No National ESOP Framework Yet: How Qatar Startups Can Still Share Equity With Their Team

"Key gaps remain in the development of a national employee stock ownership plan (ESOP) framework." That line comes from the IFC and US-Qatar Business Council Doha study of Qatar's startup ecosystem, reported in July 2026. A companion finding names equity structuring, alongside hiring and product-market fit validation, among founders' "common growing pains". For a startup trying to hire a senior engineer or a head of sales away from a well-paid corporate job, equity is often the deciding offer. The lack of a dedicated framework does not mean Qatar-based startups cannot share ownership. It means they need to design the plan carefully and get the structure right.

Why equity matters for hiring in Qatar

Local founders have been saying this for years. Speaking to Gulf Times in 2023, Karty co-founder Mohamed Suleiman said attracting and retaining talent is challenging and that companies can consider offering stock options. Dibsy co-founder Ahmed Isse said investment allows "competitive salaries and employee stock options," calling these "crucial in attracting talent."

Elsewhere in the region, the practice is spreading fast. Carta reports that 67% of option grants at Middle East startups follow a four-year vesting schedule with a one-year cliff. In other words, regional candidates increasingly expect a familiar structure.

Designing the plan: general best practice

The figures below are international and regional market norms, not Qatari rules. Use them as a starting point for discussion with your investors and advisors.

• Pool size. Index Ventures notes that pools are traditionally set at 10% at seed, and that in the US they typically rise to 15% at Series A. For Europe, Index recommends 12% at Series A, 14% at Series B and 16% at Series C. Holloway's venture capital guide gives about 10% at earlier stages and 20% at later stages. The better method is bottom-up: list the hires you plan for the next 12–24 months, estimate a grant for each, and size the pool to cover them.
• Vesting. Four years is standard, with a one-year cliff: nothing vests in year one, then a quarter vests at the cliff and the rest monthly. Al Tamimi & Company notes that schedules typically run three to four years and can also be tied to milestones.
• Leaver terms. Decide in advance what happens when someone leaves. In Al Tamimi's summary, leavers generally keep only vested options. "Good leaver" cases (for example, resignation or mutual agreement) are treated more generously than "bad leaver" cases such as dismissal for cause. Index's advice is that "your guiding principle should be generosity, wherever possible."
• Pre-money or post-money pool. This is where founders lose value without noticing. If investors require the pool to be created or topped up in the pre-money valuation, only existing shareholders are diluted. Holloway warns that unless you clarify this, "a founder may think they're getting a better deal than they are." Model both cases before you sign a term sheet.

Structuring options for Qatar-based companies

No single structure suits every company, and the right answer depends on where you are incorporated, who your investors are and how many people you want to include. Founders in the region generally consider three routes. Each needs proper legal advice in Qatar.

• Phantom shares or cash-settled plans. Employees receive a cash bonus linked to the company's share value at an exit or valuation event, with no shares issued. Al Tamimi lists phantom plans as a recognised ESOP structure, and Carta notes they are used as an alternative where local company law has no specific ESOP rules. They avoid changes to the shareholder register but give employees no actual ownership or vote.
• A holding company in a financial-centre jurisdiction. Carta notes that centres such as the DIFC and ADGM offer more structured legal frameworks for ESOPs, using trusts, nominee structures and special purpose vehicles. Some Qatar founders look at the Qatar Financial Centre, where an LLC can be set up with members of any nationality acceptable to QFC. Confirm with counsel exactly how the QFC's rules treat employee share plans before choosing this route.
• A pool held by a separate vehicle. Where the operating company's shareholder register is hard to change, a separate entity or nominee can hold the pool on employees' behalf. Al Tamimi's earlier work on the UAE describes this approach, along with offshore vehicles and plan administrators.

The only codified incentive-share regime we found in Qatar applies to listed companies. In 2021 the Qatar Financial Markets Authority issued rules allowing listed companies to buy back shares for employee incentive schemes, capped at 7% of paid-up capital. Private startups still have to build their own arrangements.

Making equity mean something to employees

A plan only helps hiring if people understand it. Good practice is to:

• Give every grant in writing, with the number of options, strike price (if any), vesting schedule and leaver terms.
• Explain what the equity could be worth under different exit scenarios. Do not imply a guaranteed outcome.
• Keep a clean cap table that shows the pool, grants made and grants remaining. Investors will ask for it in due diligence.
• Review the pool at every funding round so you do not run out of equity for key hires.

The link to NDS3 and Startup Qatar

Qatar's Third National Development Strategy and the Startup Qatar platform, launched by Invest Qatar in 2024, both aim to build a private-sector economy led by innovation. Startup Qatar already offers entrepreneur visas and talent-attraction advice. Equity is the other half of the talent equation: it lets young companies compete with larger employers for experienced people and keeps those people invested in long-term growth. The IFC–USQBC study's call for a national ESOP framework points to a policy gap. Until it closes, well-designed private plans are how founders can act now.

What to do next

• Before your next round: build a 12–24 month hiring plan and size your pool from the bottom up.
• Agree the basics: four-year vesting, a one-year cliff, and clear good and bad leaver terms.
• Model dilution: compare pre-money and post-money pool scenarios before you agree a valuation.
• Choose a structure with advice: phantom shares, a holding company or a pool vehicle. Get written advice from a Qatar-qualified lawyer and a tax advisor.
• Communicate clearly: put grants in writing and explain them in plain language.

This article is general information, not legal or tax advice.

Sources

• Qatar startup sector enters new phase of growth, says study – Gulf Times – gulf-times.com
• Qatar's startup founders growing more diverse, global-focused: Study – Gulf Times – gulf-times.com
• Attracting, retaining talent is a challenge for fintech startups, say industry experts – Gulf Times – gulf-times.com
• How ESOPs are transforming employee compensation in the UAE and Saudi Arabia – Carta – carta.com
• Rewarding Talent – Index Ventures – indexventures.com
• Option Pool – Holloway Guide to Raising Venture Capital – holloway.com
• ESOP in Venture Capital – Al Tamimi & Company – tamimi.com
• ESOPs in the UAE: A New Beginning – Al Tamimi & Company – tamimi.com
• Limited Liability Companies – Qatar Financial Centre – qfc.qa
• QFMA issues rules for employees' incentive shares purchase of listed companies – The Peninsula – thepeninsulaqatar.com
• Invest Qatar launches Startup Qatar – The Peninsula – thepeninsulaqatar.com

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