Qatar Financial Centre (QFC)

• The Qatar Financial Centre (QFC) is a financial and business center established by the Government of Qatar in Doha, designed to attract international financial services institutions and multinational corporations.
• The QFC aims to encourage participation in the growing market for financial services in Qatar and the region, operating to international standards with a first-class legal and business infrastructure.
• The QFC's commercial and regulatory environment is separate from the host Qatari systems, conforming to international best practices.
• The Qatar Financial Centre Authority (QFCA) manages the commercial strategy and business development of the QFC, providing administrative functions.
• The Qatar Financial Centre Regulatory Authority (QFCRA) develops and operates regulatory systems.

Permitted Activities in the QFC

• QFC Law allows only “permitted activities” to be conducted in or from the QFC, including financial services and supporting services, as well as corporate headquarters-type functions.
• Permitted activities are sub-classified into non-regulated and regulated activities.
• Non-regulated activities do not require extensive supervision.
• Regulated activities include banking, insurance, and securities businesses, requiring close scrutiny for soundness and conduct.
• Entities conducting regulated activities need authorization from the QFCRA.
• Permitted activities under QFC Law include financial, banking, and investment business, insurance and reinsurance, money market and stock exchange business, money and asset management, funds administration, pension fund business, insurance and stockbroking, financial agency business, financial custodian services, shipbroking, classification services, company headquarters activities, professional services, holding companies, and company administration.

Objectives of the QFC

• The QFC Law, signed in March 2005 and effective from May 2005, provides the basic structure of the QFC.
• It establishes several key entities, including the QFC Authority, the QFCRA, the Civil and Commercial Court of the QFC, and the QFC Regulatory Tribunal.
• The QFC Authority manages the commercial operations of the QFC.
• The QFC Authority aims to establish the QFC as a leading international finance and business location, attract international businesses, participate in maintaining an appropriate legal and regulatory regime, ensure the QFC has adequate finance, promote international best practice, and eliminate bureaucracy.

The QFCRA - Objectives

• The QFCRA exercises its functions and powers under the QFC Law and regulations, aiming to promote and maintain the efficiency, transparency, and integrity of the QFC.
• It also promotes and maintains confidence in the QFC and maintains financial stability, including reducing systemic risk.
• The QFCRA works to prevent, detect, and restrain conduct that may damage the reputation of the QFC, including imposing fines and sanctions, and provides appropriate protection to licensed institutions, clients, and customers.
• Financial integrity of authorized firms, client experience and expertise, risk involved in investments, and client responsibility are considered for adequate protection.
• The QFCRA also promotes the understanding of the QFC objectives, and minimizes the use of the business for financial crime.

Regulated Activities

• QFC Law allows only permitted activities to be carried out, as defined in the Financial Services Regulations.
• No regulated activities can be carried out in or from the QFC without formal authorization or a license from the QFCRA.

Definition of a Regulated Activity

• A regulated activity is defined as an activity carried out 'by way of business' and includes deposit-taking, effecting/carrying out contracts of insurance, dealing/arranging deals in investments, providing/arranging credit facilities, and providing custody services.
• When an activity is carried on 'by way of business', it's when a person engages in or solicits others to engage in that activity, differing from actions not done regularly.
• The QFCRA determines when an activity is regarded as being carried out by way of business.
• Retail customers require additional protection; measures must be in place to ensure their needs are adequately protected.

Activities That Are Not Regulated Activities

• Activities not considered regulated include shipbroking, shipping agents, classification services, company headquarters and management offices, professional services (audit, accounting, tax, consulting, and legal), holding companies, and company administration.

Exempt Activities

• An activity is not regulated if it falls under certain categories, as outlined in Schedule 3, Part 1 of the QFC Financial Services Regulations (FSR).

Group Exemption

• The "group exemption" applies to activities within the same group, except for insurance contracts.

Joint Venture Exemption

• The "joint venture exemption" applies to activities carried out between participants in a joint venture.
• It does not apply to insurance.

Trustee Exemption

• A trustee carrying out activities on the instructions of the beneficiary is exempt if they are not separately remunerated for that activity.

Professional Business Exemption

• A "professional business" includes legal, actuarial, and accounting services.
• The "professional business exemption" applies if a person arranges investment deals, credit facilities, custody services, or advises on investments without separate remuneration as part of their non-regulated professional business.

Sale of Body Corporate Exemption

• This exemption applies to dealing in investments involving the sale of shares in a body corporate between qualifying parties that results in the purchasing party holding 50% or more of the voting shares.
• It applies to advising on investments, arranging deals in investments and arranging credit facilities made in connection with such a sale.

Employee Share Scheme Exemption

• The “employee share scheme exemption” applies to dealing in investments, providing custody services, arranging the provision of custody services, arranging deals in investments and advising on investments as part of an employee share scheme.

Special Purpose Vehicle Exemption

• This exemption applies to entities with project finance special purpose vehicle characteristics for financing or related activities.

Collective Investment Funds Exemption

• This exemption applies to the activity of dealing in investments by a collective investment fund if it complies with the rules set by the QFCRA.

Specified Products

• Each of the products detailed is classified as a 'specified product'.

