As an Omani law student in the UK, I wrote this blog post to examine the key differences between Omani and UK company legal forms.

General Concept of a Company

In Oman, the term “company” refers to any business vehicle other than a sole trader doing business as an individual in his or her personal capacity. Accordingly, a partnership, i.e. the legal form where two or more partners carry out an activity together with one or more of the partners having no limited liability, is considered a type of a company in Oman, is governed by the Commercial Companies Law, and is referred to as a Tadhamun Company (General Partnership) or Muhassa Company (Limited Partnership). The Omani concept of a company widens more as the Omani law considers a joint venture, merely a contract between two parties to carry out a joint project, to be a company form and regulates it under the Commercial Companies Law.

This differs from the UK, where the term “company” usually refers to a specific type of business vehicle with limited liability and a legal personality distinct from its shareholders. Other business vehicles, such as partnerships, are governed by a totally different set of legislation. The UK also does not consider venture capital a form of a company. However, the UK also has a hybrid business form between a company and a partnership called a Limited Liability Partnership that does not exist in Oman.

Limited Liability Companies

In Oman, the Commercial Companies Law has several types of what is generally considered a limited liability company, i.e. a legal form with a legal personality distinct from the shareholders who have limited liability towards the conduct of the business. These are the One Person Company (a limited liability company with one shareholder), a Limited Liability Company (a limited liability company with a maximum of 50 shareholders, and a Joint Stock Company (a limited liability company with a minimum capital of 2,000,000 Rial if the shares of the company are traded in the stock market or a minimum capital of 500,000 if the shares of the company are not traded in the stock market. The law also has specific rules for a holding company (a joint stock company created for the purpose of owning other companies).

In the UK, there is no distinction in the actual legal form identified by Omani law; all are merely referred to as a Limited Company. This company can be owned by one or multiple people, and there is no cap on the number of shareholders a company can have. The same applies in regard to publicly traded companies. A Limited Company can trade its shares on the stock market in the UK without having to adopt a different legal form.

Limited Liability Partnerships

Oman only has the traditional legal forms of a general partnership and a limited partnership in the area of partnerships. These forms also exist in the UK and offer a legal form jointly owned by the shareholders without offering limited liability except to limited partners in a limited partnership. However, the UK also offers a hybrid form between a company and a partnership called a Limited Liability Partnership (LLP) as a legal vehicle in which all the partners have limited liability, allowing them to manage the business directly without needing a board of directors. LLPs allow for a different tax treatment than an LLC, as the partnership is not subject to corporation tax and the partners are individually taxed through self-assessment tax returns as the profits are directly distributed among them.

Beyond UK Business Legal Forms

In addition to the standard limited company, partnerships, and limited liability partnerships, the UK also has several legal forms available for some specific purposes that are not necessarily profit-oriented, such as Community Interest Companies that prioritise community benefits over profit; Right to Manage Companies that are formed by leaseholders to manage their building; and UK Societas’ that provide a framework for operating across the UK and EU (formally known as Societas Europaea before Brexit).

Conclusion

Company Law is one of the critical areas of law for any person interested in corporate legal work. I highly recommend reading the Commercial Companies Law to learn about Omani company law. You can also read Decree’s Intel on the link below for an Overview of Types of Companies in Oman:

Written by:

Abdulrahman Al-Farsi

Abdulrahman Al-Farsi is a Junior Legal Researcher at Decree and a Final Year Law Student at the University of Liverpool.

The new decision clarifies the process for policing violations and stipulates that reports can only be issued by employees with judicial enforcement status. It also clarifies that employees must have an identity card stating their identity, which they are required to disclose if asked.

The main provision of the 2013 and 2024 decisions is the MOL’s power to suspend the services of companies that violate Labour Law. The 2024 decision changes these services by removing old provisions and adding new ones, and they include services such as issuing work permits to non-Omanis and transferring the services of the violating workers.

You can read the full decision in English on the link below:

Royal Decrees

The month of July was slow, and no royal decrees were issued.

Ministerial Decisions

Thirteen ministerial decisions were published in the Official Gazette during this month, with the most significant being MOSD’s Governance Regulation for the Care of the Elderly in Foster Families and the Regulation for the Work of Social Development Committees and Volunteer Teams, and TRA’s Regulation on the Governance and Approval of Telecommunications Devices, and EA’s Regulation Governing the Possession of Domesticated Wild Animals.

