Types of commercial companies in Oman

Oman is a promising investment destination, thanks to its strategic location, flexible legislative environment, and incentives for local and foreign investors.

 One of the most important aspects any investor must understand before starting a business is learning about the Types of commercial companies in Oman and choosing the legal structure that best suits their business.

This choice represents a critical step that affects the legal liability, capital requirements, management structure, and tax liabilities of the business entity.

This article aims to provide a comprehensive guide to the types of commercial companies in  Oman, focusing on the characteristics of each type, the requirements for its establishment, and the differences between them.

The article will also cover aspects related to corporate activities, types of commercial contracts, commercial registration, and answers to the most frequently asked questions about company formation in  Oman.

If you're looking for comprehensive services to establish your company, understanding the types of commercial companies in Oman is the starting point for a successful investment journey.

What are the types of companies in  Oman?

The Omani Commercial Companies Law defines the legal forms that commercial entities can take. This diversity allows investors to choose the structure that best suits the size of their investments, the nature of their business, the number of partners, and the level of liability they wish to assume. Knowing these types of commercial companies in Oman is the basis for making an informed decision.

The main types of business companies in  Oman include:

• One-person company

• Limited Liability Company (LLC)

• closed joint-stock company

• holding company

• Simple limited partnership

• General partnership (partnership)

• joint venture companies

In addition to these local forms, Omani law allows foreign investors to have a presence in the market through foreign company types in  Oman.

Local types of commercial companies in  Oman

Below we will learn about the details of each type of commercial company in  Oman:

One-person company

The one-person company is one of the newest types of commercial companies in Oman, emerging to meet the needs of entrepreneurs and individual investors.

This entity allows just one person (natural or legal) to establish a company whose capital they fully own, with their liability limited to the extent of that capital. This type of commercial company in  Oman offers the owner significant flexibility, as they have complete control over the company's management and decision-making.

Advantages of a one-person company:

• The owner has full control over management and decisions.

• Limited liability protects the owner's personal assets.

• Ease of establishment compared to some other types of commercial companies in Oman.

• Flexibility in modifying work plans and activities.

Disadvantages of a one-person company:

• It may be more difficult to raise large amounts of funding than companies with multiple partners.

• Their creditworthiness may be lower at times.

Limited Liability Company (LLC)

The Limited Liability Company (LLC) is the most common type of business entity in  Oman, especially for foreign investors and small and medium enterprises.

This company consists of at least two and no more than forty partners, none of whom shall be liable for the company’s debts and obligations except to the extent of his share in the capital.

This type of business company in  Oman is ideal for combining the advantages of personal companies (flexibility in management) and capital companies (limited liability).

Advantages of a limited liability company:

• Partners' liability is limited to the extent of their shares.

• Relative ease of establishment and management compared to joint stock companies.

• No high minimum capital requirement is required in most activities (although there are capital requirements in some sectors).

• Foreign investors can own up to 100% of many businesses under the Foreign Investment Law.

Disadvantages of a limited liability company:

• It cannot offer shares for public subscription.

• There may be restrictions on the transfer of partners' shares.

Closed joint-stock company

A closed joint-stock company is a type of commercial company in  Oman that requires a limited number of founders and does not offer its shares for public subscription.

Its shares are traded only among its founders, and shareholders' liability is limited to the value of their shares. This type of commercial company in  Oman is suitable for large projects that require significant capital but do not wish to engage in the complexities of a public offering.

Features of a closed joint-stock company:

• Shareholders' liability is limited to the value of their shares.

• Possibility of raising significant capital through partner contributions.

• Organized administrative structure.

Disadvantages of a closed joint-stock company

• The incorporation procedures are more complex than those of a limited liability company.

• Difficulty of stock trading.

• Subject to stricter control by government agencies.

holding company

A holding company is a company that does not directly engage in operational business activities, but rather its primary activity is owning shares in other companies (subsidiaries). The primary objective of this type of commercial company in  Oman is to control and supervise subsidiaries, manage investments, and provide financial and administrative support to the group.

Features of the holding company:

• Facilitating the structuring of economic groups.

• Diversification of investments and risk management.

• Potential tax benefits.

Disadvantages of holding company:

• It may be complex in its structure and management.

• It requires a clear strategic vision to manage subsidiaries.

Simple limited partnership

A limited partnership consists of two types of partners: a general partner who is fully and jointly liable for the company's debts, and a limited partner who is only liable for the company's debts to the extent of his share in the capital.

