Oman: New Commercial Companies Law Regulations: What You Need to Know

A. Branches of Foreign Companies

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:

• commercial registration certificate of the foreign company in its principal place of business, which includes the company’s commercial activities;
• incorporation documents of the foreign company (i.e. the Articles of Association, Memorandum of Association or the Constitutive Contract, as the case may be);
• authorization document issued from the foreign company to the manager(s) of the branch to carry out the management of the branch;
• undertaking letter from the foreign company to bear liability in relation to the acts of the branch; and
• passport/Omani identity card copies of the authorised managers.

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.

B. Closed Joint Stock Companies (“SAOCs”)

• Shareholders’ Register

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.

• General Meetings

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.

• 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:

• resolutions may not be passed by circulation more than three times per year;
• the subject matter of such resolutions must not relate to the financial statements or the matters referred to the board of directors from the audit committee;
• the resolutions to be passed along with all documents necessary for considering passing such resolutions must be presented to all members and be signed by them; and
• each member must write down his/her opinion on the resolution, whether accepting or rejecting passing the resolution, and clarify the reason for rejection, if any, in writing.

C. Limited Liability Companies (“LLCs”)

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.

D. Sole Proprietor Company (“SPC”)

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.

E. In-kind Contributions

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.

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Originally contributed to the MENA Business Law Review, Q4, 2021