Wednesday 26th, October 2016 /

New regulations enacted by the Ministry of Commerce and Industry (MoCI) restrict the use of ‘Oman’ in commercial names only to joint stock companies.

The restriction is part of a series of guidelines set out in Ministerial Decision 124/2016 spelling out the revised criteria when registering or reserving commercial names for new companies. Importantly, the new measures will not be applied retrospectively to existing companies, according to experts representing leading international law firm Curtis, Mallet-Prevost, Colt & Mosle LLP.

“The fundamental thrust of Ministerial Decision 124 / 2016 Regulating Company Names (the “MD 124/16”) is that it introduces new investors to the rules and regulations relating to name reservation, and cancels all provisions or rules that contradict the regulations.” said Bruce B Palmer, Managing Partner of Curtis.

“Prior to MD 124/16, new investors would generally be required to seek guidance from the MoCI as to whether they are permitted to use a certain name. With the implementation of the new ministerial decision, investors can now understand the requirements for reserving and adopting company names,” he added in remarks to the Observer.

Significantly, the new decision sets out certain restrictions on the use of the word “Oman” in the company’s name. “Previously, the MoCI would permit investors to include the word ‘Oman’ in the company’s name if it had a minimum capital investment of RO 500,000 or more. However, currently, Article 10(9) of MD 124/16 only permits joint stock companies to include the word ‘Oman’ in its commercial name. This means that all limited liability companies are therefore not permitted to include the word ‘Oman’ in the commercial name, regardless of whether such company has a capital investment of RO 500,000 or more,” says Palmer.

However, as MD 124/16 is not applied retrospectively, existing companies having the word ‘Oman’ as part of their commercial name are not required to amend the name of the company, he explained.

Likewise, the branch of a commercial establishment cannot hold a different name under the new Ministerial Decision. Palmer explained: “Article 6 of MD 124/2016 restricts branches of the establishment from holding a different name, other than the name of the establishment (i.e. the parent company). For example, if the parent company is registered with the name ‘X’ in its incorporation documents, the MoCI will not permit the branch to be registered with the name ‘AB’. The branch will only be entitled to reserve the name ‘X (Oman Branch)’.” Furthermore, the commercial name shall consist of Arabic or Arabised words and shall not include non-Arabic words or words that cannot be translated into Arabic, with the exception of names of branches of foreign companies registered in the Sultanate, Omani companies that have a joint foreign ownership, and foreign companies that have full ownership, according to the legal expert.

“Therefore, it is not permitted for foreign investor to use his or her name or that of a family member name that is not translated into Arabic or has no meaning in Arabic. The MoCI also restricts investors from using the tribe name (AL) in the commercial name,” he said.

In essence, the new Ministerial Decision puts in place a streamlined and transparent process for registering and reserving new commercial names that also dovetails with the ministry’s revamped One-Stop Shop system (OSS), adds Curtis Associate Zuhaira al Sulaimani.

“Previously, in order to set up a new company, the investor would need to check the availability of the proposed name with the MoCI.

The investor was required to file an application at the ministry for name reservation.

The ministry would then assess the nature of proposed name and issue a name reservation certificate confirming its approval.

The name reservation is valid for a period of thirty (30) days and subject to renewal by the applicant. Once the name has been reserved and approved by the MoCI, the applicant is then required to file an application for the establishment of the company.

Now, in conjunction with its restructured One-Stop Shop System (OSS), the MoCI has currently simplified the name reservation process. In order to set up a company, the applicant is required to file for the name reservation and the establishment of the company as a one-stage process. The MoCI has also ceased issuing name reservation certificate,” Zuhaira explained.

Investors must ensure that they comply with MD 124/16 prior to forming a company in Oman, the lawyer stressed. Compliance will clearly mitigate any additional expenses and time that may be incurred by the investor if it is required to amend or change its proposed name, she noted.

“Under Article 8 of MD 124/16, the MoCI may cancel or request the investor to change the commercial name of the establishment if it is not in conformity with the applicable rules and regulation or in case the establishment violates the provisions of MD 124/16. Article 9 further provides that the MoCI may prohibit the establishment from the use of the commercial name if they were over replicating a name that has already been used,” she said.

Nevertheless, the Ministerial Decision grants the applicant the right to appeal if the MoCI has rejected the name registration. Article 12 of MD 124/16 provides that the applicant is required to submit a written request to the Under-Secretary of the MoCI within 60 days from the date of notification of its decision. The MoCI will usually decide on the appeal within 30 days from the date of submission. If no decision is made within 30 days, the decision shall be deemed to have been rejected, Zuhaira added.

Company name reservation criteria:

Ministerial Decision 124/2016 enshrines a sizeable list of do’s and don’ts for new investors when selecting suitable commercial names for their companies. Article 10 of the statute provides that any name that falls under the following categories is not permitted to be registered: 1. A proper noun unless the name was not a name of an owner of the establishment or a partner.

2. Plural of a tribe name, which includes the two letters (AL). For example, the investor is not permitted to use its surname (that starts with “Al” as its commercial name);

3. A name that is identical to a commercial name of an establishment which has a local and an international reputation. For example, if a reputable company “X” was established in Oman, the investor would not be permitted by the ministry to use a similar commercial name of “X”; 4. A name which may indicate or include a religious, political, military meaning or content;

5. A demonstrative pronoun, an honorary sign or a special character in any of the regional, Arab or international organisations or one of its institutions;

6. A name that resembles the name of an authority or organisation, a social institution, local charities or international institutions;

7. A name that resembles a registered trademark or its name, or contains one of its components;

8. A name that carries synonymous meaning with the commercial name of an establishment or pluralises or singularises the name of a registered establishment;

9. A name that carries the word “Oman” or Omani” or one of its derivatives or implications, except for the joint stock companies; and

10. A name that indicates an incorrect geographical division of the Sultanate.

© Oman Daily Observer 2016