On Monday, October 7th, the OABC and members of the greater business community in Oman gathered together to hold a tax and legal seminar, in partnership with EY Oman and Clyde & Co at the Grand Hyatt Muscat. The experts discussed new laws that were issued over the summer, which were designed to promote business in Oman. These include the five Royal Decrees on Privatization, Bankruptcy, Foreign Capital Investment, Partnership Between Public and Private Sectors and additional amendments to the tax laws.
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We were at the W Hotel on October 14th, 2019, for a seminar on the Free Trade Agreement, in partnership with the US Embassy and the Oman Chamber of Commerce and Industry. Ambassador Marc J. Sievers and HE Qais from Chamber of Commerce along with three OABC Members spoke about their experiences with the U.S.-Oman Free Trade Agreement.
OABC Premium Member Asha Enterprises has graciously invited OABC’s Premium Members to dine at Mumtaz Mahal on October 9th to launch of the restaurant’s new Street Eats menu. The tapas-style menu was highlighted briefly by Chef Tryon and Manager Henry, and raffles, delicious food, and networking followed on the outdoor terrace.
Presented by the Oman American Business Center (AmCham Oman), in partnership with the U.S. Commercial Service and U.S. Embassy
The Oman American Business Center (AmCham Oman), the U.S.
Commercial Service, and the U.S. Embassy are pleased to announce the launch of the fifth
annual Discover America campaign in Oman. The regional campaign will first launch in
Oman from October 11 to October 19, then subsequently launch in the U.A.E., Qatar,
Bahrain, and Kuwait. The campaign will feature a series of trade promotion events that
celebrate strong U.S.-Omani economic ties and showcase American businesses, technology,
food, music, and film.
This year is especially significant because it marks the ten-year anniversary of the U.S.-
Oman Free Trade Agreement (FTA), which has helped Oman more than double its exports
to the U.S. and conversely, helped lower the price of and increase access to U.S. imports in
Oman. In 2018, the FTA helped generate more than $4 billion in trade between the two
countries. The weeklong series of events kicks off on October 11 when the U.S. Air Forces Central
Command Band will perform American jazz and pop music at the Hormuz Grand Muscat
hotel and City Centre Muscat mall. To showcase American foods and products, Lulu
Hypermarkets and U.S.-branded retails stores such as Starbucks and Bath & Body Works
will offer special promotions and discounts from October 13 to October 19.
Shifting gears to trade and investment, on October 14, the Oman Chamber of Commerce and Industry
(OCCI) will host a seminar focused on utilizing the FTA. With technology playing a
prominent role in accelerating global economic development, Microsoft executives will
discuss the flagship U.S. company’s new cloud-based services in Oman, as part of a “Tech
Talk” series hosted by the AmCham Oman on October 15. AmCham Oman will also be
hosting on the same day a U.S. franchise consultant who can provide advice and
connections to investors interested in establishing a U.S franchise in Oman. The campaign
concludes with a screening of an award-winning documentary film “America’s Musical
Journey,” as narrated by Morgan Freeman, at VOX Cinema on October 16.
Throughout the week, the U.S. Embassy team, including U.S. Ambassador to Oman Marc J.
Sievers, will attend events and visit various U.S. retail outlets that are promoting the U.S.
products and brands. “The Discover America campaign provides Omanis and expat
residents an opportunity to enjoy a slice of American life and is a prime example of how
public-private partnerships can have a positive impact on strengthening our bilateral economic relationship.
The campaign was initiated as a fun and innovative way to bring
our two peoples closer together and, at the same time, to help Omanis see the increasing
interest American companies have in contributing to Oman’s future.” said Ambassador
Sievers.
AmCham Oman Executive Director Rebecca Olson also stated, “The Oman American
Business Center (AmCham Oman) is proud to support Discover America each year, and
together with the U.S. Embassy in Muscat, we take great pride in highlighting U.S.
companies, brands, technology, and business, as the official affiliate of the U.S. Chamber of
Commerce in Oman. We look forward to a week of interesting and informative events for
the public and to highlighting unique flavors, sights, and sounds of the U.S.A.”
This year’s Discover America partners include Oman American Business Center (AmCham
Oman), U.S. Commercial Service, U.S. Embassy Muscat, BrandUSA, Oman Chamber of
Commerce and Industry, Microsoft, Lulu Hypermarket, City Centre Muscat, Muscat Daily,
Apex Media, Hormuz Grand Muscat, Grand Hyatt, VOX Cinemas, and OUA.
For additional information, please visit:
• Oman American Business Center (AmCham Oman): https://oabc.org/
• U.S. Commercial Service: https://2016.export.gov/discoveramerica/
• U.S. Embassy: https://om.usembassy.gov/
The Oman American Business Center kicked off a full fall lineup of networking and informational events for Muscat’s business community, starting with Cosmic Bowling at the Kempinski Hotel Muscat in early September. Over 70 executives from dozens of companies in Oman enjoyed friendly competition and opportunities to connect with each other and discuss business while participating in a unique activity.
| On Tuesday September 17, 2017, Rebecca Olson, Executive Director of OABC; Marla Valdez, Partner, Clyde and Co and OABC Board Member; and Sami Nusair, Country Manager for Saba IP, Corporate Member of OABC met over lunch with Mr. Vishal Amin, the Intellectual Property Enforcement Coordinator at the Executive Office of the President of the United States.
OABC members explained to the guest and his accompanying delegation of six other DC-based political and trade representatives, about the provisions of Omani legislations which grant protection for the intellectual property right holders, local authorities concerned and related procedures. The members also briefly updated the delegation about Oman efforts to attract investment, in order to create a streamlined and favorable regulatory environment for business. OABC would like to thank Andy Barwig and United States Embassy in Muscat for the generous and kind invitation to discuss these matters. |
Interest in Corporate Governance has increased markedly in the past decades with headline-grabbing scandals such as WorldCom and Enron and more recently the subprime mortgage crisis of 2008. One of the recurring themes in these cases was the failure of corporate governance. Lack of corporate governance can lead to bankruptcy, fines, or even worse a lengthy jail sentence. Committed to strong corporate governance principles and in an effort to continue to comply with international standards, the Sultanate of Oman has seen major changes to its legal framework in 2019, which include a New Commercial Companies Law (hereinafter the “New Law”). Not only are these laws designed to promote business in the Sultanate, but they are also in line with Oman’s Vision 2040. One of the key pillars of Vision 2040 is Governance, which will lead to greater transparency, accountability, consumer confidence, and foreign investment. As such, this article will highlight some of the key changes to the Commercial Companies Law with respect to Corporate Governance.
New Commercial Companies Law & Corporate Governance
The New Law seeks to build on a tradition that already embraces robust Corporate Governance Principles as indicated in the Code of Corporate Governance for Public Listed Companies (hereinafter “the Code”) 2015, Ministerial Decision 92/2003 regarding Closed Joint Stock Companies, as well as the Royal Decree 4/1974. As such, there are several new articles and amendments that specifically apply to the Board of Directors, Executive Management, and Minority Shareholders:
- Board Composition: Article 179 of the New Law states that Board of Directors must now represent odd numbers: 5, 7, 9, or 11 directors for a publicly listed companies and 3, 5, 7, 9, or 11 directors for closed joint stock companies. The theory is that it will provide greater decision making efficiency.
- Corporate Governance for Companies Owned or Partially Owned by the Government: Article 20 is a new article which states that, the Capital Markets Authority (hereinafter the CMA) “shall draw up governance regulatory principles which must be complied with by public joint stock companies and companies in which the Government owns shares.” Joint stock companies are already subject to the Code, however the new article indicates both public joint stock companies and companies. As such, there will be additional regulatory principles for companies where the government owns shares. It is expected that the Code will clarify these points such as the interpretation of what it means by the term companies. Also, clarification is needed to clearly state the percentage of government shares that will make companies subject to Article 20.
- Notifications and Disclosures: Article 205 is a new article that places additional duties on the Board of Directors and the Executive Management, which requires them “to notify the company in writing of the interests he/she has with the company and securities held by him/her therein, within 5 days…from gaining the membership or appointment.” Please note that this is an-ongoing duty and notification. Article 197 is also a new article which allows the general meeting to determine remuneration for the Board of Directors and any privileges in this capacity or any other capacity must be disclosed. Please note that this is an on-going disclosure. Under the old law remuneration was capped for the Board of Directors and it is anticipated that the Executive Regulations will provide further insight as to whether this will apply under the New Law.
- Increase in Minority Shareholder Rights: Article 165 of the New Law states that “any proposal submitted by a shareholder that represents 5% of the capital shall be included in the agenda of the general meeting.” The old law granted similar rights, but it applied to shareholders that represented 10% of the capital. Expansion of minority shareholder rights is also discussed in Article 164 whereby shareholders holding at least 10% (25% under the old law) can demand the Board of Directors to convene a general meeting. Here, the New Law seeks to expand the voice of the minority shareholder and provide a system of accountability.
- Conversion of Holding Company Structure to a Joint Stock Company and Establishment of a Board of Directors: Article 227 states that, “a holding company is a joint stock company…” As such, all Holding Companies structured as limited liability companies (hereinafter LLC) must convert to a joint stock company and establish a Board of Directors. Many LLCs were owned by family members as shareholders, which could create issues when forming a board and complying with the above-mentioned Corporate Governance laws.
- Liability of the Board of Directors: Article 161 is a new article that states in pertinent part, “any acts performed by…the Board of Directors, one of its committees, or the executive management shall be binding on the company.” Here, the law seeks to impose a higher degree of responsibility on the decision makers within the company.
- Increased Penalties and Jail Time: Article 306 is a new article that provides an increase in jail time for a period of 1 to 3 years and with a fine ranging from 10,000 Omani riyals to 50,000 thousand Omani riyals for various acts committed by the Board of Directors, auditors, and Executive Management including, but not limited to fraud, falsification of records, forgery, and using the company’s assets for personal gain.
The New Law also expands the role of the CMA in the field of corporate governance, which will be discussed in future articles. It is clear that the New Law provides additional checks and balances among the various stakeholders including the Board of Directors, Executive Management, minority shareholders, and the CMA. As such, this will lead to greater responsibility and accountability within the realm of Corporate Governance. Please be advised that the aforementioned is not legal advice and is not an exhaustive list of the changes to the new law.
The Role of a Corporate Lawyer with respect to Corporate Governance
Each company is unique and therefore we provide tailored advice to meet your company’s needs including the following:
- Board structure and composition that is legally compliant and fits your strategic needs;
- Counseling on conflict of interest and related party transactions;
- Vetting, elections, remuneration, and succession planning;
- Keeping Executive Management and Board of Directors up-to-date on evolving and best practices for corporate governance, including review and updating Articles of Association and related documents.
- And, much more…
About the Author
C. Ann Whalen, Esq. is a Corporate Lawyer & Head of Global Business Development at Rajab Al-Kathiri & Associates. A native of the United States and qualified to practice law in the State of New York, Ms. Whalen brings close to a decade of legal experience from New York City, the GCC, and Singaporean markets. A proud recipient of Fulbright and Boren Fellowships, Ms. Whalen has been in Oman since 2015 and is enjoying using her Arabic to write legal opinions and to train the next generation of Omani lawyers. Ms. Whalen will be publishing a similar article in Arabic on the OABC website in the coming weeks.
Rajab Al-Kathiri & Associates is a full-service law firm located in the center of Muscat at the Jasmine Complex with a branch in Sohar. Rajab Al-Kathiri opened its doors more than thirty years ago and today has more than twenty-five members on its legal team. Rajab Al-Kathiri & Associates has teams dedicated to Litigation, Corporate, and Alternative Dispute Resolution. For inquiries as to how the firm can advise your company, please contact Ms. Whalen at cwhalen@rajbasso.com.
After Oman and the US announced a new scheme which allows the citizens of both the countries to get ten-year multiple-entry visas replacing the earlier system where the visas were valid for only two years, Omanis and Americans alike have welcomed the decision saying it will further boost trade relations and open up more opportunities between the two countries.
