Agency/distributorship agreements in Oman are governed by Law of Commercial Agencies promulgated by RD 26/77 and the amendments thereto (“CAL”) contained in RD 73/96, RD 66/2005, and RD 34/2014.
Article 1 of CAL defines a Commercial Agency as “any agreement whereby a manufacturer or supplier outside Oman assigns one or more merchants or commercial companies in Oman to sell, promote or distribute goods and products or supply services whether in his capacity as an agent, representative or intermediary for the product of the original supplier who has no legal presence in Oman, against a profit or commission.”
Omani companies intending to act as agents of a foreign principal must be established under Omani law and they must have in their objects the right to import, trade and undertake commercial agency business. Such companies must be based in Oman and the minimum shareholding of an Omani national in a company undertaking agency business in Oman remains at 51%, as per the CAL. The MOCI, as a matter of policy, has commenced also allowing Omani companies with foreign shareholding of up to 70% to be permitted to act as agents in Oman for a foreign principal.
Registration of Agency Agreement
Article 11 of CAL sets out the procedures required to be completed for registration of an agency/distributorship agreement with the Commercial Agencies Department (“CAD”) at the MOCI. The conditions for registration of a commercial agency are as follows:
- Any person intending to act as a commercial agent in Oman must first complete the registration of his agency in the Register of Agents and Commercial Agencies before proceeding to act as a commercial agent. The MOCI has developed standardized forms to be completed and submitted for registration of an agency agreement with the MOCI
- The agency will only be deemed to have come into existence from the date of its registration in accordance with the provisions of the CAL. Any agency which is not registered will not be recognized as a matter of Omani law and no case concerning the same may be entertained by the Omani courts