Key Changes To The Law Regulating Partnerships In Oman

Key changes for partnerships

The new Commercial Companies Law (New CCL), promulgated by Sultani Decree 18/2019 repealing the old Commercial Companies Law (No 4/74) (Old CCL) has sought to bring more clarity and detail regarding the formation, management and dissolution of partnerships. Set out below are the key changes brought by the New CCL impacting general partnerships, limited partnerships and joint ventures.

Changes which affect both general partnerships and limited partnerships

Name of the partnership: A partnership must now contain the name of at least one partner in its title. If all the partners' names are not included in the title, then the title must include the addition of "and Partners". A partnership can have a tradename, provided it indicates that it is formed as a general partnership or a limited partnership, as the case may be. Liability of general partners: The liability of general partners in the New CCL is stated to be "joint", not "joint and several" as was the case in the Old CCL. However, the addition of a new provision allowing the partner who has paid the company's debt to claim from the company or other partners, each in proportion to his share of the debt, means that there is ultimately no material change. General partnerships

Removal of managers: A manager who is a partner assigned in the Articles of Association (Articles) may only be removed by unanimous decision of the partners or by court order based on the petition of the majority of the partners. Such removal shall cause the dissolution of the company, unless otherwise provided by the Articles. Partner managers, who are appointed in a separate agreement independent from the Articles, may be removed by a decision taken by the majority of partners and their removal shall not result in the dissolution of the company. Therefore, it may be preferable to appoint partners as managers by an agreement separate to the Articles. Liability of a deceased partner: A deceased partner's liability is transferred to his heirs for any obligations yet to be fulfilled. The consent of the heirs is required for the deceased partner's name to be kept in the partnership title. If the heirs agree for the name to be kept, they shall be jointly liable to the full extent of their property. Withdrawal of a partner: A partner withdrawing from a partnership will remain liable for the debts incurred by the partnership until his withdrawal is registered with the Commercial Registrar. A...