Starting a Limited Liability Company in Oman
As a foreign investor starting a business in Oman, you will need to decide which company structure will best suit your business. While there are various options out there – including joint stock companies, limited partnerships, branches and representative offices – the most common company structure tends to be the limited liability company or LLC.
What is an LLC? An LLC is a company structure that allows for a wide variety of trading and manufacturing business activities. In comparison to other company structures, the LLC is relatively easy and inexpensive to set up, and provides a fairly flexible option with plenty of incentives and benefits.
Requirements of an LLC in Oman
In order to set up an LLC in Oman, you will have to meet certain requirements. However, these requirements will change according to the type of LLC you opt for.
Opting for an Omani LLC
- You will need to have at least two shareholders and one director (the director can also be one of shareholders, if required). One of the shareholders must either be a national of Oman, of a GCC State, or of the USA. This shareholder must own at least 30% of the company’s shares.
- You will need a minimum paid up capital of OMR150,000.
- You will need a local address.
If you are an American citizen, you can benefit from Oman’s 2009 Free Trade Agreement with the USA. This allows you to form a company without a local partner, as long as all shareholders are also American citizens. This option requires a smaller minimum share capital of OMR20,000, which is not required to be paid up.
Opting for a Wholly Foreign-Owned LLC
- You must seek approval of the Ministry of Commerce and Industry (MOCI), providing a detailed business plan. This business plan should highlight the company’s capital investment, and the projected benefits to the Omani economy, such as the number of local jobs that will be created.
- You will need to have at least two shareholders and two directors.
- You will need a minimum capital of OMR1million
Benefits of Choosing an LLC
Providing you meet the requirements of the LLC – and the structure suits your business needs – you could enjoy a wide range of benefits from choosing this structure.
- Your business will have the freedom to carry out a wide range of activities, while servicing both private and government clients.
- With just two shareholders as a minimum, you can keep your business as small as it needs to be in the beginning.
- Setting up an LLC involves a shorter registration process than other company structures, with fewer costs involved.
- LLCs do not need to be listed on the Muscat Securities Market in Oman, and have fewer procedural, disclosure and corporate governance requirements to abide by compared to other company structures, such as the joint stock company.
- In Oman, you don’t need to pay income or any individual tax. That means, once established, your LLC will typically only pay a flat 15% corporate tax. Other tax incentives apply.
- If you require a local partner, you can choose one that will assist in the establishment and growth of your business, helping your business to succeed as you acclimatise to unfamiliar surroundings.
- Your local partner may own 30% of your company, but the amount of control your partner has, and the distribution of your business’s profits is determined by your agreement.
- Your LLC may be wholly foreign-owned under certain circumstances. For this to be an option, you will need to prove that your business is in need of foreign technical know-how or expertise that is not readily available in Oman, or that your business is participating in the development of the economy by investing substantial capital in the country.
Setting Up an LLC
Ready to set up your LLC? After identifying your local partner (if needed), you will then have to check the availability of the proposed name of your company. This may have your name included in it, but not the word ‘Oman’, according to the Ministry of Commerce and Industry (MOCI).
From there, you will need to draw up the contract of incorporation and the articles of association, which must be signed by each of the company’s shareholders. These should be submitted to the MOCI alongside all required documentation of both the shareholders and the local partner.
From there, the MOCI will assess all submitted documentation, and if approved, your company will be registered in the Commercial Register at the MOCI. You will then be allocated a Commercial Register Number, and you will receive an official Registration Certificate.
After this, your bank in Oman should issue a bank certificate showing that you have deposited your full contribution of the share capital into the designated bank account, which must be sent to the MOCI within four months after the close of the first financial year.
In addition to this, you must obtain a Municipality license by submitting your lease agreement for office premises to the relevant Municipality. This should be submitted to the MOCI. Once both the bank certificate and the Municipality license are submitted to the MOCI, your company will be fully established and ready to operate.
Whether you’re looking for a trusted local partner in Oman, or just some friendly advice on starting a business, Fusion should be your first port of call. Contact us today to find out what Fusion can do for you by setting up a no-obligation consultation.