2017: The Year of IPOs for Insurance Companies in Oman

In the Sultanate of Oman, the insurance sector is supervised by the Capital Market Authority and primarily regulated by the Insurance Companies Law promulgated by Royal Decree 12/1979 as amended. The Insurance Companies Law was extensively amended by Royal Decree 39/2014 (the “Royal Decree”), which introduced a new regulatory framework for insurance companies in Oman. We reported on the main features introduced by the Royal Decree in a previous article published in October 2014.

The first two amendments to the Insurance Companies Law set out in the Royal Decree read as follows:

Article (2/1/A)
It shall be a public joint stock company established in accordance with the Commercial Companies Law to conduct insurance business.

Article (3/2/B)
The applicant has to prove that the paid up capital is not less than RO 10,000,000 (Rial Omani ten million).

The most important requirement introduced by the Royal Decree is that, with the exception of foreign insurance companies continuing to operate in Oman as branches, all insurance companies must be incorporated as public joint stock companies.

Under the Royal Decree, these requirements applied immediately to the establishment of new insurance companies, meaning that any new insurance company wishing to set up in Oman following the Royal Decree was required to be incorporated as a public joint stock company with a paid-up share capital of no less than OMR 10 million. However, insurance companies already existing at the time of issue of the Royal Decree were granted a period of three years to meet the new requirements by (a) converting to public joint stock companies by way of an initial public offering (“IPO”); and/or (b) increasing their share capital to OMR 10 million.

This grace period expires in August 2017, and the majority of the eleven locally incorporated insurance companies are now in the process of complying with the new regulations. A number of IPOs are either already open for subscription or envisaged to be within the next few weeks.


With respect to the divestment required, the standard rule for IPOs as set out in the Commercial Companies Law is that the founders must divest and offer to the public at least a 40% stake. However, with reference to the public offerings statutorily imposed upon insurance companies by the Royal Decree, a different tendency emerged.

As regulator of the joint stock companies registered in Oman, the Capital Market Authority has the power to grant exceptions to the rule relating to the statutory minimum divestment required in connection with an IPO. It appears that several insurance companies, while planning their respective IPOs to comply with the Royal Decree, approached the regulator to request such an exemption. Consequently, the Capital Market Authority made a public announcement stating that, in principle, it will grant an exemption to all insurance companies that make a request and that such exemption will specifically allow the divestment of a stake of only 25%. From a review of the actual terms of the now current public offerings, it appears that most companies requested this exemption and are divesting a 25% stake as opposed to the standard 40%.

With respect to capital requirements for insurance companies, the Royal Decree raised the minimum capital from OMR 5 million ($13 million) to OMR 10 million ($26 million). This increase was in addition to 2011 legislation that increased the minimum capital tenfold from OMR 500,000 ($1.3 million) to OMR 5 million ($13 million).

At the time the Royal Decree was issued, the aim of the regulator was to encourage consolidation through mergers in a relatively crowded market and to guarantee adequate capitalisation of insurance companies. Some mergers have indeed been finalised, and the number of small players in the market was marginally reduced as recently reported by Sheikh Abdullah bin Salim Al Salmi, Executive President of the Capital Market Authority. At the same time, the IPOs currently open for subscription are reporting satisfactory results.