Oman: New regulations for transition of limited liability companies into SAOG entities

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Following the launch of the Incentivization Program by the Financial Services Authority (FSA), the Ministry of Commerce, Industry, and Investment Promotion is set to announce new regulations aimed at enhancing opportunities for small and medium-sized enterprises (SMEs). Mubarak Mohammed al Dohani, Director General of Commerce, revealed that the forthcoming guidelines will detail the process for converting limited liability companies into public joint-stock companies (also known as SAOG business).

Al Dohani announced that the ministry would soon disclose the requirements and procedures for converting limited liability companies into public joint-stock companies. This decision follows the Royal Directives and new economic regulations. He highlighted that these companies, including small and medium-sized enterprises, must meet specific conditions to transition, such as having a market value of no less than RO 500,000. According to Al Dohani, the ministry's commercial registry currently lists 118,252 limited liability companies.

Al Dohani emphasized that the conversion process aims to align with the recent economic reforms and provide greater opportunities for these enterprises to access the capital market. The ministry's forthcoming announcement will outline the detailed steps required for limited liability companies to become public joint-stock companies, offering them new avenues for growth and investment.

“The issuance of the Royal Decree to launch the initiative for converting limited liability companies into public joint-stock companies is a measure by our wise government to encourage the transformation of family-owned businesses into joint-stock companies, ensuring their continuity as a primary goal," stated Qais bin Mohammed al Yousef, Minister of the Ministry of Commerce, Industry, and Investment Promotion. "These companies constitute a significant portion of the Omani economy. This initiative also aims to enhance accountability, government oversight, and transparency in transactions. Additionally, it provides flexibility in management, speed in procedures, ease of trading shares, and increased confidence among investors, creditors, and clients in the companies' continuity, financial strength, and social standing, as these are capital-based companies rather than personal ones. The ministry seeks to facilitate the transition of these companies into public joint-stock companies by simplifying the procedures,” he said.

Dr Saleh bin Said Masan, Under-Secretary for Commerce and Industry, stated that the Royal endorsement of the initiative to encourage the transformation of limited liability companies into closed joint-stock companies represents a significant opportunity and incentive for such a transition. This move aims to enhance oversight, government regulation, and transparency in transactions while providing greater flexibility in decision-making. It also strengthens the accountability of those dealing with these companies and offers the general benefits of institutional transformation, ensuring the company's sustainability across generations and boosting the national economy. Dr Masan emphasized the ministry's commitment to facilitating this transition by simplifying and streamlining the procedures.

The programme offers incentives for establishing public joint stock companies, converting existing companies to public status, and listing them on the MSX. It also includes the creation of a new market for promising companies with MSX incentives and supports the conversion of limited liability companies to closed joint stock companies. These measures aim to enhance the capital market and financing options for various companies, including small and medium enterprises.

The high-level comments during unveiling of FSA’s Incentivisation Programme earlier this week, and attended by representatives from the National Programme for Fiscal Sustainability and Financial Sector Development 'Estidamah', the Ministry of Commerce, Industry and Investment Promotion, and the Muscat Stock Exchange (MSX).