Sources of Law
When starting a company, firms must be aware of the nature of the legal system of the country they want to operate in, as well as the influence these laws have on the business. This guidebook gives assistance on the many intricacies that surround the issues discussed in this document.
Legal precedents vary from jurisdiction to jurisdiction, which necessitates careful study of all relevant precedents. A constitution is a legal document that lays forth the fundamental principles of a country or jurisdiction. Islamic law, or Shari’a law, is the primary basis of legislation in Qatar. Article 1 of Qatar’s Permanent Constitution declares that the country is an Arab sovereign state, and its citizens are considered a member of the Arab people. In Qatar, the Shoura Council is likewise a source of legislation, having been established in 1972. (Shura Council – Government Communications Office, 2021).
Article 144 of the Permanent Constitution gives the members of this Council the authority to request revisions to Constitutional provisions. Article 8 gives the H.H. Amir the authority to lead the Al Thani State-based family. As a result, the reign of the H.H. Amir is also a source of law in Qatar. The State also possesses the legislative, executive, and judicial powers, which are all entrusted to a court of law in accordance with the Permanent Constitution. The Amir, aided by the Council of Ministers, has executive power under Article 61 (Khedr, 2009). The legislative power of Qatar is organised around the Permanent Constitution and other legislation. Other statutes in Qatar’s constitution create the Supreme Constitutional Court, which oversees the legal system as a whole (Khedr, 2020).
The government also has an important role to play in the process of enacting legislation. In this regard, the Consultative Assembly of Saudi Arabia, often known as the Shoura Council, is beneficial to Qatar. This is due to the authority that this Council has in terms of proposing legislation to the King of Saudi Arabia and his government. This Council also has the authority to make recommendations to the government on issues pertaining to the general public’s welfare. Moreover, according to the Permanent Constitution, the Shoura Council is also assigned the task with the legislative power duty (Shura Council – Government Communications Office, 2021).
Framing of Laws in Qatar and in general
In general, laws have served as the foundation for the legal system that a country has adopted throughout time. In a common law system, laws are created by the application of precedents. The laws serve as the authoritative source of law in the civil law system. The idea of separation of powers confers the ability to enact legislation in any jurisdiction on the legislative authority of that jurisdiction. In accordance with the Constitution’s Articles 61 and 76, the Shoura Council has the legislative power of Qatar. The suggestions of the Council were conveyed to the Ruler of the State. The Cabinet of Ministers has the authority to propose legislative ideas to the Council, albeit such suggestions are not legally obligatory on the Council in their current form. Once a proposed legislation has been adopted by the Council, it must be approved by the Emir. The Emir has the authority to reject ratifications of a drafted legislative proposal. The Emir, on the other hand, is required to accept the legislation in the event that the Council readopts the rejected proposal by a 2/3rd majority. In general, laws have served as the foundation for the law system that a country has adopted throughout time. In a common law system, laws are created by the application of precedents. The laws serve as the authoritative source of law in the civil law system. The idea of separation of powers confers the ability to enact legislation in any jurisdiction on the legislative authority of that jurisdiction. On the basis of Articles 61 and 76 of the Qatari Constitution, the Shoura Council) is entrusted with the legislative authority of the country. The suggestions of the Council were conveyed to the Ruler of the State. The Cabinet of Ministers has the authority to propose legislative ideas to the Council, albeit such suggestions are not legally obligatory on the Council in their current form. Once a draught legislation has been adopted by the Council, it must be approved by the Emir. The Emir has the authority to reject ratifications of a proposed legislative proposal. The Emir, on the other hand, is required to accept the legislation in the event that the Council readopts the rejected proposal by a 2/3rd majority (Khedr, 2009).
Role of Government in Lawmaking
Whenever a case goes to court, the judges take into account the provisions of the statute under consideration. Statutory law’s wording is examined in ambiguous situations and interpreted in accordance with the purpose for which it was enacted; this is known as “conceptual interpretation.” Likewise, the courts operate in accordance with the jurisdictions that they are assigned to. For example, criminal courts adjudicate on all offences that are within their purview, while Shari’a courts adjudicate on family law issues (Georgiades, 2022).
In common law cases, the courts examine the facts of the case and compare them to the matter at hand. The common law is applied by judges based on similarities and distinctions. Precedents may be used to settle an ambiguity in an act, which is then applied to a current case before a court of law. Courts are arranged in a certain way, and the precedents of the highest court are used by lower courts. The same is true for the appeals process (Georgiades, 2022).
Every nation’s foundation rests on its ability to enact and enforce its own laws.
