The Ministry of Economy and Commerce issued yesterday new directives for becoming a board member in private companies. The new rules include conditions such as the candidate should not be younger than 20 years of age, he/she cannot hold a senior executive position in the same company or any of its subsidiaries, and capping their remuneration in accordance with net profits of companies.
The Ministry also issued directives on the rules that govern the bonuses of board members. The directives included rules regarding the ‘General Assemblies’ of shareholders and the process of voting board members in accordance to Law No. 11 of 2015.
These directives will be implemented on private companies that are not under the regulation of Qatar Central Bank (QCB) or Qatar Financial Markets Authority (QFMA). The new rules say that they (board members) should also have no criminal history, and particularly crimes stated in article 334 and 335 of the commercial companies law.
Directors' remuneration rules set according to experience
As for independent board members, the directives state that he/she must obtain enough experience and be completely independent.
A board member also cannot be a senior executive at the company or at any of its subsidiaries where he/she is now a board member.
The independent board member cannot be a ‘first degree’ relative with any of the board members or the company's senior executives.
With respect to candidacy for membership of the Board of Directors, the Ministry's instructions obliged the concerned companies to announce the opening of candidacy for membership of the Board of Directors prior to convening the General Assembly, and to specify the criteria for membership, application conditions, date of application, and to publish the announcement in one of the local newspapers, or on the company's website where applicable, reports QNA.
The Ministry's directives also state that companies should prepare list with the candidates' names along with the documents required for casting votes.
The directives pointed out that, in case where the board member is a legal person, a natural person must be named on the Commercial Registry.
The legal person can be represented by more than one natural person.
The Ministry also set the directors' remuneration rules in accordance with the board members' experience, specialisation, tasks entrusted to them, independence and the number of meetings they attend. The directors' remuneration should not exceed 5 percent of the company's net profit.
The newly-issued directives also deal with other matters, including the Board of Directors' liabilities, the rules of convening the General Assemblies of the shareholders and authorisation to attending the General Assemblies, as well as voting for of members of the Board of Directors.
