Local Partnership requirements for foreign companies in Oman
Oman is currently experiencing economic growth and is encouraging foreign businesses to invest in the country. In addition to already strong and well-developed industries like oil and tourism, the country is working to develop other industries, including mining, construction, infrastructure, import and export trade and agriculture. As technology has become a quintessential part of the modern life, major blue-chip companies as well as knowledge and technology-driven SMEs and start-ups have been enjoying the benefits offered to the companies in the IT sector.
Oman’s Ministry of Commerce and Industry will bring a new law into force as of January 2020, which aims to make Oman an attractive investment environment. The introduction of this law comes as a move to ensure the stability of foreign investment in the country. The new Law has several incentives and advantages for foreign investments so to encourage their flow and stability in the Sultanate, as they have an impact on economic development.
Foreign citizens are permitted to open a business in Oman, however, there are numerous requirements and limitations that must be considered first. Below is a step by step guide and key considerations when choosing your local partner in Oman:
What are the requirements?
By the Omani Law, foreign companies and individuals, except for GCC or US shareholders, are generally required to have an Omani partner (individual or company) with a minimum 30% shareholding in order to form a Limited Liability Company (LLC). Minimum share capital of OMR 150,000 ($390,000) is no longer required to be deposited to register an LLC with foreign participation, however a part of this amount has to be available as a proof of funds.
What types of sponsorship are there in Oman?
As mentioned above, foreign companies can either partner with an Omani individual or 100% Omani owned company. The concept of local sponsorship is not common outside of the GCC region and might potentially be frustrating for the foreign investor. We at PRO Partner Group totally understand clients concerns but through our secure and trusted nominee structure, we ensure your interests are fully protected in accordance with the law. When you partner with us, PRO Partner Group become the Omani 30% professional corporate partner in the LLC, taking away any pressure of independently finding a trustworthy local sponsor.
Individual sponsorship: With an individual sponsor/partner an Omani national who is suggested to sponsor your business by holding 30% of shares in your company. He or she must be an Omani citizen over the age of 21, some activities require them to hold certain degree levels and have an experience in the same field as the new company. Usually they are business professionals or government employees. Profits do not have to be shared to reflect the percentage shareholding, and in most instances, the local sponsor is paid a set annual fee in exchange for full power of attorney and control over the business activities.
Corporate Sponsorship: One of greatest advantages of using a corporate sponsor is that the legal documents are more robust and full powers can be conveyed to the foreign party to ensure that the local partner is not able to interfere with the business. Additionally, entrepreneurs can maintain 100% of the financial benefits from the business along with full control. Corporate sponsorship provide entrepreneurs with extra security. There can be ownership issues when dealing with individual sponsors in the event that a partner passes away or retires early. One way that entrepreneurs opt to mitigate this risk is through ‘succession planning,’ or having a legally-binding plan in place. When working with a corporate entity, succession planning and management control can be better mitigated.
Corporate sponsorship is similar to having an individual sponsor in that it affords you the same rights. However, the process is less risky as it is transparent from start to finish. It also provides you with the support of an entire corporate team, rather than just one individual – the corporate partner is better able to provide PRO support for government liaison processes such as Visa applications, Licensing renewals and updates and overall corporate governance assistance.
Advantages of partnering with PRO Partner Group:
- As your service provider, we will use our experience to handle all the necessary paperwork to establish your business in a timely manner. This includes applying for visas, licenses, obtaining labour quotas, translation services and assisting with the opening of corporate bank accounts.
- We allow the General Manager to manage the daily operations of the company without interference.
- No interest in turnover or profits - a fixed annual fee, legally agreed at the start ensures stability and ease for you to budget.
- Through our corporate office, you will have access to ongoing PRO services, and around the clock operational support.
- We will offer networking opportunities with key local contacts, other partnered companies and government departments.
- Clear exit strategy – if you wish to close the company or transfer the shares or change local partner we will ensure there is a clear exit plan with no penalty.
PRO Partner Group can assist you to set up your company in Oman, we can act as the secure Local Partner and provide professional PRO Services to support you and your staff. For more information please contact Natalia on +971 (0)56 689 7293 or +971 (0)4 456 1761, email us at email@example.com.