Counterpart Clauses

Counterpart clauses are often used when the parties to an agreement are executing separate copies of that agreement. They are primarily used:

in large transactions involving multiple parties where not all the parties will be physically present at the signing and therefore there will be no single agreement that contains all the signatures of the signing parties;

in transactions involving the sale of property where the parties exchange signature pages (normally through their property lawyer) and keep only the signature page received from the other party; and

in any other transaction where circumstances prevent a single copy of an agreement being signed by all parties to it on the signing date.

A counterpart clause would typically read something like “This agreement may be executed in any number of counterparts, each of which when executed and delivered shall constitute a duplicate original, but all counterparts together shall constitute a single agreement”.

The absence of a counterpart clause does not of itself invalidate an agreement that the parties execute by separate counterparts. A counterpart clause may however help to prevent a party from claiming that an agreement is not binding because there is no single copy of it that is signed by all the parties or because they did not know that they were entering into a binding contract by signing an agreement not signed by the other parties to it.

Counterpart clauses are also useful where the parties to an agreement want to be sure that each copy of it is recognised as an original. Parties often require more than one original copy of an agreement for tax, regulatory or other administrative purposes. Technically, where all the parties execute a number of copies of the same document, the copies are duplicates rather than counterparts and accordingly, some lawyers also refer to duplicates in the counterparts clause.

A counterparts clause may be omitted where:

all the parties are present at a signing where each party will sign as many original copies of the agreement as required, i.e., they will execute in duplicate.

original copies of the agreement are to be signed at different times by the parties, for example, all original copies will be sent to each party for signature in succession, with the agreement to be dated and take effect on the date of the last signature; and

only one original copy of the agreement is required and certified copies are made and distributed to all parties to the agreement.

For more information, check out our December 2017 post on Counterparts Clauses and Virtual Signing.

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Curtis Helps Omani Companies with Foreign Shareholdings Win Landmark Tax Judgment in Oman Supreme Court

Muscat, February 22, 2012 – Lawyers from Curtis, Mallet-Prevost, Colt & Mosle LLP helped two Oman-based clients of the firm win an important tax judgment handed down this week by Oman’s Supreme Court.

The Court decided in favour of the two Curtis clients, who were represented by James Harbridge and Kamilia Al Busaidy, that Omani companies who have shareholdings in companies outside Oman should not have to pay tax on dividends received between the inclusive period of 2002 through 2004, the years being considered in the matter.


“The issue was hugely important for our clients, one of which is a multi-national oil and gas entity and the other concentrating in the cement business,” said Mr. Harbridge, partner in the Curtis Muscat office. “The result highlights Curtis’ perseverance on our clients’ behalf.”

This decision overturned earlier decisions of the Omani Primary and Appeal Courts in 2010 that these overseas dividends were taxable, pursuant to a 2004 Supreme Court judgment. It is expected that the written Supreme Court judgment will make it clear that the ruling also applies to the tax years immediately prior and after: 2000, 2001 and 2005-2009 inclusive.

The favourable Supreme Court judgments therefore imply that tax payers who have received overseas dividends during the applicable years should not be taxed on this income, if they have already disputed the charges or if their assessments are yet to be completed. They are deemed to have accepted their tax liability if they have already paid tax in these respective years.

Following the judgment, dividends paid in the applicable years to any Omani company on shareholdings in foreign companies will no longer be viewed as taxable income.

Curtis, Mallet-Prevost, Colt & Mosle LLP is a leading international law firm providing a broad range or services to clients around the world. Curtis has 15 offices in the United States, the Middle East, Europe, Central Asia, and Latin America. The firm’s international orientation has been a hallmark of its practice for nearly two centuries. For more information about Curtis, please visit www.curtis.com or follow Curtis on Twitter (twitter.com/curtislawfirm) and Facebook.com/Curtis.Careers).

