Initial Public Offering - Qatar
Qatar Exchange Company was established in 2009 replacing the Doha Securities Market. The exchange is monitored by Qatar Financial Market Authority (QFMA) and is a platform for trading various securities in the form of IPOs and other financial instruments. The Qatar Financial Centre (QFC) is also a business and financial center which provides legal and business structure. The QFMA regulates various aspects such as
- Regulate, control, and supervise financial markets
- Regulate the dealing of the securities activities with fairness, competitiveness, and transparency
- Raise public awareness of securities activities and promote in securities investment and development
- Monitor the investors dealing rules governing activities related to trading of securities and other types
- Implement disclosure policy
- Prevent conflict of interests and insider trading
- Combat causes and crimes in relation to the markets
- Communication and information exchange with foreign financial markets and regional and international regulators
The QFMA was established as per Law Number 33 of 2005, amended by Decree Law Number 14 of 2007. This law is more commonly known as Qatar Financial Market Law (QFMAL). Governmental bonds can only be issued by the Qatar Central Bank (QCB), as per the law. The regulations in all are:
- QFMA Law
- QFMA Regulations
- Offering and Listing Rulebook
- Commercial Companies Law (CCL)
Securities is defined in Law number 8 of 2012 of QFMA as
- Shares and bonds of Qatari shareholding companies
- Bonds, sukuk, and bills issued by the government or any Qatari Authority or public institution
- Any other securities such as non-Qatari securities licensed by authorities
- Derivatives, commodities, and other investment instruments licensed by authority
Equity Offerings refer publication
An equity offering refers to the process of allowing plausible investors to purchase a portion of the company through the acquisition of shares. By offering equity to the public, a company is able to increase its capital and create a higher value profile for itself. But, in order to be able to list a security on the Qatar Stock Exchange, the following conditions need to be met:
- Company must be a joint stock company registered with the Ministry of Business and Trade.
- Whole class of ordinary shares must be listed.
- An audited record of the issuer’s financial statement for the last three years must be presented.
- All the financial statements presented must follow the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS).
- Profitability is not necessary to prove.
Retail and Institutional Offer
While Qatar does not provide specifically for retail and institutional offers, the only term mentioned in the laws are specific investors. Even with specific investors, it is to be noted that no definition as such of what qualifies for a specific investor is provided for within the laws. The only definition in terms of issuer is provided for as Foreign and Local issuer.
There are a brief set of requirements in terms of a company to be listed for IPO. As per the regulations, a company can only list on the QSE if the entity has at least
- A subscribed set of share capitals of 40 Million Qatari Riyals
- 30 Shareholders
- 50 Percent of paid up share capital
The company is also required to prepare a comprehensive and adequate prospectus containing disclosure of all information in relation to the interest of investors as determined by the QFMA. It is also required that the company fully settle its previously issued capital provided that the equities shall not be less than the paid up capital according to the latest audited financial statements. Lastly, and approval from the QFMA is required before initiating the listing process.
The issuer is required to submit various documents in line for application processing. Some of the mentioned documents are:
- Copy of issuer’s memorandum and articles of association;
- Name of the issuer’s directors, with specimen signatures for authorized persons who are allowed to sign on behalf of the issuer;
- A financial statement that has been audited by an independent auditor;
- Particulars of existing shareholders;
- Undertaking by the issuer stating that it will observe and comply with all regulations and laws applicable to the financial markets;
- Undertaking stating that the issuer will provide Qatar’s Exchange with instructions in relation to any matter on price affects in relation to securities.
- Commercial Registration Document
- Listing Agreement and Application
Prospectus refer publication
The Qatar laws in relation to issuing of IPOs do not specify what necessarily is to be mentioned in the Prospectus. A vague mention of “all particulars and information capable of assisting investors to make their investment decision” is stated as per the laws. In practice, the Prospectus would generally include: