Ali Gouda, senior corporate attorney, and Reetika Lal, associate attorney, at Al Yahyaei and Salt highlight the step-by-step procedures of incorporating fully owned foreign companies in Oman. And the option […]
Ali Gouda, senior corporate attorney, and Reetika Lal, associate attorney, at Al Yahyaei and Salt highlight the step-by-step procedures of incorporating fully owned foreign companies in Oman. And the option to incorporate the same is available in the free zones (FZs) of Sohar, Al Duqm, Salalah, and Al Mazunah. Oman’s FZs are the best approach to start a business by a foreign entity and are not subject to the stringent Omanization directives, thereby owning 100% closely held shares. FZs also provide other huge benefits like corporate tax holiday for up to 25 years, low capital requirements, 0% import or re-export duties, 0% personal income tax, low local labor requirements (15%), and a one-stop-shop (OSS) facility for obtaining all relevant clearances. Every business entity doing business in Oman FZs must be registered with the authorities, and the registration formalities to be met for each such authorities will be addressed step by step.
DETERMINING START-UP CAPITAL To determine and finalize the share capital is the first step before beginning the process of registering the prospective company with the Ministry of Commerce & Industry (MOCI) and Oman Chamber of Commerce and Industry (OCCI). As the start-up capital also evaluates the company on grades by the OCCI, the grades are namely Excellent, First grade, Second grade, Third grade, and Fourth grade depending upon the range of start-up capital. REGISTRATION AT THE FREE ZONE As per the FZ online portal, the process of registering a new FZ company can be completed in a day, provided a correctly completed application form is received and accompanied by all required documents. Documents to be submitted include a filled in and signed investors form by shareholders, copy of shareholders’ passports, registration documents from the origin country of the foreign shareholder company (if involved), board resolution to form a FZ company in Oman signed by shareholders, and the articles of association (constitutive contract) of the shareholding company. All of these documents are to be verified by the Omani Embassy of the origin country. Once all the properly verified documents are submitted and fees are paid, the process of formal incorporation or registration is complete, and the following are awarded: _x005F • _x005F Commercial Registration Certificate (CR) _x005F • _x005F Affiliation certificate to Oman Chamber of Commerce and Industry (OCCI) _x005F • _x005F PO Box number valid for one year The registered company shall then finalize a “company seal“ via authorized signatories after successful completion of registration. OPENING A LOCAL CORPORATE BANK ACCOUNT IN OMAN The prospective company should open a corporate bank account in any local Omani Bank and transfer the initial capital to that account. Thereafter, a certificate of deposit is to be obtained along with a bank statement. The following documents are required to be submitted by an investor/investing company to open a local bank account: a copy of the commercial registration and authorized signatories form, copy of OCCI affiliation certificate, and application signed and sealed by an authorized signatory. OBTAINING A PLOT PERMIT The next milestone is obtaining a plot permit. To set up a working entity, one needs land/plot to be leased. Therefore, submitting a complete and correct plot application is essential. The reference of this application is made eventually in a land lease agreement that is signed between the investor and Free Zone Authority (FZA). PRE-CONTRACT CLEARANCES The very next step is to obtain various clearances. Prior to obtaining clearances and a Non-Objection Letter (NOL) from Ministry of Environment and Climate Affairs (MECA), the FZA requires a commercial agreement with all terms and conditions, along with lease pricing of the plot (on per year basis and in USD) and the term of the agreement. PLOT SELECTION AND APPROVAL OF PLOT PERMIT APPLICATION The next step is for the investor to select the definitive plot size and location. Post selection, the Free Zone Technical Department issues the final plot plan with all technical data of the plot and of the plot’s surrounding infrastructure. PAYMENT OF 1ST QUARTER LEASE /LICENSE FEE At this phase, the investor is requested to pay for the first quarter of the lease of the land/plot, regardless of the effective date of the contract of the prospective company. Along with this, it is also requested from the investors to pay the license fees, or the tariff, as per FZ rules and regulations that varies on type of company. By this time, a draft of the lease agreement must be circulated between the parties with all terms and conditions and both the parties should work to agree and finalize on the same. SIGNING OF LAND LEASE AGREEMENT The FZA organizes a signing event to honor the signing of the final lease agreement. For a scenario in which it is not possible for the investors of the prospective FZ company to be present on the designated signing day, the document is signed by circulation and a fully executed agreement is accomplished. COMPLETION OF INCORPORATION OF A FZ COMPANY The signing of the lease agreement by both parties makes the incorporation of the company official. The FZ OSS department then takes over the account management and begins the work for attainment of the various pre-construction clearances (construction of the factory/warehouse/etc.) on a case-by-case basis. Thus, the stages for incorporation conclude with signing. However, formalities for a fully fledged working company necessitate more procedures to be completed as per the laws of Oman.