The Ministry of Commerce and Industry (MOCI) called on auditors assigned to audit listed public joint-stock companies, and boards of directors of listed public joint-stock companies, to abide by the provisions of the circular issued by the Qatar Financial Markets Authority (QFMA) on June 22, regarding the method for determining the remuneration of members of the board of directors of Qatar Stock Exchange (QSE) listed companies.
In a statement, the ministry indicated that this step aims to enhance transparency and protect the rights of shareholders in the listed public shareholding companies, noting the need to adhere to the provisions of Article No.119 of the Commercial Companies Law No. 11 of 2015 amended by Law No. 8 of 2021, and the provisions of Article 18 of the Code of Governance for Companies and Legal Entities Listed in the Main Market issued by the Authority’s Board of Directors Decision No. 5 of 2016, when reviewing and auditing the process of calculating the remuneration of members of the boards of directors of listed companies, which is conducted by auditors.
The ministry said that the remuneration of the members of the Board of Directors is determined according to two conditions, the first condition is the deduction of legal reserves and deductions stipulated in the provisions of the Commercial Companies Law, while the second condition stipulates that a profit of not less than 5 percent of the company’s paid-up capital must be distributed to shareholders, adding that the board of directors’ bonus is not distributed until after the first two conditions are fulfilled, provided that their total does not exceed 5 percent of the net profit.
The ministry pointed out that the total amount of the board’s remuneration is deducted from the remainder of the net profit after deducting reserves and legal deductions and deducting 5 percent of the company’s paid-up capital to shareholders, and not from the total profits before the aforementioned deduction.
The MOCI indicated that reference was made in the circular to an example showing how the board remuneration is calculated; if the value of the company’s capital is QR 800,000,000 and the value of the profits is QR 100,000,000, and the deduction rate is 10 percent of a value of QR 10,000,000, then the 5 percent of the capital that must be distributed to the shareholders is QR 40,000,000, so the amount becomes the remainder of the profits after the aforementioned deduction is QR 50,000,000. Accordingly, 5 percent of the total board remuneration should not exceed QR 2,500,000, as 5 percent must be calculated from QR 50,000,000 and not from the value of the profits amounting to QR 100,000,000.
The ministry also referred to the circular issued by the QFMA, which dealt with the attendance allowances, salaries, and wages received by the members of the Board of Directors, stressing, in this regard, that the circular stipulated that the remuneration includes all what the chairman or members receive in the form of an attendance allowance or a percentage of profits or other considerations for his work on the Board of Directors, and then subject to the maximum limit specified in Article 119 of the Commercial Companies Law and Article 18 of the Corporate Governance Code, and can be disbursed, provided that the final determination is made after calculating the net profits as indicated in the circular. If found that what has been spent exceeds the maximum limit, the chairperson and members must return the excess.
In the statement, the MOCI also stressed the importance of filling out the remuneration statement form and attaching it with the minutes of the company’s annual general assembly meeting upon handing it over to the ministry’s Companies Affairs Department, noting that the form can be downloaded through its electronic website.
Source: Qatar News Agency