Qatar private firms want to stay that way
Qatar Finance Ministry attempts to woo family-owned firms into high investment shareholder companies have been met with little enthusiasm. Ministry officials said a lack of awareness of the importance of such a conversion among family-oriented businessmen is stalling their efforts. Abdullah Al-Ammadi, a ministry supervisor of companies, said each family has its own reasons for not wanting to go public - none of them convincing to the ministry.
Most have argued that family companies don't need a lot of capital for start-up and most companies have grown fast and have good revenues. They also argue that most companies have a strong financial base and are not in need of the extra money that would come in as a result of the conversion.
Others argue that the process of registering a public company is more complicated than the registration of a private company. There are thousands of family-owned companies in Qatar. Ninety-nine percent of those companies have limited functions and are medium in size. Their investment volume, with the exclusion of five large family companies, is over $165 million. Ammadi said the ministry is not giving up its efforts and will continue to encourage families to convert their companies. Ammadi said the ministry wants to increase the number of general share-holding companies to boost economic activity in the country and alert the stock market.
Ammadi said the ministry hopes the larger and stronger companies would be responsive to the initiative more than the recently established companies that have no real economic affect.
Recent statistic show that the large family-owned companies of the Gulf have been around for about 25 years, and that only 30 percent of those companies would continue to function by the next generation. Further, companies that have limited functions are not eligible for a bank loan. Qatar's banking system only approves loans to general share holding companies that can use its stocks as collateral.
Ammadi said the Finance Ministry wouldn't pressure the families to convert their companies because that would be governmental interference in private affairs. He said the majority of company owners do not want strangers (none family members) among them in the business. Not all family members are against conversion. In some companies, some 50 percent of the family members are in favor of the change. But Qatar's company laws state that at least 75 percent of the members must agree to the change.
According to Qatar's company law, a minimum of two and maximum of three partners can register a company in Qatar. However, the majority of the companies have four to five partners. The law also stipulates that the start-up capital must be 200,000 Riyals and over.
There are 27 semi-family companies, or special holdings companies in Qatar with an investment volume of about 3 billion Riyals ($824 million). The Qatari government is a shareholder in 14 of those companies and the private sector owns 13 of the companies. Yet in spite of the ministries attempts at converting family companies, Ammadi said the ministry looks carefully into conversion requests.
"The financial standing of the company that wants to convert must be stable and good so that an investor won't fall victim to opportunists and the reason for the conversion must be worthy," Ammadi said.
Once the ministry is convinced of the reason behind the conversion, Ammadi said the request would be sent to the general committee of the special-holding companies for approval and to the stock market. Qatari law prohibits government employees from establishing or becoming a partner in a family-owned company. –(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)