Companies in Oman are governed by the Commercial Companies Law and its regulations, such as the Commercial Companies Regulation. These legal instruments set the foundation for how to establish, operate, and manage companies in the Sultanate of Oman. Among the various legal forms of companies are Limited Liability Companies (LLCs) and Single Person Companies (SPCs), also known as One-Person Companies, which are the most commonly used forms due to the simplicity of the formalities for establishing them and the fact that they both offer their shareholders limited liability. This article will highlight four key distinctions between LLCs and SPCs.
Ownership Structure
LLCs are formed by multiple shareholders, with a minimum of two and a maximum of fifty shareholders. The share capital is divided among these shareholders. Whereas, SPCs are owned entirely and exclusively by one individual or entity. Thats why many people understand SPCs to be essentially LLCs, but with a single shareholder.
Number of Companies a Person Can Establish
LLCs have no specific limitation on the number of companies a person can establish, on the other hand, in regard to SPCs, a natural person may not establish more than one SPC, and a SPC cannot establish another SPC.
Management and Continuity upon Owner’s Death
In terms of management and continuity, LLCs are managed by one or more managers appointed by the shareholders, and the company continues to exist regardless of changes in shareholders. Whilst SPCs are managed by the sole owner, who may also appoint managers, and a SPC ceases to exist upon the death of the owner unless the shares of the heirs are held by one person or the heirs decide to change the SPC to a different legal form.
Operational Formalities
A LLC is required to have a shareholders meeting at least once a year, and it must appoint an external auditor if certain conditions are met (such as having more than seven shareholders or having a capital exceeding fifty thousand Rial Omani). These formalities are not required for SPCs at all.
Conclusion
LLCs and SPCs are very similar, but there are some key differences between them. It is highly recommended for any lawyer working in corporate matters to familiarise themselves with all the provisions of the Commercial Companies Law. You can read the Commercial Companies Law in English in full at the link below:
