Oman limited liability company

Business entities in Oman

Oman business entity typesHealy Consultants advises our Clients on the optimum corporate structure for doing business in Oman, then completes the Oman business setup procedures on our Client’s behalf. There are several ways of starting a business in Oman, the most common being to set up a limited liability company (LLC). Our Clients may alternatively choose a free zone company, a branch or representative office.

Limited liability company (LLC)

  1. This is the most common business entity used for starting a company in Oman. As always, the company is a separate legal entity or ‘person’. In particular, a company is separate from its owners and the directors who manage it;
  2. An Omani LLC with foreign members must have i) a minimum of one director and two shareholders and ii) a minimum issued share capital of US$390,000 iii) a local office space;
  3. Unless authorized by the Ministry of Commerce and Industry (MOCI), this type of company must have at least 35% of shares owned by a national of Oman, the US, or a GCC state;
  4. The Foreign Capital Investment Law (1994) requires one of the following conditions to be met:
    • 100% ownership by Omani, GCC or US nationals;
    • 100% foreign ownership with approval from MOCI for activities benefiting the Omani economy and paid up share capital of US$1.3 million;
    • 100% foreign ownership for companies working on Oman government contracts;
    • Minimum of 35% local ownership and paid up share capital of US$390,000;
    • Company established in free trade zone.

Oman free zone companies

Oman free zones are the most efficient way to circumvent the country’s strict foreign capital investment requirements and local ownership thresholds. Free zone companies can i) be 100% foreign owned, ii) sell directly to the Oman market iii) require minimal capital, iv) enjoy zero customs duties and tax exemption for up to 50 years, and v) only require 10% of staff to be Omani.

A foreign branch office and a foreign representative office

  1. The Commercial Code of Oman contains Oman’s company law and limits branches not owned by GCC or US shareholders to the activities of government contracts or economically necessary activities for Omani development. In these few instances, branches are generally required to have a local agent to sponsor Oman visas and licenses. Oman has not strictly enforced this requirement since joining the World Trade Organization;
  2. While an Oman representative office is 100% foreign-owned and controlled, it is not permitted to make direct sales within Oman. Such an office will only engage in activities such as i) promoting the business of the parent company and ii) market research. A local Omani agent or distributor must be appointed to sell goods and provide services to local companies;
  3. Before the Oman government issues a license to a foreign company branch or representative offices, a bank guarantee of US$390,000 must be provided to the MOCI.

How to register a foreign branch or representative office in Oman

  1. For company registration of a branch in Oman, the registration documents of the mother company must be translated and legalized in i) the Oman embassy in the country of its registration and then ii) by the Ministry of Foreign Affairs of Oman;
  2. Parent company documents to be translated into Arabic include i) two years audited financial statements ii) a Board of Directors’ Resolution authorizing opening of the branch in Oman iii) a power of attorney issued in favor of the general manager of the Oman branch iv) parent company’s Memorandum of Association and certificate of incorporation;
  3. The branch or representative office must i) sign an agency agreement with an Oman national and ii) sign a Oman premises lease agreement;
  4. Healy Consultants submits a completed license application to the Ministry of Commerce and Industry (MOCI) comprising i) an agency agreement ii) name reservation certificate issued by the MOCI iii) lease agreement iv) copy of the passport of the office general manager v) a bank guarantee of US$133,000 in favour of the Ministry of Economy;
  5. Thereafter, the MOCI will issue the required ministerial license specifying the activity to be practised by the foreign company;
  6. The branch or representative office will be i) entered in the Economic Department’s Commercial Register and ii) entered in the Foreign Companies Register of the Ministry of Industry and Commerce.

Joint ventures

  1. A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. Joint ventures in Oman are established in the form of a LLC where 51% is owned by an Oman national, but the profit and loss distribution ratio can be mutually agreed. Minimum share capital for a joint venture is US$133,000;
  2. The foreign company deals with customers under the name of the local partner, the latter bears all liability. In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

Sole proprietorships

Only Oman and GCC nationals are allowed to invest in Oman as sole traders, in their personal name. This kind of business entity is often used by doctors, engineers and lawyers.

Oman joint stock company

  1. This business entity is also known as a public joint stock company and suitable for large projects or operations, involving a large investment of funds or raising private or public capital;
  2. If our Client plans to offer shares to the general public to raise capital, we recommend forming a public joint stock company. This entity is similar to a UK Public Limited Company or German Aktiengesellschaft (AG);
  3. A public joint stock company requires a minimum share capital of US$5,2 million.

