Wednesday, June 25, 2008

The Oman Law Digest 2009 - BUSINESS ORGANISATIONS

AGENCY
Foreign natural or juridical persons must engage in commercial activities through a locally registered commercial agent in Oman. Accordingly, foreign manufacturers or suppliers who do not have legal presence in Oman must appoint a local agent to sell, promote or distribute a product or commodity or to provide service.

The relationship between the foreign principal and commercial agent in Oman is governed by Law of Commerce [RD 55/90] and Commercial Agencies Law [RD 26/77 as amended].

Law of Commercial Agencies defines commercial agency as an agreement whereby a foreign producer or supplier who has no legal presence in Oman assigns to one or more Omani natural or corporate persons the right to sell, promote or distribute a commodity or product or to provide service for profit or commission. The Law does not draw a distinction between commercial agent, representative, distributor or any other intermediary.

The agent may be a natural or juridical person. If the agent is a natural person, he must be an Omani national and resident of Oman; if a juridical entity, the Omani shareholding must be more than 51% and commercial agency must be stated as the business object of the agent. Following Oman’s accession to WTO, companies with up to 70% shareholding are permitted to be commercial agents. Agencies may be non-exclusive and more than one agent may be engaged by foreign principals.

An agency agreement must be in writing and registered with the Agency Registrar at the Ministry of Commerce and Industry (“MCI”) [MD 11/85 as amended]. Agreements signed abroad must be duly legalised by the Omani embassy. If the agency agreement is not in Arabic, a duly authenticated Arabic translation must be provided for registration of the agency. The approximate Government fee for agency registration is US $400 which includes the cost of registering the agency with the Ministry of Commerce and Industry and with the Oman Chamber of Commerce and Industry. Registration must be renewed every three years.

Except in respect of goods for the Ministry of Defence, a principal cannot sell products directly to a customer without involvement of an agent. A duly appointed agent is entitled to commission even if the principal has resorted to direct selling of products or services to customers in contravention of the law and the agency agreement.

Products manufactured abroad may be imported by customers without an intermediary or agent for private use which is not intended for a commercial purpose.