Whilst registering a limited liability company (“LLC”) in Oman, clients often enquire about the upside of incorporating an LLC with higher capital and how does the grade specified by the MOCI benefit the LLC.
The Ministry of Commerce and Industry (“MOCI”) specifies the following grades for an LLC in the Sultanate based on the company’s capital. The grades for companies are as follows:
Whilst the minimum capital requirement of a wholly-owned Omani Company is RO 20,000, the MOCI grants an excellent grade company certain benefits over other grades.
Please note that the benefits of an excellent grade category are clearly based on the MOCI, Ministry of Manpower (“MOM”) and Tender Board practice and their internal policy and regulations. Therefore, there is no direct law or provision that defines the benefits and limitations applicable to the grades for companies.
The potential advantages for an excellent grade company as against lower grade companies are as follows:
- An Omani company registered in the excellent grade category would be allowed to bid for any tenders floated by the Tender Board in Oman. Some tenders are restricted so as to only allow excellent grade companies to bid.
- Excellent grade companies are granted maximum clearances for recruitment of expatriate employees and MOM tends to expedite the process for granting expatriate employees clearances for companies in the excellent grade category.
All other grades of company are also entitled to expatriate employee clearances. However, they would not be granted the same special treatment that applies to excellent grade companies.
Please note that, in any case, Omanisation applies to all companies in Oman and the specific requirements are in accordance with the commercial activity of the company. - The MOM by its directive dated April 15, 2014 has extended the ban on hiring expatriate workers in construction. This ban will be effective from May 4, 2014. The decision however is only applicable to commercial entities registered as first, second, third or fourth grade companies and therefore excellent grade categories and branches of international companies are exempt from this decision.
- The MOM has also issued MD 122/14 which extends the ban on new visas for expatriate employees working as carpenters, metallurgy workers, blacksmiths and brick kiln workers. The ban came into effect on July 1, 2014 and applies only to new visas and not renewals. However, the decision will not affect companies registered with excellent grades or branches of international companies or those implementing government projects.
Please note that in previous years the MOM has issued a number of Ministerial Decisions and announcements which prohibits companies from employing expatriate employees in certain commercial sectors. However, such bans have not applied to excellent grade companies.
Conclusion
There may be some benefit to being an excellent grade company in terms of expedition of applications (i.e. visa and clearances) and general benefits regarding the employment of expatriates. However, the decision to increase the capital of a company to OMR 250,000 is a commercial decision and should be taken on the basis of the business and operations of a company as well as its capital requirements and its manpower requirements.
