Formation

An SPC is a limited liability company in which 100% of the share capital is held by a single natural person (an individual) or a juristic person (a corporate entity). To maintain market transparency and prevent overly complex corporate webs, the law states that an individual may not establish more than one SPC, and that an SPC cannot establish another SPC of its own.

Limited Liability

The defining feature of an SPC is the limited liability shield provided to the owner, which caps their financial responsibility to the amount of the capital invested. This safeguards the owner’s personal assets from company debts. However, article 296 of the law provides that the owner would be held personally liable if he, acting in bad faith, liquidates it or discontinues its activity before the expiry of its duration, or if he does not separate the company’s business from his private business.

Dissolution

Article 295 of the law governs the dissolution of an SPC and provides that this occurs automatically upon the death of the sole natural owner unless the heirs consolidate the shares in one person or elect to continue the business in another legal form within 180 days, and the company likewise ceases if the juristic owner itself is dissolved.

Conclusion

SPC is one of the most popular company forms that are used for doing business in Oman. It is highly recommended that you read the text of the Commercial Companies Law to learn more about its attributes on the link below:

Written by:

Arwa Al-Zadjali

Arwa is a legal intern at Decree. She has previously interned in international and local law firms in Muscat. She is interested in corporate law and intellectual property. She holds an LLB from Cardiff University.

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:

Written by:

Arwa Al-Zadjali

Arwa is a legal intern at Decree. She has previously interned in international and local law firms in Muscat. She is interested in corporate law and intellectual property. She holds an LLB from Cardiff University.