Monday, August 21, 2017

Waqf in Oman

The ancient Islamic concept of waqf (plural ‘awqaf,’ meaning religious endowment) recently made headlines in Oman when, in April this year, Meethaq Islamic Banking announced that it would be collaborating with the Ministry of Awqaf and Religious Affairs (MARA) in support of the Organisation of Waqf, which was launched by MARA to encourage innovative uses of awqaf in the Sultanate.

A waqf is a charitable endowment that allows a person to donate property for the public good in the name of Allah. Typically, this is achieved by building mosques, schools or hospitals for the benefit of local communities in perpetuity. The Qur’an does not mention waqf explicitly, though it advocates charitable donations more broadly. The conceptual framework was set out in more detail later in the Hadith.

Waqf is frequently compared with the English charitable trust, with many speculating that the former inspired the latter by way of Crusaders who, during the 12th century, might have been exposed to the concept of waqf in Muslim territories and seen it as flexible device that could be used by both religious and state interests to fulfil a number of purposes.

A waqf is a contract, and it follows that the founder (called al-waqif or al-muhabbis in Arabic) must have the capacity to enter into a contract. A waqf is usually established by a written document, accompanied by a verbal declaration.

Waqf is a special form of disposal of property allowing its owner to freeze the property from subsequent transfer and transmission to others. This power of the owner is inalienable and cannot be rescinded by anyone, except in accordance with the conditions expressly provided for by the owner in the document creating the waqf.

There are several conditions that a waqf must satisfy, the most important of which is that the waqf is perpetual in nature. The subject matter of the waqf can be either movable or immovable, but its corpus must be preserved and remain inalienable.

The property used to establish a waqf must be the subject of a valid contract and should not already be in the public domain. Public property, therefore, cannot be used to form a waqf. Furthermore, the property should be free from any encumbrance.

As explained above, the main characteristic of a waqf is that it should be perpetual. In order to comply with this requirement, the waqf must be maintained at all times. Accordingly, part of the income of the waqf is necessarily spent on its maintenance, renewal and development.

Both natural and legal persons can be beneficiaries of a waqf. However, a waqf cannot be created for the benefit of the founder himself, or for an immoral or sinful purpose. The beneficiaries of the waqf can be specified by the founder.

Waqf institutions earn returns by depositing the income generated from the waqf with Islamic financial institutions. Any further returns so generated are then spent on charitable purposes.
Mazin bin Ghadouba, one of the followers of the prophet Muhammad, is credited with having built the Al-Midmar Mosque - the first mosque in Oman - in approximately 627 A.D. At the time, waqf was limited to building and renovating mosques. Later, Omanis extended the ambit of waqf to helping the poor, and for other charitable purposes.

Now there are over thirteen types of waqf in Oman, including those for mosques, education, Qur’an schools, and the maintenance of graves. Until relatively recently, awqaf were managed by imams. In 1950, the father of the present Sultan, Sultan Said Bin Taimur, established an institution dedicated to the management of awqaf, which in 1997 evolved into the present-day Ministry of Awqaf and Religious Affairs.

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Monday, August 14, 2017

Recent Improvements in the Public Transport Sector in Oman

The Sultanate of Oman has recently seen a shift in public transport methods towards more convenient and accessible means of short-distance travel. Previously, the main forms of public transport available to individuals were the conventional orange and white (or “street”) taxis used for short to medium distances, and Oman National Transport Company (“ONTC”) buses for long-distance journeys.

While the ONTC buses were adequate for long-distance travel, the options for short-distance transport seemed relatively outdated when compared to neighboring countries. Taxis were not required to use a meter unless operating from the airport (as required by Ministerial Decision 34/1998), and commuters were subject to varying and unpredictable pricing. However, in the past year, the ONTC has been rebranded and restructured as Mwasalat, and Marhaba Taxi has begun operations in Oman. These developments have improved and modernized the transport system, and have resulted in an uptick in consumer use.

The rebranding of ONTC to Mwasalat has been hailed as major development, as the company introduced new buses with modern features and operational protocols. Mwasalat has also been granted a licence by Ministry of Transport and Communications (the “MOTC”) to start operating taxis from airports and malls which, in turn, will provide tourists and citizens alike with comfort, ease of mind and modern means of transport.

The commencement of the operations of Marhaba Taxi in Oman has also led to better public transport services, as individuals may now use their smart phones to book taxis in a convenient and safe manner. Marhaba Taxi has also been provided with a licence to operate from Sultan Qaboos Port and hotels, which should lead to better services in general to and from the main hubs used by residents and tourists alike.

It is important to note that the licences given to Mwasalat and Marhaba Taxi have been granted to manage the services in those specific areas, and not to completely replace the current street taxis operating in those areas. In turn, street taxis will not be permitted to offer their services in the specific areas assigned to the two companies, unless they are working under the relevant licensed company. MOTC has urged all taxi owners operating near these specific area to join either Marhaba Taxi or Mwasalat accordingly in order to be permitted to operate therein. Street taxis not operating in these designated locations remain subject to their current regulatory scheme, though the MOTC is expected to issue revised regulations in the near future.

With the implementation of these regulations and the issuance of the above-mentioned licences, MOTC has contributed significantly to the development of the public transport sector in Oman, establishing new services while retaining the services of the conventional orange and white taxi drivers. Moreover, MOTC has been able to provide much-needed security, efficiency and technology in this area as requested and required by the general public. MOTC has also recently provided official and approved tariffs for transport, which could lead the way to implementing a metering system for street taxis as well. MOTC has also sought to provide better training of taxi drivers, particularly with regard to safety and security protocols.

The revamped transport sector in Oman is expected to contribute greatly towards the development of various other sectors, including tourism, whilst also spurring job creation. It is important to keep in mind that taxi drivers must be Omani citizens, thereby contributing to Omanisation and in-country value.

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Monday, August 7, 2017

Protecting Personal Data and Individual Employee Privacy in Oman

While there are no specific Omani laws that explicitly protect the privacy and personal data of employees, there are general laws that govern an employer’s conduct with respect to an employee’s privacy. A summary of the laws that govern privacy and personal data protection of individuals is set out below.

The Basic Law, issued by Royal Decree 101/1996, provides for the individual’s right to privacy in communication.  Article 30 of the Basic Law prohibits any interference with or monitoring of an individual’s telephone calls or written correspondence and guarantees the confidentiality of their contents, except in certain circumstances. It is therefore generally not permitted for an employer at the workplace to impinge upon an employee’s privacy by making a recording without permission, confiscating an employee’s details or revealing confidential information about the employee to a third party. 

Individual privacy is also protected in the Penal Procedure Law promulgated by Royal Decree 97/1999, as amended (“CPL”). Article 90 of the CPL provides that correspondence and cables may not be confiscated or perused; newspapers, publications and parcels may not be confiscated; conversations taking place in private may not be recorded; telephone conversations may not be tapped; and dialogue may not be recorded without the permission of the Public Prosecutor of Oman. The permission specified in Article 90 of the CPL may only be issued by the Public Prosecutor, who would only permit audio or video recording of an individual if there is sufficient evidence of a an offence or misdemeanor punishable by imprisonment for a period exceeding three months. Once granted, the permission is valid for a renewable period not exceeding 30 days, during which the audio or video evidence must be obtained.

In general, the courts of Oman are very protective of employees’ interests.  In practice, therefore, the employer would need to have a compelling reason to obtain permission from the Public Prosecutor and violate an employee’s privacy using one of the methods described above.

Exceptions to the presumption of privacy
Royal Decree 69/2008, enacting the Law of Electronic Transactions (the “ETL”), applies to parties who have agreed to perform their transactions electronically and safeguards the confidentiality of information or data contained in such transactions.

The ETL allows for exceptional circumstances in which personal data may be disclosed (i.e., allowing access to electronic communications and the disclosure of their contents to third parties). According to Article 43 of the ETL, obtaining, disclosing, providing or processing of personal particulars or data shall be lawful in the following cases:

• If such information is necessary for preventing a crime or detecting a crime pursuant to an official request by the enquiring authority;

• If such particulars were required or authorised by any law, or if the collection of such particulars occurred pursuant to a court order;

• If such particulars were necessary for the assessment of any tax or fees; and

• If the processing of such particulars was necessary for the safeguarding of vital interests of the person about whom such particulars were being collected.

Penalties for breaching an employee’s privacy
The CPL sets out penalties for those who violate an individual’s privacy. Article 276 of the CPL provides that any person who illegally observes or collects information or data, violates another’s privacy or their right to protect their secrets, or reuses collected information and data shall be punished by imprisonment for a period of not less than three months and not more than two years, by a fine of OMR 100-500, or both.
The Cyber Crime Law, promulgated by the Royal Decree 12/2011, also sets out certain penalties for breaching an individual’s privacy, which include:

(a) Imprisonment for a period of not less than one month and not exceeding one year and/or a fine of not less than OMR 500 and not exceeding OMR 2,000 is applied to any person who uses information technology tools to obstruct or intercept the flow of data or electronic information transmitted by way of information technology.

(b) Imprisonment for a period not less than one year and not exceeding three years and/or a fine of not less than OMR 1,000 and not exceeding OMR 5,000 is applied to any person who uses information technology tools (such as camera phones) to photograph or record individuals without their permission; who disseminates such information, even if it is true; or who uses such information towards slander and defamation.

Conclusion
Taken as a whole, Omani law protects individual privacy, especially that of employees. Employers are prohibited from monitoring or recording their employees, and may only obtain permission to do so from the Public Prosecutor under stringent circumstances.  Employees and private individuals have a reasonable expectation that, if they are photographed or recorded without permission, they will have recourse in the law.

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Tuesday, August 1, 2017

2017: The Year of IPOs for Insurance Companies in Oman

In the Sultanate of Oman, the insurance sector is supervised by the Capital Market Authority and primarily regulated by the Insurance Companies Law promulgated by Royal Decree 12/1979 as amended. The Insurance Companies Law was extensively amended by Royal Decree 39/2014 (the “Royal Decree”), which introduced a new regulatory framework for insurance companies in Oman. We reported on the main features introduced by the Royal Decree in a previous article published in October 2014.

The first two amendments to the Insurance Companies Law set out in the Royal Decree read as follows:

Article (2/1/A)
It shall be a public joint stock company established in accordance with the Commercial Companies Law to conduct insurance business.

Article (3/2/B)
The applicant has to prove that the paid up capital is not less than RO 10,000,000 (Rial Omani ten million).

The most important requirement introduced by the Royal Decree is that, with the exception of foreign insurance companies continuing to operate in Oman as branches, all insurance companies must be incorporated as public joint stock companies.

Under the Royal Decree, these requirements applied immediately to the establishment of new insurance companies, meaning that any new insurance company wishing to set up in Oman following the Royal Decree was required to be incorporated as a public joint stock company with a paid-up share capital of no less than OMR 10 million. However, insurance companies already existing at the time of issue of the Royal Decree were granted a period of three years to meet the new requirements by (a) converting to public joint stock companies by way of an initial public offering (“IPO”); and/or (b) increasing their share capital to OMR 10 million.

This grace period expires in August 2017, and the majority of the eleven locally incorporated insurance companies are now in the process of complying with the new regulations. A number of IPOs are either already open for subscription or envisaged to be within the next few weeks.


With respect to the divestment required, the standard rule for IPOs as set out in the Commercial Companies Law is that the founders must divest and offer to the public at least a 40% stake. However, with reference to the public offerings statutorily imposed upon insurance companies by the Royal Decree, a different tendency emerged.

As regulator of the joint stock companies registered in Oman, the Capital Market Authority has the power to grant exceptions to the rule relating to the statutory minimum divestment required in connection with an IPO. It appears that several insurance companies, while planning their respective IPOs to comply with the Royal Decree, approached the regulator to request such an exemption. Consequently, the Capital Market Authority made a public announcement stating that, in principle, it will grant an exemption to all insurance companies that make a request and that such exemption will specifically allow the divestment of a stake of only 25%. From a review of the actual terms of the now current public offerings, it appears that most companies requested this exemption and are divesting a 25% stake as opposed to the standard 40%.

With respect to capital requirements for insurance companies, the Royal Decree raised the minimum capital from OMR 5 million ($13 million) to OMR 10 million ($26 million). This increase was in addition to 2011 legislation that increased the minimum capital tenfold from OMR 500,000 ($1.3 million) to OMR 5 million ($13 million).

At the time the Royal Decree was issued, the aim of the regulator was to encourage consolidation through mergers in a relatively crowded market and to guarantee adequate capitalisation of insurance companies. Some mergers have indeed been finalised, and the number of small players in the market was marginally reduced as recently reported by Sheikh Abdullah bin Salim Al Salmi, Executive President of the Capital Market Authority. At the same time, the IPOs currently open for subscription are reporting satisfactory results.  

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