As money laundering and terrorist financing methods become more sophisticated, criminals are increasingly using multi-layered corporate structures to hide the individuals behind the business. This lack of transparency makes it difficult for authorities to trace illicit funds. In response, governments across the Middle East are shifting toward stricter transparency measures to align with international standards that require companies to disclose the identity of the ultimate beneficial owners, or UBOs, and maintain a register for the government to inspect at any time. This blog post will highlight the Omani legal framework in this regard and the key UBO obligations in Oman.
UBO Regulations in Oman
UBO requirements in Oman are predominantly sub-regulations of the Commercial Companies Law and accordingly fall under the mandate of the Ministry of Commerce, Industry, and Investment Promotion. The first UBO regulation in Oman was issued in 2022, and was quickly replaced by the second UBO regulation of 2023.
Identifying the Ultimate Beneficial Owner
The key objective of the UBO regulation is to identify the person who owns or exercises ultimate effective control over the entity in question or on whose behalf the transaction is made. The technical definition for this concept in the Regulation Governing the Procedures for Identifying the Beneficial Owner of 2023 is “A person who owns or exercises ultimate effective control over a client, directly or indirectly, including the natural person on whose behalf the transaction is conducted, as well as the natural person who exercises ultimate effective control over the legal person or legal arrangement.”
Registration Requirements
The key obligation for companies in Oman under this regulation is that they are required to keep a register providing detailed information of each UBO who holds 25% or more of the shares of the company. This obligation applies to all types of companies other than SAOGs, which are governed by special rules for publicly traded companies.
This must be kept at the company’s main headquarters and maintained for a minimum period of ten years from either the date of registration or from the date of dissolution or liquidation of the company.
When no individual can be identified as a UBO, the most senior management officer of the company is deemed the UBO for the purposes of the provisions of this regulation.
Focal Point Obligations
To facilitate regulatory coordination, companies must appoint a natural person resident in the Sultanate of Oman to serve as the designated liaison for coordinating on matters relating to all beneficial ownership data with the Ministry of Commerce, Industry, and Investment Promotion.
Compliance and Penalties
Failure to comply with these requirements may lead to administrative penalties, including warnings, fines up to 1,000 Rial Omani, suspension of commercial registration for up to three months, or cancellation of registration.
Conclusion
Identifying the UBO of a company and maintaining the UBO register is now considered an essential transparency measure that all companies need to comply with. We highly recommend that all companies familiarise themselves with the full details of the Regulation Governing the Procedures for Identifying the Beneficial Owner of 2023, which is available in full in English on the link below:
