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OMAN COMMERCIAL COMPANIES (IN SUMMARY)

OMAN
COMMERCIAL
COMPANIES
(IN SUMMARY)

F EBRUARY 2016

Published by: Al Alawi & Co., Advocates & Legal Consultants


Corporate Advisory Group
The incorporation of a commercial company in Oman is governed by the Commercial Companies Law, Foreign
Capital Investment Law & the Commercial Register Law. Depending on the capital of the business, objectives of the
parties involved and the type of business, the most common forms of commercial companies used in Oman are:
limited liability company (LLC), joint stock company (closed) (SAOC), joint stock company (public) (SAOG), joint
venture and general partnership.

Joint-Stock Company
Limited Liability Company Joint-Stock Company Joint Venture General
(Closed)
(LLC) (Public) (SAOG) (JV) Partnership
(SAOC)

Company Name
Any name including the word Any name other than the Any name other than the Does not have a Any name which
Oman will require minimum name of a natural person name of a natural person name of its own may include the
capital of OMR 500,000 in the since it is name of one or
The name may not include The name may not
under formation bank account essentially an more partners
the name of a natural include the name of a
agreement
Any name which may include person unless it is natural person unless it is General
between two or
the name of one or more registered as a patent registered as a patent Partnership must
more natural or
partners in the company is follow the name of
SAOC to follow the name SAOG to follow the juristic persons
acceptable the company
of the company name of the company establishing legal
LLC must follow the name of relationships
the company between its
members without
affecting third
parties. It has no
juristic personality
and not subject to
registration with
any government
authority.

Shareholders
Minimum of 2 partners Minimum of 3 partners Same as SAOC Minimum of 2 Formed by two or
JV partners more natural or

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OMAN COMMERCIAL COMPANIES (IN SUMMARY)
Joint-Stock Company
Limited Liability Company Joint-Stock Company Joint Venture General
(Closed)
(LLC) (Public) (SAOG) (JV) Partnership
(SAOC)
legal persons

Constitutional Documents
Constitutive Contract Constitutive Contract and Same as SAOC JV Agreement Partnerships
Articles of Association memorandum of
(must be) approved by the association
Directorate General of
MOCI

Minimum Capital Requirement


Minimum capital of OMR Minimum capital of OMR Minimum capital of OMR Not applicable Not applicable
20,000 for wholly Omani 500,000 2,000,000
owned companies
Authorized capital can be Authorized capital can
In case of foreign investment more than issued capital as be more than issued
minimum capital of OMR per the Articles of capital as per the Articles
150,000 or minimum capital of Association of Association
OMR 20,000 for foreign
No public subscription of Public subscription of
investment applicable under
shares shares
US-Oman Free Trade
Agreement and Gulf Co- At least half of issued At least half of issued
operation Council (GCC) capital to be paid-up on capital to be paid-up on
reciprocal arrangements subscription subscription
Has merely issued capital; no
authorized capital
No public subscription of
shares
Issued capital to be fully paid-
up on subscription
The capital of the company
may only be increased or
reduced by a unanimous
decision of the partners

Shares
Single class of shares with Different classes of shares Promoters shall Not applicable Partners share not
equal nominal value and preferential rights (i.e. subscribe neither less represented by
voting rights and rights of than 30% nor more than negotiable
Each partner shall have the
subscription to new shares) 60% of the companys certificates
right to attend partners
permissible shares and offer the
meeting and one vote for each The ownership of a
remaining for public
share he owns Preferential and partners share can
subscription
concessionary shares shall only be transferred
Joint ownership of shares
be included in the Shares offered for public to a third party
permissible
companys Articles of subscription are required with the consent
Shares cannot be mortgaged Association or after the to be fully subscribed. As of all partners or in
approval of an an exception the compliance with
Assignment of shares subject extraordinary general promoters may upon the the partnerships
to preemptive rights meeting approval of the memorandum of
exercisable by the other Directorate General of association
shareholders A share to be owned by a
Commerce cover the un-
single person (except under
Share transfer to be effected at subscribed shares prior
special circumstances)
the Commercial Registry to the holding of the
Loan stocks or bonds may constituent assembly
be issued
Different classes of
Shareholders shall be shares and preferential
confined to the payment of rights (i.e. voting rights
the value of the shares and rights of
subscription to new

