Qatar’s Dual Legal Landscape Presents Opportunities, Challenges for Cross-Jurisdictional M&As: Sharq Law Firm
With complexities adding to the cross-jurisdictional mergers and acquisitions (M&As) involving mainland and the Qatar Financial Centre (QFC) entities, Sharq Law Firm has made a seven-point suggestion to unlock the strategic advantages of each domain, while mitigating associated risks.
Qatar presents a dual legal landscape, comprising mainland and the QFC, each with own rules on corporate law, taxation, and business operations, said Rashid al-Saad, founder, Sharq Law Firm, in 'A Comprehensive Study of M&As: Types, Effects, and the Dual Dynamics in Qatar'.
The mainland’s regulatory framework, built on civil law, has evolved to permit 100% foreign ownership in most sectors, subject to the Ministry of Commerce and Industry approval, thereby broadening access to the local markets and public sector projects.
The QFC provides a standalone common law framework with guaranteed foreign ownership, tax incentives and unrestricted profit repatriation; but the QFC entities face restrictions on doing business directly in the local market without intermediaries or approvals.
"These jurisdictional differences create both challenges and opportunities for cross-border transaction. Successfully operating in this environment requires detailed due diligence, customised deal structuring, and a strategic understanding of both legal frameworks," al-Saad said.
In this regard, the law firm recommends structuring deals with ownership rules in mind, implying that it should account for sector-specific restrictions on foreign ownership and explore alternatives such as joint ventures or strategic asset acquisitions to navigate regulatory limits.
The law firms suggests prioritising integration planning by developing detailed integration roadmaps that address cultural address alignment, employment harmonisation, governance differences, and operational continuity from day one.
Stressing the need to conduct comprehensive and context-specific due diligence, the law house said it would go beyond legal and financial checks to examine IT systems, HR structures, customer impact, and cross-jurisdictional regulatory obligations.
Finding it necessary to engage regulators proactively, it said discussions should begin early with MoCI, the Qatar Financial Market Authority, the Qatar Central Bank, the Qatar Financial Centre Authority, the QFC Regulatory Authority, and the Competition Protection Department to clarify approval requirements and avoid delay.
While M&A in Qatar is increasingly driven by strategic goals such as market expansion, diversification, and improved operational efficiency, it also brings inherent risks, which extend beyond financial considerations, impacting shareholders, employees, and customers.
Highlighting that issues such as value dilution, loss of trust, and cultural misalignment can significantly affect integration success; it said at the macro level, M&A can enhance market competition, but also risks market concentration, prompting regulatory scrutiny.
Several key factors are currently fueling M&A growth in Qatar, reflecting both internal reforms and broader global positioning, it said, adding the government’s commitment to economic diversification has led to increased restructuring across industries, creating significant deal opportunities.
Highlighting that outbound investment remains robust, particularly in logistics and transportation; it said recent examples include QTerminals’ acquisition of the Kramer Group in the Netherlands, and Qatar Airways' stakes in Airlink and Virgin Australia.
The study stressed on the need to engage specialist advisors early for structuring compliant and efficient transactions as well as to align the M&A activity with national development goals.