Sunday, October 25, 2015

Legal Update - New Regulation on the Public Establishment for Industrial Estates

Royal Decree 32 of 2015 (the “RD”) promulgates the new Public Establishment for Industrial Estates Regulation (the “New Regulation”) which repeals Royal Decree 4 of 1993 which promulgated the regulation that used to govern the Public Establishment for Industrial Estates (“PEIE”).  The RD was issued on July 21, 2015 and came into effect on July 27, 2015.

It is evident from the wording of the New Regulation that emphasis is given to social development and it is intended to go hand-in-hand with the planned economic development to achieve a comprehensive and sustainable economic and social development.

The New Regulation makes PEIE more institutional and autonomous with less affiliation with MOCI. This is particularly clear in the composition and the functions of its board of directors.

Change in Composition of PEIE’s Board of Directors
The New Regulation states that the Council of Ministers is to appoint the Chairman and members of the board of directors, as opposed to the previous regulation which authorized the Minister and employees of MOCI to be the Chairman and members of the board respectively, albeit the Council of Ministers will do so on the recommendation of the Minister of MOCI.  The remuneration of the board Chairman and members also will be decided by the Council of Ministers instead of the Minister of MOCI.

Change in the Functions of PEIE
In light of the New Regulation, the board can adopt its draft annual budget and final report without seeking approval from the Minister of MOCI, though the final report has to be submitted to the Minister of MOCI.  The board also can accept loans and credit facilities, in accordance with the applicable rules and regulations in the Sultanate, without the need of approval from the Minister of MOCI.  In addition, the board is authorized to establish new Industrial Estates and to expand existing ones following an approval from the Council of Ministers.  This new regulation also explicitly gives the PEIE the authority to allocate areas within the Industrial Estates to investors notwithstanding the provisions set out by the Law Regulating the Usufruct of Land in the Sultanate promulgated through Royal Decree 5 of 1981.