Business structure and

regulations

Name of student

Name of course
Table of Contents

Introduction:..............................................................................................................................................3
Business entities in Oman.........................................................................................................................3
Formation of LLC.....................................................................................................................................5
Capital requirement..................................................................................................................................6
Procedure of setting up and LLC.............................................................................................................6
Reservation of name.................................................................................................................................7
MCI Application.......................................................................................................................................7
Omani shareholder documents.........................................................................................................7
Foreign stakeholder documents.......................................................................................................7
Bank certificate.................................................................................................................................7
Registration by OCCI..............................................................................................................................8
Documents required for setting up LLC in Oman..................................................................................9
Timeline....................................................................................................................................................10
Cost involved............................................................................................................................................12
Conclusion................................................................................................................................................14
References................................................................................................................................................16
Introduction:

In the given scenario we are running a consultancy firm in Muscat. The two investors have

approached us. One of them is Omani national and the other one is Australian national. They ant

to start their own Limited Liability Company. They want to start restaurant in Muscat. All they

want is the legal advice on establishing the Limited Liability Company from our firm. Our firm

has agreed o providing the consultancy services. For this purpose, we have a presentation foe

them and give the details about all the requirements of establishing a Limited Liability Company.

Our consultancy firm is considered as one of the best firms in Oman. Our advisors have the

expertise as well as the experience to guide the people in the right direction. We can advice our

clients what company type is suitable for them. We know the legal requirements and framework

required for the formation of Limited Liability Company. We will guide our clients about the

formation of Limited Liability Company and the process of formation of LLC. We will be giving

them details about the documents required during this time and how much time it will take and

how much money would be required[ CITATION Aga17 \l 1033 ].

Business entities in Oman:

There are different types of business entities in Oman like Omani Limited Liability Company,

fully foreign owned LLC, Joint Stock Company, Oman Free Zone Company and limited

partnership.

The Omani LLC should have at least 2 shareholders. One should be Omani local or citizen of

GCC or United States. Any Limited Liability Company that has foreign participant like non

GCC, Omani or United States citizen should have at least RO 150,000 of paid up capital. The

30% of the equity of company must be retained by the local shareholder and 70% of equity of

company should be retained by the foreign investor. The Omani Limited Liability Company is
most frequently used body by foreign investors who wants to do business in Oman [ CITATION

AlB16 \l 1033 ].

Foreign owned LLC is fully owned by the foreign investors. According to the laws of Oman if

foreign investors wants full share in local companies should seek out MCI’s approval. In order to

get the approval, the company should submit business plan highlighting the benefits for the

economy of Oman, capital investment as well as the total number of local jobs the company will

create or offer. In addition to this the company should have at least two shareholders along with

two directors and the capital should be OR 1million. This type of company is suitable only for

those who can invest this much amount and hire substantial number of local employees.

The companies merged in the Omani free zone can be owned fully by the foreign investors, can

do business with locals of Oman. These companies are also exempted from custom duties as well

as corporate income tax. It is suitable for the manufacturing companies that want to utilize Oman

as base and want to expand its maneuvers in Middle Eastern region.

Joint stock companies are the companies that share all their shares publicly. The minimum

capital required for setting up this company is OR150, 000 and the Omani shareholder should

have 30% of total shares. Any joint stock company that is having a foreign national member

should take the approval from MCI.

Limited partnership is a company that is commercial. The company needs one limited and one

general partner. Both the partners should be registered. The general partner ought to be Omani

national. This type of company is suitable for those who want to give professional services like

auditing, accounting as well as fiduciary services[ CITATION AlS19 \l 1033 ].

 Foreign owned Free zone
The Omani LLC
LLC companies

Limited
Joint stock
partnership
companies
companies

Types of companies

All the above-mentioned companies are the companies that are operated in Oman. Each of them

has its own importance and their own place. Our client wants to start an LLC having one local

resident of Oman as a shareholder and one foreign investor. We are going to explain the

procedure of formation of LLC, documents required for establishing LLC and time needed for

the approvals and the total cost of this procedure.

Formation of LLC:

If people want to invest and earn more profits than Oman has been a perfect location for them to

run their business and earn profit. It is very important to follow the laws while setting up a

business in Oman. The most popular and most common form of business in Oman is Limited

Liability Company. In this kind of company each partner accountable only about his own share.

The Limited Liability Company is the mostly chosen by foreign investors because it does not

take much time in founding a Limited Liability Company and it is quite inexpensive as compared
to joint stock companies. Limited Liability Company is being formed by people not less than 2

and not more than 40.

Capital requirement:

The least capital requirement for establishing a Limited Liability Company is 20,000 RO in the

case when the company is fully owned by either GCC, United States or Omani nationals. If

United States, GCC or Omani entity wants to start a new company in that case it should be fully

owned by United States or GCC citizen. Otherwise that company would be considered as a

foreign company. Any Limited Liability Company that has foreign participant like non GCC,

Omani or United States citizen should have at least RO 150,000 of paid up capital. The 30% of

the equity of company must be retained by the local shareholder and 70% of equity of company

should be retained by the foreign investor. The equity participation of foreign investor in the

LLC might be expanded from 70% to 100% provided[ CITATION Fra16 \l 1033 ].

