A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 20, Issue 1 January 2018

Oman Update

Regulatory Update

Ministry of commerce eases the rules for setting up business in Oman

Oman’s Minister of Commerce and Industry has issued a decision (MD 139/2016) changing the rules for registration of new companies and enterprises other than joint stock companies. The new rules allow entrepreneurs setting up business in Oman an extended period of up to four months after the close of the company’s first financial year to produce evidence to the Ministry of Commerce and Industry (MOCI) of the share capital in the company instead of at the time of registration as was previously the case. The decision relaxes the requirement in Oman’s Commercial Companies law that a temporary “company under formation” bank account be opened before the company is registered at MOCI. The new rule streamlines business set-up procedures enabling entrepreneurs to register a company first and then open a full-fledged bank account in the company’s name. This will also avoid the bureaucratic and time-consuming process for shareholders to get their capital back out of the “company under formation” bank account in the event that company formation does not proceed for any reason.

The decision is a welcome move to ease the rules for doing business in Oman. However, it gives rise to several uncertainties arising from the temporary nature of the registration, in the interval between issue of the company registration certificate and submission of the bank certificate to MOCI. From an operational view point, the company would be unable, technically, to enter into contracts for what might be an extended period prior to full registration at MOCI. It is critical for third parties contemplating an arrangement with a new company to conduct sufficient due diligence on its ability to enter into contracts.

New Executive Regulations of the Tourism law.

The Ministry of Tourism issued the Executive Regulation of the Tourism law by way of Ministerial Decision 39/2016 (the “New Executive Regulations”). The New Executive Regulation supersedes the Executive Regulations issued by the Ministerial Decision 91/2003 (the “Old Executive Regulations”). This article aims to provide a brief overview of the New Executive Regulations.

Licensing provisions

One of the most significant changes to the licensing provisions brought by the New Executive Regulations is the issuance of a preliminary approval to the licence applicant in order to fulfil the required conditions for the tourism project and to obtain required approvals from competent authorities, the preliminary approval will be effective for one year from the date of issuance and shall not be extended or renewed. By introducing the concept of a preliminary approval, the Ministry has done away with the mandatory requirement to launch the establishment within six months of the date of issuance of license, as provided in the Old Executive Regulations.

In order to ensure that tourist establishments are managed and operated in a professional manner, the New Executive Regulations set out the minimum qualifications and experience required of the managers of the hotels and tourist establishments. The qualifications and experience requirement has been further classified into requirements with respect to Omani and non-Omani managers.

Further, if the business of an establishment is suspended for reasons within the control of the licensee for a period of six consecutive months, then the Ministry has the right to revoke the licence. The old Executive Regulations gave 24 months’ time for revocation of a licence in the event the business is suspended. Unlike the old Executive Regulations, the New Executive regulations now provide a period of 30 working days to the licensee, prior to suspension or revocation of the licence, to allow the licensee to rectify the violation or breach.

Recognition of Archaeological Sites and Tourist Villages

Whilst the Old Executive Regulations recognised and provided for tourism establishments such as hotel, restaurants, hotel apartments and tourist camps, the New Executive Regulations now provide rules related to identified “Archaeological Sites” specified as castles, forts and other archaeological sites subject to the supervision of the Ministry of Tourism. The New Executive Regulations also include “Tourist villages” on a site encompassing a number of utilities and services including lodges but essentially having a unique architectural identity that is subject to a single management.

Musical groups

The New Executive Regulations specify that only five or four-star hotels, or a hotel that is managed by an international company in the field of hotel management, can apply for recruitment of musical groups. It is also essential that the performance of the musical group correlates with the type of restaurant and the cuisine served.

Tourism guidance

The tourism guidance licence in the Old Executive Regulations was limited to only Omani individuals provided they fulfilled all the necessary requirements. The New Executive Regulations have broadened the scope by granting a temporary licence to any person to be trained in tourism guidance for a period of not more than one month.

(This article is compiled by Mr. Bhartesh Poojari, a Director in PKF L.L.C., the PKF member firm in the Sultanate of Oman.)