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  • Section 3: Section 3: Members and Share Capital

    • Article 19 - Members

      (1) The incorporators of an LLC are deemed to have agreed to become Members of the LLC by signing the incorporation document and on incorporation shall be entered as such in the LLC's register of Members (persons other than incorporators who have died or been dissolved).
      (2) Every other person who agrees to become a Member of the LLC and whose Name is entered in the register of Members, is a Member of the LLC.
      (3) A person may cease to be a Member of an LLC (as well as by death or dissolution) in accordance with the articles of association of the LLC.
      (4) A Member of an LLC can be of any nationality and either a natural or a Body Corporate.
      (5) The minimum number of Members of an LLC is one.
      (6) Every LLC shall keep a register of Members, together with:
      (A) a statement of the Shares held by each Member, distinguishing each Share by its number (if the Share has a number) and, where the LLC has more than one class of issued Shares, by its class;
      (B) the date on which each person was registered as a Member; and
      (C) the date on which any person ceased to be a Member.
      (7) Article 19 (1) does not apply to an LLC if, on incorporation, the LLC will be a Collective Investment Fund.
      Amended (as from 5th April 2015).

    • Article 20 - Rectification of register of Members

      (1) If:
      (A) the Name of a person, the number of Shares held or the class of Shares held is, without sufficient reason, not entered in or omitted from an LLC's register of Members; or
      (B) there is a failure or unnecessary delay in entering on the register the fact of a person having ceased to be a Member
      a person aggrieved, or a Member of the LLC, may apply to the CRO for rectification of the register.
      (2) The CRO may refuse the application or may order rectification of the register.
      (3) Whether or not the CRO exercises its power under Article 20(2), the QFC Civil and Commercial Court may make one or more of the following orders:
      (A) on application of the CRO, an order enforcing any orders made by it under this Article 20;
      (B) on application of a person aggrieved, a Member of the LLC, or the LLC, an order directing the CRO to, or not to order the rectification of the register or to do any act or thing; or
      (C) on application of a person aggrieved, an order requiring the LLC to pay damages or to do any act or thing.
      Amended (as from 5th April 2015).

    • Article 21 - Allotment of Shares

      Subject to any limitations or provisions to the contrary in its articles of association, the unissued Shares of an LLC shall be at the disposal of the directors of an LLC who may, subject to any rights previously conferred on the holders of any existing Shares, or class of Shares, offer, allot, grant options over or otherwise dispose of such Shares to such persons, at such time and upon such terms as the directors of the LLC may determine.

    • Article 22 - Return as to allotments

      (1) When an LLC makes an allotment of its Shares, the LLC shall within 1 month thereafter deliver to the CRO for registration a return of the allotments in the Prescribed Form stating the number and nominal amount of the Shares comprised in the allotment, the Names and Addresses of the allottees, and the amount (if any) paid or due and payable on each Share, whether on account of the nominal value of the Share or by way of premium, and, in the event that any Shares are allotted for a consideration other than cash, a statement of the consideration for which they have been so allotted.
      (2) This Article does not apply to an LLC that is a Collective Investment Fund.
      Amended (as from 5th April 2015).

    • Article 23 - Prohibition on allotment of Shares at a discount

      (1) An LLC's Shares shall not be allotted at a discount to their nominal value.
      (2) If any Share is allotted in contravention of this Article 23 then the allottee is liable to pay the LLC an amount equal to the amount of the discount, with interest at an appropriate rate to be prescribed by the CRO.

    • Article 24 - Transfer of Shares

      (1) The Shares of any Member of an LLC shall be transferable in such manner as may be provided by the articles of association of the LLC.
      (2) Subject to Article 24(6), notwithstanding the provisions of its articles of association, an LLC shall not register a transfer of Shares in the LLC unless a written instrument of transfer is duly executed by the transferor and all outstanding sums relating to the transferring shares, if any, have been paid by the transferor to the LLC. For the purposes of trading, an LLC (Public) may allow the transfer of Shares to be made electronically or any other manner permitted by the QFMA, QSE, the relevant exchange or regulator, such transfer shall be sufficient to transfer title in the Shares if registered by the LLC (Public).
      (3) Nothing in this Article 24 shall prejudice the power of an LLC to register as a Member any person to whom the right to any Shares of the LLC has been transmitted by operation of law.
      (4) A transfer of any Share of a deceased Member of an LLC made by his personal representative, although the personal representative is not himself a Member of the LLC, is as valid as if he had been a Member at the time of the execution of the instrument of transfer.
      (5) If an LLC refuses to register a transfer of Shares, the LLC shall, within 21 days after the date on which the transfer was delivered to the LLC, send to the transferor and transferee notice of the refusal.
      (6) Article 24(2) does not apply when a transfer of shares is undertaken in accordance with rules made by the QFC Authority.
      Amended (as from 5th April 2015).