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OMAN COMMERCIAL COMPANIES (IN SUMMARY)
Joint-Stock Company
Limited Liability Company Joint-Stock Company Joint Venture General
(Closed)
(LLC) (Public) (SAOG) (JV) Partnership
(SAOC)
subscribed shares) permissible
Shares shall be represented Preferential and
by negotiable certificates concessionary shares
shall be included in the
At least half the nominal
companys Articles of
value of the issued share
Association or after the
must be paid upon
approval of an
subscription
extraordinary general
Assignment of shares to be meeting
pursuant to the Capital
A share to be owned by a
Market Law
single person (except
Approval of the Board of under special
Directors not a prerequisite circumstances)
for share sale
Loan stocks or bonds
may be issued
Shareholders shall be
confined to the payment
of the value of the shares
subscribed
Shares shall be
represented by
negotiable certificates
At least half the nominal
value of the issued share
must be paid upon
subscription
Assignment of shares to
be pursuant to the
Capital Market Law
Approval of the Board of
Directors not a
prerequisite for share
sale

Rights and Obligations Accruing From Ownership Of Shares


Right to receive dividends and Right to receive dividends Same as SAOC The agreement Right to receive
obligation to bear losses in line and obligation to bear establishing the JV profits
with share in issued capital losses in line with share in
Shall govern The partners shall
issued capital
Pre-emption right to purchase the rights and be jointly and
new shares Preferential right to obligation of severally liable
subscribe for new shares partners for obligations to
Right of first refusal to
Will also the full extent of
purchase shares sold by other
govern their personal
partners
distribution of assets
the profits Non- partners
and losses who agree to
include their
name in the
name of the
partnership shall
be responsible
(for the
partnerships
debt as a general
partner) to any

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OMAN COMMERCIAL COMPANIES (IN SUMMARY)
Joint-Stock Company
Limited Liability Company Joint-Stock Company Joint Venture General
(Closed)
(LLC) (Public) (SAOG) (JV) Partnership
(SAOC)
third party

Management & Decision Making


Managed by one or more The management of the The management of the Management of The management
managers whose appointment company shall be entrusted company shall be affairs of JV to be to be by one or
and tenure is determined by to a board of directors entrusted to a board of governed by JV more managers
the Constitutive Contract directors Agreement who shall be
Members of the board of
natural persons
A partner may also be a directors should be a Minimum of five and
and who may be
manager minimum of three and maximum of twelve
partners or non-
maximum of twelve directors
The managers may not partners (all
directors
perform certain acts without Directors compensation partners deemed
the partners authorization Directors compensation and term of office to be to be managers
and term of office to be determined by though)
The company is bound by the
determined by applicable applicable law/Articles of
acts of the managers acting A manager of the
law/Articles of Association Association
within the scope of their partnership has
Ordinary general meeting
authority as per the The general meeting full authority to
to elect the members of
Constitutive Contract shall determine the perform all acts in
the board of directors in
annual remuneration furtherance of its
Managers are liable to the accordance with applicable
business affairs
and the allowance of
company, shareholders and law/Articles of Association
attending the board (except those
third parties for damages
The general meeting shall meetings, the total of explicitly barred
caused by breach of their by
determine the annual which should not exceed
duties law/partnerships
remuneration and the 5% of the annual net
No specific rules of corporate allowance of attending the profit (a maximum of memorandum of
governance applicable board meetings, the total OMR 200,000) association)
of which should not exceed
Appointment and removal of Ordinary general Managers may be
5% of the annual net profit
managers by a decision of the meeting to elect the appointed by one
(a maximum of OMR
partners meeting members of the board of or more partners
200,000)
directors in accordance in accordance
The partners shall generally act A director, if shareholder, with applicable with the
by way of resolutions adopted to have the minimum law/Articles of partnerships
by voting at partners meetings number of shares specified Association memorandum of
Partners meetings shall not be in the Articles of association
A director, if
valid unless attended by Association
shareholder, to have the The authority of
partners or proxies who The board of directors has minimum number of the managers
represent at least fifty percent full authority to perform all shares specified in the may be restricted
of the capital of the company acts for the management Articles of Association by the
Resolutions of the partners of the Company (except partnerships
The board of directors memorandum of
meeting shall be adopted by those explicitly barred by
has full authority to association and
the relative majority of votes the law or reserved for
perform all acts for the registered in the
cast in respect of a given decision by a general
management of the commercial
resolution, except where a meeting)
Company (except those register
greater majority is required by The company is bound by explicitly barred by the
the law or the Constitutive the acts of the board of law or reserved for A General
Contract. directors, its chairman and decision by a general Partnership is
other executives acting meeting) bound by the acts
within the scope of their of its managers
The company is bound acting within the
authority
by the acts of the board scope of their
The directors not to have of directors, its chairman authority
any direct or indirect and other executives
interest in transactions or acting within the scope Partnerships
contracts concluded by the of their authority decisions shall
company for the account of generally be
The directors not to have reached by an
the company and shall not
any direct or indirect absolute majority
utilize the information
interest in transactions of the votes of all
accessible to them without
or contracts concluded its managers
the prior consent of the
by the company for the

