MUSCAT: Oman’s Commercial Bankruptcy Law has emerged as a key pillar in strengthening market stability, safeguarding investor confidence and supporting a fair, competitive business environment in line with Oman Vision 2040.
Issued under Royal Decree No 53/2019 and effective since July 2020, the law marked a decisive shift in how commercial distress is managed in the Sultanate of Oman. Rather than treating bankruptcy as the end of business activity, the legislation introduces structured mechanisms that prioritise restructuring and preventative settlement over liquidation, offering viable companies a chance to recover.
The law regulates bankruptcy procedures transparently, protects the rights of both debtors and creditors; and reduces the stigma traditionally associated with financial failure. It establishes clear pathways beginning with restructuring requests, followed by preventative settlements through the courts and, only as a last resort, formal bankruptcy proceedings.
A central feature of the framework is the fair distribution of assets, with priority given to fundamental rights such as employee entitlements and government dues. These provisions enhance competitive fairness and reinforce trust in the market.
In the long term, the law is expected to improve Oman’s standing in international business rankings and underline the Sultanate of Oman’s commitment to transparency and equal opportunity, strengthening its appeal as a regional investment destination — particularly as entrepreneurship and start-up activity accelerates.
Mohammed bin Salem al Hashmi, Director of the Department of Commercial Establishments Control at the Ministry of Commerce, Industry and Investment Promotion, said the Bankruptcy Law represents a cornerstone of market regulation and economic stability. He noted that it has redefined bankruptcy as a tool for debt restructuring rather than a termination of commercial activity, contributing to greater investor confidence and fair competition.
Al Hashmi identified weak financial planning, poor cash flow management, high operating costs and limited legal awareness as key drivers of commercial bankruptcy, particularly among SMEs. He also pointed to global economic pressures, fluctuating energy prices and delayed payments as challenges affecting local firms’ competitiveness.
Dr Khalid bin Saeed al Amri, Chairman of the Omani Economic Association, said the law forms part of a broader transformation of Oman’s economic legislation under Oman Vision 2040. He stressed that a flexible and transparent bankruptcy framework is essential for managing financial distress, protecting jobs and ensuring business continuity.
Both officials emphasised that further progress depends on enhancing legal awareness, upgrading judicial and digital infrastructure; and strengthening cooperation between government and financial institutions to create a resilient and investor-friendly business environment. — ONA
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