In a new Ministerial Decision which has attracted much attention, the Ministry of Manpower has set out a requirement that all manpower agencies in the Sultanate must be managed by Omani nationals. Ministerial Decision No. 420-2012 stipulates that expatriates will not be permitted to manage manpower agencies, as is common practice currently. The Ministerial Decision, which takes effect from 01 May 2014, requires that all Omanis who own a manpower agency will be required to either (i) manage the manpower agency themselves on a full-time basis (and accordingly must forego outside employment in the Government or private sector), or (ii) hire another Omani to manage the manpower agency.
Thursday, September 27, 2012
Monday, September 17, 2012
Frequently Asked Questions: Corporate Governance of Omani LLCs
When setting up an Omani limited liability company (Omani LLC), one of the key issues is how the Omani LLC will be governed. Many clients, particularly those from jurisdictions outside of the Sultanate, seek for the Omani LLC to be governed by a board of directors.
However, under the Omani Companies Law, an Omani LLC is governed by its shareholders acting pursuant to shareholders’ resolutions and is managed by one or more managers (the latter, often referred to as board of managers) who are appointed by the shareholders and act within the limits of the powers delegated to them (including any authorized signatory powers) by the shareholders.
That is to say, the Companies Law does not contemplate boards of directors for Omani LLC’s, as it does for Omani joint-stock companies. An Omani LLC will sometimes put in place a nominal ‘board of managers’ or ‘steering committee’; but in order for the decisions of such board or committee to be legally binding, they would need to be given legal effect by a shareholders’ resolution or the members of such board or committee would have to be authorised signatories duly empowered under their authorized signatory powers to take such decisions.
Labels:
Omani Companies Law,
Omani law,
Omani LLC
Tuesday, September 11, 2012
Share Pledges- Part II
In last month’s Client Alert, we discussed which kinds of shares can be pledged in Oman and the process for registering a share pledge in the Sultanate. This month, we conclude our introduction to share pledges by discussing how they are treated, released and enforced in Oman.
Dealing with pledged shares
Once the share pledge is registered, Muscat Depository treats such shares as blocked and will not allow the shares to be dealt with. For example, in practice it is not possible to sell shares which have been pledged. But it is possible, with the express written consent of the first pledgee, for a second priority pledge to be granted over the same shares.
In addition, Muscat Depository will contact the share pledgee each time a cash profit or free shares are issued, if such future profits are included in the share pledge, to obtain their instructions on how to deal with such cash profit or free shares.
Release of a share pledge
A share pledge can be released by the pledgee submitting a release letter allowing Muscat Depository to release the security. Again, such a release letter would need to be suitably authenticated if the pledgee is a foreign entity.
Enforcement of a share pledge
The enforcement process for a share pledge is set out in Articles 225-227 of the Omani Law of Commerce. Essentially the shares secured under the share pledge will, on a default, have to be enforced in the Omani courts pursuant to a judicially conducted process. The pledgee is required to serve formal notice requiring payment of the debt on the pledgor (and the borrower, if a different entity). Three days after service of such a notice, the pledgee may apply to the Omani courts for an order for the sale of all or part of the pledged shares. Once the default has been established, the Omani courts may then order the sale of some or all of the shares.
The court should order the sale of shares traded on the MSM through the brokerage system. The broker will auction the shares in accordance with the Omani Capital Markets Law and Regulations. The broker, after deducting commission, will remit the sales proceeds to the Omani court. The Omani court would then remit the amount of the sales proceeds, up to the value of the secured obligations (as determined by the Omani court) to the pledgee. Any surplus funds would be retained by the Omani court and returned to the pledgor.
The Omani Law of Commerce does allows the court, after the date a debt has fallen due, to vest charged assets up to the value of the secured obligations in the hands of the pledgee, however this is subject to the prior sanction of the court.
Approval requirements for certain percentages of share ownership
Please note that under Omani law, there are various notification and/or approval requirements which have to be met before certain percentage of shares can be held in an Omani joint stock company. In some cases, these requirements apply to both foreign and Omani entities. For example, if the security was over 10% or more of the voting shares of a licensed Omani bank, then any party seeking to buy the shares through the court auction or the pledgee (if it is seeking to have the shares transferred directly to it) would need to have obtained the prior approval of the Central Bank of Oman.
Subscribe to:
Posts (Atom)