This type of business company in  Oman combines unlimited liability for some partners and limited liability for others.

Advantages of a limited partnership:

• Allows capital to be raised from partners who do not wish to take on unlimited liability.

• Flexible management compared to equity firms.

Disadvantages of a limited partnership:

• Unlimited liability of the general partner.

• Difficulty in attracting new joint venture partners.

General partnership (partnership)

A general partnership is the oldest type of commercial company in  Oman. It consists of at least two general partners, each of whom is jointly and unlimitedly liable for the company's debts and obligations. This type of partnership relies heavily on mutual trust between the partners, and is often comprised of individuals who are related or closely acquainted.

Advantages of a joint-stock company:

• Ease of establishment.

• High creditworthiness due to unlimited liability of partners.

• Flexibility in management.

Disadvantages of a general partnership:

• The partners' liability is unlimited, putting their personal assets at risk.

• Difficulty in transferring partners' shares.

• It expires upon the death or bankruptcy of one of the partners (unless the articles of association provide otherwise).

joint venture companies

A joint venture partnership is not an independent legal form in itself among the types of commercial companies in Oman. Rather, it is a contractual agreement between two or more entities (individuals or companies) to cooperate in implementing a specific project or specific economic activity for a limited period of time or until the project is completed.

This partnership can take the form of any of the types of commercial companies in Oman mentioned above (often a limited liability company or a closed joint stock company) established specifically for the joint venture.

Advantages of joint venture companies:

• Pooling resources and expertise among partners.

• Sharing risks and costs.

• Entering new markets or implementing large projects that exceed the capacity of a single entity.

Disadvantages of joint venture companies:

• Disagreements may arise between partners over management and profit sharing.

• Requires detailed and clear agreements between the parties.

Types of foreign companies in  Oman

Omani law allows foreign investors to establish a presence and conduct business in Oman through several forms, different from the purely local types of commercial companies in Oman:

A branch of a company outside Oman

Foreign companies may open a branch in  Oman to carry out activities licensed by their parent company. The branch does not have a legal personality separate from the parent company, and the parent company is fully liable for the branch's obligations in Oman.

This option is suitable for companies that wish to expand directly into the Omani market under their existing name and structure.

Commercial agencies

Foreign companies may appoint an Omani commercial agent to represent them and market their products or services in Oman. Commercial agencies are subject to the Omani Commercial Agencies Law and require registration of the agency contract with the Ministry of Commerce, Industry and Investment Promotion.

This form does not create an independent legal entity for the foreign company in Oman, and the relationship is contractual with the local agent.

Representative office of the company

Foreign companies are permitted to establish a representative office in  Oman. The representative office's role is limited to promotional and marketing activities and market intelligence gathering. It is not permitted to engage in any revenue-generating commercial activity in Oman.

This option is suitable for companies that wish to explore the Omani market before fully entering it through one of the other types of commercial companies in Oman.

Conditions for establishing various types of companies in  Oman

The requirements for establishing commercial companies in  Oman vary depending on their legal form and the targeted business activity. However, there are some basic common features:

capital

Capital is a basic requirement for establishing most types of commercial companies in Oman. The minimum capital requirement varies greatly depending on the type of company and economic activity.

While a sole proprietorship may not require significant capital, joint-stock companies require significantly higher capital. Certain vital or strategic activities may impose higher capital requirements to ensure the project's viability and ability to meet its obligations.

Ownership

Ownership requirements for commercial companies in Oman vary between local companies and companies with foreign investors.

Historically, most businesses required a percentage of Omani ownership, but with the new Foreign Investment Law, foreign investors can now own up to 100% of a number of sectors, aiming to attract more foreign investment.

However, there is still a list of activities that are prohibited for foreign investment or require a specific Omani ownership percentage.

Responsibility and control

Understanding the level of liability and control is vital when choosing a commercial company type in Oman. 

As previously mentioned, liability varies from unlimited and joint liability in partnerships to limited liability limited to the share of capital in limited liability companies and joint stock companies. The ownership structure and type of company also affect the level of management control and decision-making.

What are the company's activities?

Corporate activities refer to the commercial and economic purposes pursued by a company. When establishing any type of commercial company in Oman, the activities the company will pursue must be clearly defined in the memorandum and articles of association.

Certain activities are subject to special licensing and approval requirements from the relevant government authorities before they can commence. The company must commit to engaging in only licensed activities.

What are the types of commercial contracts in Omani law?