Decree Intel

Decree Intel was updated with overviews of the Royal Academy of Management and the National Museum, and the University of Technology and Applied Sciences along with Case Summary: Supreme Court (Criminal Circuit) 19/2017 (Criminal Liability for Failure to Compensate for Official Holidays)

Blog Updates

Our blog featured posts by Abdulrahman Al-Farsi titled “Five Duties of the Sultan under Oman’s Constitution”, “Five Duties of the Legal Advisor of an SAOG” and, “Why Do Companies Liquidate?” and posts by Maraam Al-Mughairy titled “Five Rights Guaranteed by the Omani Constitution”, “Forms of Procurement under the Tender Law” and “The Process for Liquidating a Company”

The Commercial Companies Law governs the complete lifecycle of a company starting from the registration of the company all the way to closing it and liquidating its assets. The following are the grounds stipulated in article 40 of the Commercial Companies Law that require a company to start liquidation procedures:

Failure to carry out activity

The Commercial Companies Law stipulates that companies must be dissolved if the company fails to carry out activity for a period exceeding two years. This can be due to regulatory hurdles, market conditions, or internal management challenges. Such inactivity burdens the company resources, ultimately leading to the compulsory liquidation of the company.

Expiry of the term fixed for the company

Some companies are formed with a specific lifespan, especially those with temporary projects or a particular objective. Once the predetermined term expires, the company is required by law to liquidate.

Success or failure to accomplish objectives

Some companies are set up to accomplish a specific objective. However, not all companies succeed, and if the company consistently fails to meet its objective, triggering the compulsory liquidation procedures under the law.

Transfer of shares to a number of partners less than the minimum number prescribed

Some companies are required by law to have a certain number of shareholders, such as SAOGs, which need at least two partners. If these shares are transferred to a number of partners less than the minimum number prescribed by law, liquidation becomes compulsory.

Share capital falls below the minimum level

A company’s share capital is a crucial part of its operations and legal standing, and some company forms under the law are required to be a specific minimum share capital. For example, SAOGs require a minimum share capital of 150,000 Rial Omani to be named an SAOG. If the company fails to maintain that capital, liquidation becomes compulsory.

Bankruptcy or loss of all/most of the share capital

Similar to the point above, if a company goes bankrupt or suffers significant losses in share capital in a manner that makes it impossible for the company to continue operating, liquidation becomes compulsory.

Agreement by shareholders to liquidate

Sometimes, shareholders may collectively decide to liquidate the company. This can be due to strategic shifts, changing market conditions, a lack of profitable opportunities, or even personal reasons. If the shareholders agree to liquidate, the company must start liquidation procedures.

Conclusion

These are the cases that mandate liquidation as prescribed by the Commercial Companies Law. To learn more about liquidation or company law, we highly recommend that you read the Commercial Companies Law on the link below:

Written by:

Abdulrahman Al-Farsi

Abdulrahman Al-Farsi is a Junior Legal Researcher at Decree and a Final Year Law Student at the University of Liverpool.

This brand new regulation is a part of Oman’s efforts to protect wild animals as it sets the controls for owning and transporting domesticated wild animals such as gazelles and oryxes. Under this regulation, those who wish to possess domesticated wild animals are required to obtain a licence from the Environmental Authority. This licence requires a payment of a fee and it lasts for a renewable period of two years. The licence can only be granted to Omani nationals and Omani companies. The regulation provides a comprehensive governance framework that includes matters such as reporting and monitoring obligations.

Those who violate the provisions of this regulation by, for example, possessing or transferring the ownership of such animals without the permission of the authority are fined up to 1,000 Rial per head.

It is worth noting that Oman has an Animal Welfare Law, but this regulation is not associated with it, instead, it is associated with the Nature Reserves and Wildlife Conservation Law.

You can read the regulation in full in English on the link below:

What is an SAOG?

SAOG is a French abbreviation for the term Société anonyme Omanaise general, which means in English an Omani Public Joint Stock Company, or more simply, a company publicly traded in the stock exchange. Examples of SAOGs include some of the biggest companies in Oman, such as Bank Muscat and Omantel. In Oman, there are two forms of joint stock companies, the first is the SAOG, and the other is the SAOC, i.e. a Closed Joint Stock Company.

The main legal instruments that govern SAOGs in Oman are Commercial Companies Law and the Public Joint Stock Companies Regulation. This regulation provides a comprehensive framework for the establishment of an SAOG and the conversion of any other form of company into an SAOG.

How are Legal Advisors Appointed?

For us lawyers, the Public Joint Stock Companies Regulation is interesting because it requires the board of directors of an SAOG to appoint a legal advisor and prescribe in detail the qualifications and duties of this legal advisor.

A company that wishes to appoint a legal advisor must abide by the requirements in article 176 of the regulation. This includes a requirement that the legal advisor must have a bachelor’s qualification or its equivalent in law from a recognised university and that the legal advisor has practical experience of not less than five years in corporate and legal work relating to commercial activities. However, Omani nationals can be exempt from the experience requirement, provided the company enrols them in training programmes in various fields of expertise mentioned in the article. 

What are the Duties of the Legal Advisor?

The duties of the legal advisor are specified under article 183 of the Public Joint Stock Companies Regulation. We will highlight some of the most important ones here:

1. Reviewing Prospectuses

A Prospectus is a formal document that the company’s issue manager needs to submit to the authority for the company to be approved as an SAOG. This is an essential document that requires adequate legal skills to make sure that the document meets the requirements prescribed by the law. A key duty of a legal advisor of an SAOG is to review the prospectus.

2. Verifying Validity of the General Meetings

SAOG companies are required by law to hold certain ordinary and extraordinary meetings. Each of the meetings has specific requirements set by the law which the legal advisor must verify for the meeting to be deemed valid. The legal advisor is responsible for verifying the validity of the invitation procedure, the quorum, and the person holding the chairmanship of the meeting, as well as the presence of the accounts auditor.

3. Reviewing Agendas and Minutes

Due to the significance of the general meetings of SAOGs, the regulation imposes specific obligations on the legal advisor to review and approve the agendas of the meetings as well as the minutes of the meetings (i.e. the summary of the deliberations and outcomes of the meeting). The legal advisor is required to ensure that such agendas and minutes are compliant with the law, the regulations, the articles of association of the company, as well as the instructions issued by the FSA.

4. Verifying Validity of the Board Formation

The role of the legal advisor extends beyond the actual meetings as they must verify that the board remains valid throughout the term of membership in cases of, for example, the vacancy of a seat or the disqualification of a member from continuing to remain on the board.

5. Reviewing the Nomination Forms

The legal advisor is responsible for making sure that nomination forms of new members of the board are in line with the legal requirements, which is an obviously pre-requisite for any elections taking place in connection with the board.

Conclusion

The duties mentioned above are merely examples of the requirements stipulated by the Public Joint Stock Companies Regulation and they highlight the importance of the role of legal advisors in SAOGs. We highly recommend that all legal advisors read the full text of this regulation on the link below:

Written by:

Abdulrahman Al-Farsi

Abdulrahman Al-Farsi is a Junior Legal Researcher at Decree and a Final Year Law Student at the University of Liverpool.

When the higher education institutions are not satisfied with the OAAA’s accreditation result, they now have the right to file a grievance against the result under Decision 2/2024 within 60 days from the date of sending the result; however, they must do so after they have paid a non-refundable fee of 1,500 Rial Omani for each grievance. 

You can learn more about the grievance process to the OAAA by reading the full text of Decision 2/2024 on the link below:

The new regulation introduces the legal framework for establishing volunteer teams in the community. Each wilayat is permitted to have one volunteer team, with an additional one if the public interest requires it.

The regulation sets the rules for establishing, managing and financing volunteer teams.

The new regulation enters into force tomorrow. You can read it in full in English on the link below:

The amendment introduces a brand new article 9bis that imposes new potential requirements prior to issuing an agricultural licence by giving the Ministry of Agriculture, Fisheries, and Water Resources the power to verify, before issuing the licence and at the cost of the importer, the agricultural practices, phytosanitary management systems, and risk analysis applied in farms, nurseries, or production sites, and evaluate them in the country of export or the country of origin.

The new amendment enters into force tomorrow. You can read it in full in English on the link below:

The Sultan, who represents the country’s ideals and ambitions, is revered as a symbol of authority and unity in the heart of Oman. Article 48 of the Constitution defines him as the “head of the state, its most supreme representative, and its supreme commander”—a position seen by all as essential to governing the Omani identity and culture. 

Join us in this blog as we delve into five of the duties of His Majesty under article 49 of the Basic Statute of the State, exploring his esteemed position in shaping the character of the Sultanate:

1. Promulgating laws

One of His Majesty’s key functions is the promulgation of laws. The constitution outlines the process for this, which involves a review of the draft by the Council of Ministers and Majlis Oman. The final step is the issuance of a royal decree. 

2. Preserving the independence of the country and its territorial integrity

His Majesty plays a crucial role in preserving Oman’s rich history and its friendly character of peace and unity. These characteristics are well-known internationally, with the UN Secretary-General Antonio Guterres describing the Sultanate as a “voice of wisdom and a peacemaker”. To maintain this reputation, preservation is essential to protect the nation’s security, safeguard the rights and liberties of citizens, ensure the rule of law, and maintain peaceful relations.

3. Presiding over various councils 

One primary reason for Oman’s effective decision-making is His Majesty’s role in presiding over the Council of Ministers and specialised councils or appointing a person to preside over them.

4. Appointing ministers, officers, and judges 

Another significant duty of His Majesty is the appointment of trusted individuals in various fields. The Sultan appoints deputy prime ministers, ministers, undersecretaries, secretaries general, senior military and security officers, senior judges, and ambassadors. His Majesty is also responsible for relieving any of them from their role, should the need arise, for the betterment of Oman.

5. Pardoning convicted criminals

Finally, His Majesty may pardon any person convicted of any crime without the need to make any justification.

To conclude, these are just some of the duties that the Sultan holds. To learn more about the other duties of His Majesty as well as other provisions of the constitution, you can read the full text of the Basic Statute of the State on the link below:

Written by:

Abdulrahman Al-Farsi

Abdulrahman Al-Farsi is a Junior Legal Researcher at Decree and a Final Year Law Student at the University of Liverpool.