Not-for-profit company

This company is for charitable purposes only and its constitution will i) require the company to apply its income in promoting those purposes and ii) prohibits the company making distributions to its members and paying fees to its directors.

Partnerships

These unlimited liability entities require two shareholders and two directors and must have an office in Oman. Banking and insurance activities are prohibited for partnerships.

Setting up a business in Oman without a local company

To minimize business Oman company setup costs, business owners sometimes implement the following strategies:

  1. Through a local agent or distributor, a foreign company is allowed sell its goods and services directly to Oman customers;
  2. Business owners can also sell their franchise to an Oman commercial agent or distributor, eliminating the need to hire local staff and to proceed to Oman company setup. Examples include Hertz, Baskin Robbins, and Pizza Hut.

Shareholder agreement with an Oman or US national

  1. Oman company law allows foreign companies to draft flexible, differential profit sharing arrangements, independent of the Oman shareholding percentage. Healy Consultants will draft a legal shareholders agreement outlining terms and conditions, shareholder restrictions, expectations and remuneration;
  2. Through a shareholder agreement, the nominee will be designated as silent partner who will not interfere in daily business activities of the Omani company. The foreign investor legally enjoys full power to solely operate the business and bank account;
  3. The shareholder agreement will be signed by both the foreign investor and the nominee and witnessed by two different parties from each side. The agreement is legally valid in the Oman courts to arbitrate any dispute between the foreign investor and the local partner;
  4. The parties to an international contract are free to choose the law and jurisdiction that will govern that contract. If they do not choose an applicable law, the contract will be governed by the Omani Civil Code. The parties may also agree in writing to refer disputes to arbitration;
  5. As the 2009 Oman-US Free Trade Agreement (FTA) affords US citizens the same rights as Oman nationals, US citizens and US companies are allowed to own 100% of shares in all industries.

The role of the Omani shareholder

  1. While foreign companies prefer to register a company in Oman with a silent partner, there are advantages to having an active local shareholder. Advantages include i) introduction to potential customers and suppliers ii) preference in the allotment of government contracts iii) navigating Oman’s government bureaucracy iv) assistance with immigration and Oman visa matters.
  2. These are also the core function served by the Public Relations Officer (PRO) required by all Omani companies;

  3. The majority of company visas and licenses are sponsored by Omani nationals and companies, giving the latter indirect control over the business;
  4. Omani shares may only be transferred after they have first been offered to the other shareholders by way of pre-emption, unless the other shareholders have agreed to waive their right. This ensures that share transfers outside of the agreed partnership are not possible without our Client’s agreement.

Table of comparison between Oman entities

 Limited liability company (LLC)Free zone (FZ)Branch officeRepresentative office
Total company setup costsUS$26,900US$30,000US$31,800US$24,950
Subsequent annual costsUS$5,970US$5,070US$5,070US$8,440
Allowed to issue sales invoices?YesYesYesNo
Allowed to sign contracts?YesYesYesNo
Corporate tax payable12%0%12%0%
Allowed to import goods?YesYesYesNo
Allowed to export goods?YesYesYesNo
Wholly foreign owned?Yes, in some casesYesYesYes
Type of business permitted?AllAllGovernment contracts and MOCI approvalOnly research and marketing
Oman bank account allowed?YesYesYesYes
How long to open company bank account?3 weeks4 weeks4 weeks4 weeks
Can rent an office in Oman?YesYesYesYes
Tenancy agreement required?YesYesYesYes
Can conduct business within Oman?YesYesYes with MOCI approvalNo
Can apply for immigration visas?YesYesYesYes
Oman employment visa fees?US$3,950US$3,950US$3,950US$3,950
Can hire staff in Oman?YesYesYesYes
Incorporation period5 weeks2 weeks6 weeks5 weeks
Shelf companies allowed?NoNoNoNo
Minimum shareholders2100
Minimum directors allowed1100
Min capitalUS$390,000US$100
Bearer shares ?NoNoNoNo
Public registrar of companies?YesYesYesYes
Annual accounting?YesYesYes
Corporate directors allowed?YesYesYesYes
Oman resident company secretary required?YesYesYesYes
Can buy Oman property?YesYesYesYes
Need to travel?NoNoNoNo
Annual Oman tax return?YesYesYesYes
Annual audited financial statements?YesYesYesYes
Access to Oman double tax treaties?YesYesYesYes
Annual license renewal?YesYesYesYes
Oman national director or shareholder required?NoNoNoNo
Allowed own shares in other Oman companies?YesYesNoNo
Draft invoice

Frequently asked questions

Contact us

For additional information on our company setup services in Oman, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar