Qatar Central Bank (QCB) recently issued a Board Resolution
(the Resolution) restricting the ownership of shares in listed
The Resolution provides that one person's ownership of
shares may not exceed five percent of the shares of any Qatar
Stock Exchange-listed financial institution, whether direct or
indirect. However, this percentage may be increased up to 10%
subject to the prior approval of the QCB.
Shares owned or held by the state, Qatar Foundation for
Education, Science and Community Development, the funds of the
General Retirement and Social Insurance Authority, Qatar
Investment Authority and Qatar Holding Company are exempt.
The Resolution further provides that, without prejudice to
the QCB's authority to apply penalties to the financial
institutions pursuant to Law No. 13 of 2012 on the QCB and
Regulation of Financial Institutions, no person may benefit
from the voting rights in the shareholders' general meeting or
in the management of a financial institution in excess of the
permitted percentage limit.
In application of the provisions of the Resolution, indirect
ownership means: the ownership by economically or legally
interrelated persons of an organisation's shares, whether they
are natural or legal persons, and whether such relationship is
by means of ownership, common management or interrelated
'Common ownership or management' means any economic or legal
relationship by means of ownership or management.
'Interrelated interests' means each and every interest or
relationship giving a person the right to control another
person or exercise influence over them in respect of making
financial or operational decisions or an alliance of a group of
The Resolution stipulates that all financial institutions
subject to its terms adjust their statutes and amend their
articles of association to conform no later than one year from
the effective date, being March 21 2016. Failing this, they may
be subject to the penalties set out above, including the limit
on voting rights.
Although the application of the Resolution might create both
practical and legal challenges for the affected financial
institutions in terms of compliance, the initiative reflects
Qatar's strategic plan to improve governance rules, protect
consumers and investors against monopolies and also to
strengthen the financial sector's infrastructure.