Qatar is one of the best business hubs in the world as it offers a unique blend of opportunities for local and foreign investors alike. The most distinctive aspect of business in Qatar is the sponsorship system, which requires foreign companies and workers to operate under a local sponsor.
So what happens when a firm decides to change its sponsor? No matter the reason, whether it’s due to expansion, restructuring, or a change in business strategy, changing business sponsorship in Qatar is one of those processes that can be straightforward if planned properly from the beginning.
In this blog, we’ll see how to transfer business sponsorship in Qatar.
What Is a Business Sponsor in Qatar?
A typical business sponsor in Qatar is either a Qatari citizen or a locally registered company that, entering into a sponsorship agreement, undertakes to represent and act on behalf of a foreign investor so that a business can be established and operated in Qatar. Generally, the sponsor is allocated a majority shareholding, which is 51% against 49% allocated to the foreign investor by the Qatar Commercial Companies Law.
Although some industries allow up to 100% foreign ownership, the majority of businesses in Qatar continue to work with sponsorship frameworks, particularly for mainland ventures.
Why Transfer a Business Sponsorship?
A few reasons exist as to why a company opts to transfer sponsorship, for example:
- The current sponsor is inactive or disengaged with the vision of the business
- The company hopes to venture into another field that requires a different sponsor.
- There is a merger, takeover, or change in ownership.
- The company wants to change from a local sponsor to a free zone/QFC or vice versa.
The transfer must follow a particular course of action. The Ministry of Commerce and Industry (MOCI), the Ministry of Interior (MOI), and other bodies set guidelines for the latter.
Steps to Transfer Business Sponsorship in Qatar
- Get NOC from the Current Sponsor
Acquiring NOC from a current sponsor is the most critical part of the process. NOC (No Objection Certificate) is mandatory for any business sponsorship transfer within Qatar.
Without an NOC, the transfer process typically cannot proceed unless exceptional circumstances apply.
- Prepare New Sponsorship Agreement
Now that we’ve gotten NOC, the next step is to get the business to negotiate a new contract with the new sponsor. It is also necessary to add the following changes:
- Shareholder details
- Ownership percentages (if applicable)
- Commercial registration (CR)
- Trade license details
- Articles of Association (AoA)
To ensure documents are compliant, legal help is preferably sought out.
3. Apply for Changes with the MOCI
The Ministry of Commerce and Industry must be notified of the sponsor change. You’ll need to submit:
- Original and updated Commercial Registration
- NOC from the old sponsor
- New AoA
- Updated shareholder information
- Other supporting documents as required
MOCI shall examine and, in the affirmative, grant a new Commercial Registration in the name of a new sponsor.
4. Update Trade License and Municipality Records
The Mohamed Bin Rashid Academy for Entrepreneurship Extractive Industries (CR) needs to be modified first, after which the Municipality (Baldiyah) and other relevant departments (Civil Defense, among others, if available) need to be updated.
For information, you will need to:
- Update your Trade License
- Notify the Qatar Chamber of Commerce
- Modify any additional industry-specific licenses
5. Notify the Ministry of Interior (MOI)
If the business has registered employees under the company’s sponsor ID, the Ministry of Interior (Immigration Department) must also be notified.
Employee sponsorships and visas may need to be transferred to the new sponsor if tied to the old company registration.
Important Notes:
Legal Help: Contact a legal or business consultant based in Qatar to avoid delays or compliance challenges.
Planning: Proactively prepare, considering that the change of sponsorship may take a few weeks.
Communication: Keep the current sponsor in the communication loop for seamless transition.
Employee Considerations: Work with HR to ensure a smooth transition when changes affect payroll settings or employee visas.
Final Thoughts
Transferring business sponsorship is possible in Qatar, but it needs to be done carefully to make sure the company is protected and all legal requirements are fulfilled. Whether you are undergoing restructuring or growth planning, partnering with seasoned consultants such as QShield will guarantee a compliant and efficient shift.
For expert advice and comprehensive assistance with business sponsorship transfer considerations, contact QShield.