Offering and Marketing Foreign Securities in Oman - Key Regulations

The main regulation that governs all forms of marketing and sale of foreign securities in Oman is the Capital Markets Law (Royal Decree 80/98) (the “CMAL”) and the Executive Regulations of the Capital Markets Law Decision No. 1 of 2009 (the “Executive Regulations”).

“Securities” are defined in the CMAL as “shares and bonds issued by joint stock companies and the bonds issued by the Government and its Public Authorities, treasury bonds and bills and other securities negotiable in the Market.”  Despite the apparent restricted scope of this definition, the Capital Markets Authority (the “CMA”) in practice regulates any kind of investment product that is offered or marketed in Oman.

Article 117 of the Executive Regulations contains a general restriction on the offering and marketing of non-Omani securities within Oman without the approval of the CMA, and contains provisions governing the offering and marketing of non-Omani securities in Oman.  In general terms, the Executive Regulations provide:

(i) that the marketing and sale of non-Omani securities in Oman should be undertaken by a locally registered company licenced by the CMA;

(ii) that the licence issued to the local broker should include “marketing of foreign securities” as one of its permitted activities, prior to such broker undertaking the activities; and

(iii) the conditions that need to be observed by companies licenced to market non-Omani securities including, among others:

a. Marketing and advice shall be limited to regulated securities.

b. Information pertaining to the regulated securities shall be provided to investors, including the approved prospectus, any amendments thereto, and a copy of the due diligence report.

c. A statement must be submitted to the CMA every six months within seven days from the end of the term, including the details of the issuer of the security and the number and value of the marketed securities.

d. Companies shall not use fraudulent or deceptive methods, or provide false or incomplete information, or conceal any material information in order to promote the securities that they are distributing.

e. Companies shall not use the media to promote the securities.

f. Marketing shall be limited to investors who are financially solvent, have experience in securities investments, and have indicated the same in the Investor Qualification Form.

g. Investors must provide a statement to the effect that they are acquainted with all the documents relating to the security and that they are aware of the rewards and risks of the security.

h. The initial investment of any investor in any security shall not be less than OMR 5,000.

i. Companies shall keep a detailed register of investors who have subscribed to the security including the documents and statements relating to such investors.

In short, foreign companies wishing to market securities in Oman should appoint a registered local broker to do so on their behalf.