Change in Corporate Sponsor

Changing a corporate sponsor in Qatar

The introduction of 100% foreign ownership on Qatar’s mainland has transformed the country’s investment landscape, giving investors much more freedom and control over business operations. Yet, despite these changes, corporate sponsorship still provides many tangible benefits: smoother regulatory processes, better access to local markets, and often invaluable on-the-ground support. But what happens when the relationship with a corporate sponsor no longer serves the business’s evolving needs?

Whether it’s to align with a new strategic direction, address operational inefficiencies, or secure a more tailored partnership, changing a corporate sponsor is a necessary step for many businesses in Qatar. While the process requires careful planning and compliance with legal procedures, it doesn’t have to be daunting.

What is corporate sponsorship in Qatar?

In Qatar, corporate sponsorship refers to the requirement for a local Qatari individual or entity to hold a percentage % stake in businesses operating outside free zones. While this arrangement allows foreign investors to operate locally, it is largely a nominal partnership, with the foreign party retaining day-to-day operational control through legal agreements.

The decision to change your corporate sponsor often comes down to seeking better governance, enhanced security, or a partnership that’s a better fit. While the process is straightforward, it does call for careful planning and attention to detail to ensure compliance and keep your business running smoothly.

Key considerations for changing a corporate sponsor

Legal and regulatory clearances

To initiate the sponsor change process, businesses must secure the following clearances:

General Tax Authority (GTA): Obtain a No Objection Certificate (NOC) confirming no outstanding tax liabilities.

Ministry of Labour (MoL): Ensure Wage Protection System (WPS) compliance and that there are no wage-related blocks.

Ministry of Commerce and Industry (MOCI): Confirm that the Commercial Registration (CR) is free from court-imposed blocks or restrictions.

Share transfer documentation

The share transfer process involves drafting a Sales and Purchase Agreement (SPA), which must be stamped and approved by:

The MOCI

The MoL

The GTA

The Ministry of Justice

Succession and governance protections

Opting for a corporate sponsor over an individual sponsor provides enhanced safeguards, including streamlined succession in the event of unforeseen circumstances, ensuring business continuity.

Documents required for the share transfer process

For LLCs registered with the MOCI, the following documents are necessary:

For Shareholders:

Passport copies of individual shareholders
Police clearance (if required by the MOCI)

For the Company:

Articles of Association/Memorandum of Association
Commercial Registration (CR)/Certificate of Incorporation
Corporate documents (Trade Licence and Computer Card)
Access to the online MOCI portal

For the share transfer process:

Board Resolution authorising the share transfer (prepared by your partner or sponsor)
Power of Attorney (POA) for executing transactions in Qatar
Passport copy of the person granting the POA and the authorised representative holding it

From regulatory authorities: NOC from the tax department (auditors may be required to assist in obtaining this clearance)

The process for changing corporate sponsor

Initial review and compliance check - Assess the company’s compliance with tax, labour, and regulatory obligations. This step ensures all necessary clearances can be obtained without delays.
Draft and approve agreements - Prepare the SPA and associated documents, ensuring they are legally compliant and reflect the agreed terms of the sponsor change. Submit these for stamping and approval from the relevant ministries.
Secure NOCs and clearances - Work with relevant government authorities to obtain the required NOCs from the GTA, MoL, and MOCI.
Finalise share transfer - Complete the share transfer through the MOCI portal, updating the company’s AoA to reflect the new sponsor arrangement.
Post-change compliance - Update all associated licences, employee sponsorships, and government records to ensure full alignment with the new corporate sponsor.

Why choose a corporate sponsor over an individual sponsor?

Opting for a corporate sponsor offers several advantages, including:

Stronger governance: Agreements with a corporate sponsor provide greater legal protections and succession continuity.
Multiple signatories: A corporate sponsor ensures availability for necessary legal processes, avoiding delays.
Clear exit strategies: Corporate agreements often include predefined exit clauses, safeguarding the foreign investor’s interests.
Risk mitigation: Corporate sponsors typically limit the number of companies they support, reducing the risk of shared liabilities affecting your business.

How can Sovereign PPG help?

Sovereign PPG can act as the corporate sponsor in Qatar and streamline the sponsor change process, managing all aspects from securing the necessary clearances to preparing documentation and liaising with relevant authorities.

If you need assistance with changing a corporate sponsor or any related onshore or offshore company setup, restructuring, local partner, or PRO support matter in Qatar, the UAE, Oman, Bahrain, or KSA, please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@sovereigngroup.com, or complete the contact form below. We would be delighted to assist you.