We are often asked to advise on the restrictions on foreign entities marketing and promoting financial services in Oman. Below we set out the position with respect to marketing in three key areas.
Banking services
Under article 52 of the Banking Law, promulgated by Sultani Decree 114/2000, as amended (the “Banking Law”):
“No person shall engage in banking business in the Sultanate as either a domestic or foreign bank, or practice any other banking activity whatsoever, unless such a person has been granted a licence by the Central Bank…”
However, article 50 of the Banking Law provides that:
“… a foreign bank may use its name and publicize its business activities if such use and publicity clearly establish that such foreign bank does not engage in the banking business within the Sultanate.”
To the extent that a foreign bank’s contact with customers is restricted to servicing their accounts in the country where the bank is registered, or in the bank’s overseas branches or offices, this should not constitute a violation of Omani law.
When offering the foreign bank’s services or products to customers, so long as the bank makes clear to customers that it is not offering such products and/or services in Oman, this should not constitute a breach of Omani law.
Insurance
Insurance in Oman is regulated by Insurance Companies Law promulgated by Sultani Decree 12/1979, as amended (the “Insurance Law”).
Except for the provision of life insurance to non-Omanis, the Insurance Law prohibits insurance contracts with foreign companies which are not commercially registered in Oman.
Therefore, a foreign entity may promote life insurance policies provided by third parties to nonresident expatriates in Oman. However, the entity may only promote third-party insurance products (other than life insurance) to non-resident expatriates in Oman if those policies do not cover risks that (a) are situated in Oman; (b) originate in Oman; or (c) are connected with property in Oman.
If such third-party insurance products (other than life insurance) cover risks that (a) are situated in Oman; (b) originate in Oman; or (c) are connected with property in Oman, then they may be offered or provided only by entities licensed to offer such products in Oman.
Securities
The main legislation that governs all forms of marketing and sale of foreign securities in Oman is the Capital Markets Law promulgated by Sultani Decree 80/1998 (the “CMAL”) and the Executive Regulations of the Capital Markets Law Decision 1/2009 (the “Executive Regulations”).
“Securities” are defined in the CMAL as “shares and bonds issued by joint stock companies and the bonds issued by the Government and its Public Authorities, treasury bonds and bills and other securities negotiable in the Market.” Despite the apparent restricted scope of this definition, the Capital Markets Authority (the “CMA”) in practice regulates any kind of investment product that is offered or marketed in Oman.
Article 117 of the Executive Regulations contains a general restriction on the offering and marketing of non-Omani securities within Oman without the approval of the CMA.
In our opinion, the marketing of mutual funds without the approval of the CMA would be a violation of Omani law.
Conclusion
In conclusion, a foreign bank may contact its customers in Oman to service their accounts and to offer products and services as long as in doing so it makes clear that the bank does not conduct any banking business in Oman.
A foreign entity may promote third-party insurance policies (other than life insurance) to non-resident expatriates, provided it does not cover risks that (a) are situated in Oman; (b) originate in Oman; or (c) are connected with property in Oman.
The marketing of mutual funds is not permissible without the approval of the CMA.