Using a legal system, you may see how the laws would be supported by a certain set of rules. The common law and the civil law are two legal systems that have been discussed in this handbook. Islam and civil law are mixed together in Qatar. This is because Qatar’s permanent constitution recognizes Shari’a law as the primary source of the country’s legal system. Many illegal conduct are governed by these rules, including inheritance and family law. The codification of family law took place in the same year. Mixed legal systems like this enable the country to have well-defined legislation, with statutory instruments serving as the primary legislative requirements, while also upholding Islamic philosophy in its enacted statutes and regulations (Qatar, 2017).
Legal systems across the world are always evolving as time goes on. The Amir of Qatar announced in November 2020 that the first-ever elections for the Shoura Council will take place in Qatar in 2021. As a result, this was seen as a significant step forward in Qatar’s efforts to broaden public engagement in the legislative process and represent the principles of Qatar’s National Vision 2030 and the Qatari Constitution (Shura Council – Government Communications Office, 2021). Qatar’s labour rules have just undergone a significant change, which is being hailed as a reform. Law No. 18/2020, an amendment to Qatar Labour Law (Law No. 14/2004), went into force on September 9, 2020. Decree-Law No. 19 of 2020’s immigration reforms were also a contributing factor (Tapp, McDonald and Stephen, 2021).
Labour Law
The country’s labour regulations have recently undergone amendments. The Emir announced the changes in October 2019, and they went into effect in September 2020. The kafala system, or the need for migrant workers to get a “no objection” certificate before changing professions, was the most significant aspect of these reforms (Ghani, 2021). One of the most significant aspects of this reform was the 25 percent increase in the minimum pay from 1000 Qatari Riyals, as well as the inclusion of 500 Qatari Riyals for housing and 300 Qatari Riyals for food, which were previously not covered by the employer. Because it made it easier for people to switch employment and lessen their burden on their families, this was a positive move.
Application of Statutory and Common Law in Justice Courts
Implication of Law on Business
There is always a law that has an effect on one or the other part of business. Companies must ensure that they adhere to these rules to the letter and spirit in order to avoid being accountable for penalties stipulated under these laws, which would, in turn, put them at risk of violating these laws.
Company Law and its impact
The company law of every jurisdiction serves as the foundation of any firm’s operations. It is necessary for a firm to comply with local company legislation depending on where it conducts business. Setting up and running a business in Qatar is governed by Commercial Companies Law No.11 of 2015. The headquarters of a Qatari-owned corporation must be located in Qatar. In addition, the standards of documentation, conduct, and process are laid forth in this statute. Guidance is also available with regards to forming other types of businesses in Qatar, such as limited liability companies, limited partnerships, joint ventures, and equity partnership corporations. It is mandatory for the firms to sign all legal contracts in Arabic, and the Arabic translations of items take precedence over English translations (Commerce Law, 2020).
Contract Law and its impact
The customary norms in Qatar with regard to contract signing have evolved throughout the years. The practices include the practice of stamping or initialling every contract page, which is not absolutely required by Qatari law and has no effect on the enforceability or establishment of a contract. Contract formation in Qatar is governed by Civil Code Law No. 22 of 2004. The Civil Code contains information on contract creation, contract ending dates, and contracts made by communication (Clyde & Co LLP and Haddad, 2012).
Employment Law and its impact
Law No. 14 of 2004 Regulating Employment in Qatar governs Qatar’s employment relations (Overview – Qatar Labor Law, 2022). As a whole, Qatar’s employment or labor laws address the legal rights, obligations, and limits of workers, workers’ committees, and their employers. In accordance with Qatar’s labor laws, Qatari residents are always given preference in job opportunities. Non-Qataris must be granted authorization by the government if an employer wants to hire them (Labor Law, 2020).
Comparison: Legislation, Regulation and Standards
Legislation, regulation, and standards are all forms of codified law, often known as statutory law. A lot of diversity exists between the three notions even if they appear to be identical. The three concepts are compared in the table shown.
