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On 16 June 2022, Royal Decree No. 46/2022 promulgating a new securities law (the Securities Law), came into force and effect in Oman. 

The Securities Law repealed the Capital Market Law 80/98 (the Capital Market Law), except for provisions relating to the establishment and objectives of the Capital Market Authority (the CMA). In November 2023, the CMA released draft executive regulations for public consultation (the Draft Regulations), which we have participated in. These Draft Regulations are set to replace the existing executive regulations to the Capital Market Law (the Existing Regulations). 

Whilst the Draft Regulations are subject to change following the consultation and pending final approval by the CMA, among the key aspects addressed in the Draft Regulations are the new regulations for investment funds. This article briefly explores some of the potential key opportunities and implications of the Draft Regulations for investment funds and market participants in Oman.

  1. Expanded CMA requirements as part of the application process

    The Draft Regulations set out the pre-requisites and documentation required for the application for issuing units for both public and private subscriptions which are not distinguished in the Existing Regulations. We regard this as a very positive step in expanding the market both with a view to safeguarding the public's interests on public offerings and also providing the institutional and professional market with the flexibility to follow a more private offering structure with potentially simplified procedural and documentation requirements.

  2. Expanded list of supporting documents for prospectus approval in respect of public offering

    According to the Draft Regulations, issue managers may now have to submit the application for approval of a prospectus for public subscriptions, along with a list of supporting documents which includes but is not limited to the: (i) subscription form; (ii) offering announcement in Arabic; (iii) agreement with underwriters of the fund (with the underwriting component being a more express requirement under the Draft Regulations); (iv) agreements with service providers of the fund; (v) agreement with subscription banks of the fund; and (vi) any other documents requested by the CMA. On a recent equity fund establishment transaction that we are advising on, we are aware that the CMA has already begun requesting for some of this expanded list of supporting documents when considering the approval of the draft prospectus for public subscription.

  3. Expansion of the responsibilities of an issue manager

    The Draft Regulations provide more detail on the role and responsibilities of an issue manager. Summarily, when issuing units for public subscription, in addition to the current roles of an issue manager in accordance with the Existing Regulations, the Draft Regulations provide that the issue manager also has the following responsibilities:
    • completing the establishment of fund procedures within 3 months from the date of notification of the preliminary approval of the CMA;;
    • coordinating with the collective investment fund to include all essential, significant and necessary information in the prospectus; and
    • issuing of the public subscription invitation within fifteen days of approval of the prospectus.

    In public offerings, the issue manager, in coordination with the fund, must include in the prospectus all necessary information to enable an investor to make an informed decision, and if the fund does not disclose any important information to protect its interest and the interests of investors, it must indicate that in the prospectus, providing the justifications and reasons for such omission and its impact.

  4. Distinguishing between public and private offerings

    The Draft Regulations seem poised to introduce a more nuanced criteria in respect of the processes and requirements for public offerings and private offerings to professional investors. The potential evolving criteria for public and private offerings may influence the composition of investor bases for investment funds. Therefore, fund managers might need to adapt their strategies to align with the new regulatory landscape and the opportunity this provides with the increased variety of fundraising options.

  5. Negligence Liability on the Issue Manager

    The Draft Regulations impose a duty of care on the issue manager and subscription entities to the fund and subscribers. A negligence liability may arise if the concerned entity fails to exercise the necessary level of care, skill and diligence when performing their tasks. Further, it is possible that agreements between the issue manager and subscription entities may include provisions which impose financial penalties where entities receiving subscription requests fail to fulfil their responsibilities.

  6. Capital Increase for Private Offerings and Lock-in Period

    Subject to certain conditions and approval via an extraordinary general assembly meeting (EGM), the Draft Regulations allow for a fund to increase its capital through a private placement. The fund must attach to the EGM agenda a comprehensive summary of the proposed private subscription as well as a summary of the advantages and benefits expected to accrue to the fund from the allocation. Prior to the EGM, the fund must obtain a written undertaking from the individuals targeted for private subscription committing them to pay the value of the allocated units. Those who have been allocated investment units for capital increase are not permitted to dispose of them until after one year from the date of their listing on the stock exchange. This lock-in period will not apply to units allocated after their presentation to unit holders as a preferential right.

  7. Additional Pre-Requisites regarding the Board of Directors and Legal Representation of the Fund

    The Draft Regulations introduce new requirements that: (i) two-thirds of the members of the board of directors of a fund (the Board) should be independent (a move that would enhance the corporate governance position of funds for its investors); and (ii) the  fund shall be legally represented by the chairman or an individual duly authorised by the fund, in the courts or in its relationships with third parties. According to the Existing Regulations, only the chairman or his deputy can legally represent the fund in courts or in its relationship with third parties. In addition to the pre-requisites set out in the Existing Regulations, the Draft Regulations sets out further pre-requisites relating to the election of an individual to a fund's Board. Individuals must potentially also meet the following requirements: 
    • be a natural person and be at least 25 years old;
    • have a registered shareholder number with the clearing house;
    • not be individually or jointly liable, with the Board, for the insolvency of any company;
    • if running as an independent member, provide a declaration to that effect and that their membership will be forfeited if they lose their independence;
    • not be a member of more than 4 investment fund Boards, and not be the president of the Board of more than 2 collective investment funds; and 
    • not be a member of the Board of another fund in Oman with similar purposes to the fund for which they are seeking Board membership.

  8. New Section: Sharia Supervision Committee 

    The Draft Regulations introduce a section governing the role and establishment of a Sharia supervision committee (with a minimum of 3 members, or engagement with an external Sharia adviser), in respect of Sharia-compliant funds with the aim of ensuring compliance with Islamic principles relating to Islamic investment activities. The function of the committee is to pass resolutions approving the investments and activities of a fund from a Sharia perspective. The Draft Regulations also provide that the Board, investment manager and other service providers are responsible for providing the Sharia supervision committee with relevant information and documents relating to a Sharia-compliant fund and must not interfere with the Sharia supervision committee's work.

  9. New Section: Legal Advisers

    The Draft Regulations provide that legal advisers appointed by the fund must be accredited by the CMA. They also provide specific guidance on the functions and duties of the legal adviser of a fund, which include: (i) ensuring the fund adheres to applicable laws, regulations and instructions; (ii) reviewing and approving the draft prospectus of the fund in accordance with applicable laws and the fund's constitutive documents and also ensuring that the members of the fund provide data that is accurate and not misleading; (iii) verifying the proper formation of the Board as required by law; and (iv) attending general assembly meetings.

    We are pleased to note that we have been accredited by the CMA in this regard.

  10. New Section: The Managing Director (Administrator of the Fund)

    A new section in the Draft Regulations sets out the responsibilities of the administrator of a fund. As an expansion to the responsibilities set out in the Existing Regulations in respect of the administrator's role in maintenance of the fund's financial records, the Draft Regulations specify that the administrator has the role of: (i) calculating the accrued expenses, dividends and revenue of the fund; and (ii) preparing the interim and annual financial statements of the fund.

  11. New Section: Merging of Funds

    The Draft Regulations also introduce the concept of one or more funds merging into another fund through one of two methods:
    • Merger by annexation – which is the dissolution of one or more funds and the transfer of their assets and liabilities to an existing fund; or
    • Merger by amalgamation – which is the dissolution of two or more funds and the establishment of a new fund to which assets and liabilities of each of the combined funds are transferred.

    This section of the Draft Regulations then goes on to outline the steps and pre-requisites involved for each merger method, as well as the requirements for the announcement of the merger. In the event of a merger, the Draft Regulations provide that unit holders shall be provided with the option to redeem their units for cash either prior to the final merger or within a period not exceeding 30 days from the date of the approval of the merger.


As the Draft Regulations progress through the public consultation phase and subsequently, stakeholders will play a crucial role in providing feedback on these proposed changes and the market's understanding of them and the opportunity they provide in developing Oman's funds market for all participants. The aim is to strike a balance that ensures effective regulation, investor protection and the sustainable development of Oman's capital market.