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Types of Loan Agreements: Revolving Credit Facilities

Finally this month we consider revolving credit facilities. In many ways, a revolving credit facility shares features of both a term loan and an overdraft which have both been discussed in previous issues.

Common features of revolving credit facilities

A revolving credit agreement is similar to a term loan because it is usually a committed facility that provides a maximum amount of capital over an agreed period. (A committed facility is one that once the facility agreement has been executed, the lender is under an obligation to advance money when requested by the borrower, subject to compliance with certain pre-agreed conditions by the borrower.)

However, it is also similar to an overdraft because the distinguishing feature of a revolving credit facility is that the availability period extends for almost the entire life of the loan (except at the end when the final tranches need to be repaid). This means that the borrower may draw and repay tranches of the available funds whenever it chooses throughout the life (or “term” as it is commonly known) of the loan.

The revolving element of the loan facility is reflected in the fact that the borrower may take a tranche for an interest period and at the end of that interest period decide whether to repay that tranche or "roll over" into the next interest period, provided that an event of default has not occurred and is continuing.

Further funds can be drawn down at any time with interest periods running in parallel. As with term loans, the borrower must give the lender a drawdown notice and the borrower must specify its chosen interest period. Interest periods are usually 3 or 6 months long.

Revolving facilities tend to be used if a borrower requires a substantial advance but gives the borrower greater flexibility than if it used a term loan.

Advantages of a revolving facility

A revolving facility is usually a committed facility but its advantage from the borrower’s perspective is maximum flexibility; it can draw as much or as little as it requires at any time, and if cash flow is sufficient it can repay outstanding tranches that are no longer required and thereby reduce its borrowing costs.

Disadvantages of a revolving facility

A revolving facility is likely to include more restrictions than an overdraft. For example, there may be minimum notice periods before a sum is advanced; the lender may set upper and lower limits on the amounts which may be drawn at any one time or the number of interest periods that may exist in parallel at any one time (in order to reduce the administrative burden on the lender) and the lender may reduce the available funds towards the end of the term. As the availability period for draw downs is long, the total commitment fees will be higher. (Commitment fees are fees payable to a lender on available but undrawn amounts and is calculated as a percentage of those undrawn funds from time to time. The commitment fee is not as much as interest because the lender is not actually taking any risk on the money.)

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Health and Safety in the Workplace

In 2008 the Ministry of Manpower issued Ministerial Decision no. 286/2008 introducing the Regulation of Occupational Safety and Health for Establishments Governed by the Labour Law. The Regulation provides for a comprehensive regulatory framework with the aim of improving health and safety standards in the workplace and protecting workers from various occupational hazards. The Regulation consists of 43 Articles covering a wide range of issues including: lighting, ventilation, heat stress, noise, uniforms, personal protection equipments, first aid and occupational diseases.

In general, the workplace must support good health by promoting healthy food and physical activity in the workplace, prohibiting smoking in the workplace, and enhancing psychological health and social integration of workers.


Workplace Safety Issues

According to Article 15, the employer must take all necessary actions to provide adequate protection for the workers' safety while at the workplace.

Work uniform and equipment for personal protection must comply with the specified standards of safety required depending on the actual hazards the workers are being exposed to. The employer should train the workers on the best ways of using, maintaining and storing such equipment. Prominent signs in the relevant languages need to be posted in all hazardous areas where entry is prohibited without using personal protection equipment.

Most importantly, workers must not work on construction sites or open uncovered areas of high temperature at noon, from 12:30pm up to 3:30pm throughout June, July and August; subject to certain exemptions for establishments providing essential public services.

In dealing with the various hazards in the workplace, the Regulation provides a list of measures which employers need to implement to minimise occupational accidents and the exposure to various risks and hazards including: fire, mechanical and electrical risks, chemical hazards, heavy duty machinery, workers` transport vehicles, in addition to risks of harmful rays, occupational cancer and asbestos.

The employer must provide sufficient, adequate, natural or artificial lighting, distributed in the workplace equally, free from direct or reflective rays, in addition to a system of emergency lighting in case of the failure of the normal lighting. The lighting system must clearly show emergency exits so that the workers can locate and use them. The position of fire alarms and fire extinguishers must be clearly indicated.

Polluted air shall be avoided by providing a natural or artificial ventilation system that provides fresh air in the workplace and use local ventilation where sources of pollutions exist. This system must effectively suck the polluted air out. The Regulation also specifies the minimum percentage of oxygen, speed of air, and the maximum degree of relative humidity in the workplace.

To protect the workers from exposure to noise, noisy operations that exceed the permissible levels must be isolated away from the workers, or sound insulated rooms should be used. Additionally, insulating, absorbing or reflective equipment should be installed on noisy machines.

Food and Water

The employer must also provide workers with sufficient potable water within easy reach and a reasonable number of water coolers proportionate to the number of workers. Bacterial analysis of the groundwater shall be carried out once every six months and chemical testing once every year in one of the government laboratories.

If food is provided for workers, employers should ensure that food safety measures are strictly observed. A separate place for cooking shall be provided and food serving places must be equipped with hand-washing facilities.

Women's Safety Issues

The Regulation also deals with specific health and safety needs related to women and people with special needs. Employers, for instance, must not expose women to materials or occupational practices which could adversely impact on the safe delivery of children or the health and safety of the foetus.

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The Redefined State Financial and Administrative Audit Institution

In the first half of 2011, the government body formerly known as the “State Audit Institution” was renamed as the “State Financial and Administrative Audit Institution” pursuant to Royal Decree 27/2011. (We shall hereafter refer to the State Financial and Administrative Audit Institution as the “Institution”.) While the full significance of this amendment was not apparent at that time, the recent Law regulating the State Financial and Administrative Audit Institution, issued by Royal Decree 111/11 (the “Law”), has redefined the role of the Institution.

The Law has broadened the ambit of the Institution to encompass administrative audit (“toward more accountability, transparency and justice in the government performance”) and has increased the overall emphasis on ensuring transparent behavior by Omani government bodies.


Since its establishment by the State Audit Law (RD 55/2000), the Institution has been the financial watchdog of the government, endowed with broad powers to identify systemic financial weaknesses and to make remedial recommendations, rather than to limit its focus to specific transactional irregularities.

The newly issued Law, while repealing its predecessor, expands the Institution’s audit mandate to reach beyond the financial realm. The Institution’s predominant functions now include the following:

• to secure public funds, provide a framework for efficient management of such funds, and ensure their efficient and optimal utilization;
• to detect financial and administrative irregularities and identify inherent deficiencies in the relevant financial and administrative laws;
• to identify the causes of, and assign responsibility for, any deficient performances; and
• to ensure transparency in financial and administrative transactions, and make recommendations for the avoidance of conflict of interests and for the prevention of financial and/or administrative irregularities.

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Entire Agreement Clauses

Many forms of contracts, particularly commercial contracts, tend to contain a variety of so-called “boilerplate” clauses (i.e., clauses with standard wording that are routinely used). One type of boilerplate clause that is often included in contracts – and frequently plays an important role when contracts gone awry are litigated – is the “entire agreement” clause.

The purpose of an entire agreement clause is to make clear that the agreement between the parties is solely what is stated in the written contract, and to prevent the parties to the contract from subsequently raising claims that statements or representations made during contractual negotiations, and prior to the signing of the written contract, constitute additional terms of the agreement or some form of side agreement. That is, the parties include an entire agreement clause in the contract to prevent those pre-contract statements and representations from having any contractual force.


An entire agreement clause often contains the following elements:
• An entire agreement statement: a statement in the contract that the parties agree that the terms of the contract between them are to be found within the text of the contract document and nowhere else. All entire agreement clauses include this element;

• An exclusion of liability for misrepresentation: most entire agreement clauses include one or more of the following:
1. an acknowledgment by the parties that they have not relied on any representation which is not set out in the contract;
2. a statement excluding liability for misrepresentation; and
3. a statement limiting remedies for misrepresentation to those available for breach of contract; and

• A carve-out for fraud: An express statement that the entire agreement clause is not intended to exclude liability for fraudulent misrepresentation. This carve-out is sometimes not included and some argue it is unnecessary. If it is included, a carve-out for fraud from any other clause that seeks to limit the parties’ liability should be included in the contract, or the courts may draw conclusions from the discrepancy.

When reviewing an entire agreement clause, there are some important pitfalls to be aware of and avoid:
• If the contract includes schedules or other attachments, it is important to check that the definition of the “contract” includes these schedules or other attachments.

• If there are multiple contracts forming part of the same transaction, it is important to include them in the wording of the entire agreement clause, for example: “This agreement and [list other agreements] constitute the entire agreement between the parties….”.

An example of a comprehensive entire agreement clause would be as follows:

“1. This agreement [and [list other relevant agreements, if applicable]] constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to this subject matter.

2. Each party acknowledges that in entering into this agreement it does not rely on, and shall have no remedies in respect of, any representation or warranty (whether made innocently or negligently) that is not set out in this agreement.

3. No party shall have any claim for innocent or negligent misrepresentation based upon any statement in this agreement.

4. [optional] Nothing in this clause shall limit or exclude any liability for fraud.”

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Private Equity Funds – The Prospectus and the Articles of Association

In recent years Oman’s financial sector has experienced fast-paced growth, including the introduction of new types of investment vehicles. One prominent development, which we have covered in past posts, was the launch of the first Omani private equity fund early in 2011.

Our previous articles on private equity funds focused principally on Oman’s legal framework for the regulation of investment funds. In particular, we cited several key areas in which the government authorities could do well to revisit certain provisions – which appear to have been drafted with traditional mutual funds in mind – and tailor them more closely to the unique characteristics of private equity funds.

This month, we turn to a topic that investors are more likely to encounter first-hand: the prospectus and the articles of association, which are the two key legal documents of an Omani private equity fund (a “Fund”).


The prospectus

The prospectus is an informational booklet about the Fund that the Fund’s sponsors prepare and distribute to potential investors prior to launching the Fund and accepting subscriptions from investors. The purpose of the prospectus is to provide potential investors with all of the relevant information about the Fund that the investors would need in order to make a properly informed decision about whether to invest in the Fund.

The Fund’s sponsors tend to view the prospectus as a marketing tool as well as a disclosure document. As such, prospectuses are sometimes glossy documents with ornate graphics and diagrams that make them resemble a cross between a sales brochure and a legal document. However, whether the prospectus’ format is plain or glitzy, its contents are required under Omani law to be fulsome, accurate and objective. Pursuant to the Executive Regulations of Oman’s Capital Markets Authority (“CMA”), the Fund’s prospectus (and any other promotional materials) must be approved in advance by the CMA. The Executive Regulations also contain an explicit prohibition against false or misleading advertising of a Fund, providing that “any contact or disclosure to market investment units shall disclose all facts and information pertaining thereto without exaggeration.”

The prospectus will typically contain, inter alia, the following key information about the Fund:
• A summary of the Fund’s legal and administrative structure, including the Fund’s legal relationship with the sponsor launching the Fund and the investment manager that will carry out the Fund’s investments;
• Details of Fund’s financial structure, including the framework under which investors will contribute capital to and receive returns back from the Fund; the Fund’s accounting policies and procedures; and the fee structure for the investment manager that runs the Fund;
• A description of the Fund’s investment approach, including its investment strategy, investment policy and investment processes;
• A profile of the investment manager that will operate the Fund, including a profile of the investment manager as an organization and details of the investment manager’s executive team members and their relevant experience; and
• Details of the Fund’s corporate governance structure, including the respective legal rights and responsibilities of the investors, the investment manager, and any relevant parties with respect to the governance of the Fund as a legal entity.

