Corporate Structures in Oman

Corporate Structures in Oman

With a budding, prosperous population and a modern economy, Oman offers plenty of business opportunities to individuals and companies from around the world. The government has initiated schemes and provides incentives that attract foreign investors to open a company in Oman.

Setting up a company in Oman is easier and more profitable, but you need to decide on the type of business structure for your company. Every corporate structure in Oman has its own benefits, and it is the duty of the management to select a structure according to the company's needs and requirements.

Let’s examine the various types of corporate structures one may choose for company registration in Oman.

1. Sole Proprietor

A sole proprietorship is a business procedure in which a trade license is issued in the name of the owner and makes trades in that name. The sole proprietor is liable for all liabilities of the business. The capital requirement is relatively low (minimum OMR 3,000) when compared to other countries. It is a common practice in Oman to initially establish a sole proprietorship and later convert it into a limited liability company (“LLC”).

Benefits of Sole Proprietorship

  1. Tax filing is easy
  2. Tax rates are low
  3. Provides control over the business as you are the sole owner
  4. You can use any business losses to offset personal income from other sources

2. General Partnership

A general partnership is an agreement between two or more partners in which each partner is responsible for the company's liabilities. This form of corporate structure in Oman is not suitable for foreign investors, so Omani citizens can become partners in this company.

Benefits of General Partnership

  1. Tax filing is relatively easy due to the pass-through tax treaty.
  2. There is no minimum capital requirement.
  3. This company structure is very flexible.

3. Limited Partnership

A limited partnership is a modified form of a general partnership. The general partner, who is required to be an Omani national, is liable for the debts and obligations of the partnership without any limitations whereas the limited partner only has limited liability, and is only liable for the company’s debts in the amount of his capital contribution.

Benefits of a Limited Partnership

  1. It is easier to market the interests of a limited partner as an investment.
  2. Provisions protect a partner's interest in a limited partnership from being taken away when that partner is sued. 
  3. Like General Partnership, it also enjoys the advantages of pass-through tax treatment.
  4. It allows the general partners to use their expertise to make important decisions for managing the business.

4. Joint Venture Company

In a joint venture company, two or more persons establish legal relationships among themselves without affecting third parties. A joint venture cannot have a separate legal name and there is no minimum capital requirement.

Benefits of Joint Venture Company

  1. Grants access to new markets and distribution networks.
  2. There is a sharing of risks and costs with a partner.
  3. Can access resources including specialized staff, technology, and finance.

5. Joint Stock Company

joint stock company in Oman is a commercial company whose capital is distributed into shares of equal value and are negotiable as approved by law. It can further be divided into:

  • Public Joint Stock Company

The capital of a public joint stock company is divided as shares which can be publicly traded. The minimum share capital requirement is OR 150,000 (about 390,000 USD).

  • Closed Joint Stock Company

The shares of this cannot be traded publicly and a minimum share capital of OR 50,000 is required. It also requires at least 3 shareholders of which one should be a citizen of Oman holding a minimum of 30% of total shares.

Benefits of Joint Stock Company

  1. Can raise large capital.
  2. The shares can be easily transferable.
  3. It has the ability to bear the risk.

6. Limited Liability Company (LLC)

LLC company formation in Oman is popular and often the most suitable method for foreign investors to establish a business. The number of partners in an LLC company must be at least 40 but should not exceed 70. The minimum capital required to start an LLC in Oman is OR 20,000 (for Omanis or GCC partners) and OR 150,000 (for mixed shareholding).

Benefits of LLC

  1. A foreign shareholder can have up to 70% of the shares in the company.
  2. LLPs have the flexibility of choosing either a centralized management structure or a completely decentralized structure.
  3. The partners in an LLP have limited liability and do not lose the limited liability if they also actively participate in management.

7. Branch Office

A branch office is an extension of a foreign company that has entered into a contract with the government or one of its entities and is entitled to register and operate a foreign branch office in Oman. It is a popular way for foreign companies to benefit from 100% foreign ownership.

Benefits of Branch Office

  1. Provides 100% foreign ownership
  2. A minimum of tax is applicable (12%)

8. Representative Office

A representative office is started for only research or promotion purposes. No commercial or business-related activities can be conducted by a representative office in Oman.

Benefits of Representative Office

  1. Can be 100% foreign-owned.
  2. Requires neither share capital nor a local partner.
  3. The foreign company remains liable for all of the debts and other liabilities of the branch office.

These are the benefits available to investors in different corporate structures in Oman. Now, all you have to do is choose the best business structure that suits your needs.

If you do not need the hassle, you could let our business setup consultants at Business Setup Worldwide do all the work for you. Contact us to get assistance with your company registration in Oman.

FAQs

1. What is minimum share capital required for the joint stock company in Oman?

OR 150, 000, approximately 390,117 USD.

2. What is the number of required shareholders in Oman for LLC formation?

2 shareholders to 40.

3. If any company has local partners, what is the minimum ownership share in Oman?

30% ownership is mandatory.

4. Which is the governing authority in Oman for company incorporation?

The Ministry of Commerce and Industry.

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