Joint
stock companies in Oman seeking to increase their issued share capital have the
option by way of a rights issue, or through private placement. The board of
directors may, in accordance with the Commercial Companies Law of Oman (“CCL”), approve the rights issue through
a board resolution within the limits of the authorised share capital of the
company, provided that five years have not elapsed from the date on which the
shareholders approved the increase in the authorised share capital. In the
event that five years have lapsed from the date on which the increase of the authorised
capital of the company was approved, the rights issue will require the approval
of the shareholders of the company through an extraordinary general meeting.
In
relation to a capital increase through a rights issue, Article 82 of the CCL
provides that each shareholder has a preferential right to subscribe for the
new shares in proportion to the number of shares currently owned by such
shareholder. Accordingly, the additional new shares will be offered to all the
shareholders of the joint stock company on a pro rata basis.
Once
the approval of the shareholders or board of directors has been obtained and in
order for a shareholder to exercise their right and proportionately subscribe
for the new shares, a written notice must be sent to each shareholder at their
address registered in the shareholders’ register informing them of such
preferential right. For shareholders of
a public joint stock company, the notice must be accompanied by a copy of the
prospectus duly approved by the Capital Market Authority (“CMA”) and the notice must be published in two daily newspapers for
two consecutive days after being certified by the Department of Company
Affairs. The said notice must, inter alia, indicate the specified period during
which the preferential right may be exercised, provided such period shall not
be less than 15 days from the date of publication.
The
prospectus should include satisfactory information about the company’s past
business performance and the financial position including the certified balance
sheet and profit and loss account for the previous financial years or the
period that begins from the date of the establishment of the company, if such
date goes back less than three years.
With
respect to subscription and allotment of shares post a rights issue, Article 83
of the CCL provides that new shares which are not subscribed for by the present
shareholders of the company within the offer period may be offered for public
subscription or, alternatively, the board may reduce the issued share capital
of the company to the extent of shares that are not subscribed for. However, it
may be noted that offering the unsubscribed shares to the public is possible
only for public joint stock companies.
Notwithstanding
the above, a further issue arising out of Article 83 of the CCL is with regard
to the shareholders of a public joint stock company being entitled to waive or
assign or transfer to a third party their preferential right in respect of the rights
issue in accordance with the provisions of the Rules for Waiver of Rights
Issue, issued by Ministerial Decision 156/2002 (“MD 156/02”). MD 156/2002 provides that the shareholders’
preferential rights may be assigned/transferred within the period specified for
exercising the pre-emption right.
Finally, public joint stock companies need to
fulfil an additional requirement of disclosing any material information in
respect of the rights issue to the public. Accordingly, Article 3 of the
Capital Market Authority Law issued through Royal Decree 80/1998 provides that
no securities of any joint stock company may be offered for public or private
subscription except in accordance with the prospectus approved by the CMA. A
summary of the approved prospectus should be published in two daily newspapers,
one of which must be in Arabic. The prospectus must be made in accordance with
the form specified by the CMA. Any omission or avoidance of any material
information or the inclusion of incorrect statements or information shall be
the responsibility of the entity preparing the prospectus.
