Types of Qatari Sponsorship Options That You Must Know

Posted by Amelie Hayden on January 28th, 2021

Are you looking for a Qatari business sponsor? Here are the two types of Qatar sponsorships to set up a business in.

Individual sponsorship: Individual sponsorship is the most sought-after sponsorship. The local sponsor, most probably a Qatari citizen, becomes a local sponsor of your business in their personal capacity by acquiring a 51% stake in the business entity.

Corporate sponsorship: Corporate sponsorship is considered as a low-risk proposition to the individual sponsorship option. Here, the local sponsor; most probably a Qatari company, will become a sponsor of your business rather than the individual, whilst holding a 51% share in your company.

Things to consider in individual sponsorships

In order to establish a business, the foreign citizen or company should seek a Qatari sponsor for business, who would sponsor them in Qatar. For a Limited Liability Company, the sponsor or Qatari citizen should also hold a minimum of 51% share in the company. Additionally, you should conclusively show that these 51% of Qatari shareholders share a certain portion of the company profits as well as a certain portion of the losses in the company.

Here are the key points to consider before selecting an individual Qatari sponsor for business.

Know your Qatari sponsor well before finalising the partnership

While looking for a Qatari sponsor to form a company, do proper research on all the policies, business requirements, as well as on the local sponsor. This will allow you to establish your business smoothly and efficiently. It is easy to find a Qatari sponsor for business, whoever, you should gather adequate information about the sponsor and make an informed choice on your Qatari sponsor for business.

Identify the hidden costs if any of partnership formation

In general, the fee structure for sponsorships are clear and transparent, unfortunately, most individual partners do not wish to enter into lengthy or long term complicated contracts. As per the law, the Memorandum of Incorporation should show a proper distribution of the profits reaped in between the Qatari sponsor and the foreign shareholder or business owner. This understanding is usually superseded with an annual or one-time fee. You should check the details of the agreement and the fees, to avoid any unwanted fees later.

No legal agreements

In Qatar, it is common for businesses or individuals to enter into verbal agreements despite having a written agreement. Building a partnership in business on trust can be tempting but verbal agreements don’t stand in the court of law during a dispute. Only a legally bound written agreement is admissible as proof in the courts during a dispute. Therefore, do not fall into the trap of verbal assurances and agreements. Emphasis on a comprehensive written agreement while looking for Qatari sponsorfor business.

Advantages of corporate sponsorships

Though individual sponsorships are common, several entities are not aware of the corporate sponsorship option and its various benefits for the foreign companies who wish to set up business in Qatar.

No interference in business:

The foreign entrepreneur would still be able to keep complete control of the entrepreneurial entity, despite the corporate sponsor owning 51% shares in the entity. In general, corporate sponsors don’t involve themselves in the daily operations of your business. This allows you to exercise full control over the management of staff, clients, as well as the matters of the company.

Company law:

The Limited Liability Company, established with the help of a corporate local partner, are governed as per the Qatari Company Law. therefore, the business entity will not face any succession issue as per the Sahri Law, if the local partner dies. In simple words, corporate sponsorships do not come under the succession law under the Sharia law, in the event of the death of a local corporate sponsor.

It is important to know about the different sponsorship options for starting a business in Qatar. This will help you make an informed choice while looking for a Qatari business sponsor.

If you want more information about the Qatari sponsor for business, you must visit AAIQA today.