growth is attributed primarily to the dramatic increase in exports of oil, gas, petrochemicals and related industries, Qatar is becoming a hub for financial and business as a result of the reform of its commercial laws and regulations and restructuring of the financial sector.
Qatar Financial Centre
One of the most important measures taken by the Qatari government is the establishment of the Qatar Financial Centre (QFC). As an independent legal entity, the QFC has an independent financial status and is not subject to the administrative and judicial processes of the Qatar Government as the QFC has its own laws, regulations and courts. Local laws and regulations do not generally apply in the QFC’s proceedings, except for instances of criminal law. Unlike Dubai, the QFC is not a geographic or ‘free’ zone in which all financial companies must reside and undertake their business. Rather, the QFC has a legal personality of its own under which qualifying persons or companies can pursue their activities throughout Qatar. The QFC’s advisers believe that it will help Qatar become the financial hub of the Middle East. However, unwittingly perhaps, such a system has the potential for conflicts with local governmental agencies.
The QFC is authorised to oversee two tiers of activities. The first tier consists of regulated activities such as the banking, insurance, money market, stock exchange, asset management, and financial brokerage businesses. The second tier consists of unregulated activities such as legal consultancy, auditing, accounting, and shipping services. The latter tier activities are not regulated by the QFC, although the QFC does have the authority to license these two activities in support of the regulated activities.
As a result of this structure, a conflict may emerge between the QFC and certain governmental entities/agencies. For instance, one need look no further than the different fiscal regulatory schemes, with the latent variance between the QFC and the Qatar Central Bank (QCB), Qatar Exchange (QE), Qatar Financial Markets Authority (QFMA) or the Ministry of Justice, to witness the divergent and conflicting issues.
Resolution of dual authority
Therefore, the government undertook an extensive review of the financial sector and proposed measures to resolve the dual authority granted for the QFC and the statutory powers granted to various local authorities. One of the first proposed steps is to move the QFC Civil and Commercial Court to operate under the Supreme Judicial Council’s umbrella, a step recommended by a committee of judges and legal experts. The second step is to propose the creation of a new authority to serve as a single regulator. The proposal, yet to be approved by the Council of Ministers, is the incorporation of an independent Financial Authority (Financial Regulator) to oversee the financial sector. Such a step is intended to untie any overlap between the existing authorities to create a single regulator for the financial market. The proposed decree grants the QCB greater powers as the ultimate regulator for the financial market and the insurance sector. Under the proposal all financial market authorities i.e. QFC and QFMA will report to the Financial Authority, which will in turn report to the QCB.
After more than five years of progress these new proposals will be welcomed as a sensible step forward. They will enhance the stability and clarity of Qatar’s financial markets and turn Qatar into a financial hub for businesses in the Middle East.
About Al-Ansari & Associates
Al-Ansari & Associates is a leading law firm based in Doha, Qatar. Al- Al-Ansari & Associates was founded by Mohammed Ahmed Al-Ansari in early 2007 as The Law Office of Mohammed Ahmed Al-Ansari – Legal Consultancy. The substantial growth in that first two years led Mr. Al-Ansari to change the firm’s name to the Al-Ansari & Associates and to transform the firm into a multi-cultural community. Our partners, counsels and lawyers come from different backgrounds and countries. Proudly, Al-Ansari & Associates boasts lawyers from 10 different nationalities speaking 10 different languages.