New Take-Overs Regime In Qatar... And Now For Something Completely Different

A recent amendment to the Qatari Commercial Companies Law No. 5 of 2002 (Companies Law) established, for the first time, a regime for take-over of companies in Qatar¹. The new provisions in Chapter 9 of the Companies Law set out the definition and procedural elements of a take-over. Article 282 bis 1 states, inter alia, that, It appears at first glance that the new provisions of the Companies Law were enacted to cover situations where a company acquires a majority interest in another company. However, the first part of Article 282 bis 1 has been worded such that a take-over occurs by virtue of any acquisition by a company of shares in another company, without providing a minimum threshold for the acquisition. In many other jurisdictions, the take-over laws recognise the possibility of a change of control with acquisition of a lower percentage than 51%. Against this background, it is not clear how Article 282 bis 1 would be interpreted by the Qatari courts and the authorities. It also remains to be seen if, in practice, there will be any challenges mounted by interested parties against a proposed acquisition where it does not comply with these take-over provisions, even though the acquisition is not of a majority stake in a company. Additionally, although the take-over provisions do refer to an "indirect partial acquisition", they do not define what amounts to an indirect acquisition nor do they clearly address and define the concept of related parties in an acquisition. As such, it is arguable that these provisions could be circumvented through an acquisition by parties acting in concert. Under the new take-over provisions, both the offeror and the target are required to approve the acquisition by way of a resolution of an Extraordinary General Assembly (Article 282 bis 2 (1)). In the case of a Qatar Shareholding Company, this effectively means approval of shareholders holding at least two thirds of the shares represented at an Extraordinary General Assembly and, in the case of a limited liability company, 75% of the share capital of the company. A take-over must also be ratified by the Minister of Business and Trade. It is not clear what criteria or factors would be taken into account by the Minister when ratifying or objecting to the take-over. The factors could conceivably range from minority protection or procedural issues to broader economic and policy considerations. Article 282 bis 2(2) requires the offeror to increase its share...