Establishing a Non-Profit Organisation in Oman

Applicable law

The establishment of a charitable organisation falls within the scope of the Civil Association Law - Sultani Decree 14/2000 (the “CAL”) rather than the Commercial Companies Law - Sultani Decree 4/74 (the “CCL”). The CAL is implemented and regulated by the Ministry of Social Development (the “MSD”) and governs the conduct of any form of communal or charitable work, or the operation of associations for socio-cultural or developmental purposes, through the establishment and operation of not-for-profit entities. Companies or individuals that are seeking to establish an Association must consider formally registering the Association in MSD. The MSD is authorised to impose penalties if an Association does not comply with CAL.

The CCL is not applicable to not-for-profit purposes, or for social, cultural and charitable activities, as a commercial company is essentially a contract by which two or more persons undertake to participate in an enterprise for profit, with a view to sharing any profit or loss resulting from the enterprise. Article 131 of the CCL provides that a “limited liability company is a commercial company with a fixed capital divided into equal shares.” Therefore, it is the element of profit that distinguishes a company from a charitable organisation, causing a charitable organisation to fall within the ambit of the CAL.

Article 1 of the CAL defines an “Association” as “any permanent group of natural persons organized to achieve purposes other than profit making and aiming at performing social, cultural or charitable activities. This includes associations, social and cultural clubs established by private institutions, companies and organizations, regardless of the name given to them, even if physical sports are among their activities, unless sports are the main activity of the association or the club.” An Association is permitted, by Article 4 of the CAL, to engage in the activities of providing care for orphans, children and mothers; women’s services; care for the elderly; and care for people with handicaps and special needs.

In the event that an activity which is intended to be undertaken by an Association is not provided for by Article 4 of the CAL, then the MSD must, upon receipt of a written application from the intending sponsors of the Association, obtain the prior approval of the Council of Ministers for the activity to be conducted by the applicant Association.

The establishment of an Association under CAL

In order to establish an Association, Article 9 of the CAL requires the founding members to elect from amongst themselves the first board of directors of the Association, of whom one member must be authorised to act on behalf of the Association for the registration of the Association. The registration application is submitted to the MSD together with copies of documents signed by the chairman of the board and the coordinator, including names of the founding members and the board members; minutes of the founding members’ meeting; minutes of first board of directors’ meeting; and board of directors resolution nominating the person to be responsible for undertaking and completing the registration of the Association and the by-laws of the Association.

Once the above documents are submitted, the MSD shall, subject to its right of refusal under Article 11, register the Association. The Association then acquires its legal personality from the date of publication of its registration in the Official Gazette.

The Association remains under the general supervision of the MSD in accordance with Article 17 of the CAL. Supervision is undertaken by investigators appointed by the MSD, who have the right to enter the premises of the Association and examine its registers, books, documents and correspondence. The MSD must be informed, in writing, of each meeting of the general assembly of the Association at least fifteen days prior to the meeting and must be provided with the agenda and the accompanying documents in accordance with Article 23 of the CAL. The MSD is to be informed of the results of the Association’s board meetings, as well as resolutions passed at such meetings. Copies of the minutes of the meeting are to be sent to the MSD within fifteen days from the date of each meeting, pursuant to Article 32. Article 33 gives MSD the right to annul the decisions of a board meeting if the meeting was convened in violation of the law or the by-laws of the Association.