Oman Commercial Companies Law, issued under Royal Decree 18/2019, is the primary legislation governing the formation, management, and dissolution of commercial companies in Oman. It replaced the 1974 Commercial Companies Law and introduced a modernised legal framework for all business entities registered through the Ministry of Commerce, Industry and Investment Promotion (MOCIIP). The law covers every aspect of company formation in Oman, from permitted legal structures and minimum capital rules to shareholder rights, director duties, share transfer procedures, minority shareholder protections, and company liquidation.
Anyone forming a company in Oman, whether as a sole shareholder, a foreign investor, or a corporate entity, operates within the framework established by Royal Decree 18/2019 and its executive regulations. This guide explains the key provisions of the law relevant to company formation and business operation in Oman. For a step-by-step formation guide alongside the legal requirements, see our overview of company formation in Oman.
Oman Commercial Companies Law: Purpose and Scope of Royal Decree 18/2019
Royal Decree 18/2019, effective from 2020, sets the legal framework for all commercial companies incorporated in Oman. The law applies to every business entity carrying out commercial activities in Oman’s mainland, including companies owned by Omani nationals, GCC nationals, and foreign investors. Free zone entities are governed by their respective zone authority regulations, which operate alongside the provisions of the Commercial Companies Law.
The key objectives of the 2019 law are:
- Modernise corporate governance standards for Omani companies in line with international best practice
- Expand foreign ownership rights by permitting 100% foreign ownership in most mainland sectors under the Foreign Capital Investment Law, read alongside this law
- Strengthen shareholder protections, particularly for minority shareholders in LLC and joint stock company structures
- Introduce digital business procedures, including electronic general assemblies and digital documentation
- Simplify company registration through the Invest Easy portal, Oman’s central business registration platform
- Establish clear director liability rules and conflict of interest management requirements
Types of Commercial Companies Recognised Under Oman Company Law
The Commercial Companies Law recognises six main legal forms. Selecting the correct structure before submitting the MOCIIP application is critical, as the structure determines minimum capital requirements, ownership rules, governance obligations, and liability exposure.
| Company Type | Ownership | Min. Capital | Common Use |
| LLC (Sharika Zat Mas’ouliya Mahdouda) | 2 to 40 shareholders | No fixed min. (Omani); OMR 150,000 (foreign) | Most foreign and SME businesses |
| SPC (Single Person Company) | 1 shareholder, Omani or GCC only | No fixed minimum | Sole-owner consultancy, services |
| Closed Joint Stock (SAOC) | 2+ shareholders | OMR 500,000 | Large private enterprises |
| Public Joint Stock (SAOG) | Public shareholders via CMA | OMR 2,000,000 | Listed companies, banks, insurers |
| General Partnership | 2+ general partners | No fixed minimum | Professional firms, small businesses |
| Limited Partnership | 1+ general + 1+ limited partners | No fixed minimum | Investment vehicles, project SPVs |
The LLC remains the most commonly used structure under the Oman Companies Law for both Omani and foreign investors due to its flexible shareholding arrangements, limited liability protection, and lower capital requirements. The SPC is available to Omani and GCC nationals only and is not accessible to non-GCC foreign investors. For a full comparison of LLC and other structures, see our guide to LLC company formation in Oman.
Shareholder Rights Under the Oman Commercial Companies Law
The Commercial Companies Law establishes the rights of shareholders across all company types. For LLCs, shareholder rights are governed primarily by the Memorandum of Association and the law’s provisions on partner meetings and profit distribution. Key shareholder rights under Royal Decree 18/2019 include:
- Right to profit distributions proportional to shareholding percentage, unless the MoA specifies otherwise
- Right to vote at general assembly meetings on resolutions affecting the company’s direction, capital, or structure
- Right to inspect the company’s accounts, financial statements, and minute books
- Right to transfer shares subject to the pre-emption rights of existing shareholders and any MoA restrictions
- Right to appoint and remove managers by majority resolution in an LLC
- Right to dissolve the company by unanimous agreement or by court order, where specified conditions are met
Shareholder resolutions in an LLC require specific majority thresholds depending on the matter. Ordinary resolutions for routine business require a simple majority. Extraordinary resolutions affecting the company’s capital, activities, or dissolution require a qualified majority, typically 75% or higher, as specified in the MoA.
Minority Shareholder Protections Under Oman Companies Law
Royal Decree 18/2019 introduced specific protections for minority shareholders in Omani commercial companies, which were absent or weaker under the 1974 law. These provisions are particularly relevant for foreign investors entering joint ventures with Omani partners, and for LLC structures where one party holds a majority stake. Key minority shareholder protections include:
- Pre-emption rights on share transfers: Before any shareholder can transfer their shares to a third party outside the company, existing shareholders must be offered the shares at the same price. This prevents dilution and forced ownership changes without consent.
- Judicial dissolution rights: A minority shareholder holding 25% or more of an LLC may petition the court for dissolution if the majority shareholders act in a way that fundamentally prejudices the minority’s rights or the company’s interests
- Right to convene an extraordinary meeting: Shareholders holding a specified percentage of the capital may require the manager to convene an extraordinary general meeting to address matters affecting their interests.
- Audit and account inspection rights: Any shareholder, regardless of shareholding percentage, retains the right to examine the company’s accounts and financial records and to appoint an independent auditor at their own cost if they dispute the company’s accounts.
These protections are enforced through Oman’s Commercial Courts. Minority shareholders in joint ventures with foreign investors should ensure that pre-emption, dispute resolution, and meeting convening rights are clearly documented in both the MoA and any separate shareholder agreement.
Director Duties and Liability Under the Oman Company Law
The 2019 Commercial Companies Law significantly expanded the director liability framework compared to the previous law. For joint stock companies, the law establishes mandatory board governance requirements. For LLCs, the appointed manager or managers carry the equivalent responsibilities. Key director and manager duties under Royal Decree 18/2019 include:
Duty of Care and Loyalty
Directors and managers must act in the best interests of the company and all shareholders, not in their personal interest or the interest of any controlling shareholder. The law prohibits directors from using their position to extract personal benefit at the company’s expense. It requires disclosure of any actual or potential conflict of interest before participating in a related vote or decision.
Fiduciary Obligations
Directors must maintain the confidentiality of company information and cannot use non-public commercial information for personal gain or for the benefit of a third party. Any director found to have breached fiduciary duties is personally liable for losses caused to the company and may be subject to criminal liability under the Commercial Code.
Director Liability for Company Obligations
Under the law, directors are not personally liable for the debts of the company simply by virtue of their role, provided the company was properly formed, and the liability was incurred within the scope of the company’s registered activities. However, directors face personal liability where:
- The company’s losses result from gross negligence or wilful misconduct by the director
- The director continued trading after the company became technically insolvent without taking the required steps
- The company was used as a vehicle for fraud or to circumvent legal obligations
- Required filings and disclosures were deliberately omitted or falsified
Share Transfer Rules Under Oman Commercial Companies Law
The transfer of shares in an Omani LLC is governed by the pre-emption mechanism in the Commercial Companies Law and the company’s MoA. Share transfers that do not follow this procedure are void under Omani law and will not be recognised by MOCIIP or recorded in the Commercial Register.
The standard share transfer procedure under the law is:
- Written notice to all shareholders stating the transfer intention, the number of shares, and the proposed price per share
- 30-day pre-emption period during which existing shareholders may exercise their right to purchase the offered shares at the stated price
- Pro-rata allocation if multiple shareholders wish to exercise pre-emption rights on the same shares
- Transfer to a third party is permitted only if no existing shareholder exercises the right within the notice period, and only at a price no lower than the stated offer price.
- Notarized transfer agreement required for all share transfers, registered with MOCIIP and updated in the Commercial Register
Foreign investors acquiring shares in an existing Omani LLC must also obtain MOCIIP approval confirming the transfer is within foreign ownership limits for the registered activity. Failure to obtain this approval before completing the transfer can result in the transfer being challenged and the Commercial Register update being refused.
Compliance Obligations for Companies Under Royal Decree 18/2019
All companies incorporated under the Oman Commercial Companies Law must maintain ongoing compliance with the following obligations. Non-compliance results in fines, license suspension, or dissolution proceedings initiated by MOCIIP.
- Annual license renewal: Trade license and municipality license must be renewed annually before expiry through the Invest Easy portal.
- Annual financial statements: Companies above the audit threshold must file audited financial statements prepared by a licensed Omani auditor
- General assembly meetings: LLCs must hold an annual general meeting of shareholders within the timeframe specified in the MoA, typically within three to four months of the financial year end
- Commercial Register updates: Any changes to shareholders, managers, registered address, or business activities must be notified to MOCIIP and the Commercial Register updated within the statutory period
- Memorandum of Association amendments: Changes to the MoA require a notarised amendment deed and MOCIIP approval before taking effect
- Chamber of Commerce membership: Annual membership of the Oman Chamber of Commerce and Industry must be maintained
Companies in regulated sectors such as financial services, healthcare, construction, and engineering carry additional compliance obligations imposed by sector-specific authorities alongside the general Commercial Companies Law requirements. For a full breakdown of business setup and compliance obligations, see our guide to business setup in Oman.
Company Registration Requirements Under Oman Commercial Companies Law
Company registration in Oman under the Commercial Companies Law is processed through MOCIIP via the Invest Easy portal. The law mandates the following documents and steps for a standard LLC registration:
- Trade name reservation: The proposed company name must be checked for availability and reserved through the MOCIIP name reservation system
- Memorandum of Association: A notarised MoA setting out the company’s name, registered address, share capital, shareholders, percentage stakes, managers, and permitted activities
- Shareholder identification documents: Certified passport copies for all foreign shareholders; national ID for Omani shareholders
- Registered office lease agreement: A notarised tenancy agreement for the company’s registered address in Oman
- Activity approvals: Sector-specific approvals from the relevant ministry or authority where the activity requires pre-approval before MOCIIP processes the registration
- Share capital deposit confirmation: For foreign-owned LLCs, a bank confirmation letter confirming the capital deposit in an Omani bank account opened in the company’s name.
Standard LLC registration under the Commercial Companies Law typically takes two to four weeks from complete document submission to Commercial Registration certificate issuance. For full registration process details and current government fees, see our guide to company formation in Oman.
Conclusion
Oman Commercial Companies Law under Royal Decree 18/2019 provides the full legal framework for company formation, shareholder rights, director duties, share transfers, minority shareholder protections, and ongoing compliance obligations for all commercial entities in Oman. The law’s 2019 reforms strengthened foreign investment access, expanded minority shareholder protections, and modernised governance standards to international benchmarks. Understanding the specific provisions of the law that apply to your company type and shareholding structure is essential before submitting a registration application to MOCIIP.
MakeMyCompany is a business setup consultancy in Muscat, Oman, providing end-to-end company formation services for Omani entrepreneurs and international investors. Our consultants assist with activity selection, MoA drafting, MOCIIP registration, Commercial Register filings, shareholder agreement preparation, and all government submissions required under the Commercial Companies Law. Contact our team at omanbusinesssetup.com for expert guidance on company formation in Oman.
Frequently Asked Questions
What is the Oman Commercial Companies Law?
The Oman Commercial Companies Law is Royal Decree 18/2019, which governs the formation, operation, and dissolution of all commercial companies registered with MOCIIP in Oman’s mainland. It covers permitted company types, minimum capital rules, shareholder rights, director duties, share transfer procedures, minority shareholder protections, and compliance obligations.
What are the types of companies allowed under Royal Decree 18/2019?
The law recognises six main company types: Limited Liability Company (LLC), Single Person Company (SPC), Closed Joint Stock Company (SAOC), Public Joint Stock Company (SAOG), General Partnership, and Limited Partnership. The LLC is the most commonly used structure for foreign and local investors in Oman.
What is the minimum capital requirement for an LLC in Oman?
For Omani-owned LLCs, there is no fixed statutory minimum capital for most activity categories following MOCIIP reforms. For foreign-owned mainland LLCs, the standard benchmark is OMR 150,000 in share capital deposited in an Omani bank account. The OMR 20,000 figure referenced in older articles is outdated and does not reflect current MOCIIP practice for most activities.
What rights do minority shareholders have under Oman company law?
Minority shareholders in Omani companies have pre-emption rights on share transfers, the right to petition the court for dissolution where majority actions prejudice minority interests, the right to convene extraordinary meetings, and the right to inspect accounts and appoint an independent auditor. These protections apply under Royal Decree 18/2019 and cannot be waived by MoA provisions.
What are the director’s duties under the Oman Commercial Companies Law?
Directors and LLC managers must act in the best interests of the company, disclose conflicts of interest, maintain confidentiality of company information, and cannot use their position for personal gain. Personal liability arises where company losses result from gross negligence, wilful misconduct, trading while insolvent, or deliberate falsification of company records.
How are shares transferred in an Omani LLC under the law?
Share transfers in an LLC require a 30-day pre-emption notice to all existing shareholders at the proposed price. If no shareholder exercises the right, the transfer may proceed to a third party by notarised agreement registered with MOCIIP. Foreign buyer transfers additionally require MOCIIP approval confirming compliance with foreign ownership rules.
What are the compliance obligations for companies under Royal Decree 18/2019?
Annual obligations include license renewal, filing audited financial statements (above audit threshold), holding annual general assembly meetings, updating the Commercial Register for any structural changes, maintaining Chamber of Commerce membership, and timely MoA amendment registration for any changes to shareholders, managers, or activities.
Where can I find the full text of the Oman Commercial Companies Law?
The full text of Royal Decree 18/2019 and its executive regulations is published through the Ministry of Commerce, Industry and Investment Promotion and the official Invest Easy portal. Business setup consultants in Oman can advise on the specific provisions applicable to your company type and activity.
About the Author
Shuja Ahmad is a Business Setup Consultant at MakeMyCompany, a business setup consultancy based in Muttrah, Muscat, Oman. He specialises in documentation and government submissions for company formation in Oman under the Commercial Companies Law, covering MOCIIP registration, Memorandum of Association drafting, Commercial Register filings, share transfer documentation, investor visa processing, and ongoing compliance support for Omani and foreign-owned companies. Shuja advises entrepreneurs and international investors on the legal structure and MOCIIP process applicable to their business activity under Royal Decree 18/2019. For expert guidance on business setup and company formation in Oman, visit omanbusinesssetup.com.
