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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

FSA issues bond and sukuk regulation

The regulation is considered a flexible legislation that encourages innovation Green and Sustainable Bonds and Sukuk and Waqf Sukuk.
The regulation is considered a flexible legislation that encourages innovation Green and Sustainable Bonds and Sukuk and Waqf Sukuk.
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Muscat:


Sultan Salim al Habsi, Chairman of the Financial Services Authority (FSA) has issued a decision issuing Bonds and Sukuk Regulation which regulates the long-term debt market in the Sultanate of Oman as one of the financing options provided by the capital market to support the expansion of projects and new investment initiatives of the private sector.


The regulation is considered a flexible legislation that encourages innovation for including diversified financing products such as Green and Sustainable Bonds and Sukuk and Waqf Sukuk.


It also provides for special types of bonds and Sukuk that observe the nature of the financing needs of the investor and the issuer of the security. The new regulations included a chapter on disclosure rules, specifically disclosures related to green and sustainable bonds and Sukuk as the issuer will be obliged to implement the rules and terms and conditions of such disclosures to enhance the integrity of the capital market and encourage conventional investors and those interested in sustainability issues to invest in such securities.


Sheikh Abdullah Salim al Salmi
Sheikh Abdullah Salim al Salmi


On the importance of the issuance of the Bonds and Sukuk Regulation, the Executive President of the FSA Sheikh Abdullah Salim Al Salmi said the issuance of the regulation emanates from the strategic plan of the FSA to complete the legislative infrastructure of the capital market after the issuance of the Commercial Companies Law and the Securities Law during the past period so as the sector can cope with the latest global practices and standards.


Al Salmi emphasized that the regulation would contribute to designing the debt instruments to be one of the main financing options to provide for an appropriate investment environment and, at the same time, allow for additional alternative instruments for local and foreign investors making the capital market a sustainable engine for comprehensive economic development and wealth creation which is consistent with the strategic objects of the Oman Vision 2040, as the issuance of the regulations is related to three strategic objects, the first related to providing resilient and innovative financial instruments, the second issuance of flexible legislations and the third is the sustainable usage and investment of resources and natural wealth.


Al Salmi added that the regulation is resilient enough to encourage innovative and diversified financing products by the nature of the financing needs of projects. In addition to the known bonds and Sukuk, there are specific rules for the issuance of sustainable and green bonds and Sukuk to encourage such issuances in the Sultanate of Oman as there are interested investors and promising market for such types of financing for their importance in financing the earnest steps the country pledged to take to reach net zero carbon emission by 2050, as preparation of such products would enhance green and sustainable financing to achieve economic growth as the creation of such bonds and Sukuk is delivery of the national road map to alien the non-banking financing with the requirements of green and sustainable financing approved by the Board of Directors of FSA.


He explained that the regulation incentivizes Waqf Sukuk which supports the existing course to develop Waqf sector in the Sultanate of Oman to contribute to activating monetary Waqf and development of Waqf institutions, whether civil or charity institutions, as the purpose is to expand the base of subscribers and participants in the activity to benefit from such type of assets in the development of the national economy to be able to generate fair returns serving the purpose of the Waqf whether educational or medical or social etc.


The Executive President of the FSA emphasized that the regulation was posted for public consultation including public joint stock companies, audit firms, law firms and relevant government entities for formulation by mutual vision as the FSA is keen to engage the society before the issuance of regulations and responded to the feedback of the public and reviewed issuance requirement and reduced the period required for every issuance process.


On the other features of the regulation, Al Salmi said that the clauses expressly state that bonds and Sukuk can be issued in the Sultanate of Oman in any convertible currency and the FSA is allowed to accept prospectuses addressing private placement to be in English.


The regulation comprises 12 chapters including chapters on the issuance of bonds and Sukuk, private placement, rights issues and assignment, special purpose companies, financial trusts, Sharia Compliance, agents of beneficiaries or issuers, disclosure rules, general meetings, and a chapter on the rules for issuance of green and sustainable bonds and Sukuk.


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