Monday, March 21, 2011

Company Formation FAQ’s

We frequently assist clients in the formation of Omani companies. Clients who are not accustomed to doing business in Oman tend to have quite a few questions regarding the company formation process, on everything from complex subjects like corporate governance to more mundane - but important – things like naming the Omani entity. From time to time we publish such ‘frequently asked questions in the Client Alert for the benefit of all of our readers.

What name should we give to our Omani company?

For many of the clients that we help to form an Omani corporate entity, one of their first questions is what name they should give to the new company. Many wish to include the word “Oman” in the name, as in “Acme Widget Company (Oman) LLC”. However, due to internal regulations of the Ministry of Commerce and Industry, an Omani company must have a minimum capitalization of 500,000 Omani Rials (approximately US$1,300,000) in order to carry “Oman” in its name. This is significantly higher than the 150,000 Omani Rials (approximately US$400,000) capitalization that is normally required for Omani companies with foreign ownership. As a result, many of our clients choose names for their Omani entitiy that reference the region rather than the country, such as “Acme Widget Company (Gulf) LLC” or “Acme Widget Company (Middle East) LLC”.

How long does it take to form an Omani company?

We normally estimate that it takes one to two weeks to set up an Omani company once all of the appropriate corporate paperwork has been arranged, although the formation process can sometimes take as little as a few days depending on the availability of government authorities. Careful planning is the key to maximizing the speed of the process and minimizing headaches, and professional advisors can play a helpful role in determining which documents are necessary and how to prepare and/or obtain them most efficiently.