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OMAN COMMERCIAL COMPANIES (IN SUMMARY)
Joint-Stock Company
Limited Liability Company Joint-Stock Company Joint Venture General
(Closed)
(LLC) (Public) (SAOG) (JV) Partnership
(SAOC)
ordinary general meeting account of the company Removal of
and shall not utilize the managers is
Limited rules of corporate
information accessible to accomplished by
governance applicable
them without the prior a unanimous
The general meeting consent of the ordinary decision taken by
empowered to remove any general meeting all the partners or
or all members of the if partnerships
Limited rules of
board even if the Articles of memorandum of
corporate governance
Association provide association
applicable
otherwise provides so, by a
The general meeting decision of a
Meetings of board of majority
empowered to remove
directors are not valid exceeding half of
any or all members of
unless it is attended by at all the partners
the board even if the
least half the members or
Articles of Association
their representatives
provide otherwise
Board to make its decisions
Meetings of board of
by relative majority of
directors are not valid
members present,
unless it is attended by
generally
at least half the
members or their
representatives
Board to make its
decisions by relative
majority of members
present, generally
Rules of corporate
governance applicable

Auditors
It is obligatory to appoint an Appointment of Same as SAOC Not Applicable Not Applicable
auditor only under any of the independent auditor
following circumstances: mandatory who shall be
appointed by the ordinary
The number of partners general meeting
exceeds 10
Auditors liable to the
The share capital exceeds OMR company, shareholders and
50,000 third parties for failure to
The partners representing discharge their duties
more than one fifth of the professionally
capital request it [Note: Omans New Code of
Corporate Governance
imposes additional
responsibilities vis--vis
internal and external auditors.]

Liquidation
May be dissolved for reasons May be dissolved for Same as SAOC No juristic May be dissolved
specified in the Constitutive reasons specified in the personality; for reasons
Contract or as otherwise Articles of Association or as therefore, no specified in the
provided by law otherwise provided by law question of partnerships
liquidation. memorandum of
May be dissolved at any time May be dissolved by an
However, the JV association or as
by a favorable vote of partners extraordinary general
Agreement can be otherwise
representing three quarters of meeting upon erosion of
terminated as per provided by law
the capital three quarters of the
contractually
capital Deemed
agreed provisions
dissolved upon

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OMAN COMMERCIAL COMPANIES (IN SUMMARY)
Joint-Stock Company
Limited Liability Company Joint-Stock Company Joint Venture General
(Closed)
(LLC) (Public) (SAOG) (JV) Partnership
(SAOC)
the death,
declaration of
insolvency or
bankruptcy or
withdrawal of
one of the
partners
The competent
court may upon
the request of
one of the
partners decide
the dissolution of
the partnership
due to the failure
of one or more
partner to fulfill
his obligation

Al Alawi & Co., Advocates & Legal Consultants


Al Alawi Law Firm Building, Bldg No. 785, Way No. 2708, Qurum 29, P.O. Box 3746, P.C. 112, Muscat, Sultanate of Oman.
T: +968 24699761/2
F: +969 24699763
E: contact@alalawico.com
www.alalawico.com

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