    • Article 25 - Issue of certificates

      (1) Subject to Article 25(3), for each Share allotted or transferred, a Share certificate shall be issued by the LLC no later than 30 days after the date the allotment is made or the date on which a transfer of the Shares is registered in the register of Members of the LLC. For an LLC (Public) a record in the QSE or the relevant exchange's registry system is as acceptable as if it were a Share certificate duly issued by the LLC (Public).
      (2) A certificate executed by the LLC specifying any Shares held by a Member, shall be evidence of the title of the Member to the Shares. For an LLC (Public) a record of title to any Shares in the LLC (Public) held in the QSE or the relevant exchange's registry or system will be evidence of good title to any Shares held by the Member.
      (3) Article 25(1) and (2) do not apply when title to shares is evidenced in accordance with rules made by the QFC Authority which allow for title to be evidenced in some other manner.
      Amended (as from 5th April 2015).

    • Article 26 - Share premium account

      (1) If an LLC issues Shares at a premium to their nominal value, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those Shares shall be transferred to an account called the "share premium account".
      (2) The Share Premium Account may be applied by the LLC:
      (A) in paying up unissued Shares to be allotted to Members as fully paid bonus Shares;
      (B) or in writing off:
      (i) the LLC's preliminary expenses; or
      (ii) the expenses of, or the commission paid or discount allowed on, any issue of Shares or debentures of the LLC
      (C) or in providing the premium payable on redemption of any redeemable Shares or any debentures of the LLC.
      (3) Subject to Article 26(2), the provisions of these Regulations relating to a reduction of a Company's share capital apply as if the Share Premium Account were part of its paid up share capital.

      This Article does not apply to an LLC that is a Collective Investment Fund.

      Amended (as from 5th April 2015).

    • Article 27 - Rights attaching to Shares

      (1) To the extent permitted by its articles of association, an LLC may create different classes of Shares. Subject to these Regulations, the rights attaching to Shares (or any class of Shares) shall be determined by the articles of association of the LLC.
      (2) The articles of association of the LLC shall set out:
      (A) the right to vote at a meeting of the LLC carried by each class of Share;
      (B) the right to repayments of capital attaching to each class of Share;
      (C) the right to participate in any undistributed profit of each class of Share;
      (D) the rights and obligations pertaining to the transfer of each class of Share;
      (E) the right to dividends and other distributions attaching to each class of Share; and
      (F) any other rights and obligations attaching to each class of Share.
      (3) Subject to the provisions of the articles of association of the LLC, each Share shall rank in all respects equally with any other Share in the LLC.
      (4) It shall not be lawful for an LLC to issue bearer Shares.

    • Article 28 - Alteration of share capital

      (1) An LLC, if so authorised by its articles of association, may alter its share capital by Ordinary Resolution in any of the following ways:
      (A) increasing its authorised share capital by creating new Shares of such amount as it deems necessary;
      (B) consolidating and dividing any or all of its Shares (whether issued or not) into Shares of a larger amount than its existing Shares;
      (C) sub-dividing its Shares, or any of them, into Shares of a smaller amount than its existing Shares but so that, in the sub-division of any issued Shares, the proportion between the amount paid and the amount (if any) unpaid on each reduced Share shall be the same as it was in the case of the Share from which the reduced Share is derived;
      (D) cancelling Shares which at the date of passing of the Ordinary Resolution to cancel them, have not been taken or agreed to be taken by any person, and diminishing the amount of the LLC's authorised share capital by the amount of the Shares so cancelled; and
      (E) changing the currency denomination of its share capital or any class thereof to a currency denomination approved by the CRO.
      (2) A cancellation of Shares under this Article 28 does not for the purposes of these Regulations constitute a reduction of share capital.
      (3) An LLC having altered its share capital pursuant to Article 28(1), shall within 21 days thereafter give notice in the Prescribed Form to the CRO, together with a copy of the Ordinary Resolution effecting the alteration.
      Amended (as from 5th April 2015).

    • Article 29 - Class rights

      (1) If provision for the variation of the rights attached to a class of Shares is made in the articles of association of the LLC, those rights may only be varied in accordance with those provisions.
      (2) If provision for the variation of the rights attached to a class of Shares is not made as such in the articles of association the rights may be varied if, but only if:
      (A) the holders of 3 quarters in nominal value of the Shares of the class consent in writing to the variation; or
      (B) a Special Resolution passed at a separate meeting of the holders of that class sanctions the variation.
      (3) Any alteration of a provision in the articles of association for the variation of the rights attached to a class of Shares, or the insertion of any such provision into the articles of association shall itself be treated as a variation of those rights.
      (4) If the rights attached to any class of Shares are varied in the manner referred to above, the holders of not less than 15 percent of the nominal value of the Shares of the class (being persons who did not consent to, or vote in favour of a resolution for the variation) may apply to the QFC Civil and Commercial Court to have the variation cancelled.
      (5) The application for cancellation of the variation must be made within 21 days after the date on which the consent was given or the resolution was passed and may be made on behalf of the Members entitled to make it by one or more of them as they may appoint in writing.
      (6) On any such application the QFC Civil and Commercial Court, after hearing the applicant and any other persons who apply to the QFC Civil and Commercial Court to be heard and appear to the QFC Civil and Commercial Court to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the Members represented by the applicant, disallow the variation and shall, if not so satisfied, confirm the variation.
      (7) The decision of the QFC Civil and Commercial Court on any such application shall be final.
      (8) In this Article 29, "variation" includes abrogation and "varied" is to be construed accordingly.
      Amended (as from 5th April 2015).

    • Article 30 - Reduction of share capital

      (1) An LLC, if authorised by an Special Resolution and its articles of association, may reduce its Share capital in any way.
      (2) In particular, and without prejudice to the generality of Article 30(1), an LLC may:
      (A) extinguish or reduce the liability on any of its Shares in respect of capital not paid up;
      (B) either with or without extinguishing or reducing liability on any of its Shares, cancel any paid up capital that is lost or unrepresented by available assets; or
      (C) either with or without extinguishing or reducing liability on any of its Shares, pay off any paid up capital that is in excess of the requirements of the LLC.
      (3) No LLC shall reduce the amount of its share capital under Article 30(1) unless it complies with the following:
      (A) at a date not more than 30 days and not less than 15 days before the date from which the reduction of the share capital is to have effect, the LLC shall publish a notice in an newspaper approved by the CRO stating the amount of the LLC's share capital at such date, the amount to which, and manner in which, the share capital is to be reduced and the date from which the reduction is to have effect; and
      (B) on the date from which the reduction is to have effect a certificate shall be signed by at least two directors of the LLC or the sole director if there is only one director declaring either:
      (i) that on that date and following the reduction of capital, the realisable value of the LLC's assets will be not less than the aggregate of its Liabilities and issued share capital and Share Premium Account and the LLC will be able to satisfy its Liabilities as they fall due; or
      (ii) that all the creditors of the LLC on that date have consented to the reduction.
      (4) Where Shares are to be cancelled in order to reduce the capital of an LLC the Shares shall be acquired at the lowest price at which, in the opinion of the directors, the Shares are obtainable, but not exceeding an amount, if any, stated or determined by the articles of association.
      (5) Where an LLC reduces the amount of its share capital then within 30 days after the date on which the reduction has effect the LLC shall file a notice in Prescribed Form with the CRO together with a copy of the notice referred to in Article 30(3)(A) and the certificate referred to in Article 30(3)(B) above.
      (6) If, after a certificate is signed in accordance with Article 30(3)(B)(ii) above, a creditor who did not consent to the reduction has a debt or claim against the LLC which the LLC is unable to pay as a result of the reduction, every person who was a Member of the LLC at the date of the certificate is then liable to contribute for the payment of the debt or claim in question an amount not exceeding the aggregate amount which, prior to the reduction, remained unpaid on the Shares then held by him.
      (7) Notwithstanding Article 30 (1), an LLC that is a Collective Investment Fund does not require authorisation by Ordinary Resolution to reduce its share capital in anyway.
      Amended (as from 5th April 2015).

    • Article 31 - Redemption or purchase of own Shares

      (1) An LLC may, if authorised to do so by its articles of association, and in accordance with the provisions of such articles of association, redeem any of its Shares which pursuant to its articles of association are to be redeemed, or are liable to be redeemed, at the option of the LLC or the holder of the relevant Shares.
      (2) No redeemable Shares shall be issued by an LLC, nor shall any Shares in an LLC be converted into redeemable Shares, if, following such issue or conversion, there would be no Shares in the LLC which are not redeemable.
      (3) A redemption of redeemable Shares shall only be made from the following sources:
      (A) in the case of the nominal value of the Shares, from paid up capital, share premium and other reserves of the LLC; or
      (B) in the case of any premium, from realised or unrealised profits, share premium or other reserves of the LLC.
      (4) Upon redemption of Shares under this Article 31, such Shares shall be taken as cancelled and accordingly the amount of the LLC's issued share capital shall be diminished by the nominal value of those Shares but redemption shall not be taken as reducing the authorised share capital of the LLC.
      (5) Where pursuant to this Article 31 an LLC is about to redeem Shares, it may issue Shares up to the nominal amount of the Shares to be redeemed as if those Shares had never been issued.
      (6) This Article does not apply to an LLC that is a Collective Investment Fund.
      Amended (as from 5th April 2015).

    • Article 32 - Power of an LLC to purchase own Shares

      (1) Subject to the provisions of this Article 32, an LLC may purchase its own Shares (including any redeemable Shares).
      (2) Article 31(3), (4), and (5) shall apply to the purchase by an LLC of its own Shares (the "Purchased Shares") as they apply to a redemption of redeemable Shares of an LLC. However, if an LLC decides, in accordance with its articles of association, to hold Purchased Shares in treasury ("Treasury Shares"), then Article 31(4) shall not apply. Treasury Shares will be treated as issued capital but will carry: (a) no voting rights (b) no pre-emptive rights for a Member; (c) no right to receive any dividends; and (d) no rights to receive assets upon the LLC's liquidation.
      (3) A purchase under this Article must, unless the LLC is a Wholly Owned Subsidiary, be sanctioned by an Ordinary Resolution.
      (4) The Shares to be purchased:
      (A) may only be purchased in pursuance of a contract approved in advance by an Ordinary Resolution of the LLC; and
      (B) shall not carry the right to vote on the Ordinary Resolution authorising the purchase.
      (5) An LLC may not under this Article purchase its Shares if as a result of the purchase there would no longer be a Member of the LLC holding Shares.
      Amended (as from 5th April 2015).

    • Article 33 - Prohibition of financial assistance

      (1) An LLC shall not (directly or indirectly) provide financial assistance to a person to acquire its Shares or Shares in its Holding Company unless:
      (A) the giving of the financial assistance does not materially prejudice the LLC's ability to discharge its Liabilities as they fall due;
      (B) the giving of the financial assistance is approved by resolution of the Members holding not less than 90 percent of the nominal value of the Shares giving a right to attend and vote at any meeting of Members; or
      (C) the LLC's ordinary Business includes providing finance and financial assistance is given in the ordinary course of that Business and on ordinary commercial terms.
      (2) In this Article 33, reference to "financial assistance" is a reference to financial assistance of any kind and includes:
      (A) making a loan;
      (B) making a gift;
      (C) issuing a debenture;
      (D) giving security over assets; or
      (E) giving a guarantee or indemnity in respect of another person's liability.
      (3) The prohibition on financial assistance in this Article 33 shall not preclude:
      (A) a distribution of the LLC's assets by way of dividend lawfully made or a distribution made in the course of the LLC's winding up;
      (B) the allotment of bonus Shares;
      (C) a reduction of capital in accordance with these Regulations; or
      (D) a redemption or purchase of Shares in accordance with these Regulations.
      Amended (as from 5th April 2015).

    • Article 34 - Dividends and other distributions

      (1) Subject to any limitations or provisions to the contrary in its articles of association, an LLC may, by a resolution of its directors, declare and pay or make dividends or other distributions in money, Shares or other property.
      (2) An LLC shall not declare, make or pay any dividend or other distribution if there are reasonable grounds for believing that:
      (A) the LLC would after the payment of the dividend or making of the distribution be unable to satisfy its Liabilities as they become due; or
      (B) the realisable value of the LLC's assets would thereafter be less than the aggregate of its Liabilities and its issued share capital and share premium account.

    • Article 35 - Consequences of an unlawful dividend or other distribution

      Where a dividend or other distribution, or part thereof, made by an LLC to any of its Members is made in contravention of Article 34 and, at the time of such dividend or other distribution, the Member knows or has reasonable grounds for believing that it is so made, he is liable to repay it, or that part of it, to the LLC or, in the case of a dividend or other distribution made otherwise than in cash, to pay the LLC a sum equal to the value of the dividend or other distribution or such part thereof, at that time, together with, in either case, interest at a rate prescribed, or calculated in accordance with, rules made by the CRO.