Wednesday, April 18, 2012

Legal Requirements for Document Retention

In recent years, the rapid growth of the Omani economy has led to a significant increase in business activities and commercial transactions in the Sultanate. As companies have become bigger and more active, they unsurprisingly have tended to find themselves with an ever-growing amount of corporate documents and records.

Such documents were easily stored back in the days when companies were smaller and transactions were less frequent. Today, however, many companies have such high volumes of documents and data that they may look to store them outside of their own premises. Some companies also may look to discard old documents and records. The question thus arises: what, if any, legal obligations do Omani companies have to retain their business documents?

Many countries throughout the world impose legal obligations on companies to retain their documents for a certain period of time. While Omani law does not prescribe an overall regime of document retention requirements, several key statutes outline particular retention obligations that apply to companies in the Sultanate.

Commercial Companies

All organizations that are regulated under the Law of Commerce (Royal Decree No. 55/90) – which includes all types of commercial companies, regardless of corporate form – must look to the Law of Commerce to help them ascertain the record-keeping requirements that apply to them under Omani law.

For example, merchants should look to Article 28 of the Law of Commerce, which imposes on them a duty to retain the following types of records:

  • Day books, in which shall be entered day-by-day all transactions pertaining in any way to the merchant’s commercial undertaking, and month-by-month the total of his personal drawing;

  • Inventory books, which shall be updated at least once each year; and

  • Copies of all correspondence, as well as telegrams, invoices, and other essential documents sent and received by the merchant for the transactions of his trade.

  • Article 31 of the Law of Commerce obliges merchants to keep their day books and inventory books for a period of ten years. In addition, merchants must also keep the copies of their correspondence and telegrams for the transactions of their trade for a period of five years.

    Financial Institutions

    The Anti-Money Laundering Law (Royal Decree No. 34/02) imposes a legal obligation on financial institutions to retain their documents for a period of time. Article 1 of the Anti-Money Laundering Law defines ‘financial institutions’ to mean any establishment licensed to do business in the Sultanate as a bank or money exchange or as an investment, financing, insurance or a financial intermediary company (or any similar activity specified by the committee). Article 5 of the statute requires financial institutions to maintain and hold documents of identification and addresses of their customers and records of their transactions, and prohibits the destruction of the original paper documents during a period of not less than ten years.

    Law Firms

    There is no specific law concerning document retention obligations of law firms in the Sultanate; however, it could be presumed that law offices are subject to the Law of Commerce’s obligations regarding retention of documents.