I. that the foreign/outside investor who proposes to put resources into a Limited Liability

Company can exhibit that such element needs outside specialized ability or skill which

isn't promptly accessible in Oman; or

II. that the outside foreign investor is taking an interest in building up the national economy

and is putting generous capital in the state. Where a remote foreign/outside investor to

hold value in a LLC in abundance of 70% and up to 100%, an application should be

recorded with the Minister of the Ministry of Commerce and Industry (the "MOCI") on

whose proposal the Council of Ministers will be required to concede their endorsement.

Procedure of setting up and LLC:

If people want to invest and earn more profits than Oman has been a perfect location for them to

run their business and earn profit. It is very important to follow the laws while setting up a

business in Oman. The most popular and most common form of business in Oman is Limited

Liability Company. The process of registration of LLC in Oman is explained below:

 Reservation of name:

In Oman who will approve the name of the company is Ministry of Commerce and Industry

(MCI). According to the Omani law a brand-new company cannot take the name of the existing

company. MCI does not allow any Limited Liability Company to add the word Oman in its

name.

 MCI Application:

This application includes formulating as well as submitting some documents. The list of those

documents is as follows:

1. Omani shareholder documents:

Every shareholder should provide computer printout of MCI application, authorized signatory

form, certificate of Oman chamber of Commerce and Industry, certificate of registration as well

as shareholders’ resolution.

2. Foreign stakeholder documents:

Ever shareholder in case of cooperate body should provide certificate of incorporation,

constitutional documents and power of attorney.

3. Bank certificate:
This is gained from Bank of Oman. This document is used as indication of compliance with the

capital requirements of Limited Liability Company.

 Registration by OCCI:

The utmost significant step in the entire process of registration is the registration by OCCI. This

registration is obtained after the MCI finishes the examination of the company and after that

agrees on providing the certificate.

When the MOCI has permitted the constitutive agreement and the documentation granting the

control to set up and to pact with the novel company, the new company will be registered in the

Commercial Register at the MOCI. New company will be dispensed a Commercial Register

Number to be used on the total of its writing material, nameplates, and so forth and will get an

official Registration Certificate[ CITATION Kha19 \l 1033 ].

After the development, a bank certificate gave by the bank in Oman confirming that the

stockholders have saved their complete obligations of the initial capital into the assigned ledger

or the appropriately assessed accounts fulfilling the capital proof/obligation must be submitted to

the MOCI in the time of 4 months from the end of first financial year. Moreover, the

Municipality authority/license must be acquired from the important Municipality which might be

conceded after a lease agreement for office grounds is acquiesced to the Municipality. The lease

can be gone into after the arrangement of fresh company yet before it is operational. The

Municipality permit should likewise be submitted to the MOCI. After both the bank endorsement

and the Municipality permit are submitted to the MOCI, the fresh company will be wholly settled

and prepared to work and do any of its listed exercises/activities. After the registration of the

company is done the company owners need to get a municipality license, registration with Royal
Oman Police, registration with Ministry of Manpower, export and import license, industrial

license, environmental license and other license as per the nature of the business [ CITATION

SAV171 \l 1033 ].

Reservation of name

MCI application

Registration by OCCI

Process of setting up an LLC

Documents required for setting up LLC in Oman:

Along with the application form that would be submitted to MCI there are some documents that

need to be submitted too. The documents are:

 The proprietors of the Limited Liability Company need to succumb the copy of the

identity cards of the shareholders

 The proprietors of the Limited Liability Company need to succumb the copy of the

passports of the shareholders[ CITATION Mäe19 \l 1033 ].

  The holders of the Limited Liability Company need to submit the authorized signatory

form that is approved along with the signatures and names of each approved signatory.

 The holders of the Limited Liability Company need to sgive in to company registration

forms along with Articles of Association and constitutive contract.

 The holders of the Limited Liability Company need to give in to specific license’s

application depending on the activities of the company.

 The holders of the Limited Liability Company need to give in to certificate of initial

capital deposit.

For the purpose of getting lease agreement following documents are required:

 The owners of the Limited Liability Company need to submit the lease agreement of the

company.

 The owners of the Limited Liability Company need to submit the statues of the company

including articles of incorporation and memorandum.

 The owners of the Limited Liability Company need to submit industry affiliation and

chamber of commerce certificate.

 The proprietors of the Limited Liability Company need to submit agency certification as

well, if applicable.

Timeline:

Here is the timeline of different companies explained above.

Service Limited 100% GCC Free zone Limited Joint stock

Liability owned LLC Partnership

Company
 Engagement One week One week 2 weeks One week Two weeks

planning
Registration Six weeks Three weeks Six weeks Six weeks Six weeks

of entity
Approval of Four weeks Four weeks Four weeks Four weeks Four weeks

corporate

bank account
Approval of Three weeks Three weeks Three weeks Three weeks Three weeks

corporate

internet

banking
Engagement One week One week One week One week One week

completion
Total Fifteen weeks Three months Sixteen Fifteen weeks Sixteen

engagement weeks weeks

period

In the above table it is being explained that how much time is required in approval in case of

different companies. In case of Limited Liability Company, the first step is engagement planning

and it takes 1 week. It takes 6 weeks for the registration of Limited Liability Company. After that

the approval of corporate bank account takes 4 weeks and approval of corporate internet banking

takes 3 weeks. At the end the engagement completion takes 1 week. So, the total engagement

period for the Limited Liability Company takes 15 weeks. In case of fully GCC owned Limited

Liability Company the engagement planning takes 1 week. It takes 3 weeks for the registration of

100% owned GCC Limited Liability Company. After that the approval of corporate bank

account takes 4 weeks and approval of corporate internet banking takes 3 weeks. At the end the
engagement completion takes 1 week. So, the total engagement period for the100% GCC owned

Limited Liability Company takes 3 months. In case of free zone Company, the engagement

planning takes 2 weeks. It takes 6 weeks for the registration of Free Zone Company. After that

the approval of corporate bank account takes 4 weeks and approval of corporate internet banking

takes 3 weeks. At the end the engagement completion takes 1 week. So, in total it takes 16

weeks. In case of limited partnership, the time period is little different. The engagement planning

takes 1 week. It takes 6 weeks for the registration of limited company. After that the approval of

corporate bank account takes 4 weeks and approval of corporate internet banking takes 3 weeks.

At the end the engagement completion takes 1 week. So altogether it takes 15 weeks. In case of

joint stock Company, the engagement planning takes 2 weeks. It takes 6 weeks for the

registration of Joint Stock Company. After that the approval of corporate bank account takes 4

weeks and approval of corporate internet banking takes 3 weeks. At the end the engagement

completion takes 1 week. So, in total 16 weeks are required for the completion of whole

process[ CITATION Sch17 \l 1033 ].

Cost involved:

Professional services for Year 1 Year 2

LLC of Oman US $ US $
Company formation fees 11,230 0
Fee to locate office sites in 950 0

Oman
Government registration 1380 1000

fees in Oman
Fee for opening cooperate 4960 0

bank account
Fees for project 9820 0
 management
Tax registration fees of 750 20

government
Annual audit, tax and 0 4850

accounting fee
Total consultancy fee 30,000 0

payable to us for 1 month

Total consultancy fee 5870

payable after 12 months

In the above table the whole expense is being explained. The projection of 2 years is presented.

In the first year the company formation fee would be 11,230 US $. The fee to locate office sites

in Oman would be 950 US $ in the first year. The government registration fee for LLC in the

first year would be 1380 US $. The fee for opening corporate bank would be 4960 US $. The fee

for project management would be 9820 US $. The tax registration fee would be 750 US $in the

first year. Annual audit, tax and accounting fee would be 0 in the first year. The total consultancy

fee of our firm for the first month would be 30,000 US$. In the second year the fees for company

formation, opening corporate bank account, project management and fees to locate office site in

Oman would be zero. The government registration fee in the second year would be 1000 US $.

The registration fees of government in the second year would be 20 US $. The total consultancy

fees of our firm which would be payable after 12 months would be 5870 US $. Our firm has

provided.

Conclusion:

In the given scenario we are running a consultancy firm in Muscat. The two investors have

approached us. One of them is Omani national and the other one is Australian national. They
want to start their own Limited Liability Company. They want to start restaurant in Muscat. All

they want is the legal advice on establishing the Limited Liability Company from our firm. We

will guide our clients about the formation of Limited Liability Company and the process of

formation of LLC. We will be giving them details about the documents required during this time

and how much time it will take and how much money would be required. There are different

types of business entities in Oman like Omani Limited Liability Company, fully foreign owned

LLC, Joint Stock Company, Oman Free Zone Company and limited partnership. If people want

to invest and earn more profits than Oman has been a perfect location for them to run their

business and earn profit. It is very important to follow the laws while setting up a business in

Oman. The most popular and most common form of business in Oman is Limited Liability

Company. Any Limited Liability Company that has foreign participant like non GCC, Omani or

United States citizen should have at least RO 150,000 of paid up capital. The 30% of the equity

of company must be retained by the local shareholder and 70% of equity of company should be

retained by the foreign investor. There are different steps involved in setting up an LLC like

reservation of name, application of MCI and registration by OCCI. The documents required are

also being explained in this report like identity cards, passports of shareholders, certificate of

initial investment and some specific license a per the nature the company. In this report the time

needed for different sorts of approval is also being mentioned. The cost involved in the formation

of LLC is also mentioned. The projection of two years is being made. In the end the consultancy

cost for the first month and after twelve months is being mentioned for the clients [ CITATION

SAV17 \l 1033 ].
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