Oman Heralds A New Framework For Sukuk Issuances And New Listing Categories

The past few weeks have seen frenetic activity in key legislative developments being released in Oman. Hot on the heels of the publication of Oman's new Sukuk Regulations on 5 April 2016 came the introduction of new listing categories on the Muscat Securities Market (MSM).

Why are the Sukuk Regulations significant?

The Capital Market Authority (CMA) Decision 3/2016 issued on 5 April 2016 introduced the CMA's long-awaited Sukuk Regulations (the Regulations). These Regulations mark the culmination of more than three years of drafting, re-drafting and consultation with industry players both locally and internationally. The CMA has worked hard behind the scenes to take on board comments of key stakeholders to achieve the objectives of having a framework which will further promote capital market issuances in Oman. As an interim measure pending release of the Regulations, an amendment to the Capital Markets Law was promulgated in November 2014 (Sultani Decree 59/2014) which added licensing and regulation responsibility of SPVs to the CMA as well as the identification of the terms and conditions of financial trusts and issuance, listing and trading of Sukuk instruments and their Shariah supervision. The absence of a dedicated Sukuk regulatory framework, along the lines of the Regulations, did not hamper the ability of the Government of Oman to launch its debut Sukuk in 2015, nor the ambitions of a number of key corporations in planning their issuances. However, those of us who are working on structuring Sukuk transactions for a range of Omani issuers drawn from a broad spectrum of industries and sectors welcome a more formal legislative basis, which brings more certainty for both issuers and investors.

What are some of the key features of the Sukuk Regulations?

The SPV

The ability to issue through an Omani limited liability company SPV with significantly lower minimum capital requirements, rather than through a joint stock company which requires minimum paid-up capital of OMR 500,000 (approximately USD 1,300,000). Not only must the SPV be a company registered at the Ministry of Commerce and Industry, but the CMA must also grant a separate licence to the SPV (terms and conditions have yet to be disclosed), which will mean a fee of OMR 1,000 with further fees on renewal of the licence every five years.

The prospectus

The Regulations refer to issuances taking place with a "draft prospectus as per the form prepared by the CMA". Currently, no such form...