New Oman Commercial Companies Law


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Royal Decree 18/2019, the new Commercial Companies Law, comes into force in mid-April 2019 (New Law).  In many respects the New Law, which comprises 312 articles compared to the 176 articles under Royal Decree 4/74, as amended (Old Law), is generally the same as the Old Law. However, there are some important new concepts and a much needed dose of modernity introduced under the New Law.

Points to note in relation to an Oman limited liability company (LLC) include:

  •  statutory pre-emptive rights on the transfer of LLC shares and the requirement for prior consent of all other shareholders in order for a shareholder to be involved in a competing business are carried over from the Old Law into the New Law;
  • a number of provisions are carried over from the Old Law into the New Law which in practice the Ministry of Commerce and Industry (MCI) has not enforced or applied in recent years, such as (i) the requirement for the founders of a new LLC to establish an "under formation" bank account and deposit the initial capital pre-incorporation and (ii) the option for an LLC to buy back its shares, so it remains to be seen how the MCI will apply these provisions of the New Law; and
  • the New Law provides for a maximum of 50 LLC shareholders, an increase from the maximum of 40 shareholders under the Old Law, which is particularly relevant for an LLC which has multiple individual shareholders who have a large number of legal heirs under Sharia law.

 Non-LLC points to note include:

  •  the minimum registered capital for a company converting to a public joint stock company (SAOG) has been reduced from RO 2,000,000 to RO 1,000,000, which is particularly relevant for a closed joint stock company (SAOC) which has an IPO obligation in the electricity or water sectors
  • Chapter Three of the New Law deals with the issuance of bonds and, unlike the Old Law, Sukuk;
  • a joint stock company must have an odd number of directors; and
  • the New Law provides for a "sole proprietorship" as a registrable legal entity for an Omani individual.

The New Law provides for the Minister of Commerce and Industry and the Chairman of the Capital Market Authority to issue accompanying regulations within one year of the New Law coming into force.

We will be reviewing the New Law in more detail and we will consult with the MCI for guidance on some ambiguities we have already identified over the coming weeks. We will circulate further updates as appropriate.   

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