Corporate governance between form and substance

Corporate governance in the Sultanate of Oman is not in crisis. That, paradoxically, is precisely the problem.
For more than a decade, governance has been treated as a matter largely settled — codified in regulations, embedded in listing rules, reinforced through templates, committees and disclosures. Boards exist. Audit and risk committees meet. Annual reports are produced with increasing polish. From a distance, the architecture appears sound. Yet beneath this apparent order lies a quieter risk: complacency born of compliance, and a widening gap between governance as form and governance as substance.
This is the dialectic we are now compelled to confront. Compliance reassures; substance restrains. Compliance satisfies the regulator; substance disciplines power. When governance tilts too far towards the former, it risks becoming ceremonial — technically correct, institutionally hollow.
Corporate governance is often designed as if alignment were the norm and conflict the exception. In reality, alignment is temporary; conflict is structural. Interests diverge between majority and minority shareholders, between boards and management, between short-term returns and long-term viability, and — critically — between influence and accountability. Governance frameworks that function only when interests coincide are not frameworks at all; they are rituals. The true test of governance is not whether it operates smoothly in calm conditions, but whether it disciplines power when interests collide.
Many governance failures begin with a convenient abstraction: the idea that the “interest of the company” is singular, obvious and uncontested. In practice, the company is a site of layered and sometimes competing claims — economic, fiduciary, contractual and reputational. Treating corporate interest as self-evident allows dominant actors to equate their preferences with the company’s good, converting influence into legitimacy. Advanced governance systems resist this shortcut by recognising plurality and by requiring reasoned prioritisation when interests diverge.
The challenge becomes sharper where a high-net-worth individual or a powerful institutional investor occupies the boardroom or the share register. Such presence is often defended as stability, vision, or market confidence. Influence in itself is not a flaw; in many cases it brings capital, continuity and strategic ambition. The flaw emerges when influence displaces deliberation, when authority substitutes for process and when deference replaces independent judgement.
In such settings, formal compliance often intensifies precisely as substantive governance weakens. More policies are adopted, more disclosures produced, more committees convened — while the real questions go unasked. Who ultimately bears the risk of this decision? Which interest is being prioritised, and which is being quietly subordinated? What trade-offs are being accepted without articulation?
Compliance is frequently mistaken for neutrality. In fact, compliance always reflects an underlying hierarchy — explicit or implicit — about whose interests prevail when trade-offs arise. Where the law is silent on prioritisation, that hierarchy does not disappear; it migrates into informal power structures. Governance codes and disclosure rules may mask this reality, creating the appearance of order while leaving the resolution of conflicts to influence, personality, or market dominance rather than to principled judgement.
This is where Omani corporate governance reveals a structural vulnerability. The legal and regulatory framework speaks clearly about procedures, disclosures and duties, but far less clearly about how competing interests are to be weighed when they cannot be reconciled. The result is not flexibility, but discretion — often exercised by the most powerful actor in the room.
In more mature governance systems, the company is not treated as a monolith. Law and jurisprudence acknowledge that different interests surface with different urgency depending on context. The preservation of the company as a going concern takes precedence over distributive objectives. As financial stress deepens, the integrity of creditor claims becomes increasingly important. Minority shareholders are afforded heightened protection precisely because they lack control. Market integrity and transparency are treated as public goods, not optional virtues. Only once these layers are secured does maximisation of shareholder returns become a legitimate dominant objective.
Where such ordering is absent, governance defaults to power rather than principle. Dominant shareholders may treat liquidity events as personal exits. Boards may rationalise risk transfer as a strategy. Minority protections may be honoured formally while hollowed out substantively. None of this necessarily violates the letter of the law; it violates its purpose.
Here, the relevance of maqāṣid al sharīʿa is not theological but methodological. Classical Islamic legal reasoning does not assume all objectives are equal. It establishes priorities, distinguishes necessities from preferences, and resolves conflicts through proportionality, harm prevention, and the preservation of the whole. This discipline of prioritisation is precisely what governance systems require when faced with competing corporate interests.
Translated into secular legal language, the lesson is straightforward: governance must be capable of ranking claims, not merely acknowledging them. The survival of the enterprise outweighs individual advantage. Fairness to the vulnerable outweighs convenience for the powerful. Long-term integrity outweighs short-term extraction. Governance without such ordering is governance without restraint.
Avoiding an explicit hierarchy of interests does not preserve harmony; it conceals conflict. It transfers discretion from institutions to individuals, from rules to relationships. In influence-heavy environments, this outcome is not neutral. It quietly privileges control over accountability, immediacy over durability and dominance over fairness.
The challenge facing corporate governance in Oman today is not misconduct. It is the comfort of believing that because procedures are followed, judgement is no longer required. Governance, however, is not a static state achieved through regulation. It is a continuous institutional practice — one that must become sharper, not softer, where influence is concentrated.
The real question, then, is not whether Oman has governance rules. It is whether it is prepared to confront what governance is for: not the management of alignment, but the ordering of competing interests in moments when alignment inevitably fails.