OMAN: An Introduction to Corporate & Finance

Introduction

Oman’s corporate and finance laws include the Commercial Companies Law (RD 18/2019), Banking Law (RD 2/2025), and Securities Law (RD 46/2022), and regulate business operations, financial transactions and investments within the country. These laws aim to foster a transparent, secure business environment, promoting economic growth, investor confidence, and regulatory compliance, while aligning with international standards to attract both domestic and foreign investments.

In addition to the above, local regulators such as Central Bank of Oman (CBO), Financial Authority Services (FSA) and Ministry of Commerce, Industry and Investment Promotion (MOCIIP) have also issued various regulations and circulars including Executive Regulations MD 27/2021 and MD 146/2021) and the Code of Corporate Governance to regulate corporate entities and financial institutions in Oman.

Corporate Governance

The Commercial Companies Law of Oman, Executive Regulations and the Code of Corporate Governance provide a comprehensive framework for establishing, managing and dissolving business entities such as limited liability companies, joint-stock companies and partnerships. These laws have been introduced to enhance business practices, encourage transparency, accountability and ethical conduct within organisations. They outline principles for board composition, risk management and financial disclosures, urging companies to adopt best practices.

The FSA and the MOCIIP, which oversee Public Joint Stock Companies (SAOG) and Closed Joint Stock Companies (SAOC) respectively, have implemented mandatory corporate governance codes for these entities. These codes enforce stringent rules regarding management structures and board member appointments. For SAOG companies, it is mandatory for all board members to be non-executive, while at least one-third of the board members of SAOC companies must be non-executive. Both SAOG and SAOC companies are required to have independent board members to ensure an objective perspective and protect the interests of all key stakeholders. Additionally, the codes mandate the establishment of certain board committees to handle specific areas of responsibility, allowing for focused attention on critical issues, efficient task management, and the provision of detailed recommendations to the full board.

Regarding transparency, SAOG companies are required to ensure that board and executive management members provide necessary information to regulatory bodies (such as the FSA), shareholders, investors and other relevant parties in a timely and appropriate manner. This enables stakeholders to make informed decisions and fulfill their responsibilities effectively. Board members are accountable to shareholders, regulators and stakeholders. They are entrusted with both legal and ethical responsibilities, which demand a commitment to good governance, transparency, and the creation of long-term value for the company.

New Banking Law

Oman has introduced a new Banking Law which repeals the previous Banking Law (RD 114/2000). Along with the new Banking Law, a law promulgating the system of the CBO (Royal Decree 3 of 2025) has also been issued. The new Banking Law provides a comprehensive legal framework for the banking sector, which addresses the growing requirements of and developments in Oman’s financial sector.

Whilst the new Banking Law is generally aligned with the old Banking Law on matters such as licensing of domestic and foreign banks and other regulatory requirements applicable to licensed banks, the new Banking Law specifically addresses a range of issues that are progressively becoming integral to the banking industry in light of the ongoing growth and development within the Omani banking sector. By way of a quick overview the new Banking Law:

• envisages digital banks and further regulations which are expected to be issued by the CBO to provide a comprehensive framework for the establishment and operations of digital banks in Oman. Such developments in Oman have the potential to significantly boost the growth of the financial sector, fostering innovation by utilising technology and enhancing the country’s financial ecosystem in the process;
• envisages significantly more protection for customers of banks in line with principles of consumer protection and data protection, and banks are specifically required to provide services to customers with a high level of quality, transparency and fair treatment; and
• enhances the supervisory role and powers of the CBO by substantially increasing the potential penalties applicable for regulatory breaches. The Banking Law also provides the CBO the power to intervene and take preventive action against any bank that the CBO considers to be unsound/unsafe or which is otherwise in violation of the Banking law. Preventive action may include imposition of restrictions on operations, requiring additional reserves or paid-up capital, prohibiting distribution of profits, etc.

Digital Assets in Oman

In 2023, the FSA issued Decision No E/35/2023, which sets out the procedures for the registration of Virtual Asset Service Providers (VASPs) and establishes the requirements for combating money laundering/terrorism financing. The decision permits corporates as well as individuals to offer or engage in services related to virtual assets, provided they register as VASPs with the FSA. The activities permitted for registered VASPs include the exchange, management or transfers of virtual assets and fiat currencies. The FSA’s decision demonstrates that Oman is making significant strides in terms of developing a regulatory framework for digital assets designed to meet the growing demands of the financial sector.

Islamic Finance

Oman’s Islamic finance sector has experienced impressive growth and regulatory development, becoming a key player in the country’s financial landscape. In 2019, the Islamic banking sector ranked as the 15th largest globally, according to the CBO, demonstrating its significant expansion. The combined assets of Islamic banks and windows in Oman have reached around OMR7.5 billion, representing 17.7% of the country’s total banking sector assets. This growth has been driven by both rising public demand and a supportive regulatory environment.

The recent enactment of the new Banking Law is poised to further strengthen the Islamic finance industry by providing a detailed regulatory framework to help Islamic banks offer financing through established Islamic structures. Notably, Article 131 of the new Banking law specifically exempts Islamic banks from fees on transactions involving the ownership, rental or lease of real or movable property, which are central to Islamic finance products like Musharaka and Ijara.

Despite challenges such as the global oil price downturn between 2014 and 2016, followed by the economic impacts of the COVID-19 pandemic, Oman’s Islamic banking sector has continued to show consistent growth, outpacing the performance of conventional banking. This upward trajectory is expected to continue, reflecting the sector’s competitive drive to innovate and adapt in Oman’s evolving banking market.

Bonds and Sukuks

In March 2024, the FSA unveiled the new “Regulations Governing Bonds and Sukuks”, replacing the previous Sukuk Regulations (Decision No 3/2016). These new regulations oversee the issuance of bonds and sukuk within Oman, introducing provisions for green and sustainable securities. They apply to both public and private placements of debt securities but exclude government bonds and sukuk, as well as short-term bonds and sukuk issued by the CBO for monetary policy and liquidity management, provided their maturity does not exceed one year.

The new regulations represent a significant advancement in the development of Oman’s debt capital markets, aligning the country’s regulatory framework with international standards. They offer enhanced clarity regarding the processes and requirements for debt offerings, which is expected to stimulate activity within Oman’s debt markets and increase the attractiveness of securities issuances for both issuers and investors.

Building on the success of various domestic and international sukuk issuances by both the government and private sector, the new regulations are poised to make sukuk a regular financing tool for both public and private entities. As such, these regulations are expected to play a pivotal role in the expansion of the debt capital markets sector in Oman.

Conclusion 

The development of a comprehensive legislative and regulatory framework in Oman is a crucial step in streamlining the corporate and financial sectors, benefiting both domestic and foreign market participants, while also attracting additional foreign investment. Recent legislative advancements are the right step in this regard and are also aligned with regional trends observed in other Gulf Cooperation Council (GCC) countries, including the UAE, Kuwait, Saudi Arabia and Qatar.