Limited Liability Company (LLC)
The LLC is the most frequently used business entity in Oman due to its speed of establishment, limited liability and relaxed share capital requirements. A mainland registered entity is allowed to carry out its business activities throughout the Omani market. A commercial registration is only issued for LLC entities that already have a physical office or business space. An LLC requires a minimum of two shareholders and can have no more than 40. A foreign shareholder can own up to 70% of the shares in the company, although US citizens are permitted 100% ownership under the 2009 US-Oman Free Trade Agreement (FTA). The minimum capital requirement is OMR150,000 (c. USD390,000). This is generally no longer required to be deposited to register an LLC, but a portion must be available as proof of funds.
A Sole Establishment is a simple and straightforward business structure whereby an individual trades on his/her own account under a trade licence issued by the Ministry of Commerce & Industry (MOCI). An establishment does not provide limited liability. The sole proprietor is personally liable to the full extent of his/her assets for the liabilities of the business. Generally, only Omani, GCC and US nationals (subject to certain conditions) are permitted to form sole proprietorships in Oman.
A popular way for foreign companies to secure 100% foreign ownership in Oman is to establish a Branch Office of the parent company. A Branch Office is legally an extension of its parent company. It does not have a distinct legal identity in Oman and is required to use the same name as its parent company. To establish a Branch Office, the foreign company must be contracting for a discrete project with the Omani government or a government company. There is no minimum capital requirement. Read more
Free zones allow companies to have a physical presence in Oman with 100% foreign ownership and offer prebuilt facilities, ‘one stop-shop’ registration and administrative services. Three free zones have been established in the Sultanate – Salalah Free Zone (SFZ), SOHAR Free Zone and Al Mazyunah Free Zone – together with a major logistics hub, the Special Economic Zone at Duqm (SEZAD), and the Knowledge Oasis Muscat (KOM) tech park.
Although geographically located in Oman, these free zones operate as distinct legal jurisdictions and companies setting up in free zones are eligible for various incentives. The legal forms available for investors to set up in the free zones in Oman are a Sole Establishment and an LLC with at least two shareholders.
Foreign nationals are generally not permitted to conduct any business activities or participate in an Omani company without obtaining a licence from the Ministry of Commerce & Industry (MOCI). As from January 2020, foreign investors are allowed to own 100% of a business in mainland Oman in certain sectors. Some business activities are still reserved for Omanis and other activities still require a local Omani partner with a minority shareholding.
All types of consultancy activities still require a local Omani partner, who is required to hold a minimum of 35% of the shares in the new company. The minimum share capital requirement is OMR150,000. This does not have to be deposited but a portion must be available as a proof of funds.
In-Country Value (ICV)
Oman’s ‘In-Country Value’ (ICV) is designed to develop the skills of Oman’s workforce and increase in-country spending on local goods and services. ICV is defined as the total spending retained in-country that can benefit business development, contribute to human capability development and stimulate productivity in Oman’s economy.