Shares

• A share or stock is the share capital of any body corporate or any unincorporated body constituted under the law of a country or territory outside the QFC, excluding units in a collective investment fund.

Debt Instruments

• A debt instrument acknowledges indebtedness (e.g., debenture, bond, certificate of deposit) transferable without the borrower's consent.
• Instruments that acknowledge or create debt for goods/services, bills of exchange, statements showing a balance on a bank account, or a contract of insurance are not debt instruments.

Credit Facility

• A credit facility is any advance, loan or other similar facility for which the person to whom it is given has access to the funds.

Warrant

• Warrants or other instruments entitling the holder to subscribe for shares or debt instruments.

Securities Receipt

• Is a certificate that confers property rights in debt instruments held by a person.

Unit in a Collective Investment Fund

• A collective investment fund is an arrangement that enables participants to receive profits from the acquisition, holding, management or disposal of a property.
• Participants do not have day-to-day control over the property, and contributions of participants are pooled into a single investment

Options

• Options confer the right, but not the obligation, to buy or sell shares, debt instruments, warrants at a future time.

Futures

• Futures contracts confer rights to sell a commodity for delivery on a future date at an agreed price, considered investment instruments.

Contract for Differences (CFDs)

• Contracts confer rights under a contract for the purpose of securing a profit or avoiding a loss by reference to fluctuations.

Contract of Insurance

• A contract of insurance or reinsurance is either a general or a long-term insurance contract.
• General insurance encompasses land vehicles, aircraft, ships, goods in transit etc.
• A long-term insurance contract includes contracts of assurance on human life or contracts to pay annuities.

Deposit

• A deposit is a contract for the placement of a sum of money that will be repaid, with or without interest.
• Money paid as advance or part-payment, security for the performance of a contract, or security for the delivery or return of property, is not considered to be a deposit.

Rights in Investments

• Any right or interest in any investment in specified products is defined in section 2.5.

Specified Activities

• Are listed as regulated activities in Schedule 3, Part 2 of the QFC Financial Services Regulations.

Deposit-Taking

• The activity of accepting money received as a deposit if that money is lent to others or any other activity of the person accepting the deposit is financed, at least to a material extent, out of the capital of, or interest on, that money.

Effecting a Contract of Insurance

• The activity of effecting a contract of insurance as principal.

Carrying out a Contract of Insurance

• The activity of carrying out a contract of insurance as principal.

Dealing in Investments

• Is defined as the activity of buying, selling, subscribing for or underwriting investments or agreeing to do so.
• The following activities are not considered to be dealing in investments: the issue by a body corporate of its own shares , and the acceptance by a person of an instrument creating or acknowledging indebtedness.

Arranging Deals in Investments

• Arranging deals in investments consists of making or agreeing to make arrangements with a view to another person investment or contract of insurance.
• The following are excluded from the activity of arranging deals in investments: a transaction, the issue by a body corporate, and the acceptance by a person of an instrument.

Providing Credit Facilities

• The activity of providing a credit facility to another person.

Providing Custody Services

• Custody services is the activity of both safeguarding and administering assets belonging to another person, including investments or long-term insurance contracts.
• The activities of providing information as to number of units, converting currency or documents don’t constitute administering assets.

Arranging the Provision of Custody Services

• The activity of arranging for one or more persons to provide custody services.

Managing Investments

• Managing investments is defined as managing assets (including investments or long-term insurance contracts) belonging to another person.

Advising on Investments

• Advising on investments constitutes giving advice to another party on investments or a contract of insurance.

Operating a Collective Investment Fund

• Operating a collective investment fund is the activity of establishing or winding up a collective investment fund.

QFCRA Powers

• The QFC Regulatory Tribunal may order the QFCRA to obtain documents and information from a person outside the QFC or request assistance from overseas regulators.
• The QFCRA is entitled to enter the premises of any person in the QFC to inspect documents at any time.
• The QFCRA may request reports by a nominated person about which the Regulatory Authority has required the provision of information.
• The QFCRA may appoint one or more competent investigators to investigate a suspected contravention of a relevant requirement.

Investigation Duties and Powers

• The QFCRA may require a person to attend a meeting or product specific documents.
• The QFCRA may apply to the Tribunal for an order to preserve all its assets books and records.

Admissibility of Evidence

• Any statement made or documents produced will be admissible as evidence in any proceedings.

Restrictions

• The QFCRA and the investigator may not require a person to produce, disclose or permit the inspection of a protected item.

Discipline and Enforcement

• The QFCRA’s powers with regard to discipline and enforcement enable it to publish a public censure if it considers that a person has contravened a relevant requirement.
• The QFCRA can imposes a financial penalty of an amount it considers appropriate.
• Penalties are payable to the QFCRA, unless it determines otherwise.

Undertakings

• The QFCRA may accept a legally enforceable undertaking from any person.

Prohibitions and Restrictions

• The QFCRA may place prohibitions and restrictions on authorized firms or approved individuals.

Injunctions and Restitution Orders

• The QFCRA can apply to the Tribunal for an order to restrains a contravention of a relevant requirement.
• The QFCRA may introduce rules to allow persons to appeal to the Tribunal for an order.

Appeals

• The person concerned may refer the matter to the Appeal Body within 28 days of the receipt of a decision notice.