While Omanis have been getting ten-year visas since January this year, US citizens started getting the same from last week onwards. In remarks to Muscat Daily, Rebecca Olson, executive director Oman American Business Center (OABC), said, “As the international affiliate of the US Chamber of Commerce in Oman, the Oman American Business Center is pleased with this move to further facilitate trade and commercial development between the US and the sultanate.
“Many of our members often travel back and forth and this will make things easier for all. There are still many opportunities for those who wish to take advantage of the US-Oman Free Trade Agreement, which will continue to benefit both nations after this ten-year mark.”
As Oman’s free trade agreement with the US marks ten years, the move is a complementary step towards good relations.
Talal al Subhi, executive director of Rohn Products International Arabia, said, “The new system will obviously bring more businesses between both the countries. It is a good move because before we used to get visas every two years but now we will do so once in ten years.”
However, Subhi informed that even though the visa is issued and valid for ten years, entry to the US is not fully guaranteed as a few questions will be asked at immigration there.
“First-timers need to understand that entry is not guaranteed even if they have visas and the entry is subject to the approval of immigration officers at the port of entry who will ask a few questions,” he said.
Subhi and his American partners in tower manufacturing plant in Sohar have suggested that Oman Air should start direct flights to the US.
“Oman Air should consider starting direct flights to two or three cities in the US and this will boost further the businesses between both countries. And by having direct Oman Air flights, this means there would be counters to cater to the vetting of travelers from Oman and in case of anything, they would be informed before departing to the US,” he said.
Rhon is one of the American Omani partnership companies and has set up 10,000 towers. It has also constructed the tallest tower in Oman at a height of 279m.
Marla Valdez, an American lawyer based in Oman, said, “I believe this new ten-year visa extension is a significant milestone in the longstanding relationship between the US and Oman and a development that should further extend the bilateral cooperation at many levels.”
She added, “As a board member of the Oman American Business Center, as well as being both a US citizen and an Oman resident, I obviously feel very proud of this achievement. I am confident that it will encourage tourism and business between the two countries, and that it will lead to other positive measures going forward.”
Mundhir al Alawi, who fell in love with American donuts during his studies in the US, and later founded 3rd Street Donuts in Muscat, said, “I travel to the US three times a year and this move is great and our travels to the US are now hassle-free. The move will enhance many other business opportunities. It will be a complement to the free trade agreement with the US.”
Following completion of a study conducted by the Omani Ministry of Health and an international insurance company, the Council of Ministers of the Sultanate of Oman issued its decision number 26/2017 and tasked the Capital Market Authority of Oman (the “CMA”) to prepare and implement a compulsory unified medical insurance scheme regulation to govern the medical insurance granted to all private sector employees in Oman. In implementation of the aforementioned decision, the CMA issued the Unified Health Insurance Policy (the “UHIP”) on 24 March 2019 by virtue of its decision no. 34/2019.
The CMA provided that the new insurance scheme will emphasise on the fairness of the insurance clause for all parties involved in the insurance process, and ensure that the insurance premium will not cause additional burden or expensive financial cost on the employers through the limitation of the insurance companies’ profit margins; thus making the scheme more affordable for a wider base of employers. In this respect, Moody’s stated that due to the possible limitation of insurers’ profit margins, it is likely that, following implementation of the compulsory health insurance scheme, a number of such insurers may lose high profit margin business opportunities.
The UHIP constitutes part of the mandatory health insurance plans being rolled out by the government of Oman for private sector workers in Oman, and will be governed by and subjected to special regulations the preparation of which is currently being undertaken by the CMA. It is not yet clear what impact will the implementation of the new health insurance scheme have on existing private insurance schemes that offer benefits higher than those provided under such a new scheme, however it is possible that a downsizing of the insurance benefits would be interpreted as amendment to employment agreements which employers will not be able to implement without obtaining their employees’ approval. The situation will become clearer following issuance of the regulations governing the UHIP, which is expected to take place this year.
The article has been prepared by Al Busaidy, Mansoor Jamal & Co.
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