|
|
Legislation |
Regulations |
Standards |
|
Meaning |
When a city, state, or country’s legislature creates a statue of the law, it is called legislation. |
Details on how law enforcement is to be carried out are provided in regulations. (Standards vs. Regulations, 2022). |
Systems, goods, and services are all subject to standards. These criteria or recommendations are called standards. (Standards vs. Regulations, 2022). |
|
Enactment |
Legislators and high-ranking officials sign off on statues before they become official. |
Enacted by the government or other governmental or regulatory authorities |
Enacted by bodies |
|
Obligatory Nature |
The law must be obeyed at all times. (Standards vs. Regulations, 2022). |
At all times, the law should be followed. |
Usually suggestive in nature |
|
Other Names |
Also called as Acts |
Also called as rules |
Are in form of reference documents |
|
Impact on Company |
Noncompliance with the rules might result in disciplinary action. |
Obligatory to adhere to, and failure to do so may result in sanctions. |
These should be adhered to in order to build a positive reputation with stakeholders. |
|
Example |
Law on the Protection of Trade Secrets, (7/2005) |
QFC Anti Money Laundering Regulations |
International Financial Reporting standards (Khedr, 2020) |
Individuals who want to create a business in either jurisdiction must choose from a variety of business organizations and structures. There are a few major categories of corporate organizations in this context. To begin with, sole proprietorship is a type of business that is controlled only by a single individual. In this case, he or she is entitled to all of the company’s earnings and losses. The next category is a partnership. As described in the partnership agreement, or as agreed upon by the partners themselves, a partnership is an association of two or more people that comes together for a shared goal while operating a business and share in the company’s profits and losses. Because of the partnership’s unlimited liabilities, a partner’s personal assets may be seized to pay out the firm’s obligations. Limited liability partnerships have all the same characteristics as regular partnerships but do not have unlimited liability in their liability provisions. In such a partnership, each partner’s liability is restricted (Choose a business structure, 2022).
Critical Evaluation: Law and Legal System
The structure of a firm is yet another type of business structure. One of the most important aspects of business is that it is a legal entity of its own. Profits are made and retained by a corporation. As a company’s shareholders, directors are responsible for the company’s day-to-day operations. As a result, ownership and management are no longer intertwined. One type of general business entity is a C corp. In order to prevent double taxation, the S corporations have been created as a particular sort of company. A “B corps” is a for-profit corporation. Close corporations have a different corporate structure than B corporations, yet they are nonetheless related. The non-profit corporations are those that have been created for religious, educational, scientific, literary, or charitable purposes. A Limited Liability Company (LLC) combines the advantages of a corporation and a partnership in one company structure (Choose a business structure, 2022).
Businesses can get funds in various ways. This is frequently determined by the company’s legal structure. Bootstrapping, loans from friends and family, credit cards, crowdsourced, bank loans, angel investors, or venture capital are some of the sources of finance that may be used in various ways.
|
Business Structure |
Formation |
Funding |
|
Sole Proprietorship |
No need to go through the legal process because it was started by a single individual. |
Bootstrapping, loans from friends and family, credit cards, crowdfunding, bank loans, angel investors and venture capital. |
|
Partnership |
Two or more people are needed to generate this type of work, and it can either be written or vocal. |
Other than credit cards, any other means of funding is acceptable. |
|
Limited Liability Partnership |
To restrict the responsibility of partners, it is necessary to prepare an appropriate deed, as both parties have agreed upon. |
Same as partnership |
|
Corporation- C Corp |
The lengthy process mandated by the law must be adhered to. As part of this, you’ll need to choose your company’s name, verify its availability, register a DBA name, nominate directors, file articles of incorporation, establish corporate bylaws, and have your first board meeting. This is followed by the issuing of shares, licensing and permits, registration with municipal, state and federal tax agencies as well as the Internal Revenue Service, and creating a corporation bank account. (Wong, 2021). |
Same as partnership, but also includes the ability to raise funds from the public by issuing shares. |
|
Corporation- S Corp |
Similar to C Corp |
Similar to C Corp |
|
Corporation- B Corp |
Similar to C Corp |
Similar to C Corp |
|
Corporation- Non Profit |
Similar to C Corp |
Similar to C Corp |
Selecting one of the business organizations mentioned previously has both pros and downsides. In this section, we’ve spoken about a few of them.
|
Business Structure |
Advantages |
Disadvantages |
|
Sole Proprietorship |
– Complete control. – Effortless formation. – Fewer conformances. – Low startup expenses. (Galbraith, 2014) – External restrictions are limited. – Private matters. |
– Liability is limitless – Sources of funding that are restricted – Overwhelming workload – Taxes on self-employment and personal income – There will be no permanent succession |
|
Partnership |
– Profit-sharing, losses distributed – More talent pool – More sources of raising funds – Limited external regulations – Private affairs |
– Liability is unlimited (Stent, 2015). – Taxes on self-employment (save for limited partnerships), and personal income tax. – There will be no permanent succession. – Simple conflicts might result in the firm’s breakup. – Each addition or departure of a partner necessitates a reassessment of the firm. |
|
Limited Liability Partnership |
– Limitation of liability – Additional sources of funding – External restrictions are limited. – Ease of ownership transfer (Blair and Marcum, 2015) |
– Self-employment tax, individual income tax, or corporation income tax. – There will be no permanent succession. – Simple conflicts might result in the firm’s breakup. – Each addition or departure of a partner necessitates a reassessment of the firm. – Affair of the public. |
|
Corporation- C Corp |
– Limited liability – Corporate tax – More sources of raising funds – Perpetual succession (Mitchell and Fontana, 2010) – No restriction on number of shareholders |
– More compliances – Higher running and formation costs – Public affairs (Mancuso, 2020) |
|
Corporation- S Corp |
– Limited liability – More sources of raising funds – Perpetual succession |
– More compliances – Personal tax – Higher running and formation costs – Public affairs – Harder to raise funds in comparison to C Corp |
|
Corporation- B Corp |
– Limited liability – Corporate tax – More sources of raising funds – Perpetual succession |
– More compliances – Higher running and formation costs – Public affairs |
|
Corporation- Non Profit |
– Limited liability – More sources of raising funds – Tax-exempt, but corporate profits cannot be distributed – Perpetual succession |
– More compliances – Higher running and formation costs – Public affairs – Works for non-profit motives (Steingold and Steingold, 2021) |
Conclusion
Thus, this guidebook efficiently offered information about the legal system’s nature, with a specific emphasis on the Qatari system. Additionally, the handbook is beneficial in terms of comprehending how laws, rules, and standards affect the firm. Finally, the specifics on the establishment and influence of various commercial organizations were successfully elaborated. It is critical for new start-up businesses to understand and use the material contained in this guidebook while initiating and operating their business operations.
Blair, E.S. and Marcum, T.M., 2015. Heed our advice: Exploring how professionals guide small business owners in start?up entity choice. Journal of Small Business Management, 53(1), pp.249-265.
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Galbraith, J.R., 2014. Designing organisations: Strategy, structure, and process at the business unit and enterprise levels. John Wiley & Sons.
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Ghani, F., 2021. Labour law changes: Are Qatar’s migrant workers better off?. [online] Aljazeera.com. Available at: <https://www.aljazeera.com/features/2021/3/15/labour-law-changes-are-qatars-migrant-workers-better-off> [Accessed 14 April 2022].
Gothard, B., 2017. Sole Proprietorship, Partnership, LLC, S Corporation, and C Corporation Taxation, Structure, and Guide. Ben Gothard.
Government Communications Office. 2021. Shura Council – Government Communications Office. [online] Available at: <https://www.gco.gov.qa/en/about-qatar/shura-council/> [Accessed 14 April 2022].
https://hukoomi.gov.qa. 2020. Commerce Law. [online] Available at: <https://hukoomi.gov.qa/en/article/commerce-law#:~:text=Foreign%20business%20owners%20and%20investors,a%20maximum%20of%2030%20shareholders.> [Accessed 14 April 2022].
https://hukoomi.gov.qa. 2020. Labor Law. [online] Available at: <https://hukoomi.gov.qa/en/article/labor-law> [Accessed 14 April 2022].
Khedr, A., 2009. A Guide to Qatar’s Legal System – GlobaLex. [online] Nyulawglobal.org. Available at: <https://www.nyulawglobal.org/globalex/Qatar.html#:~:text=Central%20Municipal%20Council.-,The%20Qatar%20Legal%20System,part%20of%20the%20Arab%20nation.> [Accessed 14 April 2022].
Khedr, A., 2020. UPDATE: Overview of the Qatar’s Legal System – GlobaLex. [online] Nyulawglobal.org. Available at: <https://www.nyulawglobal.org/globalex/Qatar1.html> [Accessed 14 April 2022].
Mancuso, A., 2020. LLC Or Corporation?: Choose the Right Form for Your Business. Nolo.
Mitchell, P. and Fontana, P.K., 2010. Choosing the right legal form of business: The complete guide to becoming a sole proprietor, partnership, LLC, or corporation. Atlantic Publishing Company.
Qatar Labor Law. 2022. Overview – Qatar Labor Law. [online] Available at: <https://qatarlaborlaw.com/> [Accessed 14 April 2022].
Steingold, F.S. and Steingold, D., 2021. Legal guide for starting & running a small business. Nolo.
Stent, A.E., 2015. The limits of partnership. Princeton University Press.
Tapp, L., McDonald, P. and Stephen, R., 2021. Qatar Labour Law and immigration: recent reforms. [online] Pinsentmasons.com. Available at: <https://www.pinsentmasons.com/out-law/analysis/qatar-labour-law-immigration-recent-reforms> [Accessed 14 April 2022].
The Indian Express. 2020. Explained: The new changes in Qatar’s labour laws. [online] Available at: <https://indianexpress.com/article/explained/explained-what-are-the-recent-changes-in-qatari-labour-laws-6579084/> [Accessed 14 April 2022].
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