The articles of association

The articles of association (“AoA”) are the Fund’s constitutive legal document. The AoA is the ultimate source of legal authority over the governance of the Fund (subject, of course, to Omani law). Often, the AoA will come into play with respect to significant structural and governance issues which the Fund might confront – for example, a change in the Fund’s investment objectives, the Fund’s policies around investor redemption, or even liquidation and dissolution of the Fund.

AoA terms can vary significantly from one fund to another, but all Omani funds are required to include in their AoA certain core terms prescribed by the CMA, such as:
• Name, form, capital, and official currency of the Fund;
• Constitution of the management of the Fund;
• Investment objectives of the Fund;
• Method and frequency of transfer, issue and redemption of Fund units (if applicable);
• Procedures for dissolution and liquidation of the Fund; and
• Commencement and end of the Fund’s financial year.

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Types of Bank Loans - Term Loans

Following on from a previous post on overdrafts, this article focuses on term loans. A term loan essentially provides an agreed lump sum over a set period, usually referred to as the “term”, requiring payment at or by the end of the term. Such loans usually have a term of more than one year and will often be for more than five years.

Common features of term loans

Term loans are usually committed facilities. A “committed” facility is a facility where once the facility agreement has been executed, the lender is under an obligation to advance money when requested by the borrower subject to compliance with certain pre-agreed conditions by the borrower.

With a term loan, a borrower is usually permitted a short period after execution during which it can draw down funds. This is known as the “availability period”. Additional funds may be drawn down in stages or “tranches” as agreed under the loan facility and at the borrower’s discretion. Each tranche has its own pre-agreed conditions which need to be satisfied and its own availability period. If funds are not drawn down during the relevant availability period, such funds cease to be available and the commitment is automatically cancelled. The use of tranches gives the borrower greater flexibility and greater control over the amount of money borrowed and, therefore, the amount of interest paid.

When the borrower decides to exercise its right to draw down during an availability period, it must give notice to the lender (usually two or three days’ notice) so that the lender can get the required funds. The borrower must choose the first interest period. At the end of the interest period, the borrower pays interest on the amount borrowed and chooses the next interest period.

The loan will be repayed according to the repayment schedule in the facility agreement. The most common methods of repayment are:
• Amortisation: repayment, in equal amounts, is spread evenly over the term of the loan;
• Balloon repayment: repayment is made in instalments and the final instalment is the biggest; or
• Bullet repayment: repayment is made in a single instalment at the end of the term of the loan.

In addition, it may be possible for the borrower, on giving sufficient notice, to prepay
all or part of the loan (that is, before the dates specified in the repayment schedule), because, for example, it may no longer need as much money as it first borrowed. It may have to pay a fee to the lender to compensate it for the lost interest the lender would have received had the money still been outstanding; this is known as a “prepayment fee”.

Advantages of a term loan

A term loan provides the borrower with the certainty of a fixed repayment schedule. This contrasts with the on-demand nature of an overdraft.

The use of tranches provides the borrower with some flexibility, which may be further increased if the term loan allows the borrower to draw money in different currencies. Interest on a term loan is likely to be lower than that paid on an overdraft and will either be at a fixed rate or, more commonly, will be set at an amount (known as the “margin”) above the relevant LIBOR (London Interbank Offered Rate).

Disadvantages of a term loan

Commitment fees may be payable on a term loan as they are committed facilities. The commitment fee is calculated as a percentage of the undrawn funds that the lender has to keep committed to the borrower from time to time. The fee covers the costs incurred by the lender in committing funds to this loan which it cannot then lend to anyone else.

One feature of a term loan is that once it has been repaid, it cannot generally be reborrowed, unlike a revolving credit facility (which will be considered next month) or an overdraft.

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