The newly promulgated Commercial Companies Law, which is set to come into force next month, provides stronger impetus to private and family-owned businesses to go public, according to the Executive President of the Capital Market Authority (CMA).
Abdullah Salim al Salmi said the new statute, which replaces legislation first enacted nearly 35 years ago, will make it easier, faster and more secure for private companies to operate and govern themselves in the Sultanate More importantly, it is expected to spur an increase in privately owned businesses opting to list on the Muscat Securities Market (MSM) in order to grow and sustain their operations, he noted.
“The new law is meant to encourage private and family-owned companies to be listed — not for the sake of listing per se — but to make sure that they become sustainable in the way they operate. As these companies are becoming increasingly important to the national economy, ensuring their sustainability is imperative as well,” he said.
Addressing a press conference ahead of the implementation of the Commercial Companies Law, the Executive President said the new statute seeks to safeguard the interests of private and family-owned businesses when they go public.
“The law allows the founders of family businesses and other transforming private companies to keep a percentage higher than the limit prescribed for founders of newly established companies,” said Al Salmi.
“Article 100 provides that the founders of public joint stock companies shall subscribe not less than 30 per cent and not more than 60 per cent of the capital, and offer the balance for public subscription except in case of transformation to public companies, the shareholders or partners in the company may, prior to transformation, keep 75 per cent of the capital. The CMA may allow the founders in the transformed companies to hold a higher percentage from the specified in the previous paragraph.”
The official cited in this regard the government’s keenness to enable family-owned businesses to become public companies given their importance to the national economy. “These private, family-owned businesses are considered national institutions that require an appropriate environment for the continuation of their performance without being impacted by any challenges they may face when they pass on from one generation to the next.”
Earlier, the Executive President underlined the significance of the new Commercial Companies Law, which has been enacted as the Sultanate gears up to embrace the 2040 Vision. The blueprint accords a key role to the private role in driving economic development and creating employment opportunities for young Omanis, he said.
The new Commercial Companies Law (CCL), enacted by Royal Decree 18/2019, regulates the businesses of commercial companies, their establishment, legal forms, management and corporate actions, said the Executive President.
The law, he elaborated, addresses shortcomings in existing legislation and thereby positions the Omani capital market for its intended role as an enabler of economic growth, wealth creation, and a key source of financing for investment projects and other productive initiatives.
Importantly, the new Law confers upon the Capital Market Authority complete powers to regulate public joint stock companies and supervise their work to ensure they are compliance with stipulated laws and regulations in the interest of their shareholders.
“The new law organises all the procedures for the establishment of public joint stock companies and reduces the time required for this. The CMA has the power to put in place the procedures required for establishing of such forms of commercial companies. This incentivises the companies, including family businesses, to transform into public companies by granting advantages different from the newly established companies such as maintaining the commercial name even if the name is that of a natural person; Further, it allows the converted companies to have RO 1 million capital while the newly established companies are required to have RO 2 million or more as capital.”
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