Wednesday, July 9, 2014

Legal Updates - July 9, 2014

The Formation of a Supreme Committee for Financial Stability

The Central Bank of Oman (“CBO”) recently issued Circular no. BM/55/3/2014 dated 18 March 2014 granting the establishment of “The Supreme Committee for Financial Stability” (the “Committee”).

The Committee shall be formed by the decision of the Board of Governors of the CBO and will comprise of the following members: (1) the Chief Executive of the Capital Market Authority and deputy chairman; (2) representative from the Ministry of Finance (“MOF”); (3) representative from the Ministry of Commerce (“MOCI”); and (4) head of the CBO’s Financial Stability Unit, a member and a rapporteur. The representatives from both the MOF and MOCI will not be from positions lower than that of General Director.

To assist its purpose of monitoring and managing the risks in the banking and capital markets within Oman, the Committee shall exercise the following powers: (1) study the risks of the banking business and Capital Market, develop solutions and come up with proposals to manage those risks and financial crises; (2) coordinate between the fiscal and monitory policy; (3) coordinate between supervisory and regulatory bodies in the fields of banking and finance; (4) coordinate with the international financial institutions in the fields of banking and finance; (5) express opinions on the application of the best international banking and finance standards in line with the local regulatory systems; and (6) any other works assigned to it by the Board of Governors.

The Expatriate Residency Law

In May 2014, various reports surfaced regarding the re-implementation of certain provisions of the Expatriate Residency Law in Oman (supposedly to be effective from 1st July 2014). It was reported that no employment visa will be issued to any expatriate for a period of two years if they leave their job in Oman. As such, the expatriate would need to leave Oman and wait for two years to come back and work for another employer, unless they have obtained a no objection certificate from their current employer. However, the Royal Oman Police have since specified that the law itself is still being clarified and that the date for its implementation has, at the time of writing, not been confirmed.

The law has been met with both support and uncertainty among businesses and the community alike. In support of the law, the two-year ban has been expressed by the Oman Chamber of Commerce and Industry to be beneficial to the private sector in that it will see a reduction of poaching of the skilled and experienced workforce. Accordingly, the re-introduction of the law is evidence of the Government of Oman’s commitment to make the conditions of employees more ‘stable’ for companies operating in the Sultanate.

Once the legal position is clear, we will provide further information on what effects this law will have.