The new law in Oman related to companies viz. Commercial Companies Law (hereinafter "CCL") is in effect and it replaces the older Companies Law 1974. The amendment brings the commercial companies' law in line with new global corporate developments.
The gist of the new amendments are as follows:
A. LIMITED LIABILITY COMPANIES
Single Shareholder Companies:
New CCL permits companies to be incorporated with a single natural person corporate shareholder. This may assist in mitigating risks pertaining to inheritance when one shareholder is a natural person and the other is a corporate entity.
Minimum Share Capital:
New CCL is silent on this aspect
Liability Of Authorized Managers:
The liability of authorized managers is now almost equivalent to the liability of directors owning joint stock companies.
Conflicts Of Interest
The authorized managers should formally notify at shareholders' meetings of any conflict of interests they have in any transaction.
Related Party Loans:
New CCL fully prohibits a company from lending to its authorized managers and shareholders. Infact, such facility under the new ccl is deemed void and unenforceable and there is liability of loan recipient to compensate back the amount to the company.
Shareholder Information Rights:
Shareholders can request documents pertaining to the companies in which they held shares upto ten years back.
B. JOINT STOCK COMPANIES
1. minimum quorum for the board of directors' meetings is at 2/3rd of the board, and decision passed by an absolute majority.
2. Board's decision may be circulated in advance as draft minutes as well as ratified by the board.
3. person signing the minutes of the meeting shall be liable for the content of the minutes laid in there.
4. The statutory casting vote of the chairperson is dispensed with.
1. Shareholders singly or in concert with at least 10% of the share capital may call for a general meeting
2. Shareholders singly or in concert with at least 5% of the share capital may request the board of directors for inclusion of an item in the agenda of general meeting.
3. A person who is a proxy for more than one shareholder can attend the general meeting if the shareholder singly or in group holds more than 5%
C. Director Interests:
The company shall under the new CCL maintain a register of interests to record director(s) interests in any transactions
D. Dividend To Equity
The distribution of cash declared to shareholders may be partly converted into equity
E. Global Depositary Receipts (GDR):
The shares of joint stock companies may be converted into GDRs so that the investors outside the Sultanate of Oman may trade the equity of companies listed on the Muscat Stock Market.
Due the changes ushered by the new CCL, the companies have to adjust the articles of association and implement the new legal provisions and file the resolutions and other documents with Ministry of Commerce. Any failure to comply with the mandate may result in companies or authorized managers or directors being penalized.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.