The Omani Commercial Law regulates many types of commercial contracts in Omani law that govern transactions between merchants and companies.

The most prominent of these contracts are: the commercial sale contract, the transportation contract, the commercial mortgage contract, and the commercial agency contract.

Understanding these contracts and their provisions is essential to ensure the integrity of business transactions and protect the company's rights.

What are the types of commercial registers in Oman?

The commercial register is an official registry in which all commercial entities (individuals and companies) conducting business in Oman are registered.

The commercial register provides basic information about the merchant or company, such as its name, legal form, capital, activities, and managers.

There are different types of commercial registers in  Oman, depending on the legal form of the entity.

Registration in the commercial register is mandatory for legally conducting commercial activity.

The commercial register includes restrictions for sole proprietorships and restrictions for different types of commercial companies.

What are the company ratings in Oman?

Companies in Oman are classified into different grades, based on several criteria such as capital size, project size, and experience.

This classification affects a company's eligibility to participate in government tenders and projects. Each corporate classification in Oman grants the company specific benefits and job opportunities that differ from those of other classifications.

How can City Squares help you choose a company type in Oman?

Choosing and establishing a business in Oman can be a complex process, requiring a thorough understanding of local laws and procedures. This is where a specialized company like City Squares comes in to provide support and guidance.

City Squares is a leading provider of company formation and investor services in  Oman. City Squares' team of experts can assist you with:

• Evaluate your business needs and goals to determine the most suitable type of business in Oman for you.

• A detailed explanation of the characteristics of each type of commercial company in  Oman and a comparison between them.

• Assistance in fulfilling all company establishment requirements, including capital and ownership requirements.

• Preparing and submitting the necessary documents to the Ministry of Commerce, Industry and Investment Promotion and other relevant authorities.

• Follow up on registration procedures in the commercial register and obtain the necessary licenses.

• Providing advice on types of commercial contracts in Omani law and appropriate corporate activities.

• Help understand company grades and requirements.

In short, City Squares provides integrated solutions to facilitate the process of establishing your company in  Oman, allowing you to focus on developing your business.

Conclusion

If you're just starting out on your investment journey in Oman and need guidance on the types of commercial companies in Oman that are right for you and assistance with the complex incorporation procedures, hiring specialized experts can save you a lot of time and effort.

City Squares invites you to benefit from its extensive experience in company formation and investor services in  Oman. We are here to make your investment experience in Oman easy and fruitful.

Feel free to contact us today for a free consultation:

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City Squares - Company Formation Services in  Oman

Frequently asked questions about company formation in  Oman

Here are answers to some common questions that may come to mind for investors interested in establishing a business in  Oman:

How much does it cost to establish a company in  Oman?

The cost of establishing a company in  Oman varies depending on the type of company, capital, activities, and various government fees. Costs typically include registration fees, licensing fees, and professional service fees (such as lawyers or company formation firms). City Squares can provide an accurate estimate of the expected costs based on the details of your project.

What is the minimum capital for a one-person company?

There is no high minimum capital requirement for a one-person company under Omani law, making it an attractive option for entrepreneurs with limited budgets. However, the capital must be sufficient for the nature of the intended activity.

How do I open a commercial register in Oman?

The procedures for opening a commercial register in Oman are carried out through the “Invest easilyUnder the Ministry of Commerce, Industry and Investment Promotion, the process requires submitting an online application, selecting the legal entity type (from among the types of commercial companies in Oman or a sole proprietorship), specifying the activities, submitting the required documents, and paying the prescribed fees. City Squares can assist you in completing these steps smoothly.

What is the difference between a business and a company?

The main difference lies in ownership and liability. A business is owned by one person and has unlimited liability for its debts and obligations.

As for the company, it is owned by two or more persons (except for the one-person company), and liability varies according to the type of company, as it is limited in most types of commercial companies in Oman, such as limited liability and joint-stock companies.

A company has a legal personality independent of its owners, while a sole proprietorship does not have an independent legal personality.

What are the best investment areas in  Oman?

Oman encourages investment in diverse sectors, such as tourism, logistics, manufacturing, mining, renewable energy, fisheries, and agriculture.

The best investment area depends on the investor's interests, experience, and investment size. City Squares can advise on promising investment opportunities in Oman.

What is a general partnership in Omani law?

A general partnership is a type of commercial company in Oman. It consists of at least two general partners who are jointly and unlimitedly liable for all the company's debts.

The company name usually consists of the names of all or some of the partners, plus the phrase "and their partners."