The Commercial Companies Law promulgated by Royal Decree No. 18/2019 (the “CCL”) is the cornerstone of company law in Oman. The Ministry of Commerce, Industry and Investment Promotion (the “MOCIIP”) has now published the Regulations that apply to all forms of Omani commercial companies other than public joint stock companies. The Regulations were published in the Official Gazette on 24 October 2021 and came into force on 25 October 2021. Below is a high-level summary of certain key changes that have been implemented by the Regulations. It is not at this time possible to assess how certain of these provisions will be interpreted and shaped by the MOCIIP in practice.
Previously, having a contract with a government entity was one of the prerequisites to establish a branch in Oman. It is likely that the Regulations are intended to override this requirement, and provide that the following documents are required to establish a branch:
All these documents (except for passport/Omani identity card copies) must be translated to Arabic and duly notarised and legalised or apostilled, as the case may be.
The Regulations now require the shareholders’ register to be maintained with Muscat Clearing and Depository SAOC (“MDC”), who will assume responsibility for recording share transfers and registering any related information. In order to maintain a register with MDC, SAOCs must open an account with MDC and pay the prescribed annual fees.
The agenda of the General Meeting requires the MOCIIP’s approval. Under the Regulations, approval must be sought by the board of directors of an SAOC by filing an application through the MOCIIP’s electronic system. This filing must be made at least 20 days prior to the date of the General Meeting. The notice of the General Meeting must be published in MOCIIP’s electronic system and in one of the local newspapers at least 15 days prior to the date of the General Meeting.
SAOCs have the option to convene the General Meeting virtually through MCD’s platform (subject to approval of MOCIIP) or physically.
The Regulations also include the rules by which the General Meeting may determine the remuneration and the sitting fees of the members of the board of directors.
The Regulations mandate that a person who is nominated to the membership of the board of directors of an SAOC is a natural person. Juristic persons are no longer able to nominate a representative to the board of directors from the date the Regulations came into force. In practice, we expect that current memberships held by juristic persons shall continue until the end of the term of such memberships.
The Regulations also specify the circumstances and rules which govern the passing of board resolutions by circulation. For example, under the Regulations:
Shareholders in an LLC may no longer appoint a manager working in another company, except after the termination of his/her service in that company. As an exception, managers may be appointed in companies that own shares in the company in which he/she was appointed.
The CCL provides that a natural person may not establish more than one sole proprietor company. The Regulations clarify that this restriction does not apply to juristic persons (owned by two or more shareholders) which may establish more than one sole proprietor company provided that the objects of each sole proprietor company are different.
The CCL contains a procedure for valuing in-kind contributions to LLCs but not to SAOCs. The Regulations supplement the CCL by including a procedure for valuing in-kind contributions which applies to all types of companies regulated by the MOCIIP, including SAOCs.
Originally contributed to the MENA Business Law